Howmet Aerospace (HWM) Q3 2026 earnings review
Howmet raises its 2026 plan, but 2027 revenue growth slows
Howmet Aerospace, a maker of jet engine parts and truck wheels, grew faster than ever in the third quarter while pointing to a calmer 2027. Sales from businesses owned a year ago rose 25%, lifting profit per share excluding one-offs by 54% as power turbine sales jumped 45%. Chief executive John Plant raised the full-year outlook again and added $5 billion to the share buyback plan.
| Sales from businesses owned a year ago | +25% total revenue $2.70B (+29%) |
|---|---|
| Profit per share, excluding one-offs | $1.46 +54% from a year ago |
| 2026 revenue outlook | Raised $250M middle of the range: $10.3B (+25%) |
| First 2027 revenue outlook | ~$11.5B about 12% growth from 2026 plan |
⚖️ Verdict: 🟢 Bullish
The story got better because power turbine demand pushed engine division margins to 39% and North American truck wheel orders recovered. The board backed that cash generation with a $5 billion buyback expansion while paying down short-term debt. One caution: Plant's first 2027 revenue plan calls for 12% growth, half of this year's 25% pace, while factory spending stays high.
The question now is whether the 12% growth target for 2027 is another cautious starting point or a real cooldown as new turbine capacity comes online. Howmet started 2026 predicting 10% growth and now expects 25%, but next year also laps the April fastener acquisition and carries bigger factory bills. The formal 2027 profit and spending targets in February will settle it.
🐂 Bull Case
Jet and Power Turbine Parts Lift Margins
Engine Products, Howmet's largest division, makes parts for aircraft engines and industrial gas turbines that generate electricity. Sales in the unit rose 33% from a year ago to $1.45 billion. Chief executive John Plant highlighted a 45% jump in gas turbine revenue, which he said shows "both the extraordinary addition to output and, even more importantly, the increase in market share".
- Engine Products profit margin (adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, excluding one-offs): 39.1%, up 5.8 percentage points from a year ago
- Cost of making products across the company: 62.9% of sales, down 2.5 percentage points by our math
- Overhead and selling costs: 4.4% of sales, down 0.4 percentage points by our math
That turbine demand lifted company-wide profit margins by 3.1 percentage points to 32.5%. The engine division expanded its margin even though it hired 520 net new factory workers during the quarter to prepare for future orders, proving that higher factory volume is outweighing the cost of new staff.
What to watch: Engine Products profit margin in the fourth quarter. Holding above 39% while new factories ramp up would show that hiring costs are no longer holding back profitability.
Board Adds $5 Billion for Share Buybacks
Howmet borrowed money earlier this year to buy two fastener makers, Consolidated Aerospace Manufacturing (CAM) and Brunner, for $1.93 billion. Despite that debt, the Pittsburgh-based manufacturer generated $562 million in free cash flow this quarter and spent $500 million of it buying back 1.9 million of its own shares. It also raised its quarterly dividend by 17% to 14 cents per share.
The board approved another $5 billion for share buybacks, lifting the total available pool to $5.4 billion. At the same time, the aerospace supplier paid down $60 million of short-term commercial paper debt, so it is returning cash to owners and trimming its acquisition loans at once.
What to watch: commercial paper borrowings at year-end, now at $390 million. Paying off another chunk while keeping buybacks near $500 million would show free cash flow can cover both priorities.
Underlying Sales Grew in Every Division
For the past year, weak commercial truck demand in Forged Wheels, which makes aluminum truck wheels, and shrinking sales in Engineered Structures, which makes airframe parts, held back parts of the business. This quarter, sales from businesses Howmet owned a year ago grew 25% across the group, which Plant called "the strongest quarterly growth rate on record for Howmet".
Both lagging divisions grew on an underlying basis. Forged Wheels revenue jumped 32% to $327 million as North American truck orders recovered. Engineered Structures revenue fell 4% on paper because the firm sold its Savannah factory in March, but excluding that sale, its underlying sales grew 8% and its profit margin rose 2.9 percentage points "on the exit of lower-margin business including the divestiture".
What to watch: Engineered Structures underlying sales growth in the fourth quarter. A second quarter near 8% would confirm the airframe division has turned the corner after the factory sale.
🐻 Bear Case
First 2027 Plan Points to Slower Growth
Plant described demand across aircraft and power turbines as strong, "with customers looking to increase volumes beyond previous expectations, which supports the outlook beyond 2028". He also gave his first target for next year: "Looking forward to 2027, we envisage revenue of approximately $11.5 billion, representing approximately 12% growth from the increased 2026 guidance."
That 12% target cuts Howmet's growth rate in half from the 25% pace set for 2026. Part of the slowdown happens because the group will pass the April anniversary of buying CAM, removing the boost from adding a new business. Even so, 12% is half of this quarter's 25% underlying pace, and Plant said capital spending will stay high "beyond 2027" to build more factories.
What to watch: the formal 2027 profit and cash flow targets in February. Those numbers will show whether slower revenue growth and high factory spending hold back free cash flow next year.
