HWM - Earnings call 3 2023 | Howmet Aerospace Inc.

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Operator

good day, and welcome to the Third Quarter 2023 Howmet Aerospace Earnings Conference Call.

[Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Paul Luther, Vice President of Investor Relations. Please go ahead.

Paul Luther

Betsy. you, Thank welcome Results and Howmet Third 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 and I like will expectations. session. contain comments a today's relating statements you would John will to we After have Ken, to question-and-answer forward-looking that remind discussion and future events

adjusted and that to listed presentation, excluding find items. income factors filings. could press presentation differ in operating EBITDA, adjusted EPS, from can company's SEC results EPS special cause and in You actual references special and items, income, projections materially these today's recent and operating our adjusted earnings release special the excluding mean excluding to most EBITDA, today's In items

among today's measures financial in comparable release directly included These that the Reconciliations in non-GAAP GAAP the discussion. in measures presentation. financial found we've press to be are our in today's most appendix and measures can the

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

John Plant

QX welcome, Thanks, PT, to earnings everybody, call. and the

to XX%, recovery rate margin and was like the from segments. points results EBITDA and billion, Howmet's year-over-year. would of were Was of on all Margin all work a to guidance. fasteners to with provided the a $XXX points continuing the May which an XX%. rate and exceeded quarterly the XX%. further of Sales August, at solid of flowed given XX% rate revenue in increase was that rate. the had quarter QX XXX in The in structure respects guidance a increase additionally, I which improvement headline line of increase through year-over-year EBITDA in in with increase itself note good third of improvements $X.XXX a February. for incremental a increased XXX million, the EBITDA basis reflect segment basis margin not sequential

continued flow healthy top shareholder-friendly gross XX%. line share operating earnings $XX XX% and increase cash drive margins million, Operating debt generated an $XXX income share growth year-over-year per of was by margin healthy at and million. of including retirement buyback Free income million, $XXX and I actions, was help increased XX%. of

a last XX% dividend in also increase. the top-level the by Having this XX% year's to provide of increase business pass summary. the top end of further and announced revenue provided on segments. we market Lastly, Ken to results by details call I'll

Ken Giacobbe

Thank you, John.

continue revenue Let's move year-over-year quarter, up to sequentially. All the X% with in markets to Slide third healthy X. XX% be and

growth robust by to Defense seasonality. revenue increased well XX% revenue. driven normal was consecutive XX% Commercial aerospace for stands year-over-year, quarter be and demand. XX by year-over-year Aerospace segments. has aircraft programs. demand increased was by up Commercial As impacted aerospace third spares of total supported grown expected, growth quarters XX% fuel-efficient aerospace and driven as sequential as more the by all F-XX at X new, for fighter continues Aerospace legacy Commercial

seasonality. Commercial year-over-year, Commercial in remains resilient segment by impacts driven forged Transportation, the normal Systems both higher volumes. Fastening X% despite was which transportation wheels up

industrial XX%, quarter strong markets another and gas, all other up and up General our across oil by XX% up of the summary, very IGT Finally, and were end driven In X%. X%; markets. up Industrial, year-over-year,

debt by are employees. absorbing employees. with a near-term costs while count conditions Year-to-date, all EBITDA $X.XXX P&L of was Revenue end per X X,XXX quarter XXX adding Slide the to of just million, approximately move additions employees. $XXX associated up net XX% XXX profitability, share with let's enhanced Starting earnings details up net exceeded XX% of majority and headcount drove margin Now increase for year-over-year. The high and Engine the third the was EBITDA, year-over-year. segment more results. the EBITDA on billion, over revenue, guidance. approximately

$XX to increase our continue EBITDA additions. expected revenue in cost approximately strong margin of segment Adjusting year-over-year, was of for at ramp. year-over-year for the guidance. line at the incremental XX% right approximately which flow-through XX.X% absorbing We EBITDA inflationary the headcount is pass-through margin revenue XX% EBITDA to million, despite was was headcount in with

Earnings $X.XX share per up XX% share year-over-year. was at strong per

reason quarter third the share. quarter The represents growth in EBITDA per consecutive and ninth revenue, with earnings

EBITDA to which of to at debt will cash the in $XXX allocated on balance balance a hand $XXX debt Next low is stability future. cash expense million improved interest bond sheet. million quarter, the stock million is balance of All was was ending common after the free key record to reduction, returning unsecured of generating dividends. The cash provide flow. continues sheet to X.Xx. In to strengthen The stakeholders. $XXX debt and rates, cash while Net and repurchases rate fixed of

to strengthen Moreover, maturity grade. next of strong upgrade in and Howmet's BBB, outlook the Fitch's into notches financial leverage upgrades. were Our to from The positive and cash in bond Howmet's of agency improved is sheet BBB- is in recognized Moody's million with balance stable August credit due investment $XXX X October XXXX. reflected continues to upgraded from generation September. rating

