Howmet Aerospace Inc. (HWM) | The Buildout — AI Infrastructure

——Mkt cap — · 52-wk —–— · YTD — · delayed
Updated Sep 22, 2026Q2 FY2026 reviewed
Howmet Aerospace makes hot-section components for jet engines and the natural-gas turbines that generate data-center power.
Revenue +24% YoY
Q2 2026 revenue $2,547M; second high-end beat in a row.
Gas turbines +38%
Fastest-growing end market; tied to data-center power demand.
IGT blade share >50%
Management says Howmet holds over half the global IGT blade market.
CAM margin drag
CAM ~20% margin vs ~30% legacy; 2026 EPS roughly breakeven.
The Buildout Takeaway
Howmet's AI exposure runs through the power grid, not the data hall: it supplies the hot-section parts inside natural-gas turbines that generate electricity for data centers. The open question is how much of that demand becomes revenue, because growth is gated by Howmet's own multi-year capacity adds rather than by customer orders.
Analyst coverage
25 analysts·21 Buy3 Hold1 Sell
Coverage is thin — only 5 price estimates, so no target is shown
Management guidance
FY2026: revenue $10.05B ±$50M · EBITDA $3.23B ±$20M · EPS $5.27 ±$0.04 · free cash flow $1.9B ±$50M
Important: The Buildout is a data analytics platform. Content is generated by algorithms and AI agents using public filings, earnings transcripts, and market data. This is not personalized investment advice.
Our View

The Verdict

Howmet makes the metal parts that have to survive the hottest, most stressed sections of a jet engine or an industrial gas turbine: blades, vanes, investment castings and coatings, plus aerospace fasteners, titanium airframe structures and forged aluminum truck wheels. In the AI buildout its role sits upstream of the data hall — the natural-gas turbines that generate electricity for data centers need the same hot-section components Howmet produces, and management describes gas-turbine demand as extraordinary. Howmet is not an AI compute supplier, and its gas-turbine exposure is embedded inside one segment rather than disclosed as a standalone line.

Market Cap—
Revenue (TTM)$9.1B
Revenue Growth+18.1%
EBITDA Margin (TTM)31.7%
Net Debt$3.9B
Earnings Beats7 of 7
P/E (TTM)—
EV/EBITDA (TTM)—

What We Like

  • Management states Howmet has a market share in excess of 50% globally for turbine blades in the IGT market, and frames the market's growth as dependent on Howmet's willingness to invest.
  • Gas turbines grew +39% in Q1 2026 and +38% in Q2 2026, roughly double the company's organic growth rate of +19% and +21%.
  • Spares rose from 11% of revenue in 2019 to 21% in FY2025 and about 22% of H1 2026; total spares grew 37% in Q2 2026.
  • All seven major IGT customer agreements are complete, covering demand and capital-investment provisions, with some customers already wanting to add to their demand outlooks.
  • FY2026 guidance was raised twice; in Q2 2026 revenue, EBITDA, EBITDA margin and EPS all exceeded the high end of guidance.

What We’re Watching

  • First sighting of 2027 revenue comes at the November 2026 Q3 call and is expected to be an increase over 2026; management deferred the 2027 growth 'angle' to that call.
  • Growth is capacity-gated: fresh-start IGT capacity lands 'earliest August of '28,' and exotic coating equipment carries a three-year lead time.
  • The LEAP-1B new-technology blade cutover slipped to 'more likely.. first quarter of 2027,' with the date explicitly not fixed.
  • Defense spares are 'anticipated but not assured because we don't have specific orders in hand,' and missile rate increases have 'nothing formally agreed,' competing for the same Virginia space as IGT work.
Bottom Line

The thesis looks like it is strengthening on the numbers the source material shows: two consecutive beat-and-raise quarters, accelerating organic growth, record EBITDA margins, and all seven IGT customer agreements complete with capacity being added on several continents. The counterweight is that the fastest-growing line is a bet on natural-gas generation for data centers running 4 to 5 years, and the company deliberately will not build ahead of signed agreements. The open question is whether the incremental IGT demand customers say they want lands as orders in time to lift 2027 revenue beyond what is already planned.

Next upThe next catalyst is the November 2026 Q3 earnings call, where management has promised the first sighting of 2027 revenue, expected to be an increase over 2026. That tests whether the multi-year capex ramp is turning contracted demand into visible revenue.
Last Quarter — Q2 FY2026

Earnings Beat

Q2 2026 revenue was $2,547M, up 24% year over year and 21% organic, with gross margin of 37.3% against 30.2% a year earlier and adjusted EBITDA margin of 32.1%, up 340 basis points. GAAP and adjusted EPS were both $1.33, and free cash flow was $479M, up 39%. Revenue, EBITDA, EBITDA margin and EPS all exceeded the high end of guidance — the second consecutive quarter to do so.

