Howmet raises 2026 free cash flow guidance to $2 billion
Key Facts
Howmet Aerospace raised its base fiscal 2026 free cash flow guidance by $100 million to $2.000 billion, within a range of $1.950 billion to $2.050 billion, as it reported third-quarter results on Oct. 29. Chief Executive John Plant said quarterly results exceeded the high end of the company’s guidance and revenue posted its strongest quarterly growth in the company’s history. Third-quarter revenue was $2.703 billion, up 29% from $2.089 billion a year earlier. Free cash flow also rose to $562 million from $423 million, an increase of 33%. The company expects 2027 revenue of about $11.5 billion, or growth of about 12% compared with its raised 2026 guidance.
Alongside the higher free cash flow outlook, Howmet raised its base 2026 revenue guidance by $250 million to $10.300 billion, within a range of $10.290 billion to $10.310 billion. The revision puts the 2027 outlook in context: the roughly 12% increase is measured against raised 2026 guidance, rather than an unspecified long-term growth target. Plant said revenue grew 29% year over year and 25% organically in the third quarter, calling it the company’s strongest quarterly growth rate ever. Revenue growth was 24% in the second quarter, when revenue reached $2.547 billion, compared with $2.053 billion a year earlier. The quarterly figures show revenue growth accelerating between the two quarters as the company expanded its outlook for the rest of the fiscal year.
Sales growth flowed through to third-quarter earnings and margins. Operating income rose to $777 million from $542 million a year earlier, and its margin increased to 28.7% from 25.9%, a gain of 280 basis points. Adjusted earnings before interest, taxes, depreciation and amortization were $879 million, versus $614 million, while the margin rose to 32.5% from 29.4%, an increase of 310 basis points. U.S. GAAP diluted earnings per share were $1.42, up from $0.95, while adjusted earnings per share were $1.46, compared with $0.95. Those figures represented year-over-year increases of 49% and 54%, respectively, according to company data.
The company attributed strong demand to growth in its core markets during the third quarter: commercial aerospace revenue rose 32%, defense aerospace 10%, gas turbines 45% and commercial transportation 28%. Gas turbines recorded the fastest growth among the four markets cited by the company, while commercial aerospace posted a broad-based increase. Plant said the exceptional aircraft order backlog supports expectations for higher production volumes during 2027 and beyond. Management added that gas turbine customers are seeking volume increases above previous expectations. The company linked growth in aerospace, defense and energy markets to its production and investment plans extending into the coming years.
The quarterly results added to strong performance since the start of the year. Revenue for the first nine months of 2026 was $7.563 billion, compared with $6.084 billion in the same period of 2025, an increase of 24%. Operating income for the period rose to $2.241 billion from $1.557 billion. With cash generation in view, the company repurchased $500 million of shares in the third quarter, bringing buybacks since the start of the year to $1.1 billion as of Oct. 28. On the same day, the board authorized a $5 billion increase in the share repurchase authorization, bringing the total to $5.397 billion. Management said capital spending plans include elevated levels after 2027 to support growth in aerospace, defense and gas turbines.
The announcement drew a positive market reaction, with Howmet shares rising 8.6% in premarket trading on Oct. 29. The company was scheduled to hold its third-quarter results conference call at 10:00 a.m. Eastern time that day. Howmet expects 2027 revenue of about $11.5 billion, relying on growth in markets that posted increases in the third quarter and its aircraft order backlog. It also expects aircraft production volumes to continue rising during 2027 and beyond, while noting that capital spending will remain elevated after 2027. Management’s outlook extends beyond the current fiscal year, with the new 2026 guidance remaining the basis for comparison with projected 2027 growth.