What changed in Howmet Aerospace's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Howmet Aerospace's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+288 added−272 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-13)
Top changes in Howmet Aerospace's 2024 10-K
288 paragraphs added · 272 removed · 219 edited across 6 sections
- Item 7. Management's Discussion & Analysis+160 / −159 · 120 edited
- Item 1. Business+56 / −54 · 46 edited
- Item 1A. Risk Factors+51 / −45 · 41 edited
- Item 5. Market for Registrant's Common Equity+12 / −6 · 4 edited
- Item 1C. Cybersecurity+8 / −7 · 7 edited
Item 1. Business
Business — how the company describes what it does
46 edited+10 added−8 removed32 unchanged
Item 1. Business
Business — how the company describes what it does
46 edited+10 added−8 removed32 unchanged
2023 filing
2024 filing
Biggest changeSeparation Transaction, the two companies entered into several agreements that govern their post-separation relationship. Overview Howmet is a leading global provider of advanced engineered solutions for the aerospace and transportation industries.
Biggest change(the new name for Alcoa Inc., which, through the transactions described above, later became Howmet Aerospace Inc.) and Alcoa Corporation. Following this separation, the Company retained the Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions businesses. In connection with the Alcoa Inc. Separation Transaction, the two companies entered into several agreements that govern their post-separation relationship.
Its products and solutions include investment castings for jet engines and industrial gas turbines (nickel superalloys, titanium, and aluminum), including airfoils and structural parts; seamless rolled rings for jet engines (mostly nickel superalloys); fastening systems for aerospace, industrial and commercial transportation applications (titanium, steel, and nickel superalloys); forged jet engine components (e.g., jet engine disks); machined and forged aircraft parts (titanium and aluminum); and forged aluminum commercial vehicle wheels, all of which are sold directly to customers and/or through distributors.
Its products and solutions include investment castings for jet engines and industrial gas turbines (nickel superalloys, titanium, and aluminum), including airfoils and structural parts; seamless rolled rings for jet engines (mostly nickel superalloys); fastening systems for aerospace, industrial and commercial transportation applications (titanium, steel, and nickel superalloys); forged jet engine components (e.g., jet engine disks); machined and forged aircraft parts (titanium and aluminum); and forged aluminum commercial vehicle wheels, all of which are sold directly to customers or through distributors.
Engineered Structures Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions, forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components, and assemblies for aerospace and defense applications.
Engineered Structures Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, titanium extrusions, and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components, and assemblies for aerospace and defense applications.
This culture is supported by internal policies, standards, rules and procedures that clearly articulate our stringent requirements for working safely in all of our worldwide facilities. The Company embeds annual health and safety goals and objectives into its operating plans to progress against our ultimate goal of zero incidents.
This culture is supported by internal policies, standards, rules, and procedures that clearly articulate our stringent requirements for working safely in all of our worldwide facilities. The Company embeds annual health and safety goals and objectives into its operating plans to progress toward our ultimate goal of zero incidents.
Government Regulations and Environmental Matters Our operations and activities are global and are subject to various federal, state, local, and foreign laws, rules and regulations, including those relating to the environment. In 2023, compliance with these laws, rules and regulations did not have a material effect on our capital expenditures, results of operations or competitive position.
Government Regulations and Environmental Matters Our operations and activities are global and are subject to various federal, state, local, and foreign laws, rules and regulations, including those relating to the environment. In 2024, compliance with these laws, rules and regulations did not have a material effect on our capital expenditures, results of operations or competitive position.
From January 2013 until October 2016, Mr. Giacobbe served as Chief Financial Officer of the Engineered Products and Solutions segment. Before joining Howmet, Mr. Giacobbe held senior finance roles at Avaya and Lucent Technologies. Lola F. Lin , 49, Executive Vice President, Chief Legal and Compliance Officer and Secretary. Ms.
From January 2013 until October 2016, Mr. Giacobbe served as Chief Financial Officer of the Engineered Products and Solutions segment. Before joining Howmet, Mr. Giacobbe held senior finance roles at Avaya and Lucent Technologies. Lola F. Lin , 50, Executive Vice President, Chief Legal and Compliance Officer and Secretary. Ms.
Cosme-en-Vairais (2) Fastening Systems Fasteners Toulouse Fastening Systems Fasteners Us-par-Vigny Fastening Systems Fasteners Germany Bestwig Engine Products Aerospace Castings Erwitte Engine Products Machining of Aerospace Castings Hildesheim-Bavenstedt (2) Fastening Systems Fasteners Kelkheim (2) Fastening Systems Fasteners Hungary Nemesvámos Fastening Systems Fasteners Székesfehérvár Engine Products; Forged Wheels Aerospace and Industrial Gas Turbine Castings and Forgings Japan J Ô etsu City (2) Forged Wheels Wheels Machining Nomi Engine Products Aerospace and Industrial Gas Turbine Castings Mexico Ciudad Acuña (2) Engine Products; Fastening Systems Aerospace Castings/Rings and Fasteners Monterrey Forged Wheels Forgings Morocco Casablanca (2) Fastening Systems Fasteners United Kingdom Ecclesfield Engine Products Metal, Billets Exeter (2) Engine Products Aerospace and Industrial Gas Turbine Castings and Alloy Glossop Engine Products Metal, Billets Ickles Engine Products Metal, Billets Leicester (2) Fastening Systems Fasteners Redditch (2) Fastening Systems Fasteners Telford Fastening Systems Fasteners Welwyn Garden City Engineered Structures Aerospace Formed Parts 4 Table of Contents Country Facility Location Segment Products United States Tucson, AZ (2) Fastening Systems Fasteners Carson, CA (2) Fastening Systems Fasteners City of Industry, CA (2) Fastening Systems Fasteners Fontana, CA Engine Products Rings Fullerton, CA (2) Fastening Systems Fasteners Rancho Cucamonga, CA Engine Products Rings Torrance, CA Fastening Systems Fasteners Branford, CT Engine Products Aerospace Coatings Winsted, CT Engine Products Aerospace Machining Savannah, GA Engineered Structures Forgings, Disks La Porte, IN Engine Products Aerospace and Industrial Gas Turbine Castings Whitehall, MI Engine Products Aerospace and Industrial Gas Turbine Castings and Coatings, Titanium Alloy and Specialty Products Washington, MO Engineered Structures Titanium Mill Products Big Lake, MN Engineered Structures Aerospace Machining New Brighton, MN Engineered Structures Aerospace Machining Dover, NJ Engine Products Aerospace and Industrial Gas Turbine Castings and Alloy Kingston, NY (2) Fastening Systems Fasteners Rochester, NY Engine Products Rings Barberton, OH Forged Wheels Wheels Machining Canton, OH (2) Engineered Structures Titanium Mill Products Cleveland, OH Engine Products; Engineered Structures; Forged Wheels Forgings, Investment Casting Equipment, and Aerospace Components Niles, OH Engineered Structures Titanium Mill Products Morristown, TN (2) Engine Products Aerospace and Industrial Gas Turbine Ceramic Products Houston, TX (2) Engineered Structures Extrusions Waco, TX (2) Fastening Systems Fasteners Wichita Falls, TX Engine Products Aerospace and Industrial Gas Turbine Castings Hampton, VA (2) Engine Products Aerospace and Industrial Gas Turbine Castings Martinsville, VA Engineered Structures Titanium Mill Products (1) Principal facilities are listed by location, with certain locations having more than one facility.
Cosme-en-Vairais (2) Fastening Systems Fasteners Toulouse Fastening Systems Fasteners Us-par-Vigny Fastening Systems Fasteners Germany Bestwig Engine Products Aerospace Castings Erwitte Engine Products Machining of Aerospace Castings Hildesheim-Bavenstedt (2) Fastening Systems Fasteners Kelkheim (2) Fastening Systems Fasteners Hungary Nemesvámos Fastening Systems Fasteners Székesfehérvár Engine Products; Forged Wheels Aerospace and Industrial Gas Turbine Castings and Forgings Japan J Ô etsu City (2) Forged Wheels Wheels Machining Nomi Engine Products Aerospace and Industrial Gas Turbine Castings Mexico Ciudad Acuña (2) Engine Products; Fastening Systems Aerospace Castings/Rings and Fasteners Monterrey Forged Wheels Forgings Morocco Casablanca (2) Fastening Systems Fasteners United Kingdom Ecclesfield (2) Engine Products Metal, Billets Exeter (2) Engine Products Aerospace and Industrial Gas Turbine Castings and Alloy Glossop Engine Products Metal, Billets Ickles Engine Products Metal, Billets Leicester (2) Fastening Systems Fasteners Redditch (2) Fastening Systems Fasteners Telford Fastening Systems Fasteners Worcester (2)(3) Engine Products Aerospace and Industrial Gas Turbine Castings Tooling 4 Table of Contents Country Facility Location Segment Products United States Tucson, AZ (2) Fastening Systems Fasteners Carson, CA (2) Fastening Systems Fasteners City of Industry, CA (2) Fastening Systems Fasteners Fontana, CA Engine Products Rings Fullerton, CA (2) Fastening Systems Fasteners and Tooling Rancho Cucamonga, CA Engine Products Rings Torrance, CA Fastening Systems Fasteners Branford, CT Engine Products Aerospace Coatings Winsted, CT Engine Products Aerospace Machining Savannah, GA Engineered Structures Forgings, Disks La Porte, IN Engine Products Aerospace and Industrial Gas Turbine Castings Whitehall, MI Engine Products Aerospace and Industrial Gas Turbine Castings and Coatings, Titanium Alloy and Specialty Products Washington, MO Engineered Structures Titanium Mill Products Big Lake, MN Engineered Structures Aerospace Machining New Brighton, MN Engineered Structures Aerospace Machining Dover, NJ Engine Products Aerospace and Industrial Gas Turbine Castings and Alloy Kingston, NY (2) Fastening Systems Fasteners Tooling Rochester, NY Engine Products Rings Barberton, OH Forged Wheels Wheels Machining Canton, OH (2) Engineered Structures Titanium Mill Products Cleveland, OH Engine Products; Engineered Structures; Forged Wheels Forgings, Investment Casting Equipment, and Aerospace Components Niles, OH Engineered Structures Titanium Mill Products Morristown, TN (2) Engine Products Aerospace and Industrial Gas Turbine Ceramic Products Houston, TX (2) Engineered Structures Extrusions Waco, TX (2) Fastening Systems Fasteners Wichita Falls, TX Engine Products Aerospace and Industrial Gas Turbine Castings Hampton, VA (2) Engine Products Aerospace and Industrial Gas Turbine Castings Martinsville, VA Engineered Structures Titanium Mill Products (1) Principal facilities are listed by location, with certain locations having more than one facility.
The Company’s website is included in this annual report on Form 10-K as an inactive textual reference only. The information on, or accessible through, the Company’s website is not a part of, or incorporated by reference in, this annual report on Form 10-K. The SEC maintains an Internet site that contains these reports at http://www.sec.gov.
The Company’s website is included in this annual report on Form 10-K as an inactive textual reference only. The information on, or accessible through, the Company’s website is not a part of, or incorporated by reference in, this annual report on Form 10-K. The SEC maintains an Internet site that contains these reports at https://www.sec.gov.
