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

——Mkt cap — · 52-wk —–— · YTD — · delayed
Updated Aug 12, 2026Q1 FY2026 reviewed
Howmet Aerospace makes investment-cast turbine blades used in gas turbines that supply electricity to data centers.
IGT share >50%
Management says Howmet holds >50% of global IGT turbine blades.
Revenue +24% YoY
Q2 2026 revenue $2.547B; organic growth 21%.
7/7 IGT contracts
All seven major IGT customers contracted; some adding demand.
Capacity 2028-30
New IGT gigawatts arrive mainly 2028-2030.
The Buildout Takeaway
The pills show a demand-led, capacity-constrained setup: critical gas-turbine parts are sold out before new capacity arrives, while aerospace aftermarket and pricing continue to support margins. The open question is whether Howmet can staff, tool, and build out capacity fast enough before demand goes unserved or the cost base overheats.
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 · FCF $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 Aerospace makes advanced engineered components for aerospace and transportation, including jet engine components, fastening systems, airframe parts, and forged aluminum wheels. Its AI-infrastructure role is indirect but concentrated in Engine Products: the company casts superalloy turbine blades and vanes for industrial gas turbines, which utilities deploy for natural-gas power generation serving data centers.

Market Cap—
Revenue (TTM)$8.6B
Revenue Growth+14.2%
EBITDA Margin (TTM)31.1%
Net Debt$2.3B
Earnings Beats7 of 7
P/E (TTM)—
EV/EBITDA (TTM)—

What We Like

  • Management discloses >50% global share of IGT turbine blades and says market growth depends on Howmet’s willingness to invest.
  • All 7 major IGT customer negotiations were complete by Q2 2026, and some customers already want to add to demand outlooks.
  • Q2 2026 revenue was $2.547B, up 24% YoY; adjusted EBITDA was $817M, up 39% to a 32.1% margin.
  • Spares reached 23% of Q1 2026 revenue, up from 11% in FY2019, lifting earnings quality.
  • First-half 2026 free cash flow was $838M, up 75% YoY, even while full-year CapEx is expected to exceed $500M.

What We’re Watching

  • Defense spares uplift tied to Middle East utilization is 'anticipated but not assured' and more likely 2027.
  • New IGT capacity largely lands 2028–2030; near-term growth depends on yield and hiring.
  • CAM is EPS-breakeven-ish in 2026; the majority of margin synergies are expected in 2027.
  • Commercial transportation volume was still -8% YoY in Q2 despite sequential improvement.
Bottom Line

The thesis is strengthening: demand is contracted, pricing exceeds cost pass-through, spares mix is rising, and guidance has been raised twice. The open question is whether unbooked defense orders and the 2028–2030 capacity ramp can convert today’s IGT demand into revenue without overbuilding.

Next upThe next major datapoint is the November 2026 Q3 call, when management plans to give its first 2027 revenue sighting and expects an increase over 2026. Japan first production in Q4 2026 tests whether the pre-sold IGT plant ramps on schedule.
Last Quarter — Q1 FY2026

Earnings Beat

Q2 2026 revenue was $2.547 billion, up 24% YoY with organic growth of 21%. Adjusted EBITDA rose 39% to $817 million, an adjusted EBITDA margin of 32.1%, up 340 basis points. Engine Products led with revenue up 32% to $1.37 billion, including gas turbine growth of 38%.

MetricQ1 FY2026Q4 FY2025Q1 FY2025YoY
Revenue$2.3B$2.2B$1.9B+19.1%
Gross margin36.9%31.5%30.0%+690bps
EBITDA$827M$650M$559M+47.9%
EPS$1.44$0.92$0.85+70.3%
Gas turbine growth+38%+39% (Q1)n/a+38% YoY
We have completed negotiations with the last of our 7 major customers, though the overall picture continues to expand with some customers already wanting to revisit and add to their demand outlooks.— John Plant, Executive Chairman and CEO, August 6, 2026

Management tone: Management’s tone shifted from a 'very bright' IGT picture on the Q1 call to describing IGT demand as 'extraordinary' on Q2, while repeatedly separating contracted demand from anticipated orders. On defense spares, management stayed cautious and said specific orders are not in hand.

Management Guidance

For Q3 2026, management guided revenue of $2.575 billion ± $10 million, EBITDA of $830 million ± $5 million, and EPS of $1.35 ± $0.01. For FY2026, management raised revenue guidance to $10.05 billion ± $50 million, EBITDA to $3.23 billion ± $20 million, EPS to $5.27 ± $0.04, and free cash flow to $1.9 billion ± $50 million. Segment assumptions from Q1 included commercial aerospace organic growth around 20%, defense around 10%, gas turbines 25–30%, and commercial transportation below 5%.

