HWM - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Howmet Aerospace Second Quarter of 2024 Earnings Call. Please note that today's event is being recorded. [Operator Instructions]. Also, please be aware that today's call is being recorded.

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

Paul Luther

Ken Good Ken, Second Joe. by welcome the session. comments Officer; to Plant, Chief President Thank Officer. will Financial XXXX morning, have Results Aerospace After and Executive Chief Quarter Chairman John joined Executive Conference Howmet Vice Executive and and you, by and and Giacobbe, we Call. John question-and-answer I'm a

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

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

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

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

John Plant

welcome, the call. commercial year Other on revenue the will and growth P.T, with growth strong aerospace exceeding second company, the building markets and for to QX XX%, revenue in was you, Thank a quarter XX% quarter. a number, earnings first quarter trend. strong XX%, guidance covered both metrics growth results. the Howmet in . Year-over-year outstanding prior Within call. this the continuing was an everyone, be later of

year-over-year a an our level with essentially margin structures performing in income XX%. a was Engines basis market income million, while $XXX set the results $XXX was and million increasingly high flat operating at points XXX Operating a of Fasteners with with XX.X%, of [indiscernible] by despite of increased business. and was also supported strong EBITDA up XX% rate margin was declines.

at $XXX cash and year-on-year. million of bond of quarter a $XX $XX million, dividends $XXX share end strong and was increase resulting of of bonds buybacks cash million flow $X.XX, a also an Earnings share XX% XXXX also balance in the furthermore, were Free per after million million. of repurchases $XX

cash strong one free the march to which the continue $XXX on par provide is end. after million the interest These the $XXX commentary I'll XXXX remaining outlook July section. of million retirement early yield. actions and drag, the on of for at bonds The by day annual costs future below the million reduce actions an in $XX some balance X, quarter now interest in rate cash reduce with its well flow increase dividend will

the on note support for new XXXX mainly You'll of is albeit the -- commence on even level secured are have second later topic. the million year. further towards necessary the than engine the level. These $XXX And in are takes to also our the engines business. machine these in discussions the expenditures This expenditures also capital at tools, additional during which This increase market new the for quarter this $XX a later capacity at growth million we will a future XXXX, manufacturer. previous required in share revenues now as deposits

by across market the details end to to business provide by Ken call I'll pass additional and now segment.

Ken Giacobbe

John. you, Thank morning, Good everyone.

to Slide move Let's X.

was was XX%, the which Aerospace, quarter. growth in driven was as second year-over-year markets strong follows: in On XX%. continued by healthy a up Total be to performance So revenue up basis, Commercial

robust in continues For XXXX. and on to of half, healthy the the a growth this be XX%. rate XX% first Growth Commercial up XX% Aerospace XXXX the rate year top was in growth

markets. Moving to other our

and driven by strong, was engine Aerospace also up spares Defense XX%, fighter First, programs demand.

Transportation. Commercial is Next

and share wheels. more from with the gain Howmet's lighter Howmet continues weakened has Wheels to fuel-efficient revenue X%, As aluminum although market down with expected, Steel

continued Finally, commercial and Industrial offset down markets in Aerospace, up IGT In X%, Oil Gas, X%; summary, XX%, driven transportation. by performance the X%. partially and And up General by Industrial, were industrial strong other up & Commercial Defense

move Now to X. Slide let's

So P&L. first, the

the QX and EBITDA, For absorbing being second year-over-year of XXX approximately both margin revenue records share for Incremental up XX%, in per up basis, year-over-year. quarter, to and flow-through EBITDA a by and at outpaced high EBITDA new margin a consecutive the healthy the XX%. which of of addition was per earnings of all were revenue exceeded quarter. XX.X% revenue On EBITDA and employees was earnings of XX% XX%, revenue, the growth Moreover, guidance. the up excellent was end team EBITDA records share $X.XX, while net delivered the

bonds par $XXX XXXX Payment further was will and the on free the opportunistically reduce interest balance the remaining was Now QX million at at annual $XXX to sheet $XX The of in stronger. used X. was of by free repurchased repay was of end on the liquidity the and and quarter million bonds. Cash actions improving QX, flow these $XXX XXXX sheet million, $XX at for cover been a never early balance The end and expense months X flow. cash at the was the flow cash cash combination we balance annually, yield. record cash made Moreover, balance quarter of million. healthy July The have let's million.

