HWM - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the Howmet Aerospace Fourth Quarter and Full Year 2024 Conference Call. [Operator Instructions]. Please note this is being recorded. I would now like to turn the conference to Paul Luther, VP of Investor Relations. Please go ahead.

Paul Luther

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

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

included special press our listed the differ materially are to recent can today's Reconciliations in to in You in items. items presentation In excluding GAAP today's EPS, references actual adjusted today's company's today's find in the These most items, income, means factors income directly to that results among EBITDA, release excluding and filings. measures SEC in financial EBITDA, measures adjusted non-GAAP the earnings these found comparable can excluding be special special in most appendix and could presentation. projections and we've our adjusted operating the cause financial presentation, press from discussion. EPS and that and release measures operating

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

John Plant

Thanks, PT, today's to and welcome, everybody, call.

$X.XX over per good and a XX% and $X.XX, prior the were to with high put move year as and results, out fourth closed quarter. of exceeded Slide earnings we share. increase XXXX record EBITDA year, on at EBITDA, I'll guide. margin X, We concludes commentary Let's begin the Revenues Fourth our quarter end share our earnings year an well per it. of that which of healthy as and a as

XXXX. than XX% increase XX% year-over-year our For is the full a represents initial for guide year, higher this and

cash $XXX was record was flow flow Free quarter conversion reduction cash of XX% and to free $XXX net the for income The at over debt Of the an also approximately share year was Operating representing of year, Average dividends. all deployed conversion margin of income. for the a X million, flow million the years last in been cash repurchases, free the has XXX%. net generated XX%.

of completed also of paid million $XXX During XXXX, dividends. was million stock, repurchased QX. $XXX I common in million $XXX which million $XXX Howmet reduced debt and by in

This Regarding announced in with provide balance increase dividend, segment in Ken's The largest with to moving end continues of will highlight later the additional be leverage to regarding paid segment stock month. will which quarterly results. the in recently this and improvement the outlook it common dividends, later the comments. year showed moving color quarterly a Ken is sheet was before increase. improving The X.Xx. debt-to-EBITDA I'll welcome regarding quarter profitability into clearly be the after and of provided XX% segment now will we The since market revenues strengthen to commentary one XXXX. helps net confidence Structures our

Ken Giacobbe

Good John. you, thank morning, everyone. So

Slide move Let's to X.

So to healthy. another Howmet. for solid quarter be End markets continue

XX% the well the aerospace future throughout up in to are quarter driven for XX% year. XX% the the for fourth in by and growth. full full growth the up segments. positioned Revenue invest with aerospace XXXX was up We X% for Commercial and year strong all up remained quarter fourth X and for revenue continue

quarter the Defense fourth Aerospace and in up growth was accelerated XX%.

revenues was fourth driven up X% in quarter year, Commercial full expected defense were for aerospace fighter down and the XX% engine year. programs and For Transportation be the was down to XX% full demand. by fighter the spares as and challenging

full the note quarter outperform and that Howmet's market despite Although both Howmet's challenging I delivered down, XX.X% healthy with fourth margin products. we would year. continued for to a Wheels also segment the the market, EBITDA premium the

up fourth XX% X%. up XX%; up gas XX%; and up were markets quarter, other and driven IGT General Industrial, oil industrial the in and Finally, the by

up of growth, oil X%. X%, to XX% combination and were robust half For industrial spares total in and commercial IGT up other billion. aerospace, had our defense X% up Within the XX%, in the aerospace year gas, up we full year, $X.XX of driven the the up general markets, IGT the by accelerated markets represented and of and XXXX revenue revenue Fares and for spares, the approximately was XX% second year. full industrial

As a total was compare, revenue. XX% spares revenue of in XXXX

in partially industrial, aerospace In transportation. summary, commercial and continued strong by commercial performance defense offset aerospace,

be a EBITDA X, approximately performance. margin and Now year-over-year year year starting revenue, The Full to and EBITDA, per my outpaced structures, revenue up reduced fasteners, productivity of with and labor while was revenue X,XXX The seeing improved will of Slide the we wheels benefits added investments. employees earnings basis, are share all approximately segment the XX% records. move of let's P&L. On Engine on focus comments EBITDA and XX%, we full CapEx were employees. in our as employees absorbing growth XXX new net while