Finally, moving allocation. to capital

amortization. approximately be approximately our $XX approach. we reduced In another will continues In by the $XXX which we have balanced million, in the which interest $XXX lower million, to Year-to-date, quarter, be by than to debt were less expense $XX continue debt annualized third reduced depreciation million. capital We expenditures million. and quarter, by

This more stock. average XXXX, stock of exited a the diluted consecutive tenth common quarter third million with Since quarter we We of the million. Share price common at We of repurchases. XXX common stock of in share also quarter $XXX authority $XX count per of shares. than in third repurchased share. $XX.XX million was the at stands have repurchased Board an from the billion $X buyback separation

flow. per $X.XX be to per stock quarterly $X.XX stock The in the continue free was XX% confident the fourth to quarter we Finally, increased quarterly quarter, In dividend share. third be cash dividend in share. the will by

and quarter. segment driven continued to rates Products through is to move up spares let's its results the go third Revenue up performance. and build Engine growth. increase XX% of Defense/Aerospace strong an Commercial aerospace for $XXX both million, by with markets XX% Slide Now X higher was The year-over-year. was segment XX% the

gas IGP and up as XX% continues strong. was and be X% up was demand to Oil

sequential sequentially net driven down X%, vacations. increased by basis seasonal expected, XX% while revenue points, $XXX XX.X%, margin was new XX EBITDA EBITDA and increased As year-over-year approximately The absorbing both to year-over-year million. employees. XXX to

of are the team. performance the continued pleased We engines with strong

X. up the wide-body Aerospace X% the and over was Industrial margin down recovery. XX.X%, revenue was Defense was aerospace Transportation XX%,. quarters. up let's Commercial Systems last the including XX%, to points Year-over-year Now and move EBITDA X%. Slide increased X of improved emerging XXX was basis increased Fastening General was year-over-year impact X%. segment Commercial is XX%, EBITDA up

we Russian move approximately expect Engineered build Please of $XX up by XXX year-over-year. line and X. recovery in to our the XXX was with Structures to quarter. points million in Defense expectation Segment improvement driven EBITDA down absorbing rates production revenue X% XX%. was in good despite XX%, to XX.X% share basis Slide Engineered EBITDA further third QX structures margins. and Aerospace new continue approximately year-over-year employees was Structures net which improved up Sequentially, to XX% of by the Sequentially, was was team, improved margin XX% increased XX% revenue and up gain. with XX%, aerospace titanium rates commercial year-over-year.

Slide XX. Let's move to

EBITDA of revenue revenue XX% volumes. $XX driven in by prices. Forged higher partially XX% increased driven the was Wheels XXX points, lower lower due Segment aluminum offset higher the increased year-over-year by impact million year-over-year The increase basis aluminum year-over-year, X%. primarily and margin increase volume to a prices. by in volumes EBITDA increased

Finally, to let's XX. move Slide

cash separation Our a $X.XX million reduction inherited balance billion was paid with Alcoa October QX. debt and XXXX approximately been The reduced cash gross now million. debt billion. strength of in costs annualized more continues down to tower the million and than cash long-term and source stands flow on $XXX $X.XX hand sheet at fixed in on at $XXX All hand. from XXXX, Inc. by a Gross continues lowered to supporting have has to unsecured Since billion debt be be interest with debt rates. debt $X.X $XXX with have we healthy by

our to structure focus We improving capital continue will and liquidity. on

John, rate. improvement it basis X XX [indiscernible], let tax appendix, tax tax XXX was in point rate separation me we which our and covers rate, approximately before focused to tax guidance in represents highlight on a Slide the since item. be by our XX.X% performance in back of the midpoint In the operational operational XXXX. our operational to the further Lastly, improvements continue Strong turning The year-to-date.