Our Code of Conduct describes how we lead with integrity and work with one another while supporting our stakeholders. The Company provides competitive wages, benefits and terms of employment. Attracting and recruiting candidates through workforce planning, increased hiring efficiency and effective onboarding has been a priority for the Company.
Our Code of Conduct describes how we lead with integrity and work with one another while supporting our stakeholders. The Company provides competitive wages, benefits and terms of employment. Attracting and recruiting candidates through workforce planning, increased hiring efficiency and effective onboarding have been a priority for the Company.
Engine Products Fastening Systems Engineered Structures Forged Wheels Ceramics Aluminum Alloys Energy Energy Cobalt Energy Nickel Alloys Primary and Scrap Aluminum Energy Nickel Alloys and Stainless Steels Primary Aluminum Nickel Steels Titanium Scrap Platinum Titanium Alloys Titanium Sponge Titanium Vanadium Alloys Generally, raw materials are purchased from third-party suppliers under competitively priced supply contracts or bidding arrangements.
Engine Products Fastening Systems Engineered Structures Forged Wheels Ceramics Aluminum Alloys Aluminum Aluminum Cobalt Energy Energy Energy Energy Nickel Alloys and Stainless Steels Nickel Alloys Nickel Steels Titanium Scrap Platinum Titanium Alloys Titanium Sponge Superalloy materials Vanadium Alloys Titanium Generally, raw materials are purchased from third-party suppliers under competitively priced supply contracts or bidding arrangements.
Chanatry held numerous positions within the General Electric Aviation & Aerospace divisions, as well as at Lockheed Martin from 1983 to 2009. Ken Giacobbe , 58, Executive Vice President and Chief Financial Officer. Mr. Giacobbe was initially elected Executive Vice President and Chief Financial Officer of Howmet effective November 1, 2016. Mr.
Chanatry held numerous positions within the General Electric Aviation & Aerospace divisions, as well as at Lockheed Martin from 1983 to 2009. Ken Giacobbe , 59, Executive Vice President and Chief Financial Officer. Mr. Giacobbe was initially elected Executive Vice President and Chief Financial Officer of Howmet effective November 1, 2016. Mr.
On December 31, 2017, Arconic Inc., then a Pennsylvania corporation, changed its jurisdiction of incorporation from Pennsylvania to Delaware. The Alcoa Inc. Separation Transaction. On November 1, 2016, Alcoa Inc. completed the separation of its business (the “Alcoa Inc. Separation Transaction”) into two independent, publicly traded companies: Arconic Inc.
On December 31, 2017, Arconic Inc., then a Pennsylvania corporation, changed its jurisdiction of incorporation from Pennsylvania to Delaware. The Alcoa Inc. Separation Transaction. On November 1, 2016, Alcoa Inc. completed the separation of its businesses (the “Alcoa Inc. Separation Transaction”) into two independent, publicly traded companies: Arconic Inc.
The strength of the Company’s rivets, bolts and fasteners offers another light-weighting solution that delivers performance. Industrial and Other Markets. Industrial and other markets include industrial gas turbines, oil and gas, and other industrials, which represented approximately 15% of the Company’s revenue in 2023.
The strength of the Company’s rivets, bolts and fasteners offers another light-weighting solution that delivers performance. Industrial and Other Markets. Industrial and other markets include industrial gas turbines, oil and gas, and other industrials, which represented approximately 15% of the Company’s revenue in 2024.
The Company’s executive officers are annually elected or appointed to serve until the next annual meeting of the Board of Directors (held in conjunction with the annual meeting of shareholders), except in the case of earlier death, retirement, resignation or removal. Michael N. Chanatry , 63, Vice President and Chief Commercial Officer. Mr.
The Company’s executive officers are annually appointed to serve until the next annual meeting of the Board of Directors (held in conjunction with the annual meeting of shareholders), except in the case of earlier death, retirement, resignation or removal. Michael N. Chanatry , 64, Vice President and Chief Commercial Officer. Mr.
With its precision engineering, materials science expertise, and advanced manufacturing processes, Howmet aims to help its customers achieve greater fuel economies, reduced emissions, passenger comfort, and maintenance efficiencies. Commercial Transportation Market . The commercial transportation market represented approximately 21% of the Company’s revenue in 2023.
With its precision engineering, materials science expertise, and advanced manufacturing processes, Howmet aims to help its customers achieve greater fuel economies, reduced emissions, passenger comfort, and maintenance efficiencies. Commercial Transportation Market . The commercial transportation market represented approximately 17% of the Company’s revenue in 2024.
Executive Officers of the Registrant The names, ages, positions and areas of responsibility of the executive officers of the Company as of February 13, 2024 are listed below.
Executive Officers of the Registrant The names, ages, positions, and areas of responsibility of the executive officers of the Company as of February 13, 2025 are listed below.
Background As described below, Howmet Aerospace Inc. was previously named Arconic Inc. and, prior to that, Alcoa Inc. The Arconic Inc. Separation Transaction. On April 1, 2020, Arconic Inc. separated its businesses (the “Arconic Inc. Separation Transaction”) into two independent, publicly traded companies: Howmet Aerospace Inc. (the new name for Arconic Inc.) and Arconic Corporation.
Background As described below, Howmet Aerospace Inc. was previously named Arconic Inc. and, prior to that, Alcoa Inc., a company formed in 1888. The Arconic Inc. Separation Transaction. On April 1, 2020, Arconic Inc. separated its businesses (the “Arconic Inc. Separation Transaction”) into two independent, publicly traded companies: Howmet Aerospace Inc. (the new name for Arconic Inc.) and Arconic Corporation.
Additionally, we do not currently anticipate material capital expenditures for environmental control facilities in 2024.
Additionally, we do not currently anticipate material capital expenditures for environmental control facilities in 2025.
Plant was President of Lucas Varity Automotive and managing director of the Electrical and Electronics division from 1991 through 1997. Barbara L. Shultz , 50, Vice President and Controller. Ms. Shultz was initially elected Vice President and Controller of Howmet effective May 25, 2021. Ms.
Plant was President of Lucas Varity Automotive and managing director of the Electrical and Electronics division from 1991 through 1997. 8 Table of Contents Barbara L. Shultz , 51, Vice President and Controller. Ms. Shultz was initially elected Vice President and Controller of Howmet effective May 25, 2021. Ms.
The Cleveland location began negotiations with the UAW in February 2024. On a regional basis, collective bargaining agreements with varying expiration dates cover employees in Europe, North America, South America, and Asia. The Company believes that it has positive relationships with its employees and any respective labor union representatives.
On a regional basis, collective bargaining agreements with varying expiration dates cover employees in Europe, North America, South America, and Asia. The Company believes that it has positive relationships with its employees and any respective labor union representatives.
As of the end of 2023, the Company’s worldwide patent portfolio consists of approximately 940 granted patents and 215 pending patent applications. The Company also has a significant number of trade secrets, mostly regarding manufacturing processes and material compositions that give many of its businesses important advantages in their markets.
As of the end of 2024, the Company’s worldwide patent portfolio consisted of approximately 950 granted patents and 220 pending patent applications. The Company also has a significant number of trade secrets, mostly regarding manufacturing processes and material compositions that give many of its businesses important advantages in their markets.
New technology that increases the automation of job postings enables us to more widely disseminate our job vacancies to diverse partners and job boards, such as our campus recruitment platform that provides an ability to proactively reach a broad talent network of students and schools across the United States.
New technology that increases the automation of job postings enables us to more widely disseminate our job vacancies to various partners and job boards, including our campus recruitment platform that enables us to proactively reach a broad talent network of students and schools across the United States.
Aerospace (Commercial and Defense) Market. Howmet’s largest market is aerospace, which represented approximately 64% of the Company’s revenue in 2023.
Aerospace (Commercial and Defense) Market. Howmet’s largest market is aerospace, which represented approximately 68% of the Company’s revenue in 2024.
In addition, Howmet has operating activities in numerous countries and regions outside of North America and Europe, including China and Japan. 1 Table of Contents Description of the Business The Company produces products that are used primarily in the aerospace (commercial and defense), commercial transportation, and industrial and other markets.
In addition to the United States, Canada, and Mexico in North America and France, United Kingdom, Hungary, and Germany in Europe, Howmet has operating activities in numerous other countries and regions, including Japan and China. 1 Table of Contents Description of the Business The Company produces products that are used primarily in the aerospace (commercial and defense), commercial transportation, and industrial and other markets.
TRW Automotive was acquired by ZF Friedrichshafen AG in May 2015. Mr. Plant was a co-member of the Chief Executive Office of TRW Inc. from 2001 to 2003 and an Executive Vice President of TRW from 1999 (when the company acquired Lucas Varity) to 2003. Prior to TRW, Mr.
Plant was a co-member of the Chief Executive Office of TRW Inc. from 2001 to 2003 and an Executive Vice President of TRW from 1999 (when the company acquired Lucas Varity) to 2003. Prior to TRW, Mr.
For a discussion of the risks associated with certain applicable laws and regulations, see “Risk Factors.” Information relating to environmental matters is included in Note U to the Consolidated Financial Statements in Part II, Item 8 under the caption “Environmental Matters.” Human Capital To attract, recruit, develop and retain world-class talent, the Company has created a culture that embraces diversity, drives inclusion, and empowers and engages our employees.
For a discussion of the risks associated with certain applicable laws and regulations, see “Risk Factors.” Information relating to environmental matters is included in Note U to the Consolidated Financial Statements in Part II, Item 8 under the caption “Environmental Matters.” Human Capital Howmet strives to attract, recruit, engage, develop and retain world-class talent.
In this report, unless the context otherwise requires, “Howmet”, the “Company”, “we”, “us”, and “our” refer to Howmet Aerospace Inc., a Delaware corporation, and its consolidated subsidiaries. The Company’s Internet address is http://www.howmet.com.
Item 1. Business. General Howmet Aerospace Inc. is a Delaware corporation with its principal office in Pittsburgh, Pennsylvania. In this report, unless the context otherwise requires, “Howmet”, the “Company”, “we”, “us”, and “our” refer to Howmet Aerospace Inc. and its consolidated subsidiaries. The Company’s Internet address is https://www.howmet.com.
The principal markets served by Engineered Structures are commercial aerospace, defense aerospace, and land and sea defense. Forged Wheels Forged Wheels manufactures forged aluminum wheels for trucks, buses, and trailers and related products for the global commercial transportation market.
The principal markets served by Engineered Structures are commercial aerospace, defense aerospace, and land and sea defense. 2 Table of Contents Forged Wheels Forged Wheels manufactures lightweight, high-strength forged aluminum wheels for trucks, buses, and trailers, serving the global transportation market.
The Company’s proprietary Dura-Bright® surface treatment is unmatched in appearance and corrosion protection. 2 Table of Contents For additional discussion of each segment's business, see “Results of Operations—Segment Information” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Note C to the Consolidated Financial Statements in Part II, Item 8 .
For additional discussion of each segment's business, see “Results of Operations—Segment Information” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) and Note C to the Consolidated Financial Statements in Part II, Item 8 .