XX.X% rate a quarter with XX.X%. margin exit year XXX to points Full fourth of increased EBITDA basis

incremental year, of which revenue up full share the Earnings healthy XX% per excellent EBITDA a year-over-year. For XX% at to was $X.XX share, approximately per year-over-year. was flow-through was

up year guidance. balance target of continued cover $XXX Free as continue cash which flow we the income deliver XX%. strengthen. were flow net for record the let's $XXX million the sheet $XXX cash investments continues Free we XX% balance in on of growth. to and Now for year-over-year the exceeded year long-term million, approximately record was to a million, our sheet cash as invest flow. CapEx was conversion The high end a to of

record fixed rates. to from and was to The strong generation cash is year-end cash EBITDA Net in healthy unsecured at improved QX Howmet's and S&P's debt reflected improve was BBB. $XXX long-term were million. and X.Xx. at upgrade balance debt a continues All a of financial leverage rating low trailing to BBB-

by billion program. Moody's BaaX. flexibility cash investment As complemented in paper with to remains the revolver $X you in a up recall a billion undrawn upgraded $X Howmet balance strong additional a QX, two will grade also Liquidity of notches healthy and commercial

to deployed and we paydown cash approximately of common Regarding million debt repurchases, dividends. stock capital quarterly $XXX deployment,

quarter QX $XX For count $XXX exit XXth low of record to was price the XXX an million stock improved share a share. we rate the year, The stock repurchased million of diluted consecutive repurchases. of at common common average per shares. average of

additional share the million Remaining of Additionally, repurchased XXXX, an stock the approximately of common of share. Board January average we from $XX billion an January. for authorization per $X.XX at in price approximately of of Directors as repurchases end is XX

debt reduced debt reduce due $XXX loan million in interest will For QX for annualized year the This included that's pay a dollar-denominated down million. combined drag the XXXX. of approximately expense $XX $XX million. we term year, the November U.S. of in partial by by of actions The

to we cash free continue confident Finally, be in flow.

was an of For $XXX to the $X.XX XX% $X.XX in dividends, million we per from year, share. per increase share which year-over-year paid

from We stock to share. also XX% recently a $X.XX quarterly the announced per dividend $X.XX a share common increase in

X Slide cover and year-over-year to aerospace results spares X%. our for driven move IGT strong strong up continues XX%, Oil engines engine and to the Products all volume. by was let's was gas up record markets up Revenue Engine XX% of million. was Now Demand up increased engine be The with to to segment across XX% Commercial and XX% fourth spares growth. quarter. another $XXX defense the was quarter. delivered aerospace

new to million. XX.X%, to EBITDA basis in net XXX $XXX EBITDA points while margin outpaced year-over-year approximately increased revenue the growth XX% of XXX quarter. was absorbing year-over-year employees an increase

were For approximately for basis up segment the to XX% new EBITDA XX% records added points approximately to which full All margin to segment. billion, net $X.X up $X.XX future X,XXX the the employees XX.X%, year, revenue year-over-year. was support growth. XXX was Product billion. EBITDA was up and Products Moreover, Engines was Engines

Aerospace Now up to XX% of million. to quarter. strong the commercial and revenue another transportation, which aerospace recovery the was was up and represents was XX%. X% was up strike. move increased Slide had XX% General XX%. including Systems the of down let's year-over-year Commercial approximately widebody and X. Fastening Industrial Fasteners Boeing $XXX XX% Revenue impact Defense

with healthy continued through EBITDA points XXX Year-over-year, margins team to XX% million. and margin $XXX The to fastest has of an to revenue growth commercial improvements. EBITDA XX.X%. expand a increased increase operational basis year-over-year outpaced

For which and margin and and up year-over-year. XXX up solid full XXX employees. points delivered basis was was billion. million, XX% by EBITDA reducing while XX.X%, approximately $XXX EBITDA team EBITDA $X.X growth year-over-year revenue revenue up the Fasteners XX% year, was approximately The was to to headcount

Slide aerospace driven F-XX go Commercial program. to defense was XX% increased continues Now Engineered was up Structures million. the X. XX%, to up Revenue let's and primarily improve. by to $XXX performance aerospace X% year-over-year

to product margin maximize outpaced revenue growth points million. $XX we increase segment to to as and manufacturing EBITDA footprint increased optimize XXX EBITDA and was to profitability. the structures mix of the XX% XX.X% Year-over-year, basis continue rationalize an

margin headcount was reduced $X.X we to billion. XXX and For was XX% XXXX. up was progress, year, the $XXX margin The was continued make XX% to was approximately EBITDA to expect EBITDA year-over-year. million revenue points basis improvements up and full year-over-year employees team and continues EBITDA XXX up in approximately by XX.X%.

