Earnings call transcript Q1 2023

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Operator

Good day. And welcome to the Howmet Aerospace First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

to Investor conference Relations. like Luther, to now President, Vice would turn over the Paul I Please ahead. go

Paul Luther

Thank you, I'm we and Andrew. Officer, Chief Howmet session. Plant, Aerospace Financial Good question-and-answer Chairman will and morning and quarter Executive comments Vice results have welcome Ken XXXX Officer. Giacobbe, a conference President Chief After Ken, call. and joined Executive John first by Executive to and the John by

relating to would will statements I to contain that remind events discussion today's future like you expectations. and forward-looking

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

items. references adjusted the the EBITDA and and among measures in the presentation, we've items non-GAAP today's EBITDA financial today's in found measures and presentation. comparable release in directly to can to measures excluding Reconciliations These be our discussion. in today's that are special In financial special GAAP included most excluding adjusted Appendix EPS press

that, with the call to I'd turn John. over to like So,

John Plant

louder and speak Howmet's was X% year-over-year revenues significant in an Commercial X% quarter-over-quarter naturally and some of good increase everyone. XX% and Revenue which sequentially. an increased themselves. increased of require year-over-year QX Aerospace morning, guidance and capital. increase $X.X results was Revenue XX% above sequentially. P.T. increase demand, was Thanks billion, for by itself an working

increase year-over-year an XX% EBITDA of of sequentially. was $XXX an million, and X% increase

now three of the inflow. higher XX% EBITDA million, by negative Free and was increase cash Earnings will cash $XX was sequentially. per share margin at year-over-year. substantial be were successive up XX.X%, healthy an by again, driven quarters followed revenues flow

by the with by flow million And that $X yield. cash $XXX on During payments annually, reduce further million reduced hand. the future hence and free XXXX interest was increasing bonds from this will cash quarter

of million were repurchased. addition, In common $XX stocks

shareholder thereby cash value. application During further expect steps the regarding and the balance flows, of XXXX, creating of shareholders can

business model segments. All of further to cash by business outlined performance the financial and company. value flow the margin after the on to I has comment all Ken the rate, free and and of markets above growth, growth the by application the outlook create speak will

Ken Giacobbe

And everyone. you, Thank morning, good John.

Let's move markets the fastening with of growth up Revenue for overview year-over-year X first revenue increase sequentially. Commercial continue Aerospace engine for structures year-over-year an was and Slide and driven to of up to XX% Sequentially, products, engineered was X%. the X% by Commercial Aerospace XX% lead an systems. quarter.

XX% total Commercial growing Aerospace XX% has expanded of grown although of pre-pandemic revenue, the continues revenue. and to and be of for quarters short of eighth consecutive total level

and Defense driven by in Aerospace F-XX program was was Sequentially, due to XX% year-over-year, Defense strong spares. year-end growth the Aerospace seasonality. up legacy flat

year-over-year, was XX% Commercial and impacts system wheels X% forged higher both driven Transportation which segments volumes. and up by fastening up sequentially the

of Finally, with gas Sequentially, up driven XX% gas oil up growth all In of industrial up were and across our which were XX% other X%. markets was up Industrial these up summary, and markets. the and by XX%, XX%. IGT General Industrial oil markets up and IGT XX% General XX%, and XX%, end year-over-year, strong

Now let's to move X. Slide

EBITDA all for to of additions. approximately headcount start billion or the enhanced first EBITDA incremental through the inflationary revenue year-over-year flow $X.X and net $XX XX% and was the was was production high costs EBITDA on XX% through XX.X%. margin XX%, XXX of the EBITDA year-over-year, quarter. training, for while will absorbing approximately Revenue XX% and focus approximately term was exceeding was margin P&L near Adjusting guidance. million, recruiting, Revenue, per and for the pass costs up of We profitability earnings with EBITDA end share up and year-over-year. the

$X.XX, was which share Earnings per XX% was year-over-year.

of quarter in consecutive share. The growth first EBITDA the and revenue, per earnings represented seventh quarter

balance of million. approximately reduction of stock after driven negative million, revenues allocation, $XXX Moving million for was flow debt repurchases of common the cash Free through cash million, quarter capital million, dividends the and first ending quarterly $XX $XXX a the in $XXX was by of $XX balance sheet, quarter. higher $XX million the

net All the a rates record remained future. interest low will and provide Finally, stability its expense which debt-to-EBITDA debt of at unsecured into of is times. X.X bond fixed rate

next XXXX revolver and the billion maturity in $X is undrawn. Our October bond remains

in a balanced $XX to in recovery. to to Moving the continue in allocation, COVID-XX million position were quarter puts support prior less to we continued to expenditures be continue than and very capital the our Capital strong aerospace Capital installed us be approach. depreciation. commercial