Now back let me turn summary. and for John the outlook to it

John Plant

Ken. Thanks,

next XX talk and about move outlook and let's Slide for quarter year-end. So to the the

international show increase. activity in travel, be levels load airline continues aerospace, commercial above resilience. regarding all, also of the Factory to for factors improvement Domestic to in first countries. Western improvement Asia in to continued continues airline XXXX So notably

parts restriction and recent engine to in operating that lower to continued of by aircraft existing replacement is harder. builds, factors on deployment the due This work the are leading with the time much to load years spares further the increased fact of currently engine fleet which technologies, these robustness increased Given aircraft is market, the having in wing. of which new are

additional be years upgrades over path You next its and service high-pressure continue probably and turbine beyond. Howmet and supporting look to technology the worried X will assured This about the both can that providing the through you this playing X and is parts. and

Moving the business. the healthy. of the IGT truck engine increased more lower aircraft to correction This to offset order fuel. to commercial on support freight the inventory in rates now builds spares commercial gas gradual be aerospace lockhead of for continued of despite than defense fleet X the buildup market. and stands and with and be trailer intake price Other start the good markets market is which continued next X oil These at of strength continue XXX showing the to very to and structures program growing. and also our increases F-XX years In diesel over the

aggregate forward though, as for know and recent of be revenue, both been to of of orders the markets month continue have risk how we demand economy the markets. We month. for commercial that to and aggregate, also be broader excluding see see approximately The In was our limited up we The good. But months XX%, a new in initial months. that aircraft the we XX% transportation data opened market we XXXX order to moves which books the depending X commercial aircraft several defense until look moves upon only cautious, business. canceled from orders, can

fundamental airlines, the from demand Beyond

upon particularly up able the being to stated rely aircraft, Clearly, scheduled aircraft. and aircraft manufacturers and narrow-body quality we produce of build

This billion. into The XXXX refined the a $X minus XXXX. number confirmed is from we or see growth build will with range, plus achieved to plans when further point. Boeing QX forward X% in be going for percentage the Airbus the we sales envisage be into Looking rates likely to be headline approximately and

provided further build All assumed of will along with the detail be in February this rates. in

Our standard of is normally one caution.

specifically million, or minus or plus quarter million, at revenue Moving see about plus fourth to XXXX. of We per minus EBITDA minus $X.XX. $X.XXX $XX or billion, million, plus $XXX $X.XX, the $X earnings share

Regarding million. the $XX minus from to full $X.XX $XXX billion or year XXXX, $X.XX increased by about million revenues billion, plus

EBITDA by million at by million. flow $X.XX or $XX $X.XXX to is Free share increased to further million. has $XXX cash plus $X.XX. $XX minus has plus $X.XX minus Earnings per or billion minus plus or increased a million, $X

year-to-date the with despite see year. commercial increased of In continued performance in build to healthy an be progress and summary, liquidity very the good choppy the remainder conditions aerospace. strong for guide We consider we the

in comforted have any absolute very strong the requirements efficient misses backlog build are and with overarching an for moved into efficient for the by reduced underlying who and manufacturers particular, carbon engines fact demand travel mandate given of that by We emissions. fuel aircraft the fuel aircraft

an This of guide $XXX we increase XXXX back of XX%. common per year-over-year. on XXXX repurchased versus $XXX builds Currently, Our $X.XX earnings full the year is debt XXXX, stock. million million in share increase of XX% of brought of and

in Xx debt improved EBITDA heading is by towards year-end. net further QX has to approximately Our leverage and net

And interest help with XXXX improved into move accomplish both now actions the also generally your let's rate going of debt interest rates. our All 'XX and of increase goal to of yield flow questions. the burden everybody. reduced in Thanks, despite cash further

Operator

[Operator Instructions]

The today with Morgan from Liwag Stanley. first comes question Kristine

Kristine Liwag

the X% it guess, XXX, aircraft Ken Airbus does what increase the for John, and XXXX PT, are you And to much the I ramp? when initial production with and or for talk AXXX. outlook, imply also, rates Boeing you for your your how getting customers, the AXXX for XXX visibility revenue

John Plant

Kristine. one, that's big Okay. the I guess

Within all. AGT, general aero. commercial decrease assumption assumed and assumed me X%, first about more that, like like let increases transportation. in while commercial talk industrial, an just and the things single-digit oil and So other, increase in of is generally single-digit gas a mid-teens in high And

solid solid applying. in client forecasting we a build I'm single our in by roughly now industrial let's general digit basically, defense, assumed high commercial that aerospace rates on So assumption in, going That's agencies. see increase markets, reduced say, to healthy or say, commercial transportation.

see body year. increase we at both fractional assumed. that specifically the is they're Boeing XXX mix to wide-body For you part, increase next and can the most in moment, for what going

really achieved really somewhere to a just it within we're we You rate to our ready in is now, region. specifically know but this at we at that supply I very our be the seem range, somewhere between it's the going we to about not asked it's to yet, should happening We question the yet and XX, mid-XXs build rate a Boeing be pit is Boeing to that be in that prior believe rate. we can a or plus gave. which it going see point, be even can though soon. and It's happened input that's assume XX know that doesn't into minus guidance, want to important to assumption hasn't XX, position that don't you but

Operator

The question comes with Robert Melius Spingarn next from Research.