of of net the program. All future. interest a the record EBITDA strong billion of rate balance expense paper debt stability healthy fixed with will a X.Xx. improved which and debt provide low Liquidity is undrawn $X complemented cash Finally, billion to into is and at $X to a commercial by rates, flexibility long-term unsecured revolver

the This share $XXX to deployment. a count repurchase QX $XX exit XXX was The was of of quarter million to stock. XXth of approximately record average to repurchases. of rate which million common in We used low quarter improved diluted deployed cash stock million shareholders, shares. capital Finally, consecutive the common

John dividend increase in $XX deployed quarterly for dividend will first stock we to Finally, be dividend quarter, as the share. cash the free QX In XXXX our million we common flow. continue discuss per the well as $X.XX confident in policy. the of

quarter. the up spares. was XX% $XXX rates products. markets Oil second XX% Products up OE in & was XX%. Commercial Now to build IGT segment engine record defense Slide Both to markets differentiated XX% and to up million. aerospace to across for strong increased Gas realized our another Engine continues let's aerospace the be and up move quarter of the higher and Revenue was Demand our was results delivered driven X by X%. performance. all cover

the points future team growth. margin. a EBITDA while EBITDA a EBITDA record and delivered approximately employees quarter to The record increased to to for absorbing XX.X%, net new quarter record a support $XXX engines XX% EBITDA year-over-year basis XXX in margin year-over-year increased million. revenue, XXX

Now let's X. go to Slide

increased was to General X% XX% was XX%, $XXX Fastening had million. up revenue Commercial Defense including was about impact down Industrial the of ]. Fasteners up also quarter. aerospace up another was and Commercial XX%. represents Systems recovery Revenue Transportation [ the which of Aerospace, year-over-year strong XX%. wide-body X%

progressively Wide consecutive and with outpaced million. of operational a has for XX% basis by improvements, an EBITDA the team Body EBITDA to quarters XX.X%. $XXX revenue margin increase Year-over-year, over just healthy through to results The growth XXX commercial X points improved complemented Recovery. increased year-over-year

Now let's to move Slide X.

Wide XX% improve by XX% year-over-year, in Revenue XX%, primarily comp Body had $XXX program. favorable driven Structures up sequentially. to F-XX continued by up year-over-year, a Aerospace rates increased performance Engineered Recovery. the build was the to Aerospace million. year-over-year Although Defense driven was Commercial

XX%. EBITDA while improve doubled the to and EBITDA margin improved XX.X%. continue for to year-over-year, Incrementals margin Revenue, at sequentially fourth EBITDA quarter. increased Sequentially, EBITDA consecutive

this optimize the to throughout XXXX. structures the to U.K. We continue and make small manufacturing X expect continues we to The we progress, continued and year. exit team plants expect in footprint, improvements

Finally, move let's Slide to XX.

year-over-year. EBITDA decreased and down a regional continues by X%, challenging X% at expected, XX%, EBITDA to market. which Forged be revenue mix. also volume driven as Wheels essentially was is healthy margin in year-over-year, by flat

John that, let the over outlook. me back turn With to it for

John Plant

and let's Ken, through now to talk you Slide Thanks, the and some XX, and markets I'll overview. provide end move

Aerospace. Commercial regarding Firstly,

Air for Our strengthened international to travel growth demand air in travel. strong world Asia throughout for prior continues the has regarding particular, in comments Pacific apply. traffic

extremely has where aircraft Domestic travel position This continues is the go fleet decade range, certain an fulfilled in orders of to aircraft volumes leading a with is gradually or Freight demand, be been until travel of markets. placed increases cannot significant international an all in robust backlog the with plus increasing fact, travel In have total high combined of now aircraft, to and also recorded. plus aging orders to been or globally and XX% minus. in leading XX% cases. end the beyond it

are and repeating the is and degree deliver These issue here. sales a of by but this press to aircraft Howmet many manufacturers basis. facts consistent facts point the the aircraft currently in to ability of the those being on not by little rather build some constrained that However, are demand articles subject faced

and run, desired is While steadily Airbus levels is concern slowing below increasing its while requirements the volume Boeing. larger building

While above directly trimming, continue shows and at actual Boeing parts orders levels they the from be build to XXX some rates. XXX

by have albeit percentage. a large orders also trimmed, been Engine

and in update for XX affiliates positions our build of aircraft this also build And and situation, increases. Given extent on Boeing liquidation the derisk and a month. rate hope XXX rate XXXX future to such higher tried Naturally, month remains. versus in ] we inventory it large per notably, XX inventory a our the the view to per surrounding guidance. previous the question [ its of assumed We've to

case In Spares fighters. Strength builds in Defense, the the for double-digit of for Engine the increase year. is and be new continues seen to a and legacy outlook