This platform allows us to align employee goals and growth with the Company’s future business needs so that we can pinpoint potential successor candidates and build their readiness for their future roles.
Using a human capital management platform, employees can build a professional profile to share their career aspirations and learn new skills. This platform allows us to align employee goals and growth with the Company’s future business needs so that we can pinpoint potential successor candidates and build their readiness for their future roles.
The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation. Howmet’s technological capabilities support the innovation and growth of next-generation aerospace programs.
Overview Howmet is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation.
From July 2006 to May 2015, Mr. Marchuk was Executive Vice President of Human Resource at TRW Automotive, and served as TRW’s Vice President, Human Resources from September 2004 to July 2006. Prior to joining TRW, from December 2001 to August 2004, Mr. Marchuk was Director, Corporate Human Resources for E.I. Du Pont De Nemours and Company (“E.I. Du Pont”).
Prior to joining TRW, from December 2001 to August 2004, Mr. Marchuk was Director, Corporate Human Resources for E.I. Du Pont De Nemours and Company (“E.I. Du Pont”). From September 1999 to November 2001, Mr. Marchuk was Director, Global HR Delivery for E.I. Du Pont. From February 1999 to August 1999, Mr. Marchuk served E.I.
Plant was appointed Howmet’s Chief Executive Officer effective October 14, 2021, and was Co-Chief Executive Officer from April 2020 to October 2021. From February 2019 to April 2020, he was the Chief Executive Officer of Arconic Inc., as the Company was then known prior to its separation.
From February 2019 to April 2020, he was the Chief Executive Officer of Arconic Inc., as the Company was then known prior to its separation. He has served as chairman of Howmet's Board of Directors since October 2017 and as a member of the Board since February 2016. Mr.
Marchuk , 66, Executive Vice President, Chief Human Resources Officer and Interim President, Engineered Structures. Mr. Marchuk was initially elected Executive Vice President and Chief Human Resources Officer of Howmet effective March 1, 2019. Prior to joining Howmet, from January 2016 to February 2019, he was Executive Vice President and Chief Human Resources Officer at Adient, an automotive manufacturer.
Prior to joining Howmet, from January 2016 to February 2019, he was Executive Vice President and Chief Human Resources Officer at Adient, an automotive manufacturer. From July 2006 to May 2015, Mr. Marchuk was Executive Vice President of Human Resource at TRW Automotive, and served as TRW’s Vice President, Human Resources from September 2004 to July 2006.
Its differentiated technologies enable lighter, more fuel-efficient aircraft and commercial trucks to operate with a lower carbon footprint and support more sustainable air and ground transportation. Howmet is a global company operating in 20 countries. Based upon the country where the point of shipment occurred, North America and Europe generated 70% and 23%, respectively, of Howmet’s sales in 2023.
Howmet’s technological capabilities support the innovation and growth of next-generation aerospace programs. Its differentiated technologies enable lighter, more fuel-efficient aircraft and commercial trucks to operate with a lower carbon footprint and support more sustainable air and ground transportation. Howmet is a global company operating in 19 countries.
Sales by Market and Significant Customer Revenue Sales by market for the years ended December 31, 2023, 2022, and 2021, were: For the Year Ended December 31, 2023 2022 2021 Aerospace - Commercial 49 % 46 % 41 % Aerospace - Defense 15 % 16 % 19 % Commercial Transportation 21 % 23 % 23 % Industrial and Other 15 % 15 % 17 % In 2023, General Electric Company and RTX Corporation represented approximately 12% and 9% , respectively, of the Company’s third-party sales.
Sales by Market and Significant Customer Revenue Sales by market for the years ended December 31, 2024, 2023, and 2022, were: For the Year Ended December 31, 2024 2023 2022 Aerospace - Commercial 52 % 49 % 46 % Aerospace - Defense 16 % 15 % 16 % Commercial Transportation 17 % 21 % 23 % Industrial and Other (1) 15 % 15 % 15 % (1) Industrial and Other comprise industrial gas turbine (approximately 45%), general industrial (approximately 30%), and oil and gas (approximately 25%).
The list in the above table does not include 18 locations that serve as sales and administrative offices, distribution centers or warehouses. (2) Leased property or partially leased property. 5 Table of Contents Sources and Availability of Raw Materials Important raw materials purchased in 2023 for each of the Company’s reportable segments are listed below.
The list in the above table does not include 17 locations that serve as sales and administrative offices, distribution centers or warehouses. (2) Leased property or partially leased property.
He has served as chairman of Howmet's Board of Directors since October 2017 and as a member of the Board since February 2016. Mr. Plant previously served as Chairman of the Board, President and Chief Executive Officer of TRW Automotive from 2011 to 2015, and as its President and Chief Executive Officer from 2003 to 2011.
Plant previously served as Chairman of the Board, President and Chief Executive Officer of TRW Automotive from 2011 to 2015, and as its President and Chief Executive Officer from 2003 to 2011. TRW Automotive was acquired by ZF Friedrichshafen AG in May 2015. Mr.
This covers approximately 1,400 employees; the current agreement, which was ratified in 2023, expires on April 1, 2028. The second largest workforce covered under a collective bargaining agreement is between Howmet and the UAW at our Cleveland, Ohio location. This covers approximately 750 employees; the current agreement expires on April 28, 2024.
Of these eight, the largest workforce covered under a collective bargaining agreement is between Howmet and the United Autoworkers (“UAW”) at our Engine Products facility in Whitehall, Michigan. The current agreement, which covers approximately 1,450 employees, expires on April 1, 2028.
Our development process framework provides tools and resources to identify career options, skills gaps and actions they can take to progress within the Company. Using a human capital management platform, employees can build a professional profile to share their career aspirations and learn new skills.
The Company enables our employees to own their development and create rewarding careers that draw on their aptitudes and support their ambitions. Our development process framework provides tools and resources to identify career options, skills gaps and actions they can take to progress within the Company.
We prioritize our risk management processes toward the prevention of fatality and serious injury. 7 Table of Contents Employees Total worldwide employment at the end of 2023 was approximately 23,200 employees in 23 countries. Approximately 3,400 employees, or 25% of the U.S. workforce, are represented by labor unions in the United States.
Employees Total worldwide employment at the end of 2024 was approximately 23,930 employees in 22 countries. 7 Table of Contents Approximately 3,500 employees, or 25% of the U.S. workforce, are represented by labor unions in the United States. Within the United States, there are eight collective bargaining agreements with varying expiration dates between Howmet and various labor unions.
Our talent review and succession planning process is an ongoing priority and is sponsored and led by our Chief Executive Officer (“CEO”) with oversight by the Board of Directors. We use a data-driven approach to track how our employees are progressing through our organization.
Our talent review and succession planning process is an ongoing priority and is sponsored and led by our Chief Executive Officer with oversight by the Board of Directors. Howmet’s strong health and safety culture empowers our employees and contractors to take personal responsibility for their actions and the safety of their coworkers.
From September 1999 to November 2001, Mr. Marchuk was Director, Global HR Delivery for E.I. Du Pont. From February 1999 to August 1999, Mr. Marchuk served E.I. Du Pont as its Global HR Director, Global Services Division. 8 Table of Contents John C. Plant , 70, Executive Chairman and Chief Executive Officer. Mr.
Du Pont as its Global HR Director, Global Services Division. John C. Plant , 71, Executive Chairman and Chief Executive Officer. Mr. Plant was appointed Howmet’s Chief Executive Officer effective October 14, 2021, and was Co-Chief Executive Officer from April 2020 to October 2021.
We seek to identify high performers and support their development into potential future leaders, with a particular focus on providing equitable opportunities to individuals who are members of underrepresented groups.
We use a data-driven approach to track how our employees are progressing through our organization. We seek to identify high performers and support their development into potential future leaders, focusing on providing opportunities to all individuals. A valuable component of development is Howmet’s mentoring program, which builds readiness for future leaders.
We believe providing employees with avenues to new skills contributes to increased motivation and engagement, resulting in higher employee retention. The Company enables our employees to own their development and create rewarding careers that draw on their aptitudes and support their ambitions.
In addition to existing training development programs for salaried employees, we have been working to extend training access using technology to our hourly employees during 2024, piloting this technology at several locations. We believe providing employees with avenues to new skills contributes to increased motivation and engagement, resulting in higher employee retention.
To retain new talent, the Company offers an onboarding program to develop a sense of belonging, teamwork and productivity. In addition to existing training development programs for salaried employees, we extended training access using technology to our hourly employees during 2023.
Additional technologies such as recruiting booster text capabilities facilitate communicating with candidates quickly and efficiently. To retain new talent, the Company offers an onboarding program to develop a sense of belonging, teamwork, and productivity.
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Item 1. Business. General Howmet Aerospace Inc. (formerly known as Arconic Inc.) is a Delaware corporation with its principal office in Pittsburgh, Pennsylvania and the successor to Arconic Inc., a Pennsylvania corporation formed in 1888 and formerly known as Alcoa Inc.
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Based upon the country where the point of shipment occurred, North America and Europe generated 71% and 23%, respectively, of Howmet’s sales in 2024.
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(the new name for Alcoa Inc., which, through the transactions described above, later became Howmet Aerospace Inc.) and Alcoa Corporation.
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The Company’s portfolio, sold under the Alcoa® Wheels brand, includes advanced wheel designs utilizing MagnaForce® alloy, offering superior durability and performance. Compared to standard steel wheel configurations, our aluminum wheels deliver up to 59% weight savings per tractor-trailer, enabling greater payload capacity.
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Following this separation, the Company retained the Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions businesses; and its previous Alumina and Primary Metals businesses, rolling mill operations in Warrick, Indiana and 25.1% interest in the Ma’aden Rolling Company were spun-off to Alcoa Corporation. In connection with the Alcoa Inc.
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Our proprietary Dura-Bright® surface treatment resists corrosion and significantly reduces maintenance requirements, helping fleets maintain a professional appearance while lowering operational costs.
Removed
The Company’s portfolio of wheels is sold under the product brand name Alcoa® Wheels, which are five times stronger and 47% lighter than steel wheels. The Ultra ONE® Wheel with MagnaForce® alloy is the lightest portfolio of wheels on the market.
Added
On April 2, 2024, General Electric Company, one of our largest customers, completed the spin-off of its energy-focused business into GE Vernova, a new publicly traded company. Since then, General Electric Company operates as GE Aerospace. In 2024, RTX Corporation and GE Aerospace each represented approximately 10% of the Company’s third-party sales.
Removed
A significant trademark filing campaign for the names “Howmet” and “Howmet Aerospace” along with its “H” logo was initiated in 2019, in support of the corporate launch of Howmet Aerospace Inc. As of the end of 2023, the Company’s worldwide trademark portfolio consists of approximately 1,470 registered trademarks and 116 pending trademark applications.
Added
(3) In October 2024, Howmet acquired Camcraft LTD. 5 Table of Contents Sources and Availability of Raw Materials Important raw materials purchased in 2024 for each of the Company’s reportable segments are listed below.