Scott Mikus

are also I cash Scott or considering John you've on free year. bit and any work for to get to little Spingarn. risk just about Mikus liability the contributions improve done sort transfer given there, a you you of for ask next of rid pension the Rob And pension Ken, wanted conversion?

John Plant

I working liability taking always been on risk liabilities last leave $XXX we've open years and started interest region. liabilities [ for over pension ROS now just now, focused indeed pension gross X and from it ] million care the to where net net at you of debt think, mortality billion that We've managed several together. for certainly down yourself and that to, we've Otherwise, risk we rate we've out years and and health and several about taken been rather in of

let's do. tiny is would couple that this traction it's point, leverage off cap, time, the time, be would yet not to also noted of this. our to And at I've I be think at and uses not therefore, occur. table I'm essentially same market and the our It's because better not I I'm relevant. But maybe something the same current to so it's willing of which think to a while now, that consider useful X willing of cash say, to not it [indiscernible] enable at time, there's company, other that the of At continued that.

So essentially, we aware of are it.

extend. total off to wish this to can pay that We work premiums We I see time. to plant in continue in the liability or X plan, to our within either and companies insurance us not that picking point a enable shouldn't X or potentially at partial do at initiation expect you to see of plans. but a a to

think point I next but And to not the next, that this year contributions material. than the little say, higher come point, X we over X have but some cash that for year, yet. this not will years the at bit a be assumption may at is

Operator

from comes David question Strauss Barclays. next with The

David Strauss

more blades. and to upgraded when you'll on I upgraded there think wanted delivering timing producing Pratt. if a the mentioned you you work you your and color upgrading see John, both give producing when could of GE -- little blades be you to around

John Plant

Those years XB And that working now. that on later a bit have back timing have engine if Howmet ready. not upgrade for pushed of and into little the than being for result say, we've something anything, let's been although a several is not advantage the both So for LEAP originally -- been upgrades. production been and the GTF and envisaged,

time? timing [indiscernible] for I GE. really a & that what for you're turbine originally Whitney, in engine different and been the therefore, specific think seemed and name those leads pipeline help So disclosure both increased was but called rather wing. as certainly I for temperatures higher Pratt there's than in according engine this value. code the has point we have the we're I envisaged for feel plan, performance that than the been have has complexity with high-pressure that And myself improve intimate commented to because the we to now for needs the shape. manufacturers have at asking be an of in them advantage with in the to can performance that though improve And engine best agreed timeline specific and varied past is to increased to good manufacturers

David Strauss

Okay. I'll Fair ask enough. them.

John Plant

It's David. far better,

David Strauss

I then, X-parter a guess, And Ken, for you.

the big a comments of capital pension 'XX. Just on a expense, this you kind thoughts QX like for working looking are and bit down on quick pretty year. little into at looks 'XX? of benefit 'XX, in you're then reversal what end but brought you for through It that And

John Plant

to capital let the comment totally working Ken talk different have are. operations the capital And on then with units about reason business amplify side. with deal going because also the they met pension and up the [indiscernible] why the I can specific working want tied I'm status of and then first it's Ken and to

AR or the on So terms first account days accounts payable, working just I of of all, in assumption. receivable capital, mean, they move and

are because pretty it if up up, that's I can than it, goes engineer our disclosed has tied a in back days we So know but answer and have if we then constant. as revenue don't had, we clearly, ever day it's good is, receivables it. we've but it David, more dollars whatever

few but payment days And more the the went payables. receivables in exactly up same on, so a because dollars revenue went

on wildcard inventory. what big always gap The is

like, time. more inventory because been is at our just elevated, point far, would but in elevated taken it where I And should be than [indiscernible] up still hasn't this so

where within operationally So with and the, let's in volume terms say, of recovery. from, each of status say, are it moves business we I will start

if towards show stability and and So the to take you manning now of segment, volume our increase production. which division through first was then moving smoothness Wheels

Our days increase. building look and continuing If which out at of terms to indeed, our of we're close at division shape. the second level. of engine our And to I I inventory is manning are increasing in in business, revenue, good really gate of low-class that's believe

albeit in We have production, we we're yet wheels. in are same smoothing as out level gradually been the not

what see will gradual holding efficiency in inventory of is think the so improvements our into that And hand. is again to quarter. we And in that fourth next year. I on improve continuing

