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Howmet Aerospace Inc.’s (HWM - Free Report) second-quarter 2024 adjusted earnings of 67 cents per share beat the Zacks Consensus Estimate of 60 cents. The bottom line surged 52% year over year.
Total revenues of $1.88 billion surpassed the consensus estimate of $1.84 billion. The top line increased 14% from the year-ago quarter. The increase was backed by strength in the company’s commercial aerospace market.
Segmental Details
The Engine Products segment’s revenues totaled $933 million, representing 49.6% of net revenues. On a year-over-year basis, the segment’s revenues increased 14%, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine and oil & gas markets. The Zacks Consensus Estimate for Engine Products revenues was pegged at $915.3 million.
The Fastening Systems segment generated revenues of $394 million, accounting for 21% of net revenues. Revenues increased 20% year over year, driven by growth in the commercial aerospace market, including emerging wide-body aircraft recovery. The consensus estimate for Fastening Systems’ revenues was pegged at $381.5 million.
The Engineered Structures segment’s revenues, representing 14.6% of net revenues, increased 38% year over year to $275 million. The results benefited from growth in the commercial aerospace market, including wide-body aircraft recovery, and the defense aerospace market. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $257.4 million.
The Forged Wheels segment’s revenues totaled $278 million, representing 14.8% of net revenues. On a year-over-year basis, the segment’s revenues were down 7%. The consensus estimate for Forged Wheels’ revenues was pegged at $287.1 million.
Howmet Aerospace Inc. Price, Consensus and EPS Surprise
Howmet’s cost of goods sold increased 7.6% year over year to $1.29 billion. Selling, general, administrative and other expenses increased 10.2% year over year to $97 million. Research and development expenses were $7 million.
Adjusted EBITDA, excluding special items, was $483 million, up 31% year over year. Adjusted EBITDA margin increased 340 basis points year over year to 25.7%. Operating income increased 39.6% year over year to $398 million.
The operating income margin in the quarter was 21.2%, up 390 basis points year over year. Net interest expenses totaled $49 million, down 10.9% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Howmet had cash and cash equivalents of $752 million compared with $610 million at the end of December 2023. Long-term debt (less amount due within one year) was $2.88 billion compared with $3.50 billion at the end of fourth-quarter 2023.
In the first six months of 2024, Howmet generated net cash of $574 million from operating activities compared with $252 million generated in the year-ago period. Capital spending totaled $137 million compared with $105 million spent a year ago. Free cash flow in the first six months of the year was $437 million.
Howmet paid out dividends of $42 million in the first six months of 2024 compared with $35 million in the year-ago period. Also, it repurchased shares worth $210 million in the period compared with the $125 million buyback made in the year-ago period.
Q3 Outlook
For the third quarter, Howmet expects revenues to be $1.845 -$1.865 billion. Adjusted EBITDA is expected to be between $460 million and $470 million while the adjusted EBITDA margin is anticipated in the range of 24.9-25.2%. Adjusted earnings per share are estimated to be in the range of 63-65 cents.
2024 Outlook
Howmet predicts revenues to be $7.400-$7.480 billion compared with the earlier anticipated range of $7.225-$7.375 billion. Adjusted EBITDA is expected to be between $1.855 billion and $1.875 billion while the adjusted EBITDA margin is projected to be 25.1%.
Adjusted earnings per share are forecasted to be in the band of $2.53-$2.57. Free cash flow is expected to be in the range of $840-$900 million.
It has a trailing four-quarter average earnings surprise of 51.3%. The Zacks Consensus Estimate for FLR’s 2024 earnings has increased 1.4% in the past 60 days.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank #2 (Buy). FLS delivered a trailing four-quarter average earnings surprise of 18.2%.
In the past 60 days, the consensus estimate for Flowserve’s 2024 earnings has remained stable.
Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.
In the past 60 days, the Zacks Consensus Estimate for EMR’s 2024 earnings has increased 0.4%.