Removed
Our Employee Resource Groups, composed of the African Heritage, EurAsian Diversity & Inclusion, Latin+, Next Generation, Pride, Veterans, and Women’s Networks, continue to be fundamental to building our culture of inclusion. These networks provide colleagues with valuable support and advice, create development opportunities, and provide leadership with feedback that raises awareness of issues and challenges.
Added
As of the end of 2024, the Company’s worldwide trademark portfolio consisted of approximately 1,570 registered trademarks and 50 pending trademark applications. Following the Alcoa Inc.
Removed
The Company also provides diversity awareness training and resources. Our Board of Directors and Executive Leadership team review diversity, equity and inclusion activity on a regular basis. Howmet’s strong health and safety culture empowers our employees and contractors to take personal responsibility for their actions and the safety of their coworkers.
Added
Separation Transaction, the Company retained the Alcoa Wheels® business and, pursuant to a Trademark License Agreement, is the exclusive licensee of the “Alcoa” name and logo for use with the wheels, hubs, and related products that we manufacture.
Removed
Within the United States, there are eight collective bargaining agreements with varying expiration dates between Howmet and various labor unions. Of these eight, the largest workforce covered under a collective bargaining agreement is between Howmet and the United Autoworkers (“UAW”) at our Whitehall, Michigan location.
Added
We use various risk identification, assessment, and control processes to reduce the likelihood of safety and health incidents in the workplace, with prioritization of the prevention of fatality and serious injury.
Added
The second largest workforce of approximately 700 employees within our Engineered Structures and Forged Wheels segments is covered under a five-year collective bargaining agreement reached in March 2024 between Howmet and the UAW at our Cleveland, Ohio location, which expires in February 2029. The Company’s next significant plant collective bargaining agreement in the U.S. expires in 2027.
Added
Marchuk , 67, Executive Vice President, Chief Human Resources Officer. Mr. Marchuk was initially elected Executive Vice President and Chief Human Resources Officer of Howmet effective March 1, 2019. He served as Interim President, Engineered Structures, from October 2023 to April 2024; and Interim President, Fastening Systems, from November 2022 to May 2023.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
41 edited+10 added−4 removed75 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
41 edited+10 added−4 removed75 unchanged
2023 filing
2024 filing
Biggest changeHowmet is unable to predict the future course of industry variables, the strength of the U.S., regional or global economies, or the effects of government actions. Negative economic conditions, such as a major economic downturn or recession, continued inflation, or disruptions in the financial markets, could have a material adverse effect on Howmet’s business, financial condition or results of operations.
Biggest changeNegative economic conditions, such as a major economic downturn or recession, continued inflation, changes in the global trade landscape or disruptions in the financial markets, could have a material adverse effect on Howmet’s business, financial condition, or results of operations. 10 Table of Contents A material disruption of, or manufacturing difficulties at, Howmet’s manufacturing operations could adversely affect Howmet’s business.
The result of these circumstances could have a material adverse effect on Howmet’s business, operating results and financial condition. Howmet’s global operations expose Howmet to risks that could adversely affect its business, financial condition, results of operations, cash flows or the market price of its securities.
The result of these circumstances could have a material adverse effect on Howmet’s business, operating results and financial condition. Howmet’s global operations expose Howmet to risks that could adversely affect its business, financial condition, results of operations or cash flows, or the market price of its securities.
If Howmet’s operations, particularly one of its key manufacturing facilities, were to be disrupted, including because of significant equipment failures, natural disasters, power outages, fires, explosions, terrorism, theft, sabotage, adverse weather conditions, public health crises, labor disputes, labor shortages or other reasons, Howmet may be unable to effectively meet its obligations to, or demand from, its customers.
If Howmet’s operations, particularly at one of its key manufacturing facilities, were to be disrupted, including because of significant equipment failures, natural disasters, power outages, fires, explosions, terrorism, theft, sabotage, adverse weather conditions, public health crises, labor disputes, labor shortages, or other reasons, Howmet may be unable to effectively meet its obligations to, or demand from, its customers.
Additionally, we may not be able to increase the prices of our products due to competitive pricing pressure and other factors. If the Company is unable to offset significant cost increases through customer price increases, productivity improvements, cost reduction or other programs, Howmet’s business, operating results or financial condition could be materially adversely affected.
Additionally, we may not be able to increase the prices of our products due to competitive pricing pressure and other factors. If the Company is unable to pass through or offset significant cost increases through customer price increases, productivity improvements, cost reduction or other programs, Howmet’s business, operating results or financial condition could be materially adversely affected.
Additional risks and uncertainties not presently known to Howmet or that Howmet currently deems immaterial may also adversely affect the Company materially in future periods. Risks Related to Our Business and Operations The markets for Howmet’s products are cyclical, and such markets and Howmet’s operations are influenced by a number of factors, including global economic conditions.
Additional risks and uncertainties not presently known to Howmet or that Howmet currently deems immaterial may also adversely affect the Company materially in future periods. Risks Related to Our Business and Operations The markets for Howmet’s products are cyclical, and such markets and Howmet’s operations are influenced by a number of factors, including global economic conditions and regulations.
Share repurchases and the declaration of dividends fall within the discretion of Howmet’s Board of Directors, and the Board’s decision regarding such matters depends on many factors, including Howmet’s financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of the Company’s debt obligations, industry practice, legal requirements, regulatory constraints and other factors that the Board deems relevant.
Share repurchases and the declaration of dividends fall within the discretion of Howmet’s Board of Directors (the “Board”), and the Board’s decision regarding such matters depends on many factors, including Howmet’s financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of the Company’s debt obligations, industry practice, legal requirements, regulatory constraints, and other factors that the Board deems relevant.
If either Alcoa Corporation or Arconic Corporation, as applicable, is not able to fully satisfy its indemnification obligations to us, we may be required to bear such losses. Each of these risks could negatively affect our business, results of operations and financial condition. Item 1B. Unresolved Staff Comments. None.
If either Alcoa Corporation or Arconic Corporation is not able to fully satisfy its indemnification obligations to us, we may be required to bear such losses. Each of these risks could negatively affect our business, results of operations, and financial condition. Item 1B. Unresolved Staff Comments. None.
Physical risks associated with climate change may result in an increase of the exposure to, and impact of, events with damage due to flooding, extreme winds and extreme precipitation for Howmet locations, suppliers or customers. Prolonged periods of drought may result in wildfires and/or restrictions on process water use.
Physical risks associated with climate change may result in an increase of the exposure to, and impact of, events with damage due to flooding, extreme winds, and extreme precipitation for Howmet locations or those of its suppliers or customers. Prolonged periods of drought may result in wildfires and/or restrictions on process water use.
Such contracts are subject to various procurement laws and regulations and contract provisions relating to their formation, administration and performance. New laws and regulations or changes to existing ones (including, but not limited to, those related to subcontracting, cybersecurity and specialty metals) can increase our risks and/or costs.
Such contracts are subject to various procurement laws and regulations and contract provisions relating to their formation, administration, and performance. Compliance with new laws and regulations or changes to existing ones (including, but not limited to, those related to subcontracting, cybersecurity, and specialty metals) can increase our risks and/or costs.
While we generally attempt to pass along higher raw material and energy costs to our customers through contractual agreements in the form of price increases, there can be a delay between an increase in our costs and our ability to increase the prices of our products.
While we generally intend to pass along higher raw material and energy costs to our customers through contractual agreements in the form of price increases, there can be a delay between an increase in our costs and our ability to increase the prices of our products.
Material liabilities relating to injury, death or other workers’ compensation claims could have a material adverse effect on our results of operations and financial condition or result in negative publicity and/or significant reputational harm. Howmet may be affected by global climate change or by legal, regulatory, customer or supplier responses to such change.
Material liabilities relating to injury, death, or other workers’ compensation claims could have a material adverse effect on our results of operations and financial condition or result in negative publicity and/or significant reputational harm. 15 Table of Contents Howmet may be affected by global climate change or by legal, regulatory, customer, or supplier responses to such change.
If our government contracts are terminated, if we are suspended from government work, or if our ability to compete for new contracts is adversely affected, our financial condition and results of operation could be adversely affected. Howmet may face challenges to its intellectual property rights which could adversely affect the Company’s reputation, business and competitive position.
If our government contracts are terminated, if we are suspended from government work, or if our 14 Table of Contents ability to compete for new contracts is adversely affected, our financial condition and results of operation could be adversely affected. Howmet may face challenges to its intellectual property rights which could adversely affect the Company’s reputation, business, and competitive position.
Consolidation within Howmet’s customer base may result in customers who are better able to exert leverage in negotiating prices and other terms of sale, or may lead to 12 Table of Contents reduced demand for Howmet’s products if a combined entity replaces Howmet with a Howmet competitor with which it had prior relationships.
Consolidation within Howmet’s customer base may result in customers who are better able to exert leverage in negotiating prices and other terms of sale, or may lead to reduced demand for Howmet’s products if a combined entity replaces Howmet with a Howmet competitor with which it had prior relationships.
The occurrence of such events could negatively impact Howmet’s reputation and its competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have a material adverse effect on its financial condition and results of operations.
The occurrence of such events could negatively impact Howmet’s reputation and its competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability, 12 Table of Contents and increased remediation costs, any of which could have a material adverse effect on its financial condition and results of operations.
Manufacturing problems arising from equipment failure or malfunction, inadvertent failure to follow regulatory or customer specifications and procedures, including those related to quality or safety, and problems with raw materials could have 10 Table of Contents an adverse impact on the Company’s ability to fulfill orders or meet product quality or performance requirements, which may result in negative publicity and damage to our reputation, adversely impacting product demand and customer relationships.
Manufacturing problems arising from equipment failure or malfunction, inadvertent failure to follow regulatory or customer specifications and procedures, including those related to quality or safety, and problems with raw materials could have an adverse impact on the Company’s ability to fulfill orders or meet product quality or performance requirements, which may result in negative publicity and damage to our reputation, adversely impacting product demand and customer relationships.
Howmet’s competitive position and future performance depends, in part, on the Company’s ability to develop and innovate products, deploy technology initiatives and implement advanced manufacturing technologies.
Howmet’s competitive position and future performance depend, in part, on the Company’s ability to develop and innovate products, deploy technology initiatives, and implement advanced manufacturing technologies.
Howmet’s tax expense includes estimates of additional tax that may be incurred for 14 Table of Contents tax exposures and reflects various estimates and assumptions. The assumptions include assessments of future earnings of the Company that could impact the valuation of its deferred tax assets.
Howmet’s tax expense includes estimates of additional tax that may be incurred for tax exposures and reflects various estimates and assumptions. The assumptions include assessments of future earnings of the Company that could impact the valuation of its deferred tax assets.
These climate-related impacts may have an adverse effect on production capacity of Howmet sites, suppliers and customers. These types of incidents could have a material adverse effect on our results of operations and financial condition.
These climate-related impacts may have an adverse effect on production capacity of Howmet sites or those of its suppliers or customers. These types of incidents could have a material adverse effect on our results of operations and financial condition.
The foregoing factors may adversely affect the Company’s financial condition, liquidity and results of operations. 13 Table of Contents Dividends and share repurchases fall within the discretion of our Board of Directors and depend on a number of factors.
