Howmet Aerospace (NYSE:HWM) reported record results for the fourth quarter and full year 2025, citing strong demand in commercial aerospace, defense aerospace, and land-based gas turbines, as well as expanding spares activity across multiple end markets. Management also outlined 2026 guidance and described a stepped-up pace of investment and portfolio activity, including acquisitions in the fasteners business.
Fourth-quarter and full-year results
In the fourth quarter, Howmet posted revenue of $2.17 billion, up 15% year over year, with adjusted EBITDA of $653 million rising 29% and adjusted operating income of $580 million increasing 34%. Adjusted earnings per share were $1.05, up 42% from the prior-year quarter.
Free cash flow for 2025 was $1.43 billion, which management said was more than $100 million above its guide point, despite record capital spending of $453 million. The company said free cash flow conversion of net income was 93% for the year, consistent with its long-term 90% target. Winterlich also noted that over the last six years, aggregate net income conversion to free cash flow has been 95%.
End-market trends: spares, aerospace demand, and data-center-driven gas turbines
Winterlich said commercial aerospace revenue grew 13% in the fourth quarter and 12% for the full year, driven by accelerating demand for engine spares and a record backlog for new aircraft. He added that commercial aerospace engine spares increased 44% for the full year, supported by both legacy and next-generation engines.
Defense aerospace revenue rose 20% in the fourth quarter and 21% for the full year, which Winterlich attributed to engine spares growth (up 32% for the year) and new F-35 aircraft builds. Executive Chairman and CEO John Plant added that within Howmet’s engine products segment in 2025, F-35 spares demand exceeded original-equipment demand in aggregate value of parts provided.
Howmet also highlighted rapid growth in gas turbines after combining oil and gas with industrial gas turbine (IGT) markets into a single “gas turbines” category, citing increasing overlap from turbines used for data centers. Gas turbine revenue increased 32% in the fourth quarter and 25% for the full year, which management linked to rising electricity-generation demand, especially natural gas for data centers.
Across commercial aerospace, defense aerospace, and gas turbine spares, the company reported combined spares revenue increased 33% for the full year to $1.7 billion. Spares rose to 21% of total revenue in 2025, up from 17% in 2024 and 11% in 2019. In the Q&A, Plant said spares represented about 40% of the company’s engines business, and he noted commercial aerospace spares grew “nearly 40%” for 2025. Management said it expects spares growth to continue in 2026, without providing a specific rate.
Commercial transportation trends were mixed. Winterlich said commercial transportation revenue increased 4% in the fourth quarter but declined 5% for the full year, including the pass-through of higher aluminum costs and tariffs. On a volume basis, the Forged Wheels business was down 10% in the fourth quarter and down 13% for the full year, though management said it continued to outperform the market with premium products. Plant said the commercial truck wheel segment appeared to be stabilizing, with the company expecting the first quarter of 2026 to be the quarterly low point and anticipating improvement toward the second half of 2026 as 2027 emissions regulations influence demand.
Segment performance
Howmet reported gains across its operating segments, led by Engine Products and Fastening Systems.
- Engine Products: Fourth-quarter revenue rose 20% to $1.16 billion, with adjusted EBITDA up 31% to $396 million and EBITDA margin improving 290 basis points to 34%. For the full year, revenue grew 16% to $4.3 billion, EBITDA increased 25% to $1.44 billion, and EBITDA margin rose to 33.3%. Winterlich said the segment added about 1,440 net new employees in 2025, which he described as a near-term margin drag that positions the business for future demand.
- Fastening Systems: Fourth-quarter revenue increased 13% to $454 million, with adjusted EBITDA up 25% to $139 million and margin rising 290 basis points to 30.6%. Full-year revenue grew 11% to $1.75 billion, EBITDA rose 31% to $530 million, and margin improved to 30.4%.
- Engineered Structures: Fourth-quarter revenue increased 4% to $287 million, as defense aerospace revenue rose 37% driven by what management described as the end of destocking on the F-35 program, while commercial aerospace fell 6% due to product rationalization. EBITDA increased 24% to $63 million and margin improved to 22%. Full-year revenue rose 8% to $1.15 billion, and EBITDA jumped 46% to $243 million, with margin expanding to 21.2%.
- Forged Wheels: Fourth-quarter revenue rose 9% despite lower volumes, helped by aluminum cost and tariff pass-through and favorable foreign currency impacts. EBITDA increased 20% to $79 million, with margin improving to 29.9%. For the year, revenue decreased 1% to $1.04 billion, while EBITDA increased 3% to $296 million and margin improved to 28.5%.