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Howmet (HWM) Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Howmet Aerospace Inc.’s (HWM - Free Report) second-quarter 2024 adjusted earnings of 67 cents per share beat the Zacks Consensus Estimate of 60 cents. The bottom line surged 52% year over year.
Total revenues of $1.88 billion surpassed the consensus estimate of $1.84 billion. The top line increased 14% from the year-ago quarter. The increase was backed by strength in the company’s commercial aerospace market.
Segmental Details
The Engine Products segment’s revenues totaled $933 million, representing 49.6% of net revenues. On a year-over-year basis, the segment’s revenues increased 14%, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine and oil & gas markets. The Zacks Consensus Estimate for Engine Products revenues was pegged at $915.3 million.
The Fastening Systems segment generated revenues of $394 million, accounting for 21% of net revenues. Revenues increased 20% year over year, driven by growth in the commercial aerospace market, including emerging wide-body aircraft recovery. The consensus estimate for Fastening Systems’ revenues was pegged at $381.5 million.
The Engineered Structures segment’s revenues, representing 14.6% of net revenues, increased 38% year over year to $275 million. The results benefited from growth in the commercial aerospace market, including wide-body aircraft recovery, and the defense aerospace market. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $257.4 million.
The Forged Wheels segment’s revenues totaled $278 million, representing 14.8% of net revenues. On a year-over-year basis, the segment’s revenues were down 7%. The consensus estimate for Forged Wheels’ revenues was pegged at $287.1 million.
Howmet Aerospace Inc. Price, Consensus and EPS Surprise
Howmet Aerospace Inc. price-consensus-eps-surprise-chart | Howmet Aerospace Inc. Quote
Margin Profile
Howmet’s cost of goods sold increased 7.6% year over year to $1.29 billion. Selling, general, administrative and other expenses increased 10.2% year over year to $97 million. Research and development expenses were $7 million.
Adjusted EBITDA, excluding special items, was $483 million, up 31% year over year. Adjusted EBITDA margin increased 340 basis points year over year to 25.7%. Operating income increased 39.6% year over year to $398 million.
The operating income margin in the quarter was 21.2%, up 390 basis points year over year. Net interest expenses totaled $49 million, down 10.9% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Howmet had cash and cash equivalents of $752 million compared with $610 million at the end of December 2023. Long-term debt (less amount due within one year) was $2.88 billion compared with $3.50 billion at the end of fourth-quarter 2023.
In the first six months of 2024, Howmet generated net cash of $574 million from operating activities compared with $252 million generated in the year-ago period. Capital spending totaled $137 million compared with $105 million spent a year ago. Free cash flow in the first six months of the year was $437 million.
Howmet paid out dividends of $42 million in the first six months of 2024 compared with $35 million in the year-ago period. Also, it repurchased shares worth $210 million in the period compared with the $125 million buyback made in the year-ago period.
Q3 Outlook
For the third quarter, Howmet expects revenues to be $1.845 -$1.865 billion. Adjusted EBITDA is expected to be between $460 million and $470 million while the adjusted EBITDA margin is anticipated in the range of 24.9-25.2%. Adjusted earnings per share are estimated to be in the range of 63-65 cents.
2024 Outlook
Howmet predicts revenues to be $7.400-$7.480 billion compared with the earlier anticipated range of $7.225-$7.375 billion. Adjusted EBITDA is expected to be between $1.855 billion and $1.875 billion while the adjusted EBITDA margin is projected to be 25.1%.
Adjusted earnings per share are forecasted to be in the band of $2.53-$2.57. Free cash flow is expected to be in the range of $840-$900 million.
Zacks Rank & Stocks to Consider
HWM currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies are discussed below:
Fluor Corporation (FLR - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 51.3%. The Zacks Consensus Estimate for FLR’s 2024 earnings has increased 1.4% in the past 60 days.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank #2 (Buy). FLS delivered a trailing four-quarter average earnings surprise of 18.2%.
In the past 60 days, the consensus estimate for Flowserve’s 2024 earnings has remained stable.
Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.
In the past 60 days, the Zacks Consensus Estimate for EMR’s 2024 earnings has increased 0.4%.