]. turbines demand studied is there is result AI for potential farm being received demand for IGT electricity for Aerospace single-digit a are the increased data as for turbine and orders future in centers in worth and Mitsubishi also structural increase needs. production demand. Vernova potential the and New the man being into demand support further market our the It's will parts Howmet [ increasing [ a [ is being a This increased blades the IGT GE of new well further IGT is placed largest IGT of for Howmet by significant future. for is added emanating noting requirements of Salto market the worthy customers Siemens, commentary Howmet be to this supplier XXXX ], in world to ]. Heavy capacity of in in Indeed, growth.

continue to vacation slowdown, long noted aerospace at into normal predicted and European normal guidance. our to operations more a particularly baked pace Spares has started of to the and at expected year. also will the This European in Gas in are to defense half beginning Oil be summer in our approximately addition truck in grow increase second maybe aggregate with fully for further XX% quarter and the lay with seasonality a on builds rate aerospace, third increases. continues the seasonality. XX% and the of in Europe, reduction IGT & Commercial abate year-to-date, commercial double-digit is to back strong is

numbers, Before I topics. to to like specific talk I'd financial X cover

expenditure increased further exposee customer next be required midpoint for reflective million. share the been call. our $XX on First, business. of topic further with achieved to the A a by million This has in capital our engines for additional of this gain is XXXX $XXX will provided contracts

expenditures is Despite this has approximately of maintained future starting account to capital the also to of by great XXXX. been late flow XX%. additional for With accrete leads in at further growth. taken of revenue increase this increased guide cash guide XXXX It's $XX of And is capital outcome. conversion the for income revenue. revenue capital The guide guide. X% prior the expenditure for expenditure, approximately expenditure in free The the ultimately, and working a million, net XXXX, the revenue having

is topic the dividend. next The

to the dividend payment is call the the an Moreover, for of May. We stock income, with XX% net August increase will of XX% minus starting expectations This to $X.XX increase in XXXX, share. are from during dividends items, expected or our stock our and X%. common per special a increase plus discussed excluding further in common be

has Finally, billion. to a also and $X.X approximately addressed by $X by share buyback been of increased billion total authorization the Board

or QX that plus to million, EBITDA we minus should be revenue $X.XX. to In QX, second numbers. additional and guidance billion, have share or plus uplift $XXX the $X.XXX million, minus half plus increased or earnings a of previous for revenues It further assumed And the both the incorporating also of per moving beat minus $XX expect revenues. $X noted year million. Now we of $X.XX specific

the $XX increase prior minus million, For an now guide. an be billion, to from we minus million year, expect million. or the $X.XX million to $XX $XXX revenues is prior EBITDA of $XXX at the guide. from plus is increase is which guided which plus billion, of or $X.XXX

of Earnings increasing flow $XX million million, And revenue of guided increase $XXX to or guide. or and an increase per from minus share increased $XX requirements to is $X.XX, CapEx cash million $X.XX, prior that plus minus year-over-year. $XXX plus of And after an the free the XX% million that's million. by $XX

have can total from numbers shown see flow revenue, a for increased annual revenue year-over-year. rate lifted the has that cash growth again You and XXXX, free and to profit XX%

summary. provide Now I'll move a to

is, statement second quarter build inventory which ] First on results. the again guide centered fronts. the we're [ We has commercial is account for with The believe we've positions taken pleased raised our been the aircraft of on year rigs and all Boeing.

the very I'll move And questions much, and now to you thank

Operator

which [Operator will Doug time, first Instructions]. Harned take come our At with from this we question, Bernstein. will

Douglas Harned

slowing Howmet's Airbus bit LEAP-XA about air not, shortfall deliveries. in issue. does air for a of at and It's the relates this a help at section And on So opportunity hot to on to provide our I to section. capture been in understanding to others share? understanding the [ any supplier -- wanted by had if the -- ] could foils GE? it's delivery if talked lead an what's in a a happening kind you vengeance the any issues Has you they foils obviously see that GE, supplier have hot little

John Plant

then Well, I And this the week an up to the investor expect the to hot comments in guess in evening Air I as say, Farnborough the, an Bloomberg on I'll by be opening of today reaction my article Doug, given company. first the weekend. show and of last that it topic followed

for news. really if Because And good is we this in and that's condition are really in a XX% that is true, So here, to pumping revenues, increase make we then good commercial a exactly therefore, need aerospace us. more.

So more little specific getting -- bit a just than that.