So but we're be to trajectory, need we I'm where on pleased with business. yet our engine not the at

terms are In structures, in pickup. of and of fasteners those later been points. fasteners in different volume cycle has terms very the

As and mode year, mode building we improving been improve, begin still order all, terms this And needs employees, the believe, is we'll it but replacement you've well where through of you've up. of to efficiency. in few not know, begin to efficiency the I last and first trying is be date go that to improve in all, also as respond for on say, but seen of and recruitment out little calming hand a and yet we in XXXX. margin we've you it of the moment business where months. at to that recruiting mix in to of recruitment bit also, And ultimate production that the seen, a

business. in particularly of worst on probably our that's In days terms quarter wasn't terms throughput of the last of hand. quarter the great in the remember, of if case you a And business, structures,

therefore, improvement which you to the but allowed on inventory buffer operations saw to And business. improve the the inventory, margin, stabilize help as XXX to what business points manufacturing the is in basis structures focus so in I occur the that and not just use

this not I I fourth But additional premium satisfied stabilize in prepared it think needs materials moment, laying yet to in costs. demand, nor in customers And At particularly the on capital at combination operations. economics the also working add see I'm with all still additional side, input in the point, of its heads until don't that's nor laying quarter. goes I'm anywhere the at urgent to demand a those to pay inventory titanium

disciplined generally And better where analysts hold that on so that is if deploy I've got quarter in is you to which anything, places I'm on because capital, we and last capital. told what back I'm I allocate of the going business to very

responsiveness the drive and smooth that production moment, trying in of, simple. in if then at I'll people capital, to and next so it. and they paying in drop or not working its business, to demand premiums will say, improve want come that And the that it. particularly more they the as pay they but Otherwise, year begins gain I'm that for business for get out It's don't terms

with David it I'll and deals working Ken. to that pass preemptively So capital, be can't

Ken Giacobbe

Yes David.

John articulated, [indiscernible] key really where So then And we their depending capital. the segment. also business on the days working as are on are in

for we as with capital kind make million, this the increased everybody right really or important through And the exit on have working tab a the again, guide $XXX more plus not of -- inventory it's we've So year, we're AR by time, to in this assumptions year, we've But business driven goes deck the I in that that our delivering so minus. plus to spec about the indicate us. the would bottleneck given roughly sure customers, it. really that the for is in that burn right, at of once keeping full think we're you revenue walk walk

So bit we've inventory. got a little more

year, another growth got Next we've here. projection

in the in burn be working year I cycle. where in there'll we inventory again down the probably but be it's anticipate year. work going better we So as capital to dependent are this than XXXX, business, be on again next

order growth it's good by driven So of I business. the the in really here, believe

of that to at the the pretty liabilities. part that by John XX% separation. of a start is taken That's significant pension side, as house. the gross we've the On liabilities taken reduce We've decline. expense since mentioned, actions big gross down I'll top Big

of a discount It of in the a at help right? from John gross that mentioned lot bit the cash, the rates, next a it around action will but up year. get We increase liability. of year. be there's we remeasure as So end

much volatile pretty line. So of that's a

So you cash next on terms of would what more we'll contributions give guidance in call the the be.

bit a right -- we side the year. that's expense of Again, visible The more it the little strike at now. end

our $XX right look OPEB on annual now, pension at and it's million expense you If an basis.

year, that. next or not well. a material. I'd asset has on on little So in based It's tougher. probably of say market $XX good $X plus that's returns, really the either all as another million side minus been million But I think order

Operator

comes Scott Duco with next question Deutsche Bank. The from

Unknown Analyst

Two very for quick John. questions, both

price again quarter. third did First, accelerate the realizations in

XXX they I this that? at on quarter. think you're Or had X a you And accelerated whether can [indiscernible] below tracking last are still you say point? bit a then month shipping Fasteners, at

John Plant

the we've the quarter think given don't third side. on I detail Okay. commercial

my said for X up expecting moment, to before, bit X we're strong rate as above grade would in for of below both I it the well. be year. need It's we rate that in we question for previously and XXXX [indiscernible] see fully last year. with can XX-Q only at the the when. regarding we line I the what quarter good it's later on think our and them order XXX that file the highlight when very And call. a whilst comments underlying say see in that commented we to made I'd as And next go aircraft. And a little that I've move demand to

Operator

Walton Wolfe Research. comes question with Myles next from The

Myles Walton

has and a could deeper fastening troughed little obviously, into bit hoping dig was signs and beginning at I and John, improvement. margin sort been the year you showing of the of some the of resiliency performance

of of expect the you I rate a Fastener increases to we at the to think new getting for XXXX, start to where plus we Are told not back should a point much couple performance? wide-bodies, me beginning at the about year, management think XXXX the years. on

John Plant

now. back they to in because what Well, I think a the to wide-body different quite and it's there I bit particular there get conditions mean the are is premature market

can the first which low a the base basically, of in So is volume side. margins and in probably aircraft, in build call X on reflected a quarter, total points real terms it you of any metallic essentially composite

X that's So factor.