Business Trajectory

Trajectory

Revenue accelerated from 19% YoY in Q1 to 24% in Q2; first-half revenue was $4.860 billion, up 22%. Q2 adjusted EBITDA margin expanded 340 bps to 32.1%, and Engine Products margin rose 470 bps to 37.7% while absorbing 485 net new employees. The drivers are pricing above material and inflationary cost pass-through, a rising spares mix, and gas turbine growth near 39%.

Revenue & Margin Trajectory
RevenueGross margin$0$2.0B$4.0B$3.2B$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$2.3B22%37%Q2'16Q3Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26
RevenueGross margin$0$2.0B$4.0B$3.2B$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$2.3B22%37%Q2'16Q3Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26
Gross margin as reported.
Share Price — 12 Months
$100$200$300$052-wk high $288Aug '25NovFeb '26MayAug '26
52-week range $171–$288.
Share Price — 12 Months
$100$200$300$052-wk high $288Aug '25NovFeb '26MayAug '26
52-week range $171–$288.
The Numbers

The Model

The model projects FY+1 revenue of $9,750M and EBITDA of $3,100M (31.8% margin), and FY+2 revenue of $11,030M and EBITDA of $3,684M (33.4% margin). Near-term is anchored by the 2026 beat-and-raise trajectory and contracted IGT demand; FY+2 assumes continued aerospace and spares growth plus initial contribution from new IGT capacity.

Revenue & EBITDA Projections
REVENUE$8.3B$9.8B$11.0BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$2.4B$3.1B$3.7B33.4%FY25FY+1 (E)FY+2 (E)
REVENUE$8.3B$9.8B$11.0BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$2.4B$3.1B$3.7B33.4%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$9.8B$11.0B
YoY Growth—+18.2%+13.1%
EBITDA$2.4B$3.1B$3.7B
EBITDA Margin29.2%31.8%33.4%

Projections are the median of 5 independent model runs. The model’s revenue sits 0.0% above analyst consensus.

For Q3 2026, management guided revenue of $2.575 billion ± $10 million, EBITDA of $830 million ± $5 million, and EPS of $1.35 ± $0.01. For FY2026, management raised revenue guidance to $10.05 billion ± $50 million, EBITDA to $3.23 billion ± $20 million, EPS to $5.27 ± $0.04, and free cash flow to $1.9 billion ± $50 million. Segment assumptions from Q1 included commercial aerospace organic growth around 20%, defense around 10%, gas turbines 25–30%, and commercial transportation below 5%.

What Could Go Right — and Wrong

What good looks like
  • Defense spares and missile rate proposals convert into formal orders across PAC-3, THAAD, Tomahawk, and classified programs.
  • IGT customers revisit and add to demand outlooks, creating contract amendments beyond the seven completed agreements.
  • Yield improvements and flow production lift gas turbine revenue above the 25–30% full-year outlook before new capacity arrives.
  • CAM synergies arrive in 2027 and the acquisition becomes earnings-positive as guided.
  • Commercial transportation volume recovers further, helped by the 2027 emissions-driven truck pre-buy.
What could go wrong
  • Defense spares and missile orders do not materialize, leaving a gap in the 2027 outlook.
  • IGT yield gains stall or hiring misses delay new capacity, keeping growth constrained.
  • Commercial aerospace build rates cool on macro or Middle East fallout.
  • CAM remains earnings-dilutive longer and 2027 synergies slip.
  • Aluminum pass-through keeps diluting Forged Wheels margin percentage and wheels volume stays negative.
What’s Next

Looking Ahead

The next 12 months test execution on Japan, engine-program ramps, and defense order flow. The November 2026 Q3 call provides the first 2027 revenue sighting, while Japan first production in Q4 2026, LEAP-1B Maverick cutover likely in Q1 2027, and GTF Advantage ramp through 2027 are dated milestones. Management also expects the majority of CAM synergies in 2027.

