Howmet Aerospace (HWM 2.57%), a leading supplier in the aerospace and transportation manufacturing sector, reported its second-quarter 2025 earnings on July 31, 2025. The highlight of the release was a clear beat on both non-GAAP earnings per share and GAAP revenue compared to consensus estimates, with EPS (excluding special items) at $0.91 versus the expected $0.87, and GAAP revenue reaching $2.05 billion compared to an estimate of $2.007 billion. The company posted substantial year-over-year improvements in cash flow and operating metrics, and management raised its full-year FY2025 guidance for all major metrics. Overall, the quarter marked record results driven by aerospace growth, operational efficiency, and improved margins, while commercial transportation continued to face softness.
| Metric | Q2 2025 | Q2 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (Non-GAAP) | $0.91 | $0.87 | $0.67 | 35.8 % |
| Revenue (GAAP) | $2.05 billion | N/A | $1.88 billion | 9.0 % |
| Adjusted EBITDA (Non-GAAP) | $589 million | $483 million | 21.9 % | |
| Free Cash Flow (Non-GAAP) | $344 million | N/A | N/A | |
| Adjusted Operating Income Margin (Non-GAAP) | 25.3 % | 22.0 % | 3.3 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Model, Strategic Focus, and Key Success Factors
Howmet Aerospace manufactures highly engineered parts for aero engines, airframes, and commercial vehicles. Its main products include advanced turbine airfoils (used in jet engines), engineered fasteners for structural joining, and lightweight forged aluminum wheels. It works closely with leading airframe and engine manufacturers.
The company's recent strategic focus has been on delivering advanced, fuel-efficient components to meet rising demand for air travel and defense modernization. Success is driven by investments in technology, manufacturing process control, and maintaining vital relationships with original equipment manufacturers (OEMs) such as GE Aerospace and RTX. Its global reach and diversification across segments and geographies help it absorb market fluctuations. Innovation, manufacturing reliability, and customer concentration remain key factors shaping outcomes.
Second-Quarter Developments: Growth, Segment Performance, and Key Moves
The second quarter saw Howmet Aerospace set new records in both adjusted (non-GAAP) earnings and free cash flow. Revenue grew 9% year over year, handily surpassing estimates on a non-GAAP basis. The primary growth engine remained the aerospace segments. Commercial aerospace revenue rose 8% year over year, fueled by strong demand and OEM order backlogs for new aircraft. Defense aerospace revenue also jumped 21%, a surge closely tied to renewed F-35 fighter jet production and the fading impact of prior inventory destocking.
Industrial markets, including demand for industrial gas turbines (IGT), added 17% growth, with management noting that rising data center construction indirectly increased sales of gas turbine components. Meanwhile, commercial transportation revenue contracted 4%. Lower truck builds and a cautious outlook for the Forged Wheels segment—where volumes fell 11%—pulled this area downward, illustrating ongoing softness in that end market.
On a segment basis, Engine Products (jet engine components and turbines) delivered the largest revenue share, up 13%, with adjusted EBITDA margin expanding to 33.0%. Fastening Systems (aerospace and industrial fasteners) grew revenue by 9% and adjusted EBITDA by 25%, with margin expansion driven by efficiency gains and favorable sales mix. Engineered Structures (airframe and engine structural castings) segment adjusted EBITDA margin increased by approximately 6.9 percentage points year over year, reflecting successful manufacturing improvements and the benefit from last year’s strategic exit of low-margin business lines. Forged Wheels revenue declined 1% year over year.
The company continued its focus on operational productivity. Management described efforts such as tighter process control and waste reduction in engineered structures—leading to higher yields and lower scrap rates. Capital investment also accelerated, aimed at expanding capacity in aerospace and industrial turbine products. In total, capital expenditures were up about 60% year over year in the first half of 2025, reflecting confidence in multi-year demand.
The company returned $175 million to shareholders through share repurchases and completed another $100 million in July 2025. In addition, the company announced a 20% increase in the quarterly dividend, bringing it to $0.12 per share for Q3 2025. Net long-term debt fell by $76 million, producing further interest savings. Liquidity remains robust with $545 million in cash at quarter end and substantial share buyback authorization remaining.
Management cited a modest but manageable risk from new tariffs affecting imported raw materials and components. The net impact for the full year 2025, after applying trade mitigation measures and contractual pass-throughs, is projected at under $15 million, reducing the risk of immediate disruptions. However, executive commentary noted the ongoing need for vigilance regarding geopolitical and supply-chain risks.
Looking Forward: Guidance, Market Signals, and Investor Focus
Howmet Aerospace leaders raised their financial guidance for FY2025 across all major metrics. Midpoint revenue is now projected at $8.13 billion for FY2025, up $100 million from prior guidance. Adjusted EBITDA is forecast at $2.32 billion for FY2025, with adjusted EBITDA margin up 50 basis points from previous expectations for FY2025. The company also raised its FY2025 adjusted (non-GAAP) EPS outlook to $3.60, an increase of $0.20, and free cash flow (non-GAAP) to $1.225 billion for FY2025. For Q3 2025, it expects revenue of $2.03 billion, and adjusted EPS (non-GAAP) of $0.90 for Q3 2025.
Management signals ongoing confidence in aerospace and defense market strength, citing record aircraft order backlogs and robust trends in data center builds—both positive for Howmet’s main product lines. Key areas for investors to watch in coming quarters include: execution and onboarding of new hires, the pace of aerospace production ramps (particularly commercial aircraft), impact of tariffs, and continued commercial transportation weakness. Notably, customer concentration risk—arising from reliance on large customers such as GE Aerospace and RTX—remains a pivotal factor to monitor as overall demand patterns shift.
The quarterly dividend was raised by 20% to $0.12 per share for Q3 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