The foregoing factors may adversely affect the Company’s financial condition, liquidity, and results of operations. Dividends and share repurchases fall within the discretion of our Board of Directors and depend on a number of factors.
Howmet’s failure to successfully renew, 11 Table of Contents renegotiate or favorably re-price such agreements, or a material deterioration in or termination of these customer relationships, could result in a reduction or loss in customer revenue.
Howmet’s failure to successfully renew, renegotiate, or favorably re-price such agreements, or a material deterioration in or termination of these customer relationships, could result in a reduction or loss in customer revenue.
Demand for commercial aircraft and spare parts is influenced by airline industry profitability, trends in airline passenger traffic domestically and globally, the state of U.S., regional and world economies, the ability of aircraft purchasers to obtain required financing and numerous other factors.
Demand for commercial aircraft and spare parts is influenced by airline industry profitability, trends in domestic and global airline passenger traffic, the state of U.S., regional and world economies, the ability of aircraft purchasers to obtain required financing and numerous other factors.
In connection with our separation transactions, we entered into various agreements with Arconic Corporation and Alcoa Corporation, including respective Separation and Distribution agreements pursuant to which Arconic Corporation and Alcoa 15 Table of Contents Corporation agreed to indemnify us for certain liabilities, and we agreed to indemnify those parties for certain liabilities.
In connection with our separation transactions, we entered into various agreements with Arconic Corporation and Alcoa Corporation, including respective Separation and Distribution agreements pursuant to which Arconic Corporation and Alcoa Corporation agreed to indemnify us for certain liabilities, and we agreed to indemnify those parties for certain liabilities.
Howmet is exposed to environmental, health and safety risks and is subject to a broad range of health, safety and environmental laws and regulations which may result in substantial costs and liabilities. Howmet’s operations worldwide are subject to numerous complex and increasingly stringent health, safety and environmental laws and regulations.
Howmet is exposed to environmental, health, and safety risks and is subject to a broad range of health, safety, and environmental laws and regulations which may result in substantial costs and liabilities. Howmet and its worldwide operations, as well as its customers and suppliers, are subject to numerous complex and increasingly stringent health, safety, and environmental laws and regulations.
Additionally, a significant downturn or deterioration in the business or financial condition or loss of a key customer supplied by Howmet could adversely affect Howmet’s financial results.
Additionally, a significant downturn, adverse development or deterioration in the business or financial condition of a key customer, or the loss of a key customer, could adversely affect Howmet’s financial results.
Changes and uncertainties in the timing and level of future aircraft production by OEMs may cause our future results to differ from prior periods due to changes in the Company’s product mix. The defense aerospace cycle is highly dependent on U.S. and foreign government funding.
Changes and uncertainties in the timing and level of future aircraft production by OEMs may cause our future results to differ from prior periods due to changes in the Company’s product mix. The defense aerospace cycle is highly dependent on U.S. and foreign government defense spending, which can be impacted by a government’s shifting priorities and budget compromises.
Commercial transportation sales and production are affected by many factors, including the age of the vehicle fleet, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, and levels of competition.
The demand for Howmet’s commercial transportation products is driven by the number of vehicles produced by commercial transportation manufacturers. Commercial transportation sales and production are affected by many factors, including the age of the vehicle fleet, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, and levels of competition.
Additionally, Howmet utilizes natural gas, electricity and other fuels to operate its facilities. Significant increased energy costs and/or costs to transition to renewable energy sources, as a result of new laws, such as carbon pricing or product energy efficiency requirements, or as a result of customer requirements, could be passed along to the Company and its customers and suppliers.
Significant increased energy costs and/or costs to transition to renewable energy sources, as a result of new laws, such as carbon pricing or product energy efficiency requirements, or as a result of customer requirements, could be passed along to the Company and its suppliers.
Failure to attract and retain a qualified workforce and key personnel or to provide adequate succession planning could adversely affect Howmet’s operations and competitiveness. Howmet’s global operations require qualified and skilled personnel with relevant industry and technical experience.
Failure to attract and retain a qualified workforce and key personnel or to provide adequate succession planning could adversely affect Howmet’s operations and competitiveness. Howmet’s global operations require qualified and skilled personnel with relevant industry and technical experience. Additionally, the increase in aerospace demand requires the Company to successfully recruit, train, and retain new workers and talent.
Supply constraints could impact our production or force us to purchase materials and other supplies from alternative sources, which may not be available in sufficient quantities or at prices that are favorable to us. Howmet could also have exposure if a key supplier is unable to deliver sufficient quantities of a necessary material on a timely basis.
Supply constraints could impact our production or force us to purchase materials and other supplies from alternative sources, which may not be available in sufficient quantities, at prices that are favorable to us or in a timely manner.
Although past attacks did not result in known losses of any critical data or have a material impact on Howmet’s financial condition or results of operations, the scope and impact of any future incident cannot be predicted.
Although past attacks did not result in known losses of any critical data or have a material impact on Howmet’s financial condition or results of operations, the scope and impact of any future incident cannot be predicted. The use of new and evolving technologies, such as artificial intelligence, or AI, presents risks and challenges that can impact our business.
If the Company fails to attract, train, develop and retain a global workforce with the skills and in the locations we need to operate and grow our business, our business and operations could be adversely impacted. Furthermore, the continuity of key personnel and the preservation of institutional knowledge are vital to the success of the Company’s growth and business strategy.
If the Company fails to attract, train, develop, and retain a global workforce with the skills and in the locations we 11 Table of Contents need to operate and grow our business, our business and operations could be adversely impacted.
Compliance with health, safety and environmental laws and regulations, including remediation obligations, may impact Howmet’s results of operations or liquidity in a particular period. In addition, the industrial activities conducted at Howmet’s facilities present a significant risk of injury or death to our employees or third parties that may be on site.
In addition, the industrial activities conducted at Howmet’s facilities present a significant risk of injury or death to our employees or third parties that may be on site.
It is also impacted by the effects of terrorism, a changing global geopolitical environment, U.S. foreign policy, whether older military aircraft are retired, and technological improvements to new engines and airframes. The demand for Howmet’s commercial transportation products is driven by the number of vehicles produced by commercial transportation manufacturers.
It is also impacted by the effects of terrorism, a changing global geopolitical environment, U.S. foreign policy, the impact of government shutdowns and federal debt ceiling on funding and appropriations, whether older military aircraft are retired, and technological improvements to new engines and airframes.
Limitations on Howmet’s ability to access global capital markets, a reduction in Howmet’s liquidity or an increase in borrowing costs could materially and adversely affect Howmet’s ability to maintain or grow its business, which in turn may adversely affect its financial condition, liquidity and results of operations.
Limitations on Howmet’s ability to access global capital markets, a reduction in Howmet’s liquidity or an increase in borrowing costs could materially and adversely affect Howmet’s ability to maintain or grow its business, which in turn may adversely affect its financial condition, liquidity and results of operations. 13 Table of Contents An adverse decline in the liability discount rate, lower-than-expected investment return on pension assets, and other factors could adversely affect Howmet’s results of operations or amount of pension funding contributions in future periods.
Several of our suppliers have had constraints on their ability to supply Howmet with its full requirements due to lack of capacity, labor shortages and/or material availability. If such constraints continue or escalate, it could result in an adverse impact on our business.
Howmet could also have exposure if a key supplier is unable to deliver sufficient quantities of a necessary material on a timely basis. Several of our suppliers have had, in the past, constraints on their ability to supply Howmet with its full requirements due to lack of capacity, labor shortages and/or material availability.
The costs of certain raw materials (including, but not limited to, nickel, titanium, aluminum, cobalt, and rhenium) necessary for the manufacture of Howmet’s products and other manufacturing and operating costs are influenced by market forces and governmental constraints, including inflation, supply and demand, and shortages, and could be further influenced by export limits, sanctions, new or increased import duties, and countervailing or anti-dumping duties.
The costs of certain raw materials (including, but not limited to, nickel, titanium, aluminum, cobalt, and superalloy materials) necessary for the manufacture of Howmet’s products and other manufacturing and operating costs are influenced by market forces, including inflation, supply and demand, and shortages. For example, as the Russia-Ukraine conflict continues, global titanium prices may continue to fluctuate or increase.
Because of approval, license and qualification requirements applicable to manufacturers and/or their suppliers, sources of alternatives to mitigate supply disruptions may not be readily available to Howmet. Any delay in supply from these suppliers could prevent us from meeting customer demand for our products.
If such constraints were to continue or escalate, it could result in an adverse impact on our business. Because of approval, license and qualification requirements applicable to manufacturers and/or their suppliers, sources of alternatives to mitigate supply disruptions may not be readily available to Howmet.
The manufacture and sale of our products expose Howmet to potential product liability, personal injury, property damage and related claims.
Risks Related to Legal and Regulatory Matters Howmet may be exposed to significant legal proceedings, investigations, or changes in U.S. federal, state, or foreign law, regulation, or policy. The manufacture and sale of our products expose Howmet to potential product liability, personal injury, property damage, and related claims.
There can be no assurance that the Company will declare dividends or repurchase stock in the future in any particular amounts, or at all. Risks Related to Legal and Regulatory Matters Howmet may be exposed to significant legal proceedings, investigations or changes in U.S. federal, state or foreign law, regulation or policy.
There can be no assurance that the Company will declare dividends or repurchase stock in the future in any particular amounts, or at all. The Company may modify, suspend, or cancel its share repurchase program or its dividend policy in any manner and at any time that it may deem necessary or appropriate.
Higher energy costs result in increases in operating expenses at our manufacturing facilities, in the expense of shipping raw materials to our facilities, and in the expense of shipping products to our customers.
Geopolitical tensions, conflicts, and wars have impacted, and may in the future impact, global energy markets, leading to high volatility and increasing prices for crude oil, natural gas, and other energy supplies. Energy costs impact operating expenses at our manufacturing facilities, the expense of shipping raw materials to our facilities, and the expense of shipping products to our customers.
For example, as the Russia-Ukraine conflict continues, global titanium prices may continue to fluctuate or increase. Our customers’ failure to return titanium revert (reusable scrap) to Howmet can result in an increase of the amount of titanium purchased at inflated costs.
Our customers’ failure to return titanium revert (reusable scrap) to Howmet can result in an increase of the amount of titanium purchased at inflated costs. Governmental constraints, including export restrictions, sanctions, new or increased import duties or tariffs, and countervailing or anti-dumping duties, also impact the cost of raw materials and other manufacturing and operating costs.
Removed
The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to high volatility and increasing prices for crude oil, natural gas and other energy supplies.
Added
The global trade landscape is growing more volatile, including, as a result of the recent executive orders in the U.S. for the imposition of new tariffs, the likelihood of further tariffs and retaliatory counter measures by other countries.
Removed
Recent high levels of inflation worldwide and in the United States has resulted in an increase in the costs of materials and labor.
Added
We continually monitor the global trade environment and any changes in tariffs, trade agreements, restrictions, or sanctions that may impact the Company or our suppliers or customers, and work to mitigate potential impacts. Inflation worldwide and in the United States has resulted in an increase in the costs of materials and labor.