Capital allocation, balance sheet actions, and pension update
Howmet emphasized balance sheet improvement and continued shareholder returns. During the fourth quarter, capital deployment included $200 million of share repurchases, $50 million of dividends, $55 million for preferred share redemption, and $125 million of debt reduction. For the full year, the company deployed about $1.2 billion across common stock buybacks, preferred redemption, debt paydown, and dividends.
Winterlich said Howmet repurchased $700 million of common stock in 2025 at an average price of about $161 per share, retiring about 4.4 million shares, marking the 19th consecutive quarter of repurchases. Early in 2026, the company repurchased an additional $150 million at an average price of about $215 per share. Remaining repurchase authorization was about $1.35 billion.
On debt actions, Winterlich said Howmet reduced debt by $265 million in 2025. The company paid off the remaining $140 million of U.S. dollar long-term debt due November 2026 at par, and it paid off $625 million of 2027 notes by issuing $500 million of new notes due 2032 and using $125 million of cash. The 2032 notes carry a 4.55% interest rate, and management expects the combined debt actions to reduce annualized interest expense by about $22 million. Net debt to trailing EBITDA ended the year at 1x.
In addition, Winterlich said Howmet redeemed all outstanding preferred stock for $55 million in the fourth quarter, simplifying the capital structure. He also noted the company completed annuitization of its U.K. pension plan in the fourth quarter, reducing gross pension obligations by $128 million without requiring new pension contributions in 2025.
Regarding dividends, Winterlich said 2025 dividends totaled $181 million, up 69% year over year, and reflected a policy targeting 15% ±5% of adjusted net income. He said the dollar value of dividend distributions is expected to be higher in 2026 than in 2025.
2026 outlook, build-rate assumptions, and acquisitions
Plant said most of Howmet’s served markets are in a growth phase, while commercial truck wheels are stable at a low level and expected to show signs of growth later in 2026. He cited increased air travel, freight growth, and a multi-year underbuild of aircraft as factors driving a record OEM backlog that stretches into the next decade. He also discussed elevated spares demand tied to fleet growth and aging, as well as durability issues in some modern engines operating at higher pressures and temperatures.
For guidance assumptions, Plant cited aircraft build-rate expectations used in the company’s outlook: Boeing 737 at 40 aircraft per month and 787 at seven per month rising to eight by the fourth quarter; Airbus A320 at 60 per month and A350 at six per month.
Howmet guided first-quarter 2026 revenue of $2.235 billion ±$10 million, adjusted EBITDA of $685 million ±$5 million, and adjusted EPS of $1.10 ±$0.01. For full-year 2026, excluding the acquisition of CAM, management guided revenue of $9.1 billion ±$100 million, EBITDA of $2.76 billion ±$50 million, EPS of $4.45 ±$0.01, and free cash flow of $1.6 billion ±$50 million. Plant said the company expects EBITDA incrementals in the early 40% range.
Plant also discussed portfolio activity. Howmet signed and closed the acquisition of Brunner Inc., a fasteners business in Wisconsin, which he said expands capabilities in longer-length and wider-diameter parts; he described the earnings impact as not material but a platform for future growth. He also highlighted a larger pending deal: an agreement to acquire CAM in aerospace fasteners and fittings for $1.8 billion. Plant said guidance was kept “clean” of CAM due to timing uncertainty from regulatory processes, and he said the earnings per share impact upon closing would not be material in the remaining period referenced on the call. In the Q&A, Plant said the company does not currently view M&A and buybacks as mutually exclusive, citing its leverage position and ongoing cash generation.
On investment levels, Plant emphasized elevated capital deployment to support growth, particularly in gas turbines, where he said the company’s approximately $1 billion base business could double to $2 billion over the next three to five years. He described expanding demand tied to electricity generation for data centers and said Howmet is positioned as a major supplier of turbine blades, with multiple customer contract renewals completed and additional negotiations ongoing.
About Howmet Aerospace (NYSE:HWM)
Howmet Aerospace Inc is an industrial technology company that designs, manufactures and repairs engineered metal products for the aerospace, transportation and industrial markets. Its product portfolio includes precision castings and forgings, engineered fasteners, seamless rolled rings, and complex components for turbine engines, airframes and industrial gas turbines. The company also provides aftermarket services such as component repair, overhaul and parts distribution to support the operating fleet of commercial and military customers.
Howmet serves a global customer base of original equipment manufacturers (OEMs) and aftermarket operators, with manufacturing, service and distribution facilities across North America, Europe and Asia.