Catalysts
  • H2 2026Second Japan casting machine delivery — Delivery expected in H2 2026; capacity already essentially fully spoken for.
  • Q4 2026Japan IGT first production — Tests ramp of pre-sold new plant; one casting pit left.
  • November 2026First 2027 revenue sighting — Q3 call; revenue expected to be an increase over 2026.
  • Q1 2027LEAP-1B Maverick full cutover — Timing likely Q1 2027; date not fixed.
  • 2027GTF Advantage ramp — Production lifts through 2027; retrofit program framed as an even bigger opportunity.
  • 2027CAM synergy majority — Management expects margin majority and EPS positive in 2027.
Numbers

Financials

Annual Summary

MetricFY2024FY2025TTMYoY
Revenue$7.4B$8.3B$8.6B+11.1%
Gross Margin27.5%30.7%32.6%+320bps
EBITDA$1.9B$2.4B$16.9B+24.2%
EBITDA Margin26.2%29.2%31.1%+309bps
Net Income$1.2B$1.5B$1.7B+30.6%
Free Cash Flow$977M$1.2B$3.1B—
Net Cash————

Key Ratios (Trailing)

Valuation
  • P/E TTM—
  • EV/EBITDA TTM—
  • EV/Revenue TTM—
  • Price/FCF TTM—
Profitability
  • Gross Margin (TTM)32.6%
  • EBITDA Margin (TTM)31.1%
  • Net Margin (TTM)20.2%
  • ROIC24.3%
  • FCF Conversion53.5%
  • SBC / Revenue0.9%
Reference

The Company

Howmet Aerospace makes jet engine components, aerospace fastening systems, airframe structural components, and forged aluminum wheels. Its Engine Products segment produces investment castings, airfoils, and seamless rolled rings for jet engines and industrial gas turbines; this is the part of the portfolio where data-center electricity demand reaches Howmet through natural-gas power generation.

The company operates a global, multi-site manufacturing footprint across the U.S., Canada, Mexico, Europe, the U.K., Morocco, China, Australia, and Japan. It is vertically integrated in titanium through Engineered Structures—from ingots and mill products to forgings, extrusions, and machining—and has reshaped its portfolio with the CAM and Brunner fastener acquisitions and the Savannah divestiture.

Business Segments

Engine Products
Q2 2026 revenue $1.37 billion
Investment castings, airfoils, rolled rings for jet engines and industrial gas turbines.
Growth driver: Gas turbines +38%; commercial aerospace +37%.
Fastening Systems
Q2 2026 revenue $589 million
Aerospace and industrial fasteners, expanded by CAM and Brunner acquisitions.
Growth driver: Commercial aerospace +39%; defense aerospace +45%.
Engineered Structures
Q2 2026 revenue $269 million
Titanium ingots, mill products, forgings, extrusions, and machining services.
Growth driver: Ex-Savannah revenue roughly flat; margin up 170 bps.

Competitive Landscape

Howmet describes itself as a leading global provider and discloses >50% global share of turbine blades in the IGT market, where management says market growth depends on its willingness to invest. Its 10-K names principal competitors across titanium, precision forgings, seamless rings, investment castings, fasteners, and aluminum wheels, showing competition in most product areas outside that disclosed IGT position.

  • Berkshire Hathaway / Precision Castparts
    Named in 10-K as competitor in titanium, precision forgings, seamless rolled rings, investment castings including airfoils, and aerospace fasteners.
  • VSMPO (Russia)
    Named in 10-K as competitor in titanium and titanium-based alloys, precision forgings.
  • ATI Inc.
    Named in 10-K as competitor in titanium and precision forgings.
  • Lisi Aerospace
    Named in 10-K as competitor in aerospace fasteners.
  • Aubert & Duval
    Named in 10-K as competitor in precision forgings.
Competitors named in Howmet 10-K.

Supply Chain

Howmet sits between specialized metal suppliers and aerospace and gas-turbine OEMs. Its disclosed customers include RTX and GE Aerospace, and its 10-K notes dependence on limited/sole-source suppliers for titanium sponge and specialized alloys.

Sole Source
Unnamed titanium sponge suppliers
Limited/sole-source per 10-K
Sole Source
Unnamed specialized metal alloy suppliers
Limited/sole-source per 10-K
→
>50% IGT turbine-blade share
HWM
Multi-site manufacturer spanning Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels.
→
RTX Corporation
~11% of FY2025 third-party sales
Segment allocation not disclosed
GE Aerospace
~11% of FY2025 third-party sales
Segment allocation not disclosed
Seven unnamed IGT customers
7 contracts complete
Industrial gas turbine blades and vanes

Analysis updated Aug 12, 2026, reviewing Q1 FY2026. Prices delayed. Built with The Buildout’s published methodology. Not investment advice. No positions held. © The Buildout 2026.

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