Acquisitions and Metal Pass-Throughs Squeeze Margins
While the engine division lifted company profit, profit margins shrank in two of Howmet's four segments. Fastening Systems, which makes aerospace bolts and fittings, grew total sales 41% to $630 million, but only 10% came from businesses owned a year ago. Its segment profit margin fell 1.4 percentage points to 29.4%, "reflecting impact from the CAM acquisition".
In Forged Wheels, the segment profit margin dropped 3.3 percentage points from a year ago to 26.3%, "due to the impact of higher aluminum cost pass through". Passing higher metal costs on to truck customers adds revenue without adding profit, which pulls down the percentage margin even when unit volumes rise.
What to watch: Fastening Systems profit margin next quarter. A move back above 30% would show the company is cutting duplicate costs at the newly acquired CAM factories.
Risks this quarter didn't answer
Four standing concerns from prior quarters could not be checked from the earnings release alone.
- Cash flow from selling customer bills: Howmet sold $671 million of customer receivables in the first half to speed up cash collection; the third-quarter figure will appear in the quarterly filing.
- Spare parts share of sales: the release did not state how much revenue came from high-margin replacement parts versus new plane builds.
- Jet maker build rates: the release did not detail which Boeing and Airbus monthly production rates the 2027 plan assumes.
- Customer concentration: GE Aerospace and RTX made up 24% of first-half sales; the quarterly filing will update their share.
👓 Other Themes
Middle East Conflict and Truck Demand
Plant said the Middle East conflict will not hurt demand for replacement engine parts because repair shops already have a long queue of engines waiting for service. Meanwhile, the North American commercial truck market has started to recover from last year's slump, helping lift transportation sales by 28% from a year ago.
💲 Other KPIs
Customer advances — cash payments received for parts not yet delivered — jumped 71.4% from last quarter, adding $85 million by our math. That reverses two straight quarters of declines from $147 million at the end of 2025 to $119 million in the second quarter, matching the higher sales outlook.
Total debt minus cash held steady at $3.94 billion by our math, unchanged from $3.94 billion at the end of June after rising from $2.31 billion in December to fund the CAM purchase. The aerospace group paid off $60 million of commercial paper, leaving $390 million on that credit line.
Spending on property and factory gear rose to 5.4% of sales by our math, up from $104 million (4.1% of sales) last quarter and $94 million (4.1%) in the first quarter. Nearly two-thirds of the money ($95 million) went into the Engine Products division to build turbine capacity.
🔮 Guidance
Raised. The new fourth-quarter baseline of $2.75 billion sits well above the $2.56–2.68 billion range that last quarter's full-year plan left by our math. It points to 26.8% growth from a year ago and 1.7% from the third quarter. Howmet has beaten its quarterly sales baseline by an average of 4.5% over the past four quarters; if the pattern holds, fourth-quarter sales would reach $2.87 billion by our math.
Raised. Howmet lifted its full-year sales baseline by $250 million to $10.3 billion, or 24.8% growth from 2025 by our math. It is the fourth raise for 2026: the baseline moved from $9.0 billion last October to $9.1 billion, $9.65 billion, $10.05 billion, and now $10.3 billion (+$100M, +$550M, +$400M, +$250M).
New. Plant set an initial target of about $11.5 billion for 2027, which means 11.7% growth from the raised 2026 baseline by our math. The slower pace reflects lapping the April 2026 CAM acquisition as well as a larger starting revenue base.
Raised. The $900 million baseline tops the $818–868 million range implied by the prior full-year outlook and calls for 37.8% growth from a year ago by our math. The company also expects an adjusted EBITDA margin of 32.7–32.8% in the fourth quarter, up from 32.5% in the third quarter.
Raised. The full-year baseline moved up by $100 million to $3.33 billion, with the full-year margin baseline up 0.2 percentage points to 32.3%. That is the third raise this year, with each step smaller than the last as the year winds down: +$300M, +$170M, +$100M.
New. The $1.50 baseline represents 42.9% growth from the $1.05 earned in the fourth quarter of 2025 by our math, and 4 cents more than the third quarter.
Raised. Management lifted the baseline by 23 cents to $5.50 per share, or 45.9% growth for the year by our math. It is the third raise of the year, following increases of 49 cents in May and 33 cents in August.
Raised. The baseline rose by $100 million to $2.0 billion after two earlier $150 million raises. With $1.4 billion generated in the first nine months, the plan leaves $600 million for the fourth quarter by our math, up 13.2% from $530 million a year ago.
❓ Key Questions
How much underlying growth does the 2027 plan include?
The $11.5 billion revenue target for 2027 calls for 12% total growth. Since Howmet bought CAM in April 2026, only the first quarter of 2027 gets an acquisition boost, so investors need the underlying growth rate.
How high will capital spending go in 2027?
Plant said capital spending will stay elevated beyond 2027 for aircraft and gas turbine capacity. After spending $147 million this quarter, a dollar range for 2027 would clarify how much cash remains for buybacks.
Did selling customer bills boost third-quarter cash flow?
In the first half of 2026, Howmet sold $671 million of customer receivables to collect cash faster. The release does not give the third-quarter figure, which determines how much of the $562 million free cash flow came from operations.
Who is serving as chief financial officer?
For a third straight quarter, the earnings release names only chief executive John Plant and includes no remarks from a finance chief. Clarifying the finance leadership role matters as the company integrates $1.9 billion of acquisitions.