Regarding cash million, on debt, now approximately million. approximately with interest lower debt will reduced million October tower cost the XXXX the hand. by $XXX which XXXX in by $XXX $X tower annualized quarter approximately we stands repurchases revolver. The below our debt at our These first is

S&P has from Our outlook week stable growth EBITDA an positive. to resulted continued our in progress upgrade to debt liquidity on and from last healthy reduction,

You our can remaining towers in find appendix. the debt

repurchases. share to Moving

separation common Since The average at have first with quarter in $XXX stands stock stock of quarter was the repurchased an eighth of board the directors acquisition of authority price approximately the Share we the per XXXX, $XXX million. common share. from $XX.XX consecutive repurchases. buyback million of

the flow. last per in quarterly the doubled at after free be to the quarter cash stock share first $X.XX year. confident common was it dividend remained continue we quarter, fourth Lastly, In in of

was with Products build results Aerospace and let's Now its up XX% the first segment an performance. to increase Engine higher IGT growth. was was XX% was and the cover Revenue by Slide spares up of rates gas continued and was oil and strong up XX%. of both Defense aerospace commercial XX% quarter. year-over-year up million, XX% move an for to $XXX X Year-over-year, sequentials. X% driven increase markets and

production a despite new and costs. EBITDA training for million. approximately addition XX.X% associated the was record the near-term EBITDA increased employees year-over-year of of XXX segment XX% recruiting, to margin the $XXX net and

and inflationary driven up to and XX% training Please XX%. up costs XX%. addition the narrow-body was up production year-over-year revenue volume was Commercial partially XXX Slide X% increased and costs. by recruiting, year-over-year by employees approximately Transportation the Aerospace segment increased recovery. were EBITDA Defense near-term Systems Fastening associated new move and offset Aerospace X. of the as Commercial The XX% net increases was

by points. Slide Aerospace million while Now Segment X. year-over-year build Engineered let's Structures move legacy higher driven gain. EBITDA XX% was share with Defense Russian was increased revenue year-over-year and to up XX% XX% $XX titanium XX%, XXX basis margin programs. up Aerospace approximately by Commercial improved down year-over-year, driven some rates of

Slide Finally, XX. to let's move

was EBITDA increased XX% The prices increase in by in increase mostly Segment XX driven volumes. revenue year-over-year Wheels and million of line as $XX aluminum foreign was increased volume. cost XX% inflationary increased points Forged XX%. the by unfavorable currency. lower the year-over-year, basis impact offset pass-through higher revenue with in year-over-year Margin

appendix, and of reflects Lastly, million before in reducing the Slide one million. improved million to This John, XXXX of the impact updated over we've turning $XXX added assumption XX item note, the interest from change in first $XXX quarter. late it the rate $XXX expense have back debt to for XXXX by

$XX we the already published we debt our XXXX recall, guidance. impact approximately by had reducing may in before million of included January you original As

over back it to John. turn me let Now

John Plant

Thanks, Ken, and move XX. to let's Page

manufacture lower carbon to differentiated to leverage trucks fuel-efficient we our customers to ESG, footprints. continue our help with technologies more lighter, aircraft Moving commercial and

goal our In we remains our energy consumption Howmet intensity energy own committed production. the increase greenhouse by total impacts a gas emissions hazardous consumption, our progressed reduced greenhouse from actions managing emission XX% and to Within a reduction of XXXX waste. of gas in environmental the gas as baseline reduction. goal We water XXXX use greenhouse XXXX, Howmet's and achieving against the XX.X% emissions, XXXX our operations, already have XXXX through approaching

and work can to a thrive. environment where diverse, a while equitable also is inclusive employees all workplace Howmet committed fostering safe our

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

We XXXX production also support $XXX increased the workforce to people nearly growth. and our significant in X,XXX million by invested

up of women. recognized of women boards governance, of the was XX% Regarding company having board XX-XX directors by our made on

our Investors of have Lastly, you proactive. encourage our found suppliers sustainability programs report leading sustainability be section. considered to at read the in XX% key to I'd howmet.com