was take let's of year-over-year as continues XX. slowdown revenue Orange Finally, hold decreased market. Wheels transportation down XX% Slide to commercial move to the the EBITDA X%.

flex margin and commercial at expanded to as performance. EBITDA the through team margins continued and XX.X% costs be operational However, healthy

in and for up X% For XX down the a year was was billion. the $XXX was points margin approximately full year-over-year. and to market year, full million. X% $X.X XX.X% EBITDA healthy down revenue was basis to EBITDA challenging a

turning appendix. before highlight to a are over of couple the it to John, back that wanted Lastly, I in items

XXXX represents a point tax improvement the XX.X%, was for rate First, year-over-year. which basis operational XXX

on XXXX. from by and driven XXX working capital in return net to strong the pretax And in assets assets. points fixed basis and by of XXXX optimization Second, XX% improved XX% profitability

it John. let that, turn with to So back over now me

John Plant

by I Thanks, let's to move But expect that worthwhile some each we making in outgrow that, to market XXXX, XX. to again recent years did our provide to just and a do commentary of that been I'm theme specific going then understands in and we guidance. everybody again Ken, so before sure markets also Slide XXXX. segment and that's respective move maybe and do of it's each

was freight start month the due schedules then the and higher, lasted most aircraft for no commenced given continued Air Boeing underbuild all X Airbus, Pacific. late to with Boeing, by of and build. months by Let's almost with Asia of aircraft retraining Backlogs aircraft notably especially a which quarter travel never grow, and Commercial segment. principally X the of the been and COMAC followed but which further have Aerospace in have in employee by for transportation strike, to manufacturers,

XXXX. no again. increased runway for given Aerosystems bills is in open to of aircraft parts and this production backlog delivered volume wide CORMAC Chinese Airbus Hence, we their the XXXX. Spirit XXX to going by into expect CXXX with close promise and airlines, XX during many suppliers, show starting production to revised higher came increase. can aircraft gap, continued build the principally production

While most assumption estimated we their according volume to half. their is we see average Boeing own have the build XXX enables per the an for to the on up This adjust towards the aircraft skewed interesting build assumptions. OEM which year about XX month is or perhaps each aircraft, investors models was for second MAX, down assumption

XX touch indeed now I'll course, before at Of rate defense. this. to we Boeing rate or should XX, moving on build spares will match

XX% of Our total increased be F-XX of previously XXXX. acceleration Hame again the the was latest, growing and we the envision half both F-XX healthy the with where Howmet continue to crossover revenue will projection second in strength legacy Defense or XX% approximately in In F-XX. our revenue. $X.XX see revenues. billion, XXXX sold aircraft should spares towards revenue XXXX and for last of was of in stated and continuing occur to XXXX revenue. year this from we the spares see exceed for spares volumes also Spares We and representing to early OEM XX% year,

due as in demand increases we required. XXXX increasing increase November, centers XXXX, U.S. new during the then, the the renewable hate demand subsidies and is existing and being growth expands expect to Then regarding even the by less requirements see has be fleet running demand more the fleet oil Industrial demand on worldwide. led change us and IGT to digits, of from grow The aircraft and is hence, spares November administration's Since fuels on I gas and and out we picture electricity provided was it become call. of in and extensive from turbine up beyond. demand hence, will for here. megawatts in Moreover, increased the far globally commentary more bills of turbine continue from natural future expected IGT brighter to mid-single to overall is data towards set for incoming which fossil focus, earnings the gas. 'XX while currently

increase growth investment CapEx IGT drives compared in an XXXX. expected for The to IGT in XXXX

contracts. As in XXXX, customer to investments CapEx are linked

to few for years and As the Howmet global Mitsubishi for in spares blades, additional IGT Heavy, turbine positioned optimistic We're leader Siemens, [indiscernible]. demand the OE capacity next growth. and focus both Genova global of and we'll well for continue is build IDT growth about future on