MetricQ2 FY2026Q1 FY2026Q2 FY2025YoY
Revenue$2.5B$2.3B$2.1B+24.1%
Gross margin37.3%36.9%30.2%+710bps
EBITDA$795M$827M$590M+34.7%
EPS$1.33$1.44$1.00+32.8%
Howmet has a market share in excess of 50% globally for turbine blades in the IGT market. And therefore, the growth of that market is dependent upon our willingness to invest, which we're doing.— John Plant, Executive Chairman/CEO, 2026-08-06

Management tone: Tone shifted across the two 2026 calls, from cautious on commercial truck and optimistic on gas turbines in Q1 to what management itself described in Q2 as acceleration confirmed across all end markets — calling Q2 'the strongest quarterly growth rate for the company since the first quarter of 2023' and 'the strongest growth in EBITDA since the third quarter of 2021.' Management was direct on the demand picture and candid about near-term negatives, stating plainly that no defense-spares uplift is visible yet and that CAM would be 'pretty breakeven-ish' on EPS in 2026. On the industry's ability to support build rates well above pre-pandemic levels, management reframed around true demand and the weakest link rather than giving a capacity figure.

Management Guidance

On the Q2 2026 call management initiated Q3 2026 guidance of revenue $2.575B ±$10M, EBITDA $830M ±$5M and EPS $1.35 ±$0.01, flagging typical third-quarter seasonality including European vacations. It raised FY2026 guidance across the board to revenue $10.05B ±$50M, EBITDA $3.23B ±$20M, EPS $5.27 ±$0.04 and free cash flow $1.9B ±$50M. Capex in 2026 is 'likely to exceed $500 million' with a further increase seen as needed in 2027, net leverage is targeted back to about 1x net debt/EBITDA by year-end 2026, and 90% free-cash-flow conversion of net income is maintained. CAM is guided to roughly breakeven on EPS in 2026 with positive EPS in 2027 and beyond.

Business Trajectory

Trajectory

Revenue has risen for four consecutive quarters in the audited series, from $2,053M in Q2 FY2025 to $2,547M in Q2 FY2026, and organic growth stepped up from +19% in Q1 2026 to +21% in Q2. Gross margin was 37.3% in Q2 FY2026 against 30.2% a year earlier. The drivers the company cites are mix — spares moved from 11% of revenue in 2019 to 21% in FY2025 and about 22% of H1 2026 — plus volume and pricing. Two drags are mechanical rather than demand-driven: aluminum pass-through diluted Forged Wheels margin by roughly 360 basis points with no material effect on EBITDA dollars, and CAM's roughly 20% margin dilutes the legacy fasteners margin of about 30%.

Revenue & Margin Trajectory
RevenueGross margin$0$2.0B$4.0B$5.2B$3.0B$3.2B$3.3B$3.2B$3.3B$3.4B$3.6B$3.5B$3.5B$3.5B$1.8B$1.8B$1.1B$1.6B$1.3B$1.1B$1.2B$1.2B$1.2B$1.3B$1.3B$1.3B$1.4B$1.4B$1.5B$1.6B$1.6B$1.7B$1.7B$1.8B$1.9B$1.8B$1.9B$1.9B$2.1B$2.1B$2.2B$2.3B$2.5B13%37%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
RevenueGross margin$0$2.0B$4.0B$5.2B$3.0B$3.2B$3.3B$3.2B$3.3B$3.4B$3.6B$3.5B$3.5B$3.5B$1.8B$1.8B$1.1B$1.6B$1.3B$1.1B$1.2B$1.2B$1.2B$1.3B$1.3B$1.3B$1.4B$1.4B$1.5B$1.6B$1.6B$1.7B$1.7B$1.8B$1.9B$1.8B$1.9B$1.9B$2.1B$2.1B$2.2B$2.3B$2.5B13%37%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
Gross margin as reported.
Share Price — 12 Months
$100$200$300$052-wk high $286Sep '25DecMar '26JunSep '26
52-week range $191–$286.
Share Price — 12 Months
$100$200$300$052-wk high $286Sep '25DecMar '26JunSep '26
52-week range $191–$286.
The Numbers

The Model

The model projects FY+1 revenue of $10,100M and EBITDA of $3,262M, a 32.3% margin, rising to FY+2 revenue of $11,500M and EBITDA of $3,818M, a 33.2% margin. The near-term figure rests on capacity already committed — 2026 capex likely to exceed $500M, the Japan IGT plant's first production guided to Q4 2026, and all seven major IGT customer agreements complete. The FY+2 step-up depends on the capacity waves scheduled for 2027 through 2030, a continuing shift toward higher-margin spares, and CAM synergies that management says arrive mostly in 2027.