Slide our to about and move talk Let's updated outlook. XX

and high Asia. Firstly, in backlogs both and good long-haul wide-body volume aircraft Spares continues for aircraft. and Airline is be in very continue in to the show now manufacturers' strength. order, are both narrow-body the rapid factors demand load and also with market flights in robust very to and short-haul high aircraft growth for seen jet business very west

targets for the This travel-led engines using can SAF by the cost further given current XXXX driven modern, XXXX, only the augmented substitute to and need high commitment of the be further for airlines demand stimulus and of is fully-efficient by by emission very fuel-efficient cost carbon aircraft, meet new of jet-fuel This the which fuel. today, aircraft. is and achieved

narrow-body all casting to are to looking in fit further steps given engines provide jets complex new at helps efficiency, their fuel also efficiency. capabilities improved increase and which shapes our Howmet hence, management Current to

aircraft. of wings and by but by benefiting wide-body composite suites use are Howmet not divisions sophisticated other for fastener also increased The titanium the exclusively of and required notably, fuselages,

prior market part and F-XX and parts with quarters. should part. inventory be that increased turbine dissipated correction in and the strong the of regarding for Howmet healthy sector injury demand IGT be F-XXs, outlook two and from budgets continues XXXX the three blade gas bulkheads last also defense steady motor drones, the from is rocket high. The fighters of The demand turbine resulted XXXX over F-XX very to to is and oil underbuild the demand next

in well started year commercial The truck.

so, one truck America normal at indicated and is will drop that should North regarding demand steady in backlog apply. or least Europe, pushed the Europe mean seasonality the for obviously spring quarter now out Given any it ordering QX both after albeit and

emissions increases, the have by in plus all stimulated no in until all aircraft with the the the the apply in supplier be assembly weakest reassessing performance ability chain. of by above, trucks aircraft in has half which lines to the especially parts, engine of controlled link commercial clear production which of of consistent and leads being increased. efficiency remain targets supply the see demand about build The QX, In both the seen final to the set second was will the production we U.S., cautious evidence year required the prebuild. XXXX, rate robust in will for for We outlook a

We, and in effect QX QX curtailed were phenomenon delivery as the this Howmet inventories. customer balance this requirements of in to when of late you know, saw also XXXX

million plus $X.XX. specifically plus More to $XX the billion, now per plus We revenue million, see guidance $X.XX $X.XX or earnings minus minus $XXX $X minus or of or EBITDA million, of share for and turning and quarter. second of

$XX minus million. $XX we million, year, per $X.XX $X.XX million. EBITDA billion, the plus revenue X.XXX $X.XX $XX or And share plus flow see of For Earnings $XX midpoint, $X.XX. million, of plus by to minus minus million free of million XX minus at cash $XX increased [ph], $XXX plus

and Please with performance debt of move is and great balance the XXXX, outlook Slide improved net X net summary, and to healthy QX million was given towards of balance improving. debt reduction was sheet strong. The improved and XX. the start XXXX, as times EBITDA. the balance continue to The to In now seen is Howmet will by debt both in the reductions sheet the leverage $XXX EBITDA a in

approximately can authority to service at the this OPEB and expected Annual legacy and Penton current sufficient repurchases cash is is to as program. $XX liabilities be share generated modest cash continue million. Continuing is

updating to thank in very you much. We forward August. look again you And

Let's move questions. your to

Operator

now Instructions] first Goldman The question-and-answer Poponak Sachs. question go session. comes from with will begin Noah ahead. We [Operator the Please

Noah Poponak

$X.X everything XQ year Hey, XQ, full the XQ take it like looks the good the and to if you've saying on to been -- with the end that guide, guide actual I revenue Recognizing would get closer XQ John, to you've be taking and then into need conservatism the and posture in been the around range, the order it morning. billion. markets.

the guide, how I describe just were major last what aircraft on was rates helpful Just guess, in to if quarter you you do assuming we could And there? us there? in update production get general, the

John Plant

Yeah.

on guide. build Before aircraft any specifically comment I

back you in balance talk the is of we one year. significant just volume dimensions, increases. especially me because really the upturn about Let which important up. commercial how tone we many managing such more And And when I potential through thought think have major having setting the is has aerospace segment, an this

have builds regularity And with as down, you last up, over know, aircraft for delayed the volumes year, been years. two taken some

in I And say, our QX that to doing so thought how build. so, QX for, add is we very essentially the we playing in about we see And to preparing improvement similar and out costs. to need

from knows, people. that meet some receiving commentary, similar a we in to we're recruited saw lifted of at for receiving in volumes. XXX employee of sort the QX be probably year course, And XX some second that will else you take Boeing of Ken's they to we schedules the addition XXX up rate is And And run-rate that without heading and when that are everybody in later production that expecting the you half these is. know, so has potential as announced QX, time all to specifying will exactly as will and their

of are by matched clearly the headcounts And second these revenues not cost quarter. the are in

