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Fundamental View
AS OF 07 Nov 2025In an industry beset by manufacturing issues and operational hiccups, HWM continues to perform admirably while also paying down debt.
Net adjusted leverage declined 0.2x sequentially to 1.6x and compares to 6.7x at the time of the Arconic spin in 2019. Current leverage levels justify further agency upgrades, into the A category. Recall S&P and Fitch both upgraded the credit to BBB+ this year.
We retain an Outperform view on HWM credit, which we expect will continue to move higher in ratings. We expect the credit will Outperform in a widening market environment due to its relatively short duration and defensive nature.
Business Description
AS OF 07 Nov 2025- Howmet Aerospace Inc. is the surviving entity of the legacy Alcoa Inc. following two major spin-off transactions in 2016 when Alcoa was spun off and in 2020 when Arconic was spun out. Howmet is now focused on high value add, high margin aluminum, titanium and nickel superalloy casting and forging.
- Products are sold into the Commercial Aerospace , Defense Aerospace, Commercial Transportation, and other end markets. Howmet also has four reportable segments: Engine Products Fastening Systems, Engineered Structures, and Forged Wheels. The Engine Products segment produces investment casting – including airfoils and seamless rolled rings – as well as rotating and structural parts. The Fastening Products segment produces aerospace and industrial fasteners as well as those sold into the commercial transportation, automotive, renewables, construction, and industrial equipment. Engineered Structures produces titanium ingots and mill products for aerospace and defense applications as well as produces aluminum forgings, nickel forgings, and aluminum machined components. Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and commercial transportation.
- Howmet operates 62 facilities in 11 different countries (primarily the US and the UK) and receives the majority of its revenue from the US and Europe.
Risk & Catalysts
AS OF 07 Nov 2025Aerospace industry is still going strong even as there are signs of a potential slowdown. Domestic travel boom significantly benefited narrowbody business while international travel supporting the next stage for widebody recovery.
However, there are signs that passenger demand may start to falter- at least domestically in the US- and we’ll be tracking how much of the booming OE demand will be realized over the next few years.
Increased energy demand driven by the AI boom will be driving higher volumes and demand for HWM’s portfolio of IGT products.
Forged wheels segment faces persistent headwinds from the still-weak trucking industry. However, HWM has an edge in the segment thanks to its lightweight products.
Tariffs impacts appear to be minimal thanks to the ability to pass the costs to customers.
Key Metric
AS OF 07 Nov 2025| $ mn | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|
| Revenue | 5,663 | 6,640 | 7,430 | 7,975 |
| EBITDA | 1,276 | 1,508 | 1,914 | 2,270 |
| EBITDA Margin | 22.2% | 23.0% | 26.8% | 29.4% |
| EBITDA-CAPEX-INT % of Revenues | 60.2% | 64.4% | 75.9% | 84.3% |
| Total Debt | 4,162 | 3,706 | 3,315 | 3,189 |
| Net Debt | 3,371 | 3,096 | 2,751 | 2,530 |
| Net Leverage | 2.6x | 2.1x | 1.4x | 1.1x |
CreditSight View Comment
AS OF 17 Nov 2025Howmet Aerospace (Baa1/BBB+/BBB+; S/S/S) posted another solid beat and raise quarter where revenue was +14% and EBITDA was +26% YoY. During the call, management added increasing data center spend to the solid list of tailwinds the company enjoys in Aerospace and Defense. Net adjusted leverage declined 0.2x sequentially to 1.6x and compares to 6.7x at the time of the Arconic spin in 2019. Current leverage levels justify further agency upgrades, into the A category. Recall S&P and Fitch both upgraded the credit to BBB+ this year. We retain an Outperform view on HWM credit, which we expect will continue to move higher in ratings. We expect the credit will Outperform in a widening market environment due to its relatively short duration and defensive nature.
Recommendation Reviewed: November 17, 2025
Recommendation Changed: March 02, 2022
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