Howmet Aerospace (HWM) — Q3 2026 Earnings Preview
Key Preview Takeaways
| Theme | Details |
|---|---|
| Consensus Expectations | Q3 2026 consensus: Revenue $2,588M, EBITDA $837M, EPS $1.37. |
| Guidance vs. Consensus | Company guides Q3 2026 revenue $2,575M (+/-$10M), EBITDA $830M (+/-$5M), EPS $1.35 (+/-$0.01). Consensus is slightly above the midpoint of guidance. |
| YoY Comparable | Q3 2025 actuals: Revenue $2,045M, EBITDA $589M, EPS $0.91. Q3 2026 guide implies +26% revenue, +41% EBITDA, +48% EPS YoY. Very strong comp, but coming off a period of accelerating growth. |
| Recent Results | Q2 2026: Revenue $2,431M (+24% YoY), EBITDA $773M (+39% YoY), EPS $1.24 (+46% YoY). Organic growth was 21%. Q1 2026: Revenue $2,242M (+19% YoY), EBITDA $685M (+32% YoY), EPS $1.11 (+42% YoY). |
| Key Factors to Watch |
|
| Management Tone | Management remains bullish on multi-year growth, with strong demand in commercial aero, defense, and IGT. CapEx is trending above $500M for FY26, with further increases likely in 2027. Market share gains and technology leadership are emphasized. |
| Risks/Watch Items |
|
Q3 2026 Guidance vs. Consensus
Q3 2026 Guidance and Consensus Table
| Metric | Company Guidance (Q3 2026) | Consensus Estimate (Q3 2026) | Notes |
|---|---|---|---|
| Revenue ($M) | $2,575 ± $10 | $2,588 | Consensus slightly above midpoint |
| EBITDA ($M) | $830 ± $5 | $837 | Consensus slightly above midpoint |
| EPS ($) | $1.35 ± $0.01 | $1.37 | Consensus slightly above midpoint |
| Free Cash Flow ($M) | Not provided for Q3; FY guide is $1.9B |
Full-Year 2026 Guidance (as of Q2 2026 call):
| Metric | Full-Year 2026 Guidance | Prior Guidance (Q1 2026) | Consensus (FY 2026) | Notes |
|---|---|---|---|---|
| Revenue ($M) | $10,050 ± $50 | $9,650 ± $75 | $10,109 | Guide raised post-Q2 |
| EBITDA ($M) | $3,230 ± $20 | $3,060 ± $35 | $3,259 | Guide raised post-Q2 |
| EPS ($) | $5.27 ± $0.04 | $4.94 ± $0.06 | $5.51 | Guide raised post-Q2 |
| Free Cash Flow ($M) | $1,900 ± $50 | $1,750 ± $50 | $1,901 | Guide raised post-Q2 |
Recent Quarterly Actuals (Restated Where Available)
Quarterly Results — Most Recent First
| Quarter | Revenue ($M) | EBITDA ($M) | EBITDA Margin (%) | Net Income ($M) | EPS ($) | FCF ($M) | YoY Revenue Growth | YoY EBITDA Growth | YoY EPS Growth |
|---|---|---|---|---|---|---|---|---|---|
| Q2 2026 | 2,431 | 773 | 32.1 | 502 | 1.24 | 479 | +24% | +39% | +46% |
| Q1 2026 | 2,242 | 685 | 32.0 | 447 | 1.11 | 359 | +19% | +32% | +42% |
| Q4 2025 | 2,125 | 623 | 29.3 | 391 | 0.96 | 453 | +15% | +29% | +42% |
| Q3 2025 | 2,045 | 589 | 29.4 | 368 | 0.91 | 423 | +14% | +26% | +34% |
Note: All figures restated per latest company disclosures and consensus.
Year-over-Year Comparables
- Q3 2026 guidance implies:
- Revenue +26% YoY vs. Q3 2025 actual ($2,575M vs. $2,045M)
- EBITDA +41% YoY vs. Q3 2025 actual ($830M vs. $589M)
- EPS +48% YoY vs. Q3 2025 actual ($1.35 vs. $0.91)
- Q2 2026 actuals: Revenue +24% YoY, EBITDA +39% YoY, EPS +46% YoY
- Q1 2026 actuals: Revenue +19% YoY, EBITDA +32% YoY, EPS +42% YoY
Conclusion: The company is coming off a period of accelerating growth, with Q3 2026 facing a tough but achievable comparable given continued strong demand and capacity expansion.