Moving expected. to muted be as to commercial truck, continues demand

the being build strong for with pleased summary, expected midpoint fourth ability Boeing respectable half revenue We the builds with to well. of November margin upwards were compared in out a plus profit The printing of half despite is of quarter QX The of second the increasing principally quarter. some to moved demand loaded, increased X% is top truck growth XX.X% with the Wheels downturn in we outlook see with increase or the on increase and our into likely and in guide and build with XXXX. EBITDA the the minus, back-end this in from closing very growth the X.X% moving to a margin severity very the In XXXX. unchanged QX to overall of X extra and return as XXXX has due estimate second

at minus $X.XX. minus QX healthy in million, plus or or per plus And be million expect plus XXX of incrementals and to or over first GBP $X.XX, plus Moreover, or minus we XXXX or and guided we per are minus plus expect $X.XX share minus million. earnings or revenue be $X.X GBP for minus billion, $X.XXX of $XXX to year, quarter XX%. million; revenues million, $X plus billion, $X.XX. share of billion earnings the EBITDA $X.XX, The $XX XX

in minus to million. on await guide clarity half expected $X.XXX full is commercial and narrow-body above The second the the flow $XX incrementals builds. at XX% cash the billion free or are while $X healthy we billion, year at Finally, be plus approximately particular, in more aerospace

positioned commercial allocation, moving everybody inflation to be for to costs situation you steep our Before costs and comments in mission-critical ability the view do tariffs. closing quickly monitoring make XXXX-'XX we and capital We've of for knows, customers. to to and remains a pass Q&A. products. our The fluid, on is saw strong. the well We're I'll due moving comments Howmet demonstrated expect our We'll a XXXX capital on allocation to on few closely nature the as so XXXX. balance the through to but strong summary on agreements situation following couple to that sheet pass commentary. we before invite of I the additional our

been back-end X.Xx We to are has increased to XXXX net at by well, rating XX% payout into starting debt EBITDA. QX. starting investment and well sets leverage grade XX% closed up with but in a The net -- dividend load.

The the repatriate will board year the for continue current payout will under further share dividend of funds with program plenty the availability hence, buyback And authorization. to shareholders.

that the provides return the total company be move questions. will buyback profile buyback optionality. XXXX. We Debt XXXX. will muted XXXX let's compared also to paydown with both you. exceed said, with expect And that great of This the shareholder good to and Thank in

Operator

[Operator Instructions].

Doug Harned first Our from come with Bernstein. will question

Douglas Harned

of margins mean a XX%, is been you got up. Thank has step came this kind of -- roughly. you've you. -- EBITDA Systems, Fastening up On I big

with from to really going Now mix, quarter anything or happened performance is get AXXX, a path are mix working higher materially margins there think, in XXX you operating unusual improvement that improvement leverage. the fasteners. you've or forward, on here But can talk you I got, either a here more about,

John Plant

look I move commercial think along productivity discipline enabled been very Doug. faster that back and the way operational track had from the the we're I on a long in has all business to focus is previous pathway business, restoring really to will say, I at improvements I hires. suppose better combine than even us good, The margin expected with, a has aspects,

changed And expect for wide-body gone than positive. I during body there's I that. yet positive think a do But narrow better gain so small relative don't to that be XXXX the builds on that's I has I'm the pleased mix to for fundamentally XXXX. the that with mean XXXX.

us, think that's some And for hopefully, as we there's the to so I still million. there and especially mix XXX maybe look positive forward more rate XX for at Boeing

to about X stated Airbus been XX move a And last monthly I future you'll is think year by the aircraft month to to a that has recognize XXXX also, compares month. and probably build

pick for business. finished X don't that I aggressive next I wide-body to yet. and I be, the Naturally, be benefit increase say, further going years. margin, would think over we're is should So I the to of increase expect for for rate of future. the rate the a less X in would up to that think the in But

Operator

Our will from next Wolfe come Walton Research. with Myles question

Myles Walton

margins at incrementals just first it -- quarter. some you down implying the are is guidance first rationalize What's quarter? you're more the start given to us? growing? John, for conservatism certainly headwind? beyond the what implied or visibility first your your after implies What's of the Can that step lack of of looking and And it quarter, for half

John Plant

optimistic. excess regarding inventory, don't chosen for And never And It changed given But of there's that be rate XXXX. at going financial by easy things the statements to some probably that's cutbacks have at be narrow-body also, but as for going example. always an time, there's materially you we've to lot additional to albeit build fairly been the a our a of be the possibility could bit during would know. the the us problem, a little growth more on of a be Boeing think same guide. in conservative view CFO fairly of I

other bit regard. therefore, in be the of little I that have. And wanted visibility with lack cautious and we, that to suppliers suspect a We