customers where prepared support to may So our we're volume. they in go

my manufacturers. the those remarks, that of in because what in unable as parts their going And both people to cutbacks that cognizant not said is or months year are had were also we're last airframe to we're of they and happened the four so be prepared achieve occurred I scheduled, that by manufacturers engine increases the But customers achieve thought more when some ambitious last about. did our of confident

whether marching about it link all the of weakest in or the the and supply I final assembly base place in to aircraft, matter. that's did And of say really doesn't the

to set that But we're cautious say of get see hopefully, maintain see. and that suppliers, but a half the we we're be more aerospace cut are lot guidance. increases, might we And few the are And than good going up. we going who about not not one those I the possibly better second a we say, even who ourselves produce want outcome see confidence that think the we'll knows currently stance and quite handful actually and almost to we one, back. increased of actual have production. until in to increases when So We

in So strength the is across many this -- have it's we oil some same put plans. which commercial the their may for there still and that what up everybody defense. gas, of need to out, cutbacks pushing in and It's thinking guide suitably in. taken year, also strength don't optimistic summary, and we're not for potential even to plays that into give our maintaining in commercial you the a And of account also we end. those be the increased aero, in I our see one and back whether we're truck of only because though be whether it's quarter in ourselves sectors, cautious the any occur strength to are to how the a time, achieves going sense in want which At robustness, while

know we you we numbers any. production of not gives way I've for So any out And year. other is in hopefully, Noah. the specific change in we public calling don't the And that about later only are changes the the it, which referenced rate, because in XXX also any essentially, thought

Noah Poponak

[Indiscernible] on your framework.

John Plant

Okay. Thank you.

Noah Poponak

Thanks.

Operator

from with Please Walton Wolfe question comes go The ahead. Research. next Myles

Myles Walton

Thanks. John or the profile or of margins the of Obviously, It mix. from here? could a I costs training there's you basis I the or last you points you're couple on there Systems, was those. hiring really margin doesn't year some at like the us with a good touch Ken Fastening below hundred give hoping on so. look that. margin color just EBITDA Thanks, morning. associated trajectory recruiting, Can know and production is

John Plant

Yeah.

it terms for Systems very recognize we need be. And I'd to narrow our no for is really for of are no not margin Airbus which except -- essentially time, no exactly change something or currently-- mix, where at the where passing main. same business we seen for of demand we've And focused the much -- the So metallic in change still is on like say, widebody production demand to also bodies AXXX.

the think do we were XXX-XXX at expect XXX-XXX business, look you of our and larger I Engine, ourselves, which, in change say mix that, people And we recruitment, called like the if that net of will faster preparing year. people. X.X is at We times in out balance course, improve the net

So we fasteners recruited that disproportionately for improvement. preparing in

about essentially, increase improvement stabilizing workforce, see that the plus don't but when absorbed of year. I some and production of in raising in of rate margin year the half plus change QX, I volume the in second do rate margin bit that a the essentially, think the having will improvement is little see So and think mix, we the change, positively, the maybe I much costs in

So basically, the back we've the Myles. for in been optimistically of don't positioning QX, expect ourselves end improvement much year, in and

Myles Walton

more margins incremental that in at that of 'XX-'XX the the company segment approximate point? Should whole

John Plant

as Company. to to can about up. go I sort does segment well, come that don't everybody XXXX But I'll going Howmet current earning like reality. for disappointed we have margin to our somewhat I tend But on QX if in this hopeful of not expect be that thing. level above a no be generally, they're well is then rate I'm average. that it hopes say, for match specifically we're to What Well, know But you that. our hopes it comments saying and

Myles Walton

you. Thank

John Plant

you. Thank

Operator

Robert next from The with ahead. Please Research. question go comes Melius Spingarn

Robert Spingarn

Hi, good morning.

John Plant

Rob. Hey,

Robert Spingarn

ship strong very a just this of lot have matter that had quarter. of sequential was you peers suggested a in but in that inventory that's this some available growth to first industrial, John,

how the So through year? trend that go does as we

John Plant

really you and up if And And which have thought plus. and quite that we turbines. call see our few you in oil gas XX%. for So industrial being turbine And if strong. been let's sector, that's at demand derivative business quite saw it, next, the was this the apart XX% our of strong oil wider backed I by agree, so but pick gas at XX that gas point, We terms anything extraordinary about business. -- really has then and don't positive at say, quarters for is

that, industrial really So low-single-digits. the those are was business beyond the two. But wider

there anything for nothing forward which or make a all. gas we difference us, pulled to there But specific we don't and IGT, or oil at exceptional sectors, and which any So is the two concerns whatsoever. think

Robert Spingarn

tie in on year? sequential the So just should growth this, we throughout expect the industrial to loop

John Plant

see did say QX. to QX, we I Well, similar very

good. has expecting myself, So great I quarter, you what a maybe be say think it really first given it shouldn't I anything really, was don't should been but

being the think I QX half. pair should cost So second taking for about think per you on us similar pretty and

going think see our to forward. any how way a pan above think tried wait exceptional think and the sequential And already. we're I then volumes to don't you I growth and customers' And been -- so give out. view you over what's growth expect We we've balanced of should that quite

Robert Spingarn

so John. much, Okay. Thanks

John Plant

Thank you.