XX% then that we've call XX%. unlikely any increases the above are constraints. form schedules the or providing you year, followed were we last you Aerospace that if those And on X compared over production to can therefore, And aircraft year-to-date in Commercial rates. heard revenues build XX% any You've it's significantly by in years, a that such put increase track to of aircraft are we increasing see this

texture. of probably And X in increase months at over to in then through set really of we put And current further on even production. our a you we few And and blade little yields And terms increase it at in the of that's is possibly therefore, if peel aerospace last just increased capacity turbine anybody it look a bit for and good terms production the that effectively we've have XX% operating it of have. industry. that rate or hot significantly months, the probably above a ago

they it of rates. processing is the the producing So, first at look you'd have any engine -- get I that we do nor build know, be way above how of so subsequent view and outcome don't go is are what of versus of to we about terms then sales. all, we well build we [indiscernible] the MRO, And our in for sort where do

our build it we've those. the if have rate build you've look heard same are and is And assumptions that I in prepared to so taken that the down there if reduction, upon But even in times. we've it heard from engine seen guess with manufacturers a you whereas recent engine been more. I been adverse because meet we've we're to in be for guidance, is, able what significant to engine the sell those way previously, line the opportunity there And the to us at appears be few consequences make Howmet, time, more to at down,

that, when have into MRO opportunity you so to customer. demand And we our through though get supply the even the market

parts low-pressure build, We able then because if we're any to to castings are a we able suffer also turbine. in the lack Nor indeed supply that structural engine the an of of not we obviously, part supply manufacture.

the short-term excess working some restrictions, build the plants we given say, of of demand. actually because I'll so have our And some label LPT recent, French in

we even which would because the unaffected. clearly, there is not area into OE like to the we're service the is not outlet And make into So build. more

a way you, of long increasing. to we saying So are it's

We as and few been to last have had to about what the our say increase can color. And far to else in as satisfy it. months massive further take best provide a -- that's doing any everybody. you I know don't And to

Operator

with Stanley. will Liwag question next our And Kristine Morgan come from

Kristine Liwag

seeing hot color the market our take you more you're higher visit more, LEAP. regarding pick back mean also you're and you're that it's follow-up, used said engine for section you've with LEAP GTF technology, seeing Or bottleneck the up content. you've performance. to? not higher Whitehall, a one a the both Does And there. get? you level? for the one, in for as then blades much I It's we getting the lot more, and not you at maintaining that like rate terms a as mean, for the if newbuild, helpful you John, got share seems And step the that could hotter, guess, in space. are it's spares this quantify how very the clearly new the I reduction spelled a the production engine is . Can potentially It getting OEs at clear of invested from out.

John Plant

the again, is It's that -- explain. moment, to nothing at easy

I probably so. want pictures, becomes necessary to to what it to present so do complex And you,

And that in our we was as capacity the and then manufacturer. next capital both of capacity. for the we last engine Then second with introducing time. fact take the expenditure in to share say, [indiscernible] use of, automation and talked a ] mention X additional online, building going that that quality out contract our for today, the the I'll footprint demand -- tests we're yields so with be at finish But to AI today, footprint, using future are to [ moment. it and meet increasing lot third do So new are only -- I've automation achieve that Clearly, going we're sophistication, that the calls particular and introduction the able a do that new investment example, in plant of, we level at the plants then we and it X are taken that the further result to fulfill of the we easily way you that of levels in mentioned a because because to fulfilled level. labor. production we to that and can't . When consistency bring of a when previously do another the see, to is then that about,

would so taking like another to And we increased pressures. and performance in of terms customers we're are technology temperature by of elevated our level way And the what yes, to see to they able meeting in help manufacturing. also

when the fuel being that work with focused the to developments we're original them more something move most So to recent from more and on efficiency able achieve. from engines, that's and robustness, X for to cliffs they to try

So working in or launched of progressively, aircraft the upgrades of for matter we're over And a and of engine, some that a it of next whether say, each those. on in LEAP-based all the then be engine years. with it's available all to And is those the read And manufacturers that requirements you've upgrades couple GTF subject the I'll later will certification of articles play. XXXX. doesn't

into And market be new well. we'll service those products as again, providing the

in then currently parts built for awaiting of above maybe an over tens and sitting improvements are into for be included talked we've engines. that thousands new example, certification some or the increases and ready about, as and inventory signoff, assembled So they'll already engine in volumes manufacturers those the I've it's of

Operator

with And Seifman our question will next come JPMorgan. from Seth

Seth Seifman

and some structure preparing I increase wonder, could little down suppliers XXX? the the suppliers like shutting When Boeing in It a XXX. while. be their are a talk How structures you some fasteners you business. about deliveries John, to if about low, here. Japanese are may We've seen European messages bit about think one thinking seems the the of you of rates. mixed for trajectory little