And so want ourselves. don't we to ahead get of

way also, widebody, we're that those them. that it's so but say, the all facilitizing there could think And to better, year the this Again, have want fuselage whether on see so new chain be as wait mentioned. these clear we couple little sections been seats about or been plants publicly, let's I some the Are it be you that's of of have quoted bit a supply well. challenges know, side. narrow-body and of to And clear? been cautious which exchange, a sort heat And things, now manufacturing be building out or as

so want the you to a under be those as to we've two table little got a bit bit that things. I know, And firmly a the uncomfortable having to load back-end our And well cautious little it's under placed always fleet also, in regard on things.

and strong the And And more of so that to we again, an and the think at forward best profile the all step the year for expectation, about it's also knowledge. this stage, Do know bit we second given you it visibility have, in half year how is said little out. which another bit more muted we of I year. as the is choose to also be a in expected know, But a pans we've bat commercial improve. not truck

increases demand enable match to they may infrastructure the we visibility so as and ourselves in second got into are, this need might to things substantial out from customers we the building of amount of markets know, what as until achieve of there's do. which we demand And into get for the is a And you to mean play go out the half again, us XXXX. better say what to we've year, ahead us no all of while

Myles Walton

headcount is you're What the to that expansion follow-up. capacity? of match about one thinking Just growth

John Plant

also net this commensurate number about again, be less gross But directionally guessing little to XXXX. for have down that's to is productivity. I'm than thinking determined. in But the heads about a it's that point. at how improving than it. net our X,XXX, year with we'll yet but X,XXX something which higher a us we're to bit

Operator

with Stallard Robert from come Vertical will question next Research. Our

Robert Stallard

point? on Thanks sort wondering was much purchase what your XXX at on orders John, production any businesses so clarity moment, your more I the just follow seeing got you've I wanted inventory system are forecast. whether is much. up at in this how various to of the

John Plant

have Clearly, in the wasn't seen fully lines, we couple account cutbacks inventory. in a fourth due of have quarter the product of Boeing. of occurred requirements of stellar terms that taken And have and to

first And so baked that's into quarter already our guide.

be to worry thing And actually rate demand smooth concerned those is say, The do that we into in that XXXX. us let's the to much balance so there's are some even nothing for on is year of higher an there. unable I going about to, accelerate us if could about

some which first which profile of. it's -- so healthy pretty And And that at that potential thing I most is into the in account moment but quarter, we've demand the see instability important is we pretty our baked for the that is anyway. taken think

nothing yet that. know, for as Again, air turbine are not go we're So the to further, a we bit worry LEAP-XB. the foils say -- over you about changing to just I'd

And dynamic continue later as of so compared the to the the through we to in towards expect just implementation the a of year. mentioning context product that XXXX that existing worth Leap the go with looking and we

Operator

from will come Deutsche Deuschle with Bank. question Our next Scott

Scott Deuschle

quarter structures can forward? benefit referenced from you engineered a just referring explain point going more John, detail rationalization bit and what there's that in from Maybe if product is beyond to this you for this benefiting product quarter. further rationalization opportunity

John Plant

structures that may also facilities and less profitable a in of You sold remember, couple Scott, Europe one closed I'll business. earlier our, out in did we of XXXX say,

and productivity the sort some of affect has that's So that the our than bigger step-up of been albeit business. performance the probably margin, of in even

I backwards terms when to there's think with not worry regard. going really think of rate. about pleased And for I that exit our XXXX, in about it anything so in was do And

time a having productivity. focus still call as commercial assuming think improvements us build always during that's to level say you good I to operations be And has So out good, a to hope and to I -- XXXX. combination comments also, just on why step the that for what do the in XX% which really my EBITDA XX% GTF in paid again, the margin Advantage the us from timing? GTF So able having to revenue changeover step picture of and an is certification to the just while worthwhile changeover great it, engine. the let grow, a for up shifted was me underperforming as to overall dividends out and is on the also to can guidance on and both it on through opening LEAP mentioning we'll it's And be clarify, the on chose

customer So certification approvals for from sign-off final able a to & production. regarding occurred. Whitney GTF We some done still has tooling early rate make Pratt high have not await be we to our

so mid-XXXX that because at point, engine. And the XXXX let's volumes us in so. changeover substantial yet changeover occur optimistic both orbit it's the, will durability the assume, the unclear that But wanting we're as exactly this do say, to improvements everybody soon change a year, during change will and possible, occur to the with when as