Removed
A material disruption of, or manufacturing difficulties at, Howmet’s manufacturing operations could adversely affect Howmet’s business.
Added
Howmet is unable to predict the future course of industry variables, the strength of the U.S., regional or global economies, or the effects of government actions.
Removed
An adverse decline in the liability discount rate, lower-than-expected investment return on pension assets and other factors could adversely affect Howmet’s results of operations or amount of pension funding contributions in future periods.
Added
Any delay in supply from these suppliers could prevent us from meeting customer demand for our products.
Added
Furthermore, the continuity of key personnel and the preservation of institutional knowledge are vital to the success of the Company’s growth and business strategy.
Added
For example, quality control issues and a recent labor union work stoppage at The Boeing Company (“Boeing”) have negatively impacted, and are expected to negatively impact, narrow body and wide body production rates in the near term. Boeing production rates have had and are expected to have a material impact on the financial performance of Howmet.
Added
Unauthorized use or misuse of AI by the Company's employees, vendors or others may result in the disclosure of confidential company or customer data, reputational harm, privacy law violations, cybersecurity risks, and legal liability.
Added
Credit ratings may be revised or revoked at any time at the sole discretion of the credit rating organizations.
Added
Compliance with health, safety, and environmental laws and regulations, including increased indirect costs resulting from our suppliers incurring additional compliance costs that are passed on to us, and remediation obligations, may impact Howmet’s results of operations or liquidity.
Added
Additionally, Howmet and its customers and suppliers utilize natural gas, electricity and other fuels to operate their facilities.
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+1 added−0 removed11 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+1 added−0 removed11 unchanged
2023 filing
2024 filing
Biggest changeHowmet has implemented a multi-faceted cybersecurity risk management framework, which includes progressing toward achievement of the Cybersecurity Maturity Model Certification to certify the Company’s compliance with certain cybersecurity standards published by the National Institute of Standards and Technology.
Biggest changeHowmet has implemented a multi-faceted cybersecurity risk management framework, which includes progressing toward alignment with cybersecurity standards published by the National Institute of Standards and Technology and achievement of the Department of Defense (DoD) Cybersecurity Maturity Model Certification, which will require companies like Howmet that do business with the DoD to obtain specific third-party certifications relating to specified cybersecurity standards to be eligible for new contract awards.
In the event of a potential material cybersecurity incident or ransomware demand, Howmet has adopted a policy to respond to such event, which includes protocols and procedures to, among other things, escalate the incident or demand, form a core cross-functional response leadership team (including the CISO and CIO) to assess severity, formulate response and remediation, and determine any required reporting or notifications. 17 Table of Contents
In the event of a potential material cybersecurity incident or ransomware demand, Howmet has adopted a policy to respond to such event, which includes protocols and procedures to, among other things, escalate the incident or demand, form a core cross-functional response leadership team (including the CISO and CIO) to assess severity, formulate response and remediation, and determine any required reporting or notifications.
The Cybersecurity Committee currently comprises two members and meets at least quarterly with members of management, including the CISO and CIO. The Cybersecurity Committee may, from time to time, invite third-party advisors and experts as it deems appropriate.
The Cybersecurity Committee currently comprises three members and meets at least quarterly with members of management, including the CISO and CIO. The Cybersecurity Committee may, from time to time, invite third-party advisors and experts as it deems appropriate.
The CIO has over 20 years of experience in information technology, including, most recently, as Vice President Global IT and Chief Information Officer at Varroc Lighting Systems (2018-2021) and Chief Information Officer at AM General LLC (2016-2018). The CIO holds a Bachelor of Engineering degree in Industrial Engineering from Universidad de Lima.
The CIO has over 20 years of experience in information technology, including, most recently, as Vice President Global IT and Chief Information Officer at Varroc Lighting Systems (2018-2021) and Chief Information Officer at AM General LLC (2016-2018). The CIO holds a Bachelor of Engineering degree in Industrial Engineering from Universidad de Lima. 17 Table of Contents
The Cybersecurity Committee reports to the full Board after each of its meetings and as needed regarding the cybersecurity risks, incidents and other matters reviewed and considered by the Committee. 16 Table of Contents The Company’s CISO leads management’s assessment, prevention and management of cybersecurity risks.
The Cybersecurity Committee reports to the full Board after each of its meetings and as needed regarding the cybersecurity risks, incidents, and other matters reviewed and considered by the Committee. The Company’s CISO leads management’s assessment, prevention, and management of cybersecurity risks.
Our enterprise risks, including cybersecurity risks, are reviewed on a biannual basis. The review involves participation and engagement by, among others, subject matter experts like the Company’s Chief Information Security Officer (“CISO”) and Chief Information Officer (“CIO”), the presidents of the Company’s business segments, and executive management. Mitigation plans are deployed across the Company with cross-functional collaboration as applicable.
Our enterprise risks, including cybersecurity risks, are reviewed on a biannual basis. The review involves participation and engagement by, among 16 Table of Contents others, subject matter experts like the Company’s Chief Information Security Officer (“CISO”) and Chief Information Officer (“CIO”), representatives of the Company’s business segments, and executive management.
Enterprise risk management is reviewed with the Board annually. The Cybersecurity Committee, which originated in 2015 as a dedicated cybersecurity subcommittee of the Audit Committee, assists the Board in its oversight of the Company’s cybersecurity programs and risks.
The Cybersecurity Committee, which originated in 2015 as a dedicated cybersecurity subcommittee of the Audit Committee, was made a formal committee of the Board in 2022. The Cybersecurity Committee assists the Board in its oversight of the Company’s cybersecurity programs and risks.
Added
Mitigation plans are deployed across the Company with cross-functional collaboration as applicable. Enterprise risk management is reviewed with the Board annually.
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 4. Mine Safety Disclosures 18 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18 Item 6. Selected Financial Data 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 18 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18 Item 6. Selected Financial Data 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+8 added−2 removed4 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+8 added−2 removed4 unchanged
2023 filing
2024 filing
Biggest changeAs of December 31, 2018 2019 2020 2021 2022 2023 Howmet Aerospace Inc. $ 100.00 $ 183.89 $ 222.71 $ 248.70 $ 308.80 $ 425.67 S&P 500 ® Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 ® Industrials Index 100.00 129.37 143.68 174.02 164.49 194.31 S&P Aerospace & Defense Index 100.00 130.33 109.39 123.86 145.37 155.21 19 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to the Company’s open-market repurchases of its common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)(2) October 1 - October 31, 2023 — $ — — $ 797 November 1 - November 30, 2023 381,400 $ 52.44 381,400 $ 777 December 1 - December 31, 2023 1,531,335 (3) $ 52.54 1,522,813 $ 697 Total for quarter ended December 31, 2023 1,912,735 $ 52.52 1,904,213 (1) Excludes commissions cost.
Biggest changeAs of 4/1/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Howmet Aerospace Inc. $ 100.00 $ 216.21 $ 241.44 $ 299.80 $ 413.25 $ 837.65 S&P 500 ® Index 100.00 147.26 189.53 155.20 196.00 245.04 S&P 500 ® Industrials Index 100.00 152.24 184.39 174.29 205.89 241.86 S&P 500 ® Aerospace & Defense Index 100.00 126.52 143.25 168.13 179.51 205.36 20 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to the Company’s open-market repurchases of its common stock during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)(2) October 1 - October 31, 2024 872,490 $ 103.15 872,490 $ 2,297 November 1 - November 30, 2024 386,401 $ 116.46 386,401 $ 2,252 December 1 - December 31, 2024 472,302 $ 116.45 472,302 $ 2,197 Total for quarter ended December 31, 2024 1,731,193 $ 109.75 1,731,193 (1) Excludes commissions cost.
Under the Company’s share repurchase program (the “Share Repurchase Program”), the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions.
Under the Company’s Share Repurchase Program, the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions.
The graph assumes, in each case, an initial investment of $100 on December 31, 2018, and the reinvestment of dividends. The historical prices of the Company presented in the graph and table have been adjusted to reflect the impact of the April 2020 Arconic Inc. Separation Transaction.
The graph assumes, in each case, an initial investment of $100 on December 31, 2019, and the reinvestment of dividends. The historical prices of the Company presented in the graph and table have been adjusted to reflect the impact of the April 2020 Arconic Inc.
The Company’s common stock is listed on the New York Stock Exchange under the symbol “HWM.” The number of holders of record of common stock was 8,883 as of February 12, 2024. 18 Table of Contents Stock Performance Graph The following graph compares the most recent five-year performance of the Company’s common stock with (1) the Standard & Poor’s (“S&P”) 500 ® Index, (2) the S&P 500 ® Industrials Index, a group of 78 companies categorized by Standard & Poor’s as active in the “industrials” market sector, and (3) the S&P Aerospace & Defense Index, which comprises General Dynamics Corporation, Howmet Aerospace Inc., Huntington Ingalls Industries, L3Harris Technologies, Inc., Lockheed Martin Corporation, Northrop Grumman Corporation, RTX Corporation, Textron Inc., The Boeing Company, and Transdigm Group Inc.
The Company’s common stock is listed on the New York Stock Exchange under the symbol “HWM.” The number of holders of record of common stock was 8,656 as of February 10, 2025. 18 Table of Contents Stock Performance Graph The following graph compares the most recent five-year performance of the Company’s common stock with (1) the Standard & Poor’s (“S&P”) 500 ® Index, (2) the S&P 500 ® Industrials Index, a group of 78 companies categorized by Standard & Poor’s as active in the “industrials” market sector, and (3) the S&P 500 ® Aerospace & Defense Index, which comprises Axon Enterprise, Inc., General Dynamics Corporation, General Electric Company (operating as GE Aerospace), Howmet Aerospace Inc., Huntington Ingalls Industries, Inc., L3Harris Technologies, Inc., Lockheed Martin Corporation, Northrop Grumman Corporation, RTX Corporation, Textron Inc., The Boeing Company, and Transdigm Group Incorporated.
Removed
(2) On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 million of the Company's outstanding common stock. After giving effect to the share repurchases made through the fourth quarter of 2023, approximately $697 million Board authorization remained available as of January 1, 2024.
Added
Separation Transaction by removing the estimated value of Arconic Corporation rather than reflecting the value of Arconic Corporation as a dividend as of April 1, 2020.
Removed
(3) Amount includes the surrender of 8,522 shares of Howmet common stock by a participant in the Company’s stock incentive plan to the Company to satisfy the exercise price and tax withholding obligations of employee stock options at the time of exercise. These surrendered shares are not part of any Share Repurchase Programs.
Added
As of December 31, 2019 2020 2021 2022 2023 2024 Howmet Aerospace Inc. $ 100.00 $ 121.11 $ 135.24 $ 167.93 $ 231.48 $ 469.20 S&P 500 ® Index 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 ® Industrials Index 100.00 111.06 134.52 127.15 150.20 176.44 S&P 500 ® Aerospace & Defense Index 100.00 83.94 95.03 111.54 119.09 136.24 19 Table of Contents Supplemental Stock Performance Graph Beginning with Arconic Inc.