Segment and End Market Trends
| Segment/Market | Q2 2026 YoY Growth | Q1 2026 YoY Growth | Commentary |
|---|---|---|---|
| Commercial Aerospace | +28% (organic +26%) | +20% | Driven by both OE and spares; strong backlog |
| Defense Aerospace | +11% (organic +7%) | +10% | Solid, with legacy fighter and missile demand |
| Gas Turbines (IGT) | +38% | +39% | Extraordinary demand, driven by data centers |
| Commercial Transportation | +12% | +13% | Wheels volume down YoY, but sequential recovery |
| Spares Revenue | +37% | +36% | Now ~22% of total revenue, up from 11% in 2019 |
What to Watch This Quarter
1. Execution on Capacity Expansion and Yield
- Management has highlighted that much of the recent growth in IGT and Engine Products has come from yield improvements and incremental capacity coming online.
- New plants in Japan, Europe, and the US are being built out; watch for commentary on timing, utilization, and any bottlenecks.
2. Spares Revenue Mix and Aftermarket Demand
- Spares now represent ~22% of total revenue, up from 21% in FY25 and 11% in 2019.
- Continued strength in spares, especially for legacy engines (CFM56, F-35), is a key driver.
- Management expects spares growth to continue, with potential for further upside if fleet utilization remains high.
3. Ramp of New Product Introductions
- LEAP-1B and GTF Advantage transitions are underway, with full ramp expected into 2027.
- Watch for updates on production rates, content/value uplift, and timing of cutovers.
4. CAM Acquisition Integration and Fasteners Margin Trajectory
- CAM acquisition closed in April 2026; initial impact is dilutive to Fasteners margins (~20% margin vs. legacy 30%+).
- Synergies expected to materialize in 2027; look for early signs of operational improvement and revenue synergy.
5. CapEx Cadence and FCF Conversion
- CapEx is trending above $500M for FY26, with further increases likely in 2027.
- Management reiterates 90%+ FCF conversion target; monitor for any slippage due to higher investment or working capital needs.
6. Macro Risks and Supply Chain
- Ongoing Middle East conflict, inflation, and interest rates are cited as risks.
- Supply chain and labor constraints remain a focus as volumes ramp; management notes improved retention but ongoing hiring needs.
Management Commentary and Tone
- Bullish on Multi-Year Growth: Management continues to emphasize robust demand in commercial aerospace, defense, and IGT, with multi-year contracts and market share gains.
- Technology Leadership: Howmet claims >50% global share in turbine blades for IGT, with exclusive or long-term contracts with major OEMs.
- Balanced Capital Deployment: Company is executing on organic growth, M&A (CAM, Brunner), share buybacks, and dividend increases, while maintaining leverage near 1x.
- Cautious on Macro: While confident in the outlook, management acknowledges macro/geopolitical risks and is monitoring for any demand shocks.
Summary Table — Forward-Looking Metrics
| Metric | Q3 2026 Guidance | Q3 2025 Actual | YoY Change | FY 2026 Guidance | FY 2025 Actual | YoY Change |
|---|---|---|---|---|---|---|
| Revenue ($M) | 2,575 ± 10 | 2,045 | +26% | 10,050 ± 50 | 8,207 | +22% |
| EBITDA ($M) | 830 ± 5 | 589 | +41% | 3,230 ± 20 | 2,385 | +35% |
| EPS ($) | 1.35 ± 0.01 | 0.91 | +48% | 5.27 ± 0.04 | 3.76 | +40% |
| FCF ($M) | 1,900 ± 50 | 1,430 | +33% | |||
| CapEx ($M) | >500 | 453 | +10%+ |
Conclusions
- Howmet enters Q3 2026 earnings with strong momentum, coming off two quarters of 20%+ organic growth and record margins.
- Guidance for Q3 and FY26 has been raised, but consensus is already at or slightly above the top end of company guidance.
- Key factors to watch are execution on capacity/yield, spares mix, new product ramps, and integration of recent acquisitions.
- The company faces a tough YoY comp but is well positioned to deliver another quarter of double-digit growth, provided macro and supply chain risks remain contained.
- Any commentary on further upward revisions to IGT demand, spares mix, or margin expansion will be closely watched by investors.