I'll make And the for and additional, Howmet, say, business. in overall it content

occurred. XA we which exactly month but to struggling still over. as In put GE, case the the of that change, good change LEAP changeover has finally the So for opinion a will see

prepare over And about so change to change that's and uncertain during and we think fact, you QX, And we again. were then about I change in mean, didn't that good. if change quarter,

is improved our which quarter disturbance believe will engine the think that everybody to for little changed margin performance I good bit net in, in both thing new But fourth of into February, a GE version. a we've we due understand. as important changeover, of be can the and most there's now that So say, And for over Howmet. January to

the be So some the need to at mid-XXXX. my that change during also be again, and expectation won't more be time all and Boeing and determined will But both to changeovers LEAP-XB, the by GE, like is approved the over FAA. that timing

is timing clear. less So that

of summary, a behind year, all margin in look our by major this X us. that midyear with The GTF changed forward in now like change. January. in So we to changeover required is preservation hopefully and has as that And what's that. LEAP

And so those that all robustness for good engines. of increased narrow-body on

Operator

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

go ahead. You may now

Ronald Epstein

I you Can is quarters, gotten, over on say, gas like don't guys? know could does up a mean, it, And little the Because several it driven? be big you it speak there more in the for give -- more how can color build more right? industrial to any I around it? past we So opportunity seem you've ultimately, you

John Plant

both picture Just of election. up bulled well. and throughout service believe like sense cooling And fairly the the electricity, chips the big and these just you get could massive me on of that recall -- because the the is but do after electricity I'd is is November since in it, a the tough better of the data the picture but but it even I has to to out earnings extrapolate day something. think stick call, I'm Ron, level-headed, -- then amount IGT got the U.S. it's for exceptional you which the as for But functioning with built centers new data been easy, of and require also world. for build-out I'll have just both was

have on-site. provided to electricity are to to which it And own to that interesting source And electricity of see also is data with. also, think their how the and will security of both the center will the need clusters demands it, the are certain because is I for grid going they So the cope gas be turbines extraordinary. able require

changed in gas fact, gas, discussions even or been industrial guide prospect customers to between going I And solar from at And deep natural with natural provision electricity is overall turbines which our create and the have think will from so I in And that blend brighter the that administration. wind in the capacity. an And we with think, CapEx some of seeing for new everybody gave. come I gas has actually forward. we're that

out 'XX. 'XX 'XX additions to to to enable of two back and build over to We're actually planted also our the to be end installed additional equipment to going sites of

So we're pretty optimistic about it.

Of And with was explain we course, other of -- none I happen are DeepSeek, open these the things it language developed models without all familiar hyperscalers. was that it some using that benefits doesn't it can is by revolution? of And disturbance. the the best a

scopes voice And crew that leading which which need capacity. market. means that, for demand. time, for servers turbine requirements it hype I fundamentally, most forward. data in is Oracle, centers, expect of do Howmet. have global the back same by it's think [indiscernible] and going be of But in turbine we In building gearing do short of in have the world I gross providers XX% Google at component, the term, above the terms good is the really and the the about, leads to out which all then blades up major be the the the to Microsoft they that And it's we existing which turbine are And and that think share to segment provided to all them And the add everybody spares of of intact. market running to harder, and to going for

ourselves. So we of optimistic don't it. ahead get to about we're pretty want Consciously

that -- for sales IGT going future ability I to turbines. I be did our next and very are couple in are bright is so our to out compared last our what's I this revenue state going and for aerospace we a we're margin of think going both to the be the And in call, the we forward. build in be And investing to on years and similar expect pleased it as over that to constrained what but margins clearly supply think to

Operator

Barclays. will Strauss with question next come from Our David

David Strauss

XXX% of what terms Is question free and to kind in reduction Maybe fair then talked is think a for cash of between close XXXX. flow pretty less and in year, like -- debt capital? like you Ken. of buyback working the maybe guide could gross look the about million to should buyback. John, Ken, a usage of about cash assumed for terms looks to million you expect in dividend? sounds higher return way in we and somewhere it of that to it this $XXX to $XXX similar And It

John Plant

'XX, essentially as first, I'll either then is our in if or been say, it's improvement working you What that. assumption. dividend clear at we're David, debt is also 'XX, go out also and think you shareholders and repatriated the is part buyback flow look of cash I'll 'XX, flow clear to future Maybe that cash of has by free capital that on, Ken, reduction share I very