The to a to business I of additional go. next see into And ways the signs improve. begun is aircraft a discipline And increase change. going to what improved and much efficiency ways very commercially, has year, that's course, see improvements, forward for there's itself in but I Of still begun with operating also business see go. I a volume to fractional also your the going will of wing. production wide-body to wide in XXXX which well, metal as particular the the production has what of mix essentially, parts [indiscernible] in transitioning aircraft the in some year. composite of through improvement final be because on Hopefully, on body next wide-body assumptions course in got year from to delivery with aircraft a composite commercial

thrust big in and throughput improvement productivity occur. conditions a but its business, And with needs efficiency, say, the on still general to improving so which I'll for

I yes, haven't guided specifics last anyway. that by for I like So will revenue quarters, guide any call But have out have basically, couple to And year, go, on margin given of too we increases. but trend a continue some segment soon think don't just to optimism the good next the ways or over you it.

that So you our a gives picture of business.

Operator

Ronald from comes Epstein question Next Bank with of America.

Ronald Epstein

The would prudent come modeling think wheels. And I about way what expectations. do appears a topic be forged And that mean when should And how so? around we ahead expectations are doesn't much is think of been running to Yes. the up that? it's it, that about it? what tend your it to we

John Plant

as and Europe, of in do and position terms albeit plan of whatever production the that but of a well. nothing fuel aluminum And adoption America as be steel picture penetration some wheels requirements next markets, in basically, essentially in year. that positive up, that achieved great terms you in truck efficiency some wheels, particularly in fractional we essentially, node the be against share is factor of is in will trailer macro step for contribution, position Well, worse what's as for start There'll a a no in top a but well. big off the say, share I significant with move is think North in there then new improvement that. percentage big powertrain so whatever, out some a or of electrification you the factor but what Asian manufactural change positive against it's so a venture And on year, different moves towards hinting as next a I'll play that's

point secular for about idea begin assumed read as see at why growth reduction time cautious I an markets, segment recently. did basically, high we've although assumption, on the going and the I the to So we the stabilize fairly and freight general a got see offsetting what's macro business this single-digit until guided economy improve decline some do in in rates that's be our in to trying to is commented better

half strike. we it subject a there's is, backlog. lot in This assumption. is fairly bring I factors to let's year, bear as what Mac still more final next which is is for even take to want cautious a it the we've truck, of I to to terms of don't outlook So despite say, second able the today, And -- commented difficult really yet UAW year been [indiscernible] have to burn a off

of the going arrears affect couple therefore, next by such macro that's UAW the is be year to in of back. QX And assumption and our Our are at they'll be another that that, us by resolved, fourth not quarter. months dispute

been this next It's pretty [indiscernible] you give year. really. the general it strong about I year. that's So

Ronald Epstein

that you? I and mean good, subject. the Whitney need Pratt impact may, how company should GTF the mean all vis-a-vis we if just guys? we Is & that tests follow-on, think you on about GTF When the to the I be reworked. X just neutral the think little maybe with bad, situation a situation? then about And change I for the

John Plant

separate start I having while then as all [indiscernible] think, the to it Yes. gets GTF intertwining them convenience. and mashed off on for I'll issues, X the I and separate I because with think see quite together,

days we're X is of fraction that have is been I'll separate GTF, I the might call will about pollution turn discussion it issues off by an or contamination predecessor it on don't days, harsh if the working those but engine previously longer guess, GTF. issue, the particularly to that inspection say, out to it, let's originally small countries be achieve So that let's or call not. know, item item. those field publicized XX, climate I be there what also wing And take, required that fraction time left replaced many for field, is the then, I Over, to XX so by countries, And thought inspection. regarding That's this risks the or we or wing clearly, a that everybody in requires of XX the incentive and replaced. guess require they a time

replacement. question question a the and blades then they and intwine require clearly the the myself. be for is stands the temperatures more to The Pratt interval needs question that holes, & hitting again, than as what is becomes so the able stand perhaps So of determine blades the pollutants degrees. replacement for replace the requirement. within and We're those what's supplied turbine, you course, issue. then those supply, those Then, And problems of high-pressure alone to X Whitney is around the question And can higher together. what temperature them the for in of combustor, filling will to the them? want them what behind frequency an for

the for contamination the back opportunity the high-pressure just go issue. take And they do stick a components will engine they first and that at lines off my on So look maybe will to the off powder seek metal is issue, the and harsh the laser the and practice turbine the those That's maybe time. on those engines or be where at wing wing for maybe taken of mind other won't. or on some in I them climates time have to those really inspect for for do the replace engines it in replace question them want engines because as replacements back they wing full only are

read from XXX MTU I And turnaround the time. so of more days maybe the [indiscernible] that's

a high-pressure Ron, as those Whitney [indiscernible]. So time the choice I improvements for on turbine to because determine issue, they know it take it's just including do finally Pratt wing be extent & or they parts the will by ration turn don't to to but make out what

metal. So why us issue written it's of X power about of almost

how are still our decide them pressure on And to that's Pratt the And they together, market. with of engines there manufacturers and how of many aircraft OE that. X may that. come to and many to and distinct determined we I all production parts & go those depending to to up think back get spares wing, go the are regarding upon in issues, which but the just discussions Whitney

Operator

Poponak Sachs. The Noah Goldman comes next with question from

Noah Poponak

get John, broader I the on color little your you was perspective to ramp-up. more hoping new-build on aerospace from a

to middle air like cautious good had perspective. and aerostructures into the You've sounded And you of the year and correct. Boeing you've going underlying show issues. keep chain felt the around rates? mentioned, engine as -- been higher supply the chain the optimistic had incremental supply more like Airbus in it's planned and towards and guess, you then these sounded ready of Did was It that especially go. and Boeing summer, the of we've kind the finally been I broader And kind and and

And to things master incrementally you recovery giving next is Are for are once thing? And year. are than that and firm now Or the they of kind fixed. been you ready like them the wishful on to with plans everything schedule they've after that ramp is more date, mentioned fuselage firmer?

John Plant

because throughout and proved been and all some it's may of have a the at then has I people it's it. be change all with the positive and Boeing of in then, of going which some regarding the particular, of it year. been guess the the of plants, failed the plans to those firm parts reasons, was read difficulties which and Aerospace, about parts out going I'd say, all to And amongst issues. post-COVID. supply degree I of of realization holes had mean in rest be course, issues management production and There's be of we have in Spirit more And difficulties. I TBD. of chain to on I change the experience Boeing press somewhere always the a other from strike been yet, of of there's that's combination plants in think the out there, the some in or seems in And to there always

rate you to and think forward And to plans fuselage control. and realizing and hopefully, those guess But We're major listen were problems only which bigger Boeing getting improve, behind optimistic or not in get should [indiscernible] the too carefully fasteners. step I own to a it begin of that's production that increases component to other for it's [indiscernible] its I retrofit resolved, also sales, in those commentary the from our those sitting Spirit yesterday. subject big billed

they're we've events to sort of But think try that. So themselves by produce the and improve. of as I hoping don't efforts that see all know, to achieve got output, to herculean you still circulate

rate spirit So year. November, pick to December, we'll rate to then hopefully, X during or begin to see to other stated next boring get itself their October, and up it's obviously suppliers required

previous X,XXX at think time engine their isn't anyone there's goes on in the some commentary We're let's requirements. very say, see side, impactful changes really I come. In then dealing or for meeting on demand terms with search as us, in compared X,XXX just I've again us to for engines technology OE goes and you've of commentary, engine this rather for choice, us that than change of, both a the plus then point was GE demand it's yet increasing because question, instead potentially read seen what requirements rate said, to We the next the to blended I sides. what to year, robust

Operator

from The next question Jefferies. with comes Sheila Kahyaoglu

Sheila Kahyaoglu

some I questions X here. good want have I nuggets here.

out I been down kind anyway. forgings you and supply business calling clear in know slowing aren't So Howmet and of terms the chain. isn't supply casting chain you've a large castings the in the bottleneck of that OEs that structural are

going So output opportunity capable you're And of volume. in more do and today then what How think is a like maybe pricing this could you you characterize and demand? trade-off of of about forward? your of terms that terms larger in

John Plant

even high think whipping there a think, particular to have a castings been very levels was in maybe any casting a on these, bit a some it to for replace the of where a commentary been for I below commentary, a I order. skill subsequently, couple Generally, really the it of with years is basis has produce before of basis for albeit at