Added
Separation Transaction In addition, the Company is providing the following supplemental graph which begins on April 1, 2020, the effective date of the Arconic Inc. Separation Transaction.
Added
The graph compares the Company’s common stock performance from April 1, 2020 to December 31, 2024 with (1) the S&P 500 ® Index, (2) the S&P 500 ® Industrials Index and (3) the S&P 500 ® Aerospace & Defense Index.
Added
The graph assumes, in each case, an initial investment of $100 on April 1, 2020, the date of the Arconic Inc. Separation Transaction and the reinvestment of dividends. The historical prices of the Company presented in the graph and table have been adjusted to reflect the impact of the April 2020 Arconic Inc.
Added
Separation Transaction by removing the estimated value of Arconic Corporation rather than reflecting the value of Arconic Corporation as a dividend as of April 1, 2020.
Added
(2) The Company has a share repurchase program (the “Share Repurchase Program”) that, after giving effect to the additional $50 million share repurchases made in January 2025 at an average price per share of $116.39, retiring approximately 0.4 million shares, has approximately $2,147 million in Board authorization remaining available as of January 31, 2025.
Added
The current Share Repurchase Program was authorized by the Company’s Board of Directors on August 18, 2021 at $1,500 million, which was increased by the Board by $2,000 million on July 30, 2024.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
120 edited+40 added−39 removed74 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
120 edited+40 added−39 removed74 unchanged
2023 filing
2024 filing
Biggest changeThe following financial information reflects certain key highlights of Howmet’s 2023 results: • Sales of $6,640, an increase of 17% from 2022, driven by higher sales in all markets, especially the commercial aerospace market, which increased 24% from 2022; • Net income of $765, or $1.83 per diluted share; • Income before income taxes of $975, an increase of $369, or 61%, from 2022; • Total Segment Adjusted EBITDA (1) of $1,587, an increase of $235, or 17%, from 2022; • Cash on hand and restricted cash at the end of the year of $610; • Cash provided from operations of $901; cash used for financing activities of $868; and cash used for investing activities of $215; • Purchased approximately 5 million shares of the Company’s common stock under the Share Repurchase Program for approximately $250; • Total debt of $3,706, a net decrease of $456 from 2022, reflecting repurchases and partial redemption of $876 aggregate principal amount of the 5.125% Notes due October 2024 (the “5.125% Notes”) and drew $400 in term loans due 2026 during 2023; and 21 Table of Contents • The Company’s common stock had a closing price of $54.12 per share as of December 29, 2023, an increase of $40.92 per share, or 310%, since the Arconic Inc.
Biggest changeThe following financial information reflects certain key highlights of Howmet’s 2024 results: • Sales of $7,430, an increase of 12% from 2023, driven by higher sales in the commercial aerospace, defense aerospace, and industrial and other markets, partially offset by lower sales in the commercial transportation market; • Net income of $1,155, or $2.81 per diluted share; • Income before income taxes of $1,383, an increase of $408, or 42%, from 2023; • Total Segment Adjusted EBITDA (1) of $2,009, an increase of $422, or 27%, from 2023; • Cash on hand and restricted cash at the end of the year of $565; • Cash provided from operations of $1,298; cash used for financing activities of $1,026; and cash used for investing activities of $316; • Repurchased the Company’s common stock of approximately 6 million shares under the Share Repurchase Program for approximately $500; 22 Table of Contents • Total debt of $3,315, a net decrease of $391 from 2023, reflecting repurchases and redemption of $600 aggregate principal amount of the 6.875% Notes due May 2025 (the “2025 Notes”), redemption of $205 aggregate principal amount of the 5.125% Notes due October 2024 (the “ 2024 Notes”) , early partial prepayment of $60 aggregate principal amount of its USD term loan, partially offset by the issuance of $500 aggregate principal amount of the 4.850% Notes due October 2031 (the “2031 Notes”), net of the cross-currency swap that synthetically converted the 2031 Notes into a lower fixed-interest-rate Euro liability; and • The Company’s common stock had a closing price of $109.37 per share as of December 31, 2024, an increase of $96.17 per share, or 729%, since the Arconic Inc.
Net income. Net income was $765, or $1.83 per diluted share, for 2023 compared to $469, or $1.11 per diluted share, in 2022.
Net income was $765, or $1.83 per diluted share, for 2023 compared to $469, or $1.11 per diluted share, in 2022.
The increase in results of $296, or 63%, was primarily due to higher sales in the commercial aerospace market, favorable product pricing of $105, a change of $90 due to the reversal of $25 of the $65 pre-tax charge taken in the third quarter of 2022 related to the LBIE legal proceeding (See Note U to the Consolidated Financial Statements in Part II, Item 8 ), a decrease in Restructuring and other charges of $33, and a decrease in Interest expense, net of $11, partially offset by an increase in the Provision for income taxes primarily driven by an increase in income before income taxes.
The increase in results of $296, or 63%, was primarily due to higher sales in the commercial aerospace market, favorable product pricing, a change of $90 due to the reversal of $25 of the $65 pre-tax charge taken in the third quarter of 2022 related to the LBIE legal proceeding (See Note U to the Consolidated Financial Statements in Part II, Item 8 ), a decrease in Restructuring and other charges of $33, and a decrease in Interest expense, net of $11, partially offset by an increase in the Provision for income taxes primarily driven by an increase in income before income taxes.
Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of $21 (which are included in the $43 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016.
Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of $21, which are included in the $44 in the above paragraph, that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016.
Management continued its focus on liquidity and cash flows as well as improving its operating performance through profitable revenue, efficient operations, and margin enhancement. Management has also continued its intensified focus on capital efficiency. Management’s focus and the related results enabled Howmet to end 2023 with a solid financial position.
Management continued its focus on liquidity and cash flows as well as improving its operating performance through profitable revenue, efficient operations, and margin enhancement. Management has also continued its intensified focus on capital efficiency. Management’s focus and the related results enabled Howmet to end 2024 with a solid financial position.
Sales for 2023 were $6,640 compared with $5,663 in 2022, an increase of $977, or 17%. The increase was primarily due to higher sales in the commercial aerospace, defense aerospace, commercial transportation, and industrial and other markets, favorable product pricing of $105, and an increase in material cost pass through of $90.
Sales for 2023 were $6,640 compared with $5,663 in 2022, an increase of $977, or 17%. The increase was primarily due to higher sales in the commercial aerospace, defense aerospace, commercial transportation, and industrial and other markets, favorable product pricing, and an increase in material cost pass through.
Howmet’s definition of Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization.
Howmet’s definition of Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development (“R&D”) expenses; and Provision for depreciation and amortization.
The impact on the liabilities of a change in the discount rate of 1/4 of 1% would be approximately $36 and either a charge or credit of less than $1 to earnings in the following year. The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets.
The impact on the liabilities of a change in the discount rate of 1/4 of 1% would be approximately $32 and either a charge or credit of less than $1 to earnings in the following year. The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets.
T hese rates were within the respective range of the 20-year moving average of actual performance and the expected future return developed by asset class for each plan. For 2024, management anticipates that the expected long-term rate of return for global plan assets will remain at approximately 7%.
T hese rates were within the respective range of the 20-year moving average of actual performance and the expected future return developed by asset class for each plan. For 2025, management anticipates that the expected long-term rate of return for global plan assets will remain at approximately 7%.
Arconic Corporation and Alcoa Corporation workers’ compensation claims and surety bond fees paid by the Company are proportionately billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation.
Arconic Corporation and Alcoa Corporation workers’ compensation claims and surety bond fees paid by the Company are proportionately billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively.
The yield curve models parallel the plans’ projected cash flows, which have a global average duration of 10 years. The underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company’s plans’ obligations multiple times.
The yield curve models parallel the plans’ projected cash flows, which have a global average duration of 9 years. The underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company’s plans’ obligations multiple times.
The business’s 25 Table of Contents products are also critical components of commercial transportation vehicles and construction and industrial equipment. Fastening Systems are sold directly to customers and through distributors. Generally, the sales and costs and expenses of this segment are transacted in the local currency of the respective operations, which are mostly the U.S. dollar, British pound, and euro.
The business’s products are also critical components of commercial transportation vehicles and construction and industrial equipment. Fastening Systems are sold directly to customers and through distributors. Generally, the sales and costs and expenses of this segment are transacted in the local currency of the respective operations, which are mostly the U.S. dollar, British pound, and euro.
The decrease in expense of $74 was primarily due to the reversal of $25 of the $65 pre-tax charge taken in the third quarter of 2022 related to the Lehman Brothers International (Europe) (“LBIE”) legal proceeding which was settled in the second quarter of 2023 (See Note U to the Consolidated Financial Statements in Part II, Item 8 ) (Financial Statements and Supplementary Data) and higher interest income of $17, partially offset by the impacts of deferred compensation arrangements of $18, higher non-service related net periodic benefit costs related to pension and other postretirement benefit plans in 2023 of $13, and an increase from net realized and unrealized losses of $4, primarily related to mark-to-market adjustments on exchange-traded fixed income securities and losses on sales of receivables.
The decrease in expense of $74 was primarily due to the reversal of $25 of the $65 pre-tax charge taken in the third quarter of 2022 related to the LBIE legal proceeding which was settled in the second quarter of 2023 (See Note U to the Consolidated Financial Statements in Part II, Item 8 ) (Financial Statements and Supplementary Data) and higher interest income of $17, partially offset by the impacts of deferred compensation arrangements of $18, higher non-service related net periodic benefit costs related to pension and other postretirement benefit plans in 2023 of $13, and an increase from net realized and unrealized losses of $4, primarily related to mark-to-market adjustments on exchange-traded fixed income securities and losses on sales of receivables.
Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Howmet’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence.
Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and Howmet’s experience with similar operations. Existing favorable contracts and the 35 Table of Contents ability to sell products into established markets are additional positive evidence.
Management continued to focus on actions to improve Howmet’s cost structure and liquidity, providing the Company with the ability to operate effectively. Such actions included procurement efficiencies and overhead rationalization to reduce costs, working capital initiatives, and maintaining a sustainable level of capital expenditures.
Management continued to focus on actions to improve Howmet’s cost structure and liquidity, providing the Company with the ability to 29 Table of Contents operate effectively. Such actions included procurement efficiencies and overhead rationalization to reduce costs, working capital initiatives, and maintaining a sustainable level of capital expenditures.
See Note U to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for further discussion. Obligations for Financing Activities Howmet has historically paid quarterly dividends on its preferred and common stock. The Company paid an aggregate of $73 in common stock and preferred stock dividends to shareholders during 2023.
See Note U to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for further discussion. Obligations for Financing Activities Howmet has historically paid quarterly dividends on its preferred and common stock. The Company paid an aggregate of $109 in common stock and preferred stock dividends to shareholders during 2024.
For more information on these matters, see Note U to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K. 35 Table of Contents Recently Adopted and Recently Issued Accounting Guidance.
For more information on these matters, see Note U to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K. Recently Adopted and Recently Issued Accounting Guidance.
The use of cash in 2022 was primarily related to the repurchase of common stock of $400, the repayments on the aggregate outstanding principal amount of long-term debt of approximately $69, and dividends paid to shareholders of $44. These items were partially offset by proceeds from the exercise of employee stock options of $16.