I look when we've the net contours don't leverage our XX-year the the debt interest change in of usage. going good is it is of just really an this flow last in terms our fundamentally at I long-term condition but of that's see But average order XXXX, the anything increased of the really what Given in our that us average year, great putting not in done dividend, to we've and years at a that cash stacks like of putting couple cost a our treasury. into below debt out doing also

there. good So again, work

number. commentary flow of that over repatriated wholly, such combination because if share that the our the you the largely, at great to us pin of in exact not on all will you the not cash leaves a the be it is in so to that is else if with be And working of given so everything shareholders far shape. that I've that you can Ken, but I've capital? benefits assume put XXXX. buyback. is And will -- And look above

Ken Giacobbe

Yes.

of free David, so flow, terms working capital. cash in So

starting cash that CapEx. flow that the see that embedded we XXX XX% the especially increase performance pleased can of around conversion. on free reports Very that record, And million about, we considering that talked the a $XXX of team as that 'XX you million. $XXX have here, in was investment, in with was in again, as CapEx with So record right,

in the the You business. business, net return assets which can the has see year-over-year primarily Engines in on tremendous

we you terms we on deck but blocks as move of of to Slide in into forward the in building free free XX So of $X billion XXXX. give the north of assumptions cash cash in of the flow some XXXX flow, tried

And million-ish up with question, revenue burn. working a $XXX look there is increase. capital capital, that at your revenue about of the embedded burn year-over-year it is is Usually, to specifically working If working associated I $XX on in capital would the the you around million of you way guide. burn at have look

assumption aerospace, So can you're and build in to looking on is XX at say, look million as $XXX of to our specifically that going go expect it -- XX. right, narrow-body, inventory, if we normally, you we're conservative would narrow body, maybe higher burn. is at working capital more commercial Boeing But

ready going capital inventories to that's put for We that. And will some incremental that working why be we're number.

Operator

question will Kahyaoglu next Sheila from Our with go Jefferies.

Sheila Kahyaoglu

the 'XX XXX What narrowbody capacity you were for margins Myles' about Thank maybe volume levels? engine about segment to new online margin the down engines there? growth how Maybe 'XX the and Q-over-Q surprise They And most And do bps continued in kits Engines talk about? step from can levels about given coming given a question. we down you talked QX a in in you. and QX. the follow-up decelerates think

John Plant

Okay.

It all, first margin bother I that call engine and in small at fourth Sheila, read change all. much in view, of too into the [indiscernible] me. what doesn't is quarter So in wouldn't I my the

about terms not Stage LEAP a I course, the turbine time, in know, little new in bit preparing through But for -- to as amplify should maybe Of earlier as XA noted. call, same which of we likely the the long-term you went really been changeover has which senator terms X blade, inconsequential. said the the fairly it I thing business, The is in occur. that at of think

FAA been not in final what's the dates the certification noted of change is implementation Probably terms the of readiness. and

most fourth the change some changeover. can that well. during thing we performing quarter incurred is the we is So is And as blade us see, costs the important whole far as new in that's the behind

over a not And first said in any I already the of XB will LEAP view LEAP TBD. so costs engines That's those be the XXXX of for don't in a -- see change range because reoccurring 'XX. of you certainly might we 'XX the half item and

see of more technology as engines we even it's because so changeover then, just much for positive there coming be is needed positive which possibly will course, the change LEAP and for the the considerable. the And

And And it again, so data uncertain. we look that. being forward to

thing what's is most undergoing QX was normal mean, while quarterly significant -- So be the anybody fractional percentage that terms the like I for such a of can think point think a change I is change. important in good noise. I don't

it. So that's categorize how it

of at like the was change to XX. XX question it part of think margin. in second an guess from I average terms of to total about of your average year-on-year an

and business fourth right of forward. us continue occur will into I'm put reverse I pretty positive -- the making move that's we've to at Again, percent about probably will came there's those a biggest I'd And a for them and nothing all. structures been think always forecast. that changes that it's And But I that that during lot see to of view like hope h***, we improvement that But year-on-year, year. the all our is in be business going XXXX. structures the quarter. to be things a of to the

Operator

Seifman Seth come JPMorgan. Our with from question will next

Seth Seifman

maybe morning margin following Thanks and with guess Impressive good that question much on structures. last up performance. very I

some areas. You've exited kind of

you looking way the you've its about of where kind place got incremental place you performing the portfolio? it you've been wanted a in not Once So perform, to to capital. think add how do