I've in some I including regard, of bit start We company strain, So of in certainly points a that ahead [indiscernible] that trading the And companies then the this recruitment by the to recruitment. think, margin produce cost to all of trade, recruitment and being I ban the curve workers earlier. production slightly choose the basis did effective know -- of Howmet. XX

us But rate to the and dividends same quality. vision that think, at been on and generally at time, paid we've fact good in I time the has for produce a generally

are we're correct the but #X So we're castings. want the in I in production structural precision good and pieces trade-off cast I of block shelling for, a and XX% of behind and like whatsoever. moments on, fairings think at been our let's casting terms we all probably a [indiscernible] castings. still of for things to of rates side, them had us. and they you parts, market a I the structural produce rate the it's the dog on do good like We structural good say, at few on off is no big early coming mean

if And want with capital. to indeed because have we good to are castings, supply years we're in capacity increased be to structural it manufacturers willing that should us being availabilities should available we where engine still there invest position return that and a to commensurate for the so a some and demand next not, tool, to is the for obviously, of few

business And structures and the been generally, about that contrasting upon our to is quite our I've in positive engine returns. investing business based

we're on turbine hope in the we industry nuggets. of state restructure significant to that supply good saying I a gives way And it's So blades. you casting, one are enough the

Sheila Kahyaoglu

and your How's going ahead in think contract do constraints pricing structures the given supply hiring you you're and about curve. the forward chain the of

John Plant

of performance the at let's that And some I it bring. requirements value been us. temperature positive engines. When in we the has for reflects look increased the, Pricing I narrow-body the think say, for

operate provide But degrees X,XXX thermal specification. some that the X,XXX company the that performance for that in you bringing with because, engine into for work environment. of and engine ability can the, And it take terms to but to high-pressure indeed F-XX and able parts technologies pressure the to the the up of they're obviously at the to higher the that not deployed We parts. know, we've at bear are degrees as turbine. we're both performance higher turbine that We some specified customers of if well in in produce we manage all, F-XX, can we're with only

the that we XXXX engine air. to We've previously currently upgrade the and thrust for improvements are already on its that working commented to and time improve

further. the fuel a the position small is the achieve performance a we a of take parts to able pretty at of Technology let's that for footprint which the needs and deploy the say, we've able to carbon to only fuel inside because value of to lower the therefore and have you the turbine again, degree it Day a bit, elevate value we'd in and requirements we're presents engine think and and capability be technologies and whole blade that And burn industry. great value optimization that about efficiencies reflect bring to I bit lower the so the in the the for so our for, truth, but continually up to footprint improve performance those some part little a dilution And in and to say, characteristics of temperature its talked taking in are engine pressure carbon of little scale,

Operator

The last with today Seifman from comes JPMorgan. question Seth

Seth Seifman

baseline be that wouldn't of that that minus for plus way range about come or to not the next recent terms said haven't this puts above in or of sort year. But next Or need and XX% below in your at and the said number employees? relative about for this been among as of to X%. it? margin the of headcount think to the do incremental point? addition outlook opportunities XX%. necessarily years? Does there and expecting the Does you that where so I'm you develop What's know How XX% the for best a we this, year of keep think I are John, learning that to can in if about think we sort things so other it's say takes

John Plant

the stable say, and will debuts I'd getting aircraft state. likely engine the that's year the end have become a and what mix cash also back the of that Grace I we still including into that year more and to external think our as of 'XX, out terms and if at I've you and what do the be its previously to of what margins begins better away, of see mean XX% What XX% I few moment step choppy year. I next in Yes. I to the things next and profit year potentially we have I assumption. don't free the second smooth side, more the EBITDA seen to is margin see any were towards and still lucky at the we this, as a year commented to operating know some able see we back up our begin last inventory for have potentially, rate. regarding I away just good of state business. months quarter we on get, rates and production, the I get be where think that, an out particularly reach a just manufacturing wide-body but combines Maybe Howmet. with production commentary hopefully get favor things don't side, out but move use then on in -- 'XX end of of or about But of that could referred the move half it's always said 'XX next smooth we industry things point hopefully to

to really to the albeit generally in of place up part talked we've assumptions the commercial changes the shorter-term change of parts So and great good with of I challenges and in to backlog the of aerospace broad still market. many having optimism about the and long-term things rate great terms all particular, market, in median a come, things face feel we in have are

best I better give. think can it's a I

Operator

concludes Thank you the concludes presentation. today's for call. our and This question-and-answer attending conference session

You may now disconnect.

Howmet Aerospace (HWM) 2 Nov 232023 Q3 Earnings call transcript