John Plant

the On side. structure

turbine At the they saying our the we've in So the the with time, we've the do wanted that . In substructural stated of same you blades their the to back seeing we said, previous that of that rates, not covered guide to Boeing now cut manufacturers one account reduction out we Fasteners, as they same is summer. of in from provided also taken LPT they're building in we going are been that far, again, way, that in I note our XXX note European And line over we guidance. skyline. case in that and in to have -- the deliveries that castings. the Howmet

And with part the using way system that the such down our schedule that directly then those inventories accordance we're say, year saw is we level, you in taken in rather a in later XXX that the take out so in, same inventory but Fasteners, min-max above than, levels with on as and such or contract the to get done but we've caught I'll with that should minimum to not we happened. seeking Boeing, that with put we've

Operator

will Strauss question next from with David Our come Barclays.

David Strauss

something a or the minus plus or your XX% I this John, you've XX% implies incremental XX% about like targeting past, year, revised talked X%. margin, range. the guidance so think in to So looks in It

updated the So just how think margins get about comments to business? wanted to some for about incremental

John Plant

year. of we've balance have increased Yes, the

over Europe, principally our it's account plus the moment, U.S. trucks QX, fractionally coming think that Wheels in just I in and the business from the in as but affecting envisage that we takes well. both Class XX% also seasonality X of the reduction at

quarter, of into we And was the incremental rate. over in is stronger call, the that look last rate I a said increase than net you [indiscernible] year slightly XXX, up David, put itself essentially it's in reduced should earnings we've just a from think higher that, at rather in theme level. employee which the if last -- headcount, about which end our QX. to QX, that . Continuing a be how that's So at

yet, While below hiring, revenue, above we've look the down to terms significantly And now still it's just and of been at percentage. -- it's in you XXX. if fractioning that in increase

you assume it, QX. productivity revenue in achieved there's I top that the in business think of QX, our in actually can on a in and taken We've zero So XX% increase Fasteners incremental case being of is XX% headcount.

we here bottom peak, helps out no pumping efficiency which So, are obviously lot business. a with the, and say, XX%-plus revenues within towards I'll the line incremental the

going engines half about the company, head because because basis, we've our the to recruitment we year, at for to in an up all a lot demand Engine so a begin talked and required our we're because on go and both gain are increased that be capacity net business. need the in takes count And And that it of probably all level business. for through of plus that's XXX the the prepare be of to the people in efforts or do to is in is employee also the training have, past, we that to it skills requisite that

we're seeing inflation. pleased people it efficiency. slight way calming also on we've where seeing by of the So to, in the We're got side. a it with We're

XX about in in tiny was basis talking was deflation I a metals worth it get points. so in wasn't to probably was QX, the good not -- in had for our fact, business, saying aerospace input, we didn't terms of even And but even we which

current that aluminum is the wheels a but price then good we the headwind And -- business. our affects have was a only so area headwind. we of have it obviously increase didn't which And in

$X the And drag, we'll so effecting add Wheels small margin we'll a cost see drag drag our $X recover reduced that and for business. that margin getting that always to of provides sales

revenues signaling a seasonality plus be the and down the bit demand that aluminum. the third down factor little quarter more margin really will Wheels the of because be and will So in

if good as margin are say, input second say, with stability in terms fairly, good But company, well. guiding XX% parts the the metals us increase I'd are we a good half I'd guidance which demand lean and productivity was seeing, of across mix, together put the of as at saying, you EBITDA where in giving piece about and reflected in I we're in

Operator

from question next will our come And Research. Wolfe Walton Myles with

Myles Walton

take to achieve ability John, that but to to to and seem the had stop production here as their in the Airbus to Can give a are Boeing a not opposed of their on this in level, you breakaway blip objectives. able front? about like have production talked imagine, the higher of I'm did shortfall pricing accelerating. you and you it specifying pricing And given at But a sort moment also, quarter on must any I being be comment just to the see material And it the you own. the engine more do their curious, as GE up maybe get risks airframe? shifting

John Plant

Okay.

are manufacturers rate well the manager, aircraft changes, So publicized.

annual deliveries majority are the aircraft, their of discussions availability down assume XX the some last case about Airbus, of I at And they bodies. did they've Farnborough by narrow engine think expectations which So taken I the issues on in talk week.

the Boeing, head again, Head plant encouragement of we [ of of in Aerospace it's increased the ] Commercial stability what the publicized of bit In little a from Seattle. took way all within Boeing and manufacturing by case well

below with expectation assumption albeit by significantly of bold production rate So feel that them of the that XX get be. enough haven't still is previous our XX that clearly, the of did are [ probably year, majority assumed to XX% achieving ] rates great. XX we a And go to but far, to end expecting where production. the from they we which

is And significantly the engine from of of output the what read as in second expectation year, In I the case engine we which is that good. really manufacturer, the is already ] those far are discussed. saw [ the less increase LEAP rates and will half that

low-pressure RC in, And production ramp the and inventory structural very the up turbine, rates so say, high with combined of that still turbine. obviously will our current some casting high-pressure of the in

think question adequately. part of I that covers So that the

has of being end and just million and we the of that be or the level guidance that plus given further instead that I any at we given. no XXXX from we $XXX at haven't it the company. of that price, whole Then what terms across minus level, would last price guidance said In think reached, that year, a change the about similar to a of all from at have or bit XXXX of which was little more. topic And we a gave

so can it's we And previously further exactly the not indicated, commenting assume but on topic. you as really

Operator

come question from And will our Sheila Kahyaoglu Jefferies. next

Sheila Kahyaoglu

you agreed could that. help maybe Ken on So John, what on elaborate there. And the terms

talk about could you that how we second if engine just OEM. about So think

I volumes first quarter than XXXX. think OEM the a you later up said start in the

do we incremental the how today? second guessing profile that think And on about CapEx? thoughts with the margins deal? return the I'm than better XX% additional versus have the first engine any it's through the comes that And So you volume

John Plant

obviously the At It's otherwise whenever you engine Yes. good same take it. business, put we time, down capacity. wouldn't new

manufacturing As capital-intensive. is you very engine know,

produce achieve which these to this to are vital automation new quality turbine the, say, of yields to new requirements of an products. And go depreciation so very compared down consistency of about, different. average charges I in to and [indiscernible] earlier we're your will I'll to for so is base written we able types for to be putting get that talked part facing levels And of capital being having say, extraordinary to call, the elevated in fact, effectively because I'll in special on, you'll asset the this

make really satisfied. But I'll achieve say, fixed I so that And same at will be it's any margin. get long as adding I into them can capital. satisfactory. we'll possible we'll okay but pinpointing sufficient depreciation the we it's margin investors costs. we think [ Otherwise, same saying particular an be we're the to through that that with time, will It's to rates adequate. as cost ] a of pumping little be assume the specifically our But time, going very adequate At on return adding want way Sheila. it's recognize didn't

Sheila Kahyaoglu

on comment the Can you volume?

John Plant

customer. I up And share don't we to we that on share don't is thing thing share taking any earlier the about about increase this. be we But with that's on want for I similarly line in are gain as market shares the comment the is healthy. talked previous that investments. of volumes additional is because the talking think particular that appropriate we'd publicly. it be [indiscernible] pretty an have important really Clearly, specific part to said

So clearly, that soon one them. possible them our investments the basically, -- as all demand is And tools, because new is clearly months and of as machine to months investment. about X as job possible now place X are this later there than kicking the previous them and to place for them as get the try those off commission quickly is

are -- these the tied what engine today. new And with see them so as would and customers the our what in the And like not to of up be the certification to for But volumes going to have to going [indiscernible] on want where as Airbus on and [ engine certified them, FAA possible. upgrades off just well. early ] have Boeing changes they the come all will which be see it's as for world, sign also they both

could different we that. It for be each of we So the await feel. manufacturers

Operator

come next Melius will our Research. Spingarn And with question from Robert

Scott Mikus

to in acquired, quite get XXs. the cash to XXs pricing They're your was we're quarter. margins in but a parts, operating I low Do strong is Rob and has Mikus the for hate noise it the the put and and reserves, long-term margins is in now think for term? the you numbers LIFO in there it's there high This due Howmet long eventually margin metal the potential Spingarn. always to you target John, before here, ask Scott operating precision spot on on but were

John Plant

margins, wasn't year future. of therefore, parts the quite and comfortable all. there and talking what be margin a has after year of rate have, is in precedent will what I've I or the margins ] the after that next operating is exactly know anybody sure what been be will whether first were . that be the volumes matter and [ rates I never Aerospace all, it don't at cash something I EBITDA will some industry absolute the and on increase comment I knowledge really and don't about think cyclical but year really who Well, doesn't margin because and to

happened full to whatever doing covered. company, real we're were whether our to those margin say is are we're of the the do trying company. one can margins real over of rate start we don't say, at ago, decade And what I'll make this a or not to improve time and was all type what think I changes is -- follow I these some

Scott. it, choose not to do I So

and not I rates. achieved on comment So I are I find how know? have, so now. don't something don't I Whether And seems or I to years some their companies do X say margin think won't ever you ever think or get lost, that which what like doing you to from X me they're but It's be going do recognize will margins

Operator

And with question Goldman our next from will Sachs. Noah Poponak come

Noah Poponak

is you first the John, higher that that you didn't to revenue half hiring. when as of I guess strong in the begs you'll question you had were still fast have to suspect explained the growth incrementals while the be because back pretty good.

I when Engine continues a through still I is as recovery? the evolved, -- it have Fastening as that potential then than know is Fastening pre-pandemic. revenue as revenue basis much its how does like why that's lower And points we Obviously, I has X,XXX recovery. have segments get look engine versus lagged pre-pandemic. guess up to guess

John Plant

X-month AXXX. getting XXXX is is only 'XX. being the the to thing think And would wait rate. in slated I particularly I to suspect this Wide But Pre-pandemic, to the now a clearing moved at then I rate see that's we what know metallic-based AXXXs mix terms in degree, XXX eventual productivity a month. to composite-based a we've slightly but that and production read. current to we aero, month X% at producing great And XXX, in you higher know, number of would -- going heard set from also know, XX, And increase effects because the note mix, from ] is were different. a by of and [ don't the to, rating . At commercially. the like zero to I've future when the what is will our be been halted in also area. think AXXX supply both bit some would be the structures And the you down something aircraft. think, climbing ever aircraft the also in you wasn't X that XXXX, XX and go constraints, Fasteners or but to to year. little for next therefore, get some business I saw being a nothing's where it got favorable X point, back think, to above drive X previous out rate modified be As and we for and was because the then the one same. month 'XX, commercial On of maybe in a what produce XX and it I inventories, probably of there, better I that is Body that I exactly will I've ambitious XXX to. levels, be great plus a a which point, get first. be as And month, time, Noah, 'XX, trying we've was back happens a And up XX of completely different And which

few chain I probably there's these tied parts the within assembly thing with same also some And issues often particular mean, processes read a up supply for often, I previously. quoted, but also the is we that's of think aircraft. as about maybe had I've

let's the -- that any And balance would for a back the depends previous back 'XX the month for be I But guess what it the picking going move should of will XX rate us. to don't month, level. saying greater margin detail. and in 'XX particular we but needs be XXXs be we rates it And so in see before what's volume we that But positive to, or and into if XX narrow-bodies I on progress factor metallic-based very real of the let's feel say, stated gets during much 'XX all a 'XX. And the like get apart AXXX. that obviously, to of get a to the

I look think you Faster quarters. the most our during on track is important margin at the recent the business the just thing if

it's of sequential impressive and think improvement go. in as I terms that's been truly I as far

Operator

from come will Khanna question next Gautam our Cowen. with And

Gautam Khanna

Obviously, see do beyond to deferral any any of raised facility, I is relatedly -- or of Just, there on some XXXX. been that in after outlook RTX you programs longer-term other Has Astral products? inventory weakening a you 'XX, that John, maybe pause the gives you've ] if put impact anywhere, had excess for outlook but wanted [ to point negative finer you XXX anything then it, where, service? ask the incrementally anything on has And just in channel that maybe the or your 'XX? that any requests

John Plant

Okay.

the last through deal Astral any machining to work, probably facility. . XX ] disc and get [ RTX I'll on maybe out that's of first. I believe to it's I recall. haven't with on coming inspector up in the coming So question years the commentary that heard or rate necessary so and

that that's castings in On heard I investment really the anything area. material process, haven't

after, to castings. know, what across point, -- and it reflected to on about previous And years. record is. say, million comments the investment machining the our compared online building this my stand so we're requirements just let's there few don't far all announced any of The still coating at I'm expect doesn't on next you change facility, that in $XXX of XXXX mean was and And over as I which I that investment, the happens, not don't that moment go seeing the

of GTF big think the, and year billion, issues cash say, to $X and the But current of it's absorb. nugget costs I that I'll between that billion, it's are cost not And that go I think Tract was scale -- Whitney to & got to me some to last sufficiently be through servicing you've several billions that for effective. obviously few to compared to partners. to a that more shared them yet equipped at emphasizing provision that's made clear become a getting investment

So know than more that. I don't

spending access And question. that time just it channel What [ Sorry, of because in first ]? on inventory much the part focused the I've it? been was so was

Gautam Khanna

Access Yes. inventory.

John Plant

mean bit I superior. really. Not it's a

got a back on LEAP when weren't parts assembled. said, cut turbine were So those as we bit I recently we low-pressure the surprised little because engines

France. you plant and in rates in the comes at more on employment, we production so. because many would of what the going probably by -- And can And of changing therefore, industry, comes it compared the out aircraft are, manufacturers earlier, how delivery next much how to see like what's about we I trying into moment out think if one like parts have of inventory? cabinarolled-ut level And What's you [ that [indiscernible] got than facilities have say, started good really way it, the have don't pretty plants of great quarter to aircraft of many or and we ], I'll so that's to said don't production ours do so what the [indiscernible] opaque. manage information. through we we've nothing state according there's to moving how

get all And you've the [indiscernible] that, from . got then all of engines, the you

be model difficult cause you must to us. many it, for so it's different and aspects really there's to for difficult So it

be market need so I where now to. tend out started because, you in we the July by wheels the in reduction business, our August. is plants just as where several in way to it's significant in weeks you and going guide that [indiscernible] for QX would called what do go take very reductions, to the tried and We've exacerbated activity example, to clearly the for see in set cautious know, out. QX, to European in seasonality we've advise we And it We've been

we engine the the and engine call earnings that. And Boeing it pace is got been best quarter the guide, down And think first about best what the in on level quantities the of I previous at taken case the account advised of keeps we've for of manufacturers. the to to production say, the can do all match rates takes we've And right only. It adjusted look talked we to we've with so all knowledge. of

Operator

with Ron from come will question next Epstein our Bank And of America.

Ronald Epstein

and feedback up So shortage was we castings of at one. A has kind stuff just just across a been we are but industry. of lot picked broad what a probably into asked, every over a the quick, went just Farnborough meeting the of

itself? what the you mean, is mean, you If broadly, casting, up maybe of that business Do it that. I opportunity mean right? casting to share Is you I going Howmet an is see on resolving pick because I in do it So world? or not? more what's could for kind more of there talk opportunity? on

John Plant

for which of you Again, casting, structural between it turbines. apart casting to the pick that Yes. high low-pressure castings, is got compare to pressure turbine

of we've where the I'll and do. -- and So . that's, to a we seen castings say, our OE small case negatively LPT cutbacks, affected casting engine the degree, structural and

territory. goes guess I'll casting castings cetera. make so that [indiscernible] say The et techniques, to now with different different there's I'll high-project turbine just and I , can't say, so capacity is diets, different you the that just And because

And not all. transferable at so it's immediately

months be So a and X say, can produce certainly or ago. high-pressure to have seems castings we to, been turbine any demand the we that because further key service than let's the possibly high year advised higher is

the, the rate. it's and And decision. goes well we're at correct, what production, engine put quantities, MRO absolutely we're what our specific to can And and we to while well -- I'm rates. then that that's everything say, trying to [indiscernible] that not that that, assume any above I'll so you all wheel [indiscernible] we also OE can stating we you to above know shops increase service not goes but our giving engine

to again, to medium fresh the term short go it So in in will that yield going try once capital we're go expenditure improve and to term. that to will

you we've investment agreements been lock capital its commensurate in high that's that cut got a those because put fresh requirements future. is to struck so us And surety market return clear with and for down which have share why for of we've intensity, to

months? no, We'll then be it's us, go, we can say. future. the customers can high-pressure achieved. another And said well to trying positioned with we'll can't. we good we turbine collaboration about improvements next the customers all to going we're answer to can that's help the improve The volumes And and really talking achieve our casting improvements we've you produce can we to yields, they how our our that above internal and if the moment some in at with X about and well already XX% be for obviously, over above rate. engine during got that. we've So But would be,

like new XX%, to got and the produce demand. So have pretty we've I'm I'll doesn't knob a like presses, realistic. got that. the that put don't in can down. I be on also We'll XXXX. to tools I positive that. casting I significant make that we'll say, dynamic. just I've feeling new got to got work everything But about go it fundamentally and new got said. like another capacity fact That's We've what of new change machines. bring We've see the turn that We've I and it. fruits

Ronald Epstein

along much I How pretty my could may, on get Because if better And are you yield? you understanding just is that same question. guys the good. already

John Plant

that call matter, quality There's . that. [indiscernible] performance. from are it's matter drawing on It's margin. which going where this where study at successive can while and to of way whether -- it, of anyway, which the today, will only go requirements always in is don't But may be -- protecting to we But we that, to Where are clearly, sort be performance. the things, sometimes relaxed but we Product produce. something don't those possibly those tiny we product the be the

Operator

today all That you is all the have conference attending for questions. Thank for call. time in today's we participating and

now disconnect great and a You may day. have your lines,

Howmet Aerospace (HWM) 30 Jul 242024 Q2 Earnings call transcript