Operator

The next Stanley. Liwag Kristine question comes go Morgan Please ahead. with from

Kristine Liwag

Hey, John.

on uncertain, Following mean on of marching up to supply point salient productive seems the to being ahead chain. it kind with weakest your link, time I volumes for the of invest having

you see do industry? First, link is actually sooner? where you getting keeping weakest XX to Boeing the What from think do

do to And better OEMs the also, think it make you could what these do then what XXX volume the think the increases? And do you to supply chain for MAX? easier for meet

John Plant

there parts manufacturer. down we don't engine supportive specific any can whether And I them, Well, I'm very parts the knowledge directed or production. it's if that it's don't supply are challenges up or supplied about have Boeing's any except any have information in I really, any And know specific airframe through specific by for I and support regarding suppliers. that comments

or as for and which tail to guess and of they guess are Obviously, airlines the And I get many and control read of original the amount the to don't equipment XXX tail those is parts out for any passing finite of the directed don't all how issues got, the the plane it's we fuselage. and retrofit how aircraft, are of much obviously, we've can my that about section we are and build they've even parts inventory with know that.

I hopeful just parts to the I keep said, absolutely schedule partners. So will as our plans. customers of will that think and their their And we're statements they the

had, build they'll course, is to they rate, that parts at there if use. at build have But be they their should cut pass. they of those they then for then fail didn't they've a rates, as inventories which potential the back to And rebate

so And us very question -- for a answer. to it's difficult

is our of ourselves. support we're And are think takeaway to we're ahead we so really time, I the to customers. willing ready, not committed get the At same

to We fourth we the year that but what where necessary, did up are were. of a too far customers ahead shed little recruitment employees the some do we where our hope don't we we willing with I were last end in because bit and quarter,

problem. the guess year. so how which issue I this think But wrapped statement that's fixed, solve it. ask if guess is can month And in it's was call of all can't anything would the Boeing And that we specific that up about out that I you I later there specifically is. in And the

Kristine Liwag

I if on up and John, could Myles' Thanks, follow Great. question earlier.

If whole costs, you business. through were for incremental exclude XX% the pass inflationary margins

volumes So supply as these that you CapEx in point, already materialize. place. and labor might point, the for higher at at have chain could some Airbus, Boeing And get and alleviates issue we

we the XXXX-XXXX, kind XX%? businesses. this out XX% could something the be could Is where aero for look when that be of margins in So incremental to or

John Plant

we'd see that X%. the years of low-XXs out at upon the might probably XX% seen And year or incrementals, talked to did couple being ago, all change quarter. we we dependent this so of of in a by in have terms volume been you've say or the in about Spain, minus play When of a plus high-XXs

all had I'll it's really We And growth. gross and we prepared growth, because and labor cetera. struggled that -- ingest for more we're been real we've et scrap, and cost it's well. going say excessive when untrained the to cost it's When convert to and -- reasonable a

it last years. out the So that's how play of couple

that point, we again, is volume it's And this of that happen taking and for quarter non-metal And because inflation going all we're our XX%. And around from strong. for metal to people you first of a here about the and the preparing are In it's reverse at for if you'll because know some year, year, flow-through, good them on. is XX%. we the adjusting demand see guide it's engineer is so

a And you that second numbers XX% can the from the we reverse over the to that half, XX%. of. by already the given you specific you then implies that off so got at without and start be math anticipate engineer for again, is XX%, if year a percentage recalling And just

higher obviously, it So continue? then depends incrementals into to the the to clearly rate should volumes and what for but volumes XXXX capital our in ultimately, the moment, of will higher a those that voting the margin with should our drag. capital growth on be higher expenditure having volume be, I'm And it the and going as because leverage good applying the drag zone. at the And rate overcomes working

so free flow, Kristine. ends improving And cash up it all

Kristine Liwag

John. thank you, Great,

John Plant

Thank you.

Operator

The go ahead. Sheila next Please from Jefferies. comes question with Kahyaoglu

Sheila Kahyaoglu

Thank and and thank you. morning, XX% PT, you. Good John Ken the margin. Hi, just EBITDA

the You bps, XX% high down end. on guys nice XX base at a but midpoint the had

and Any $XX us you working and you. if inflation given update on you to Thank could of previously that $XXX the assumptions prices just out. incremental mix come changes called a in little bit. the your commodity progress maybe there have million So for margin had million

John Plant

very commodities those team have seen last you quite some out I amenia, half few in come Yeah. become have moved in, a mean the against, months. also but we've example, few expensive take

sure increased make In for coverage in our quest in volumes. customers able support metals certain laying to been those that we've have stocks the adequate some we fact, to security be to of of

is It's to look the where same it trying that in zone. same recover that I At inflation at as generally it. that positive let's the non-metal it, pretty action inflation call down. And is the see a big well, still come at time, beginning to those in X%-X% it, control is think we big today high, time,

great So see both everybody us major international, time robust be we then issues rate is story secure spares moment. at what increased margin for anticipate. and demand for flow-throughs wing going quite and to those we it obviously, if the also of and and they're some built this with volume if these the spares demand that build say of domestic is and me, then And they for -- the do would on that

that calling or So margin or mean But hoping the X.X X.X is a on that to the out turns revenue I rate difficult. be better. out

You're million two or or talking frac here there. like a

So it I'd say Sheila. matter, doesn't really

Sheila Kahyaoglu

you very Thank much. Okay.

John Plant

Thank you.

Operator

Seth go ahead. JPMorgan. The comes next Please question from Seifman with

Seth Seifman

thanks. morning, very Thanks much. everyone. Hey, Good

I of -- gain mentioned prepared the think and Ken the from During on and $XX remarks, million Russia share structures. titanium engineered

that's the think gain last wrap you the I made share that on around year.

the So refined forgings, might the little some many and do running can others, with whether forward you OEMs maybe more where in have the not talk moved bit about with and And state of there there? aren't be specifically of Howmet opportunity sources the a alternative to there or that the yet?

John Plant

Okay.

about that X volume. to on add for fourth multiply that, absolutely way and So growth XX% then you're the take you $XX minus quarter by a increase correct. And XXXX. think is The the $XX or XXXX plus the in to million was about 'XX million

on thinking and titanium from notably positive XX% with the taken Airbus about you very intake you of I it. to just take probably also from recently, That's Embraer think XXXX. currently, And and I'm order steps lot restricted way orders we've 'XX some build forgings. both number large of a XX% first a that's of with the known given for work very actively And getting, particularly we who quotations say, also the And in more Boeing continue add that inventory but meal the our more and with they've wide-bodies. they've engaged I'd for the product to other that fact XXX Boeing had are and given and another

requirements those and of XXXX. increasing gradually see for of year end release and back into we But them preparing ordering win to the this

be So it's It'll all only blemish positive. of. It's very the tough see by opportunity out hold and It's expensive. as the titanium at very reverts. get is playing to moment expected

to we've So nothing sponge ramp are That's important of additional our furnaces during in in and requirements to balance laid for seeking us. really the XXXX. our titanium production up

Seth Seifman

very you Thank Great. much.

John Plant

you. Thank

Operator

go ahead. Please comes The Vertical from Research. next Robert question Stallard with

Robert Stallard

Good John. morning. Thanks,

John Plant

Hey, Rob.

Robert Stallard

ordering ahead wouldn't the suppose, by of sooner I'd And advance? hit importantly, lead have If the like start on start for XX you to per parts almost this move wouldn't metal producing like more the Boeing move the to you're to ask you you, I times. month now to going does have considerably in end year? about as to if XXX, you well, with these that

John Plant

Yes. Yes.

You're right.

to are call as that 'XX inventory quarter. input are saw, some we've that materials inventories balanced purchases, requirements we the of $XXX volume And occurring is healthy. And is year. recognizing chose to we rates into the from are of it, we let's And to you It's and think required both and increasing the only in the the keep reduce of And plus everything know, spot We have. we of we so which will scheduled million- inventory what wanted that respond such be that by also not production to can in we 'XX. that now. carried, because be balance the of to first by we going we tried amount some

all final before, are manner. good issues and to as that are we ready in prepared. of think, But -- we I respond, of But and that So the able I hopefully efficient said rate. terms be poised exactly don't what gave know to the a we're the production in

Robert Stallard

just sorry, -- that. up on just Okay, to follow

are theoretically to from customer or much to, at would need So moment, you time lead from where production say, the your an XX. you move how deliveries OEM low-XX

John Plant

They much path. the depends upon

about six where will XX let's accessing metal, to requirements you're in that to months in to really laying it's metal, base now it anticipate. order more be, nine say, are we if And alloy months. But let's of say, XX talking so

might what like look our anticipate base. those ordering for to having and our supply laying already XXXX we're requirements material on So

Do are pushed? it's many rate anything how again, built predicated And all, growth excess? on this build Or in be next year? what year? you are the will And

said prepared capital managing has facilities, upturn it's materials, in managing and my many labor, whether more I a downturn, an So et than dimensions production remarks, far cetera.

problem say fascinating have. X really and say, And I'll so quite it's high-class a sense, in really it's I to --

-- minute some the is worry we about time, to are at focused angle So be here the the these mind to goal, really what we anywhere. we've our are same which debating main conditions the got keep rate the on growth of excessively good and of

we're XXXX. we're going to We that look and know to again rates we that going in we talking at grow And know grow the again in XXXX, we're about. growth

so And all my that's pretty book, of well. good in

Robert Stallard

lot, thanks Yeah, John. a

John Plant

Thank you.

Operator

next with comes from ahead. The Strauss David go question Barclays. Please

David Strauss

taking for Thanks the question.

John Plant

David. Hey,

David Strauss

Hey, John.

So two things.

UAW you Whitehall, change If And Fasteners? the the color what's give to Thanks. then you at on want around us there? recent in the of in any can status on leadership update going

John Plant

Okay.

have in Whitehall, agreement with extended no to in the the negotiations So and interruptions. we UAW continue work with be

that's So discussing normal. last going fact, on been as again in And few we've that just the in days.

So negotiations I'd normal sort around of that topic. say

got focused the me, remind --- your on second David, one, Just

David Strauss

leadership The change thanks. in announced. Yeah, that you

John Plant

you've given also leadership Change And Fasteners. in say, at the through, of say, operating -- quarter intimate and let's we acting, with leader that us quarterly is it's And leadership, actually opportunity the the reviews. with been changed a yeah, of more before what Fastener we solution for business. started. -- Group starting engaged XXXX, of week President to person there think the out made of a appointed that temporary we a with started a now me the business fourth business, great let's has managing even going have They and an that were be being the

was -- good and information learning exchange. that think that I so a And

the which the and ship world, of second to able call then of around the coming the quarter and they from for fastest ready. heard for orientation me with which to the but in response we become if subtiers more not that particular in taking aren't increased the I'm require about those beginning And we carry getting XXX second us to to with will in And I'm so volume Myles life that I already and probable. see wide-body the it's on things made in in of recruiting the their especially that business just in improvements optimistic the I'll possible rate, half fore margin the question, this see the changes parts, mix the you year, the Boeing. improvement which the that produce optimistic costs possible, to of on I faster suppliers are then to think focus be the And talk a we've performance stirrings

and we again to it's second So a of chain, half improve mix those further can the for XXX they wide-body XXXX, increases composites degree and Airbus because plan. the supply which you in in requirements get increases and the the AXXX the long change, and anticipated improve do are quite dramatic, of aircraft beginning then that both in see for those from wide-body

David Strauss

be about place additional rates half, stated you hires additional having hit to production the Or the all anticipate you are second the the will talked to Do hires quarter? in John, in second out there? that with that that in make

John Plant

at If should it first half think, be in always is be attrition. there's the we we some rates as

I replacement. one, the have actual in degree, will the second the be, be And of to into a what we'll fourth required XXXX, be will is year case half which, predicated is on commercial production positive the rate get side. very the hiring I expect we factors rate of half? And for second secondly, the basically for as is, another 'XX there to particularly the in when on some quarter, said, so aerospace anticipating say, particularly And to we growth to two

the to the difficult be precise 'XX? I until half more and requirements And what's know the then increase for of so about angle final for second it's

David Strauss

Thank you.

John Plant

Thank you.

Operator

with The next go Cowen. Gautam question from ahead. comes Khanna Please

Gautam Khanna

morning. Good guys. Hey,

John Plant

Hey, Gautam.

Gautam Khanna

to one I promise time. I'll this it keep

John Plant

brief last one of of you question bit your a know time. I three-part

I think was--- it

Gautam Khanna

I deserved it.

-- could And you greatest. at opportunity over expectations to specify pricing price if Thank could pricing is I get of wanted if specify Just where the say. couple next which segments the you. your opportunities, then you And years? should

John Plant

Okay.

were about February, I at of agreements And we up talked now that indicated terms moving think the in XX%-XX% for I through done when we're in long-term XXXX. I too XX%-XX%. the

further So essentially, and 'XX. we in metals in order a above what pricing. is as quite nonmetals XXXX previously terms And is said magnitude talked in line complete, This everything separate. either that, that over you inflation. know, That's of terms is for pricing about is I've similar of or just of and with for any recoveries

We similar order for it's early normally magnitude a XXXX, We've bit of it's this talk direction that while recently. in point. been is that guess that about it's Gautam. a heading don't at -- little XXXX And my studying

Gautam Khanna

couple with out the years? next of Okay. Any the segment stands pricing opportunity greatest that over

John Plant

enable Price it which again but Yeah. now whole of and flight engine to let's usage are fuel I four we're of, the gas with the segments, footprint. those largest has you've for for technologies of impact inevitably the lower And particular. emissions is more in what's -- pushing Those some possible also And customers. developments, be the where say, positive mission exceptional the lower it greater greenhouse boundaries not say, to let's for the improved and because once segment. really to it's carries that that of are by carbon really got only for being made going airlines our engine assist see that achievement further, the fact aerospace

combustor. that still it's think after the the particularly helping achieve a to intimate in I on that of So are good to news stage the Howmet

Gautam Khanna

Thank you, guys.

John Plant

Thank you.

Operator

ahead. Matt from question Fargo. with The comes Akers Please next Wells go

Matt Akers

your bit I up. guys. of that on this morning. that frame that latest volumes? there of little of ramp and kind any think I could what year. the given Good kind the if thoughts maybe you is volumes up they -- was Have Pratt of any ramping hey, supposed oil John, is facility risk to the think could time that's you you Yeah, indication a there talk kind for of about what kind is -- And Nashville wondering Thanks production question. to your are

John Plant

that & of sell anything the I've change I And in in technologies Whitney that three in to with they've starting is and expanded this think a words castings in deciding the that. Well, years, deciding did oil new which two re-enter, to or on 'XX but of they topic don't bought all company the using they XXXX. business, continue would from obviously core been terms narrative develop over last then Poland with from Pratt

of of of very most And mean, But business. with I'm many, in of many with its because important I'd real of like the yield volume say in having I casting going word their and use own. really terms parts. good the the -- the I I years when leg the them complexity mean I to, take Howmet complex it's get rates, of you that's think capabilities. think development not terms to both would job. you high GE achievement economics for And of But And to of really coexisted we've I own collection production with and our whole did the them say,

is coating, got heard only I The still being that I completed machining XX% machining, hole The investment. $XXX call information or to from have that's million read I side on in that they that the earnings that terms applied the of inflation testing. that they and an drilling were were is now

As first of off those in you for for know, expensive and this machine they're machining the machining parts some expecting pass very qualification turbine investments are May parts year.

conceptually giving are also I've efficiency also on improvements also I both and same of long-term noted guess At in the you X to I've improvements you Joint in of time, shared with XX Pratt. with program agreements plan. you without the proceeding detail the so And our And requirements it's trust and making Block with with extension technology for we advantage Fighter that engine. the for the further Strike the

going intimate a there's lot with developments on we're and with those customer. So our

Matt Akers

Great. Thank you.

John Plant

you. Thank

Operator

go The from Capital KeyBanc Please next comes Gibbs question with Phil Markets. ahead.

Phil Gibbs

Hey, good morning.

John Plant

Phil. Hey,

Phil Gibbs

Hey.

strength to to expect both whether you'd aero and not or you about an pre-pandemic engine pointed continue? levels commercial idea You give to relative in business where spares and defense. that products that demand Can in us in is

John Plant

business. We're in seeing a improvement spares nice our

we we half is below aerospace probably closer grow. And well And the And the million. XXX, maybe gave go of now to reference that were XXXX, industrial. was to in million. $XXX you to $XXX commercial if back continue about quite you it's point dropped time it misses So roughly defense XXX dramatically of

at And we least segment, to this see $XXX aero probably pre-COVID commercial which back of million, levels. that pandemic year, be used XX% to its

of I and And that compounding, we of where so to that end yet with rapidly what to of be -- expect by XX% the XX% that of growing the year won't $XXX back is the say XX% XX% and level part not half it that it XX million. how not could but was, the or the turn depending was but XX% spares

Phil Gibbs

John. Thanks,

John Plant

you. Thank

Operator

the Quarter Thank question-and-answer XXXX Howmet our concludes today's Call. session This presentation. for Aerospace attending and First Earnings Conference you

disconnect. Thank now you. may You

Howmet Aerospace (HWM) 2 May 232023 Q1 Earnings call transcript