John Plant

I teens will quarter that business XXXX. see we say the doesn't say call go win I'd would high And structures margin what X year, in repeat if but to record performance. make of then moving had to a to the that I at, terms that the did on the guess we I you in

in cetera. do to business earn been towards it, in begin of margin does its deployed capital additional in when say, starving place inevitably, whereas of not way you it we've the many or business, its some because performance, I'll certainly to depreciation things so have reinvesting say, And terms of the et really, that the overall rate portfolio right

your though think earn seen, to you is I business grow that growing. So as right you've even

overhang some titanium and demand effect can you healthy I a see reason was unknown certainly XXXX we stop think Russia need And goes. is, the because of why that there of knows margin is, at that I I of the beneficiaries see tensions higher news the bulk to is us in no be of some continues good behind that teens think where think, the geopolitical Lockheed inventory and all we XXXX But a the versus I there. it's terms heads of is to in that also that and who are always business. moment, there's

that move remains to whether end so it we same. And the into be can

that's the a still technology see of motor capacitize don't But we've come. been which margins and growth, to intrinsically technologies and can business ultimately, defensive have I stand statement. the business as why because I are that have the yet rate really business, really behind we the that in the there of our just the which engine and pleased and to the

and good, creating a And contributor. far, in so I'm structures, about value. that. It's with But so good in the It's place But all so I'm portfolio. of nothing very positive pleased performance. its

to concern. go all so an And

Operator

RBC final Ken with Herbert Our question from come Capital will Markets.

Kenneth Herbert

this squeezing for in. Thanks

underlying for 'XX. particular You 'XX, and the in -- what provide in demand Can in spares had spares the that? seeing? growth the around can CFMXX talked in you you've and What's outlook, if really few what's strong you're particular you I spares on spares last specifically, in assumption within calls, guess, activity And growth aerospace up 'XX, the comment in there.

John Plant

Okay.

more that's been think you CFMXX. said for to to the XXXX. years that year XXXX So the let about was is existing of which comes has demand get it the all back me is might harder. pushed peak viewed with probably worked my is or X been like X CFMXX statements, ago, I be deal And I that the would first comment view being out that fleet

the more that are facilities into are see the increasing still being engines say can MRO is and or and performed. created deeper demand shops being overhauls You legacy those

statement really I holds. think do my so And that

either will any very be decade. 'XX marginal then if I Is would might years peak, and stand what from next than take the later that's be it And many is and moment. the into there that, the degradation that it at

market don't the engines in not as as And and say, there. those using than we planes was itself change those airlines are much and trying see possibly much XXXX, and if creates MRO think you for can is around massive to I assumption out. lead I'll started production it, higher new are the in CFMXX turned they any a through therefore, about therefore, accelerate, So repairs. more transition still And it demand because when at their

deals with CFMXX. that So

range of very for think that demand accelerate of engines, In going I demand a LEAblades demand for is anything, we're the demand And to LEAP see XXXX strong and terms in for on building [ spares I if continues leak ]. grow. think to XB the

And path we remember so don't I CFM, those think the us of into spares. a new important control it. is many control how engines to to when are built and and blades thing to let's call We leave goes how don't many our

through go And so that will be dynamic XXXX. interesting as we an

will And all bone say goes engine my spare. the expectation will be LEAP-XB But those let's to for is for that balance needs fulfilled. and of the them. produced be

then does less, an impact. are the On have first the OE spares that and hand, prioritized other engines

some that caution around provided we've so fact. And

parts And to the be turbine in by other so would the at a not we and expense rebuild, low-pressure of is then that's selling our space also out Safran. built structural of and prioritized be that if the castings all

does about going you when overall, increase say think again spares to are XXXX. in so it, that And what

to And so see spares. I a going we're in increase think very healthy

very production going called being And both think them Airbus one to higher that is enable to me of again engine LEAP very necessary mid-XXs to clear we determined. what their XX But rate I'm the you. it they going increase of want the it's is spares spares to to engines Boeing is bills going achieve above currently 'XX. engines with going that the allow healthy exit Airbus and those we also I be every and that that's is to reaching be the built. determined. are stated to be aircraft actually it to is part every and increase But necessary we're achieve enable than and maintaining produce that see out be obviously in XX, OE Boeing be of hoping numbers to build going and for the demand, is healthy which a in that out. again to a will be or those rising to into healthy to whilst to refilling Thank build But And

Operator

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

You may now disconnect.

Howmet Aerospace (HWM) 13 Feb 252024 Q4 Earnings call transcript