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Fundamental View
AS OF 01 Aug 2025In an industry beset by manufacturing issues and operational hiccups, HWM continues to perform admirably while also paying down debt.
Howmet’s journey up the ratings cycle continues, and we now believe the company will meet the upgrade requirements at all three agencies over the next year, landing the company in the A index by 2026. Howmet management pointed towards 1.1x net leverage by year end, down from 1.5x current.
As such, we continue to like HWM and look forward to a continuing spread tightening cycle for the credit.
Business Description
AS OF 01 Aug 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 01 Aug 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 01 Aug 2025| $ mn | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|
| Revenue | 5,663 | 6,640 | 7,430 | 7,721 |
| EBITDA | 1,276 | 1,508 | 1,914 | 2,143 |
| EBITDA Margin | 22.2% | 23.0% | 26.8% | 28.7% |
| EBITDA-CAPEX-INT % of Revenues | 60.2% | 64.4% | 75.9% | 81.5% |
| Total Debt | 4,162 | 3,706 | 3,315 | 3,258 |
| Net Debt | 3,371 | 3,096 | 2,751 | 2,713 |
| Net Leverage | 2.6x | 2.1x | 1.4x | 1.3x |
CreditSight View Comment
AS OF 18 Sep 2025Howmet Aerospace delivered a strong Q2 2025 with revenue up 9% and adjusted EBITDA up 22% year-over-year, supported by robust aerospace and industrial demand. All segments met or exceeded expectations for revenue and adjusted EBITDA, with notable outperformance in Engine Products and margin expansion across the portfolio. Management raised full-year 2025 guidance for revenue, adjusted EBITDA, and free cash flow, reflecting continued operational momentum and end-market strength. Balance sheet metrics improved further as leverage declined, supported by higher EBITDA, steady free cash flow, and ongoing debt reduction alongside increased capital returns. We reiterate our Outperform view and continue to expect rating agency upgrades to low A ratings as Howmet’s credit profile strengthens.
Recommendation Reviewed: September 18, 2025
Recommendation Changed: March 02, 2022
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