Revenue & EBITDA Projections
REVENUE$8.3B$10.1B$11.5BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$2.4B$3.3B$3.8B33.2%FY25FY+1 (E)FY+2 (E)
REVENUE$8.3B$10.1B$11.5BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$2.4B$3.3B$3.8B33.2%FY25FY+1 (E)FY+2 (E)
Solid bars are reported actuals; outlined bars are model projections — not company guidance.
MetricFY2025Next FY (E)Following FY (E)
Revenue$8.3B$10.1B$11.5B
YoY Growth—+22.4%+13.9%
EBITDA$2.4B$3.3B$3.8B
EBITDA Margin29.2%32.3%33.2%

Projections are the median of 5 independent model runs. The model’s revenue sits 4.2% above analyst consensus.

On the Q2 2026 call management initiated Q3 2026 guidance of revenue $2.575B ±$10M, EBITDA $830M ±$5M and EPS $1.35 ±$0.01, flagging typical third-quarter seasonality including European vacations. It raised FY2026 guidance across the board to revenue $10.05B ±$50M, EBITDA $3.23B ±$20M, EPS $5.27 ±$0.04 and free cash flow $1.9B ±$50M. Capex in 2026 is 'likely to exceed $500 million' with a further increase seen as needed in 2027, net leverage is targeted back to about 1x net debt/EBITDA by year-end 2026, and 90% free-cash-flow conversion of net income is maintained. CAM is guided to roughly breakeven on EPS in 2026 with positive EPS in 2027 and beyond.

What Could Go Right — and Wrong

What good looks like
  • IGT customers convert the demand additions they have discussed into firm orders; management says those adds are not yet built into its plans.
  • Capacity lands on schedule — Japan first production in Q4 2026, the Virginia space deployed, the Europe expansion, and the newly signed commercial-aerospace plant.
  • The spares mix keeps climbing from about 22% of revenue, with LEAP spares described as growing continuously every year for the next eight to ten years.
  • Aerospace build rates hold at the assumed levels, including 737 at 42 a month, A320 at 62 a month, 787 toward 9-10 by late 2027 and A350 toward 8-9.
  • Defense spares and missile rate increases move from anticipated and signaled to formal orders, adding a second growth leg.
What could go wrong
  • A gas-turbine order air-pocket, or a shift away from natural-gas generation for data-center power, undercuts the fastest-growing line and the reason for the capex ramp.
  • Capacity execution slips — machine tools, the three-year lead on exotic coating equipment, or labor — so demand does not become revenue on schedule.
  • Customer concentration bites: RTX and GE Aerospace each represented approximately 11% of 2025 third-party sales, with GE at about 14% and RTX about 10% of Q1 2026 third-party sales.
  • CAM integration or the 2027 synergy ramp disappoints, leaving Fastening margins below the roughly 30% legacy level.
  • Aerospace build-rate assumptions slip, hitting the largest end market, or a large customer re-sources and reduces Howmet content per engine.
What’s Next

Looking Ahead

Over the next 12 months the questions are conversion and timing rather than demand. Management has promised the first 2027 revenue figure at the November 2026 Q3 call, guides 2026 capex above $500M with a further increase in 2027, and targets net leverage back to about 1x net debt/EBITDA by year-end 2026. CAM synergies are expected mostly in 2027, the LEAP-1B blade cutover is now described as more likely the first quarter of 2027 with the date not fixed, and GTF Advantage is guided as ready sometime in 2027.

Catalysts
  • 2026-09-09Jefferies Industrials conference — First public forum after the Q2 print; CEO presenting in New York.
  • November 2026Q3 2026 earnings call — First sighting of 2027 revenue, expected to be up on 2026.
  • Q4 2026Japan IGT plant start — First production guided; second casting machine due in H2 2026.
  • Q1 2027LEAP-1B blade cutover — New-technology blade switch, date not fixed; retrofit demand follows.
  • 2027CAM synergies and GTFA — Majority of CAM synergies due; GTF Advantage guided ready.
Numbers

Financials

Annual Summary

MetricFY2024FY2025TTMYoY
Revenue$7.4B$8.3B$9.1B+11.1%
Gross Margin27.5%30.7%34.4%+320bps
EBITDA$1.9B$2.4B$2.9B+24.2%
EBITDA Margin26.2%29.2%31.7%+309bps
Net Income$1.2B$1.5B$1.9B+30.6%
Free Cash Flow$977M$1.2B$1.6B—
Net Cash————

Key Ratios (Trailing)

Valuation
  • P/E TTM—
  • EV/EBITDA TTM—
  • EV/Revenue TTM—
  • Price/FCF TTM—
Profitability
  • Gross Margin (TTM)34.4%
  • EBITDA Margin (TTM)31.7%
  • Net Margin (TTM)20.5%
  • ROIC21.1%
  • FCF Conversion54.4%
  • SBC / Revenue1.0%
Reference

The Company

Howmet describes itself as a global provider of advanced engineered solutions for the aerospace and transportation industries. The primary businesses are jet engine components, aerospace fastening systems and airframe structural components for aerospace and defense, plus forged aluminum wheels for commercial transportation. In plain terms it makes the hard, high-temperature, high-tolerance metal parts that go inside jet engines and industrial gas turbines, the fasteners that hold aircraft together, titanium airframe structures, and forged aluminum truck wheels. It sits one or two tiers below the engine primes and airframers rather than owning a platform.