These items were partially offset by proceeds from term loan facilities of $400 and the exercise of employee stock options of $11. The use of cash in 2022 was primarily related to the repurchase of common stock of $400, the repayments on the aggregate outstanding principal amount of long-term debt of approximately $69, and dividends paid to shareholders of $44.
The effective tax rate differs from the U.S. federal statutory rate primarily as a result of a $12 charge related to an increase in the valuation allowance on a foreign tax credit carryforward in the U.S., $8 of charges related to U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, $8 of charges related to nondeductible expenses, and $5 of incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, partially offset by a $6 benefit for the release of a valuation allowance on interest deduction carryforwards in the U.K., a $5 benefit related to a tax accounting method change, a $5 excess benefit for stock compensation, and a $3 benefit related to a distribution of foreign earnings.
The effective tax rate differs from the U.S. federal statutory rate primarily as a result of a $12 charge related to an increase in the valuation allowance on a foreign tax credit carryforward in the U.S., $8 of charges related to U.S. tax on GILTI and other foreign earnings, $8 of charges related to nondeductible expenses, and $5 of incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, partially offset by a $6 benefit for the release of a valuation allowance on interest deduction carryforwards in the U.K., a $5 benefit related to a tax accounting method change, a $5 excess benefit for stock compensation, and a $3 benefit related to a distribution of foreign earnings.
Operating leases represent multi-year obligations for certain land and buildings, plant equipment, vehicles, and computer equipment. Deferred revenue was $64 as of December 31, 2023. Deferred revenue arrangements require Howmet to deliver product to certain customers over a specified contract period, which is expected to be within one year.
Operating leases represent multi-year obligations for certain land and buildings, plant equipment, vehicles, and computer equipment. Deferred revenue was $60 as of December 31, 2024. Deferred revenue arrangements require Howmet to deliver product to certain customers over a specified contract period, which is expected to be within one year.
Arconic Corporation is being billed for these letter of credit fees paid by the Company and will reimburse the Company for any payments made under these letters of credit. Howmet has outstanding surety bonds primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, energy contracts, and customs duties.
Arconic Corporation is being billed for these letter of credit fees paid by the Company and will reimburse the Company for any payments made under these letters of credit. The Company has outstanding surety bonds primarily related to customs duties, workers’ compensation, environmental-related matters, and contract performance.
Management used 6.70% for both 2023 and 2022 and 6.20% for 2021 as its weighted-average global expected long-term rate of return on plan assets, which was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class for each plan.
Management used 6.70% for 2024, 2023, and 2022 as its weighted-average global expected long-term rate of return on plan assets, which was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class for each plan.
Cash provided from operations and financing activities is expected to be adequate to cover Howmet’s operational and business needs over the next 12 months. For an analysis of long-term liquidity, see “Contractual Obligations and Off-Balance Sheet Arrangements” below. As of December 31, 2023, cash and cash equivalents of Howmet were $610, of which $384 was held by Howmet’s non-U.S. subsidiaries.
Cash provided from operations and financing activities is expected to be adequate to cover Howmet’s operational and business needs over the next 12 months. For an analysis of long-term liquidity, see “Contractual Obligations and Off-Balance Sheet Arrangements” below. As of December 31, 2024, cash and cash equivalents of Howmet were $564, of which $284 was held by Howmet’s non-U.S. subsidiaries.
See Note D to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for additional detail. Interest expense, net. Interest expense, net was $218 in 2023 compared with $229 in 2022.
See Note D to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for additional detail. Interest expense, net. Interest expense, net was $182 in 2024 compared with $218 in 2023.
Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets. Howmet is a global company operating in 20 countries. Based upon the country where the point of shipment occurred, North America and Europe generated 70% and 23%, respectively, of Howmet’s sales in 2023.
Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets. Howmet is a global company operating in 19 countries. Based upon the country where the point of shipment occurred, North America and Europe generated 71% and 23%, respectively, of Howmet’s sales in 2024.
If the cash held by non-U.S. subsidiaries were to be repatriated to the U.S., the Company does not expect there to be material income tax consequences. Operating Activities Cash provided from operations in 2023 was $901 compared with $733 in 2022 and $449 in 2021.
If the cash held by non-U.S. subsidiaries were to be repatriated to the U.S., the Company does not expect there to be material income tax consequences. Operating Activities Cash provided from operations in 2024 was $1,298 compared with $901 in 2023 and $733 in 2022.
The total amount committed under these annual surety bonds, which automatically renew or expire at various dates, primarily in 2024 and 2025, was $43 as of December 31, 2023.
The total amount committed under these annual surety bonds, which automatically renew or expire at various dates, primarily in 2025 and 2026, was $44 as of December 31, 2024.
In 2024, management projects sales to increase as we expect solid growth in the commercial aerospace market, and the Company’s strong position in that market is expected to continue. Earnings per share is expected to grow as management continues to focus on revenue growth and operational performance.
In 2025, management projects sales to increase as we expect solid growth in the commercial aerospace market, and the Company’s strong position in that market is expected to continue, including engines spares. Earnings per share is expected to grow as management continues to focus on revenue growth and operational performance.
The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2024, was $114 as of December 31, 2023. 32 Table of Contents Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to retain letters of credit of $52 (which are included in the $114 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016.
The total amount committed under these letters of credit, which automatically renew or expire at various dates, primarily in 2025, was $90 as of December 31, 2024 . 33 Table of Contents Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to retain letters of credit of $48 (which are included in the $90 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016.
Separation Transaction on April 1, 2020, compared to an increase of 93% for the S&P 500 ® Index and 91% for the S&P Aerospace & Defense Select Industry Index over the same period. (1) See below in Results of Operations for the reconciliation of Total Segment Adjusted EBITDA to Income before income taxes.
Separation Transaction on April 1, 2020, compared to an increase of 138% for the S&P 500 ® Index and 99% for the S&P 500 ® Aerospace & Defense Index over the same period. (1) See below in Results of Operations for the reconciliation of Total Segment Adjusted EBITDA to Income before income taxes.
Because all dividends are subject to approval by Howmet’s Board of Directors, amounts are not included in the preceding table unless such authorization has occurred. As of December 31, 2023, there were 409,914,461 shares of outstanding common stock and 546,024 shares of outstanding Class A preferred stock. In 2023, the preferred stock dividend was $3.75 per share.
Because all dividends are subject to approval by Howmet’s Board of Directors, amounts are not included in the preceding table unless such authorization has occurred. As of December 31, 2024, there were 405,431,361 shares of outstanding common stock and 546,024 shares of outstanding Class A preferred stock. In 2024, the preferred stock dividend was $3.75 per share.
Segment Information The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures and Forged Wheels. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA.
Segment Information The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures and Forged Wheels. Segment performance under Howmet’s management reporting system is evaluated based on Segment Adjusted EBITDA.
See Note Q to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for additional detail related to the Company’s debt. Other expense, net. Other expense, net was $8 in 2023 compared with $82 in 2022.
See Note Q to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K for additional detail related to the Company’s debt. 24 Table of Contents Other expense, net. Other expense, net was $62 in 2024 compared with $8 in 2023.
Fastening Systems 2023 2022 2021 Third-party sales $ 1,349 $ 1,117 $ 1,044 Segment Adjusted EBITDA 278 234 239 Segment Adjusted EBITDA Margin 20.6 % 20.9 % 22.9 % Fastening Systems produces aerospace and industrial fastening systems, as well as commercial transportation fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines.
Fastening Systems 2024 2023 2022 Third-party sales $ 1,576 $ 1,349 $ 1,117 Segment Adjusted EBITDA 406 278 234 Segment Adjusted EBITDA Margin 25.8 % 20.6 % 20.9 % Fastening Systems produces aerospace and industrial fastening systems, as well as commercial transportation fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines.
Cash provided from operations is expected to increase for the full year in 2024 compared with 2023, resulting from a continued focus on operating performance and on capital efficiency. Capital expenditures are expected to increase with additional investments in capacity expansions. Results of Operations Earnings Summary Sales.
Cash provided from operations is expected to increase for the full year in 2025 compared with 2024, resulting from a continued focus on operating performance and on capital efficiency. Capital expenditures are expected to increase with additional investments in capacity expansions.
In 2023, 2022, and 2021, the discount rate used to determine benefit obligations for pension and other postretirement benefit plans was 5.10%, 5.40%, and 2.70%, respectively.
In 2024, 2023, and 2022, the discount rate used to determine benefit obligations for pension and other postretirement benefit plans was 5.60%, 5.10%, and 5.40%, respectively.
Forged Wheels 2023 2022 2021 Third-party sales $ 1,147 $ 1,058 $ 921 Segment Adjusted EBITDA 309 278 294 Segment Adjusted EBITDA Margin 26.9 % 26.3 % 31.9 % Forged Wheels produces forged aluminum wheels and related products globally for heavy-duty trucks, trailers, and buses. Forged Wheels’ products are sold directly to OEMs and through distributors.
Forged Wheels 2024 2023 2022 Third-party sales $ 1,054 $ 1,147 $ 1,058 Segment Adjusted EBITDA 287 309 278 Segment Adjusted EBITDA Margin 27.2 % 26.9 % 26.3 % Forged Wheels produces forged aluminum wheels and related products globally for heavy-duty trucks, trailers, and buses. Forged Wheels’ products are sold directly to OEMs and through distributors.
Income before income taxes increased 61% from 2022. Total Segment Adjusted EBITDA (1) increased 17% from 2022 primarily due to favorable sales in the commercial aerospace, defense aerospace, commercial transportation, and industrial and other markets as well as favorable product pricing.
Income before income taxes increased 42% from 2023. Total Segment Adjusted EBITDA (1) increased 27% from 2023 primarily due to favorable sales in the commercial aerospace, defense aerospace, and industrial and other markets as well as favorable product pricing.
The Company and Arconic Corporation are required to provide a guarantee up to an estimated present value amount of approximately $1,131 and $1,040 as of December 31, 2023 and 2022, respectively, in the event of an Alcoa Corporation default.
The Company is required to provide a guarantee up to an estimated present value amount of approximately $1,121 and $1,131 as of December 31, 2024 and 2023, respectively, in the event of an Alcoa Corporation default.
Also, the Company was required to provide letters of credit for certain Arconic Corporation environmental obligations and, as a result, the Company has $17 of outstanding letters of credit relating to such liabilities (which are also included in the $114 in the above paragraph). Arconic Corporation has issued surety bonds to cover these environmental obligations.
Also, the Company was required to provide letters of credit for certain Arconic Corporation and Alcoa Corporation environmental obligations and, as a result, the Company has $17 of outstanding letters of credit relating to such liabilities (which are also included in the $90 in the above paragraph).
The increase was primarily due to increased costs related to three plant fires, as well as material cost pass through and increased net headcount, primarily in the Engine Products and Fastening Systems segments, in anticipation of future revenue increases, partially offset by higher volumes and favorable product pricing.
The decrease was primarily due to higher volumes, favorable product pricing, and lower costs related to three plant fires, partially offset by material cost pass through and increased net headcