Record Margins and Cash Flow Drive Howmet Aerospace’s Raised Outlook for 2025 and 2026

Howmet Aerospace’s third quarter 2025 performance wasn’t just solid—it broke records across the board, fueling a boost in full-year guidance and setting the stage for continued growth through 2026. For investors and industry watchers, the latest numbers spotlight Howmet’s position at the crossroads of accelerating aerospace demand and prudent financial management.

Third Quarter 2025 Highlights: Revenue Acceleration and Profit Expansion

The company’s third quarter revenue jumped to $2.09 billion, a 14% increase year over year. Operating income margin rose to 25.9%, up 300 basis points compared to the prior year, while net income improved to $385 million, or $0.95 per diluted share. On an adjusted basis, EBITDA excluding special items was $614 million, climbing 26% year over year, with adjusted EBITDA margin reaching 29.4%. These gains reflect robust performance in commercial and defense aerospace as well as industrial segments.

Segment Performance: Margin Gains Across Core Businesses

Performance across all core business segments demonstrated significant year-over-year margin improvements and EBITDA growth. Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels all delivered higher margins, propelled by a mix of demand and cost management.

The company cited continued strength in commercial and defense aerospace for Engine Products and Engineered Structures, while Fastening Systems benefitted from higher aerospace demand and productivity improvements. Forged Wheels, despite flat revenues, saw notable margin growth from cost actions amid weak commercial transportation volumes.

Balance Sheet Improvements and Capital Returns Highlight Financial Discipline

Howmet continued its shareholder-friendly capital allocation. The company repurchased $200 million in common stock in the third quarter (average price: $182.20 per share) and an additional $100 million in October, totaling $600 million for the year to date. The board approved a 20% increase in the quarterly dividend to $0.12 per share, and all USD-denominated term loan debt was paid off, reducing annual interest expense by $4 million.

S&P Global also upgraded Howmet’s credit rating to BBB+, now three notches into investment grade across major agencies—bolstering investor confidence and potentially lowering future borrowing costs.

Raised Guidance for 2025 and Bullish 2026 Outlook Backed by Aerospace Demand

Buoyed by strong operating trends and visibility from commercial and defense backlogs, management lifted full-year 2025 guidance across all key metrics. 2025 baseline revenue guidance now sits at $8.19 billion, with adjusted EBITDA projected at $2.38 billion and free cash flow in the range of $1.28 to $1.33 billion. Adjusted earnings per share are guided at $3.67. For 2026, Howmet expects revenue to reach $9 billion, about 10% growth year over year.

The bullish outlook reflects an ongoing surge in aerospace travel, sustained demand for new and spare engines, and robust activity in defense and data-center-related industrial markets. Management’s commentary highlighted healthy order books through the end of the decade and resilience even in the face of softer commercial transportation markets.

What’s the Key Takeaway?

Howmet Aerospace enters the end of 2025 with strong financial momentum and improved operating leverage. The company’s track record of margin expansion, cash generation, and shareholder returns stands out among industrial peers. Investors tracking Howmet may want to pay attention to its ongoing capital returns program, improving credit profile, and exposure to durable growth trends in aerospace and defense. As always, risks remain from cyclicality, transportation markets, and global economic shifts, but Howmet’s management appears confident and committed to maximizing shareholder value.

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