Howmet operates through four reporting segments and a broad manufacturing footprint. The FY2025 10-K lists roughly 57 plant locations across North America, Europe and the UK, and Asia-Pacific. Its titanium work is vertically integrated, from ingots and mill products through forgings, extrusions and machining, and its coatings operation at Whitehall, Michigan is set up to deposit multiple chemistries and all coatings simultaneously. The company has also been reshaping the portfolio in 2026: it acquired Brunner for about $120M, acquired CAM for about $1.8B, and sold the Savannah, Georgia disk-forging operation for $230M.

Business Segments

Engine Products
Largest segment; $1.37B Q2 2026 revenue, +32%
Airfoils, rolled rings, castings, forgings and coatings for aircraft engines and industrial gas turbines.
Growth driver: Gas turbines and engine spares, both capacity-constrained
Fastening Systems
$589M Q2 2026 revenue, +37% including CAM and Brunner
Aerospace, industrial and commercial-transport fasteners; CAM adds fluid fittings, couplings and latches.
Growth driver: CAM and Brunner integration; aerospace build-rate recovery
Engineered Structures
$269M Q2 2026 revenue, −13% on the Savannah divestiture
Titanium ingots and mill products, plus vertically integrated titanium forgings, extrusions and machining.
Growth driver: Titanium demand and post-Savannah margin mix

Competitive Landscape

The FY2025 10-K names a broad competitive field, most notably Berkshire Hathaway's Precision Castparts, which is named against nearly the whole Howmet portfolio — titanium and titanium-based alloys, precision forgings, seamless rolled rings, investment castings including airfoils, and aerospace fasteners. The company also notes that for certain raw materials and services it depends on limited-source or sole-source suppliers, such as for titanium sponge and specialized metal alloys, without naming them. In its core niche, management states Howmet has a market share in excess of 50% globally for turbine blades in the IGT market.

  • Berkshire Hathaway / Precision Castparts
    Named in the 10-K against nearly the entire Howmet portfolio: titanium and titanium-based alloys, precision forgings, seamless rolled rings, investment castings including airfoils, and aerospace fasteners.
  • VSMPO (Russia)
    Named as a competitor in titanium and titanium-based alloys and precision forgings.
  • ATI Inc.
    Named as a competitor in titanium and titanium-based alloys and precision forgings through its High-Performance Materials & Components segment.
  • Lisi Aerospace (France)
    Named as a competitor in aerospace fasteners.
  • Doncasters Group and Consolidated Precision Products
    Named as competitors in investment castings.
Competitor names and the overlapping product lines come from the competitive-set disclosure in the FY2025 10-K.

Supply Chain

Howmet sits one or two tiers below the engine primes, turbine OEMs and airframers. It buys superalloys, titanium sponge and specialized metal alloys, then sells cast, forged and coated parts into engines and power turbines.

Sole Source
Unnamed limited-source or sole-source suppliers
Titanium sponge and specialized metal alloys; the 10-K discloses the dependence but does not name the supplier.
Supplier
Alcoa
Aluminum; Howmet holds a guarantee on Alcoa's energy supply agreement with an estimated present value of about $1,141M, expiring 2047.
Supplier
ATI Inc.
Superalloy ingot, billet and powder — inferred, not company-confirmed; ATI is also a named competitor.
→
Hot-section casting and coating capability
HWM
Vertically integrated superalloy and titanium casting, forging and coating.
→
RTX Corporation
~11% of 2025 third-party sales
Documented 10-K customer concentration.
GE Aerospace
~11% of 2025 third-party sales
Documented 10-K customer concentration.
Seven major IGT customers
7 of 7 under agreement
Unnamed; agreements cover demand and capital-investment provisions.

Related companies

Likely customers
SWK · Stanley Black & DeckerBKR · Baker Hughes CoBW · Babcock & Wilcox EnterprisesCAT · CaterpillarFLS · Flowserve
Likely suppliers
CRS · Carpenter TechnologyKMT · Kennametal
Competitors
ATI · ATI

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Analysis updated Sep 22, 2026, reviewing Q2 FY2026. Prices delayed. Built with The Buildout’s published methodology. Not investment advice. No positions held. © The Buildout 2026.

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