Howmet (HWM) Q1 Earnings Beat Estimates, Revenue Rises Y/Y – May 2, 2024

Howmet Aerospace Inc.‘s (HWM – Free Report) for the first quarter of 2024, adjusted earnings of 57 cents per share beat the Zacks Consensus Estimate of 52 cents. Operating profit improved by 35.7% year on year.

Total revenue of $1.8 billion exceeded the consensus estimate of $1.7 billion. Turnover increased by 14% compared to the same quarter last year. The increase was supported by an improved commercial aerospace market.

Segmental details

Engine Products segment revenues totaled $885 million, representing 48.5% of net revenues. Year-over-year, segment revenues increased 11%, driven by growth in the commercial aerospace, defense aerospace and oil and gas markets. The Zacks Consensus Estimate for Engine Products revenues were pegged at $882 million.

The Fastening Systems segment generated revenues of $389 million, accounting for 21.3% of net revenues. Revenues increased 26% year-over-year, driven by growth in the commercial aerospace market, including the emerging recovery of widebody aircraft. The consensus estimate for Fastening Systems’ revenues was set at $351 million.

Engineered Structures segment revenues, which represent 14.4% of net revenues, increased 27% year over year to $262 million. The results benefited from growth in the commercial aerospace market, including recovery of widebody aircraft, and the defense aviation market. The Zacks Consensus Estimate for Engineered Structures’ revenues was pegged at $233 million.

Forged Wheels segment revenues totaled $288 million, representing 15.8% of net revenues. On an annual basis, the segment’s revenues remained stable. The consensus estimate for Forged Wheels’ revenues was set at $277 million.

Margin profile

Howmet’s cost of goods sold rose 10.8% year over year to $1.2 billion. Selling, general, administrative and other expenses increased 17.3% year over year to $88 million. Research and development costs were $10 million.

Adjusted EBITDA, excluding special items, was $437 million, up 21.4% year over year. Adjusted EBITDA margin increased 150 basis points year over year to 24%. Operating income rose 29.5% year over year to $369 million. Operating income margin in the quarter was 20.2%, up 240 basis points year over year. Net interest expense was $49 million, down 14% from the same quarter last year.

Balance sheet and cash flow

As of the end of the first quarter of 2024, Howmet had cash and cash equivalents of $533 million, compared to $610 million at the end of December 2023. Long-term debt (less the amount due within a year) was $3.49 billion, compared to $3 .50 billion at the end of 2024. fourth quarter 2023.

In the first three months of 2024, Howmet generated net cash from operations of $177 million, compared to $23 million in the same period a year ago. Capital expenditures totaled $82 million, compared to $64 million a year ago. Free cash flow was $95 million.

Howmet, which currently carries a Zacks Rank #3 (Hold), paid dividends of $21 million in the first three months of 2024, compared to $17 million in the year-ago period. It has also repurchased shares worth $150 million in the past year, up from $25 million repurchases a year ago. You can see You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook for the second quarter

For the second quarter of 2024, Howmet expects revenue of $1.825-$1.845 billion. Adjusted EBITDA is expected to be between $435 million and $445 million. Adjusted earnings per share are estimated at 57-59 cents.

Outlook for 2024

Howmet predicts revenue will be between $7.225 billion and $7.375 billion, up from the previously forecast $7.0 billion to $7.2 billion. Adjusted EBITDA is expected to be between $1.720 billion and $1.780 billion, while adjusted EBITDA margin is expected to be 23.8-24.1%.

Adjusted earnings per share are expected to be between $2.31 and $2.39. Free cash flow is expected to be between $750 and $850 million in 2024.

Performance of other companies

IDEX company‘s (IEX – Free Report) for the second quarter of 2024 of $1.88 per share, surpassed the Zacks Consensus Estimate of $1.75. On an annual basis, operating profit decreased by approximately 10.1%.

In the quarter under review, IDEX’s net revenue of $800.5 million fell short of the consensus estimate of $805 million. Sales also fell 5.3% year over year.

AO Smith Corporation‘s (AOS – Free Report) for the second quarter of 2024 of $1.00 per share, surpassed the Zacks Consensus Estimate of 99 cents. Operating profit increased by 6% year-on-year.

Net sales of $978.8 million missed the consensus estimate of $995 million. However, sales increased 1% year over year, driven by strong demand for commercial water heaters in North America.

W. W. Grainger, Inc. (GWW – Free Report) reported second-quarter 2024 earnings per share of $9.62, surpassing the Zacks Consensus Estimate of $9.58. Operating profit improved by 0.1% year on year.

Grainger’s quarterly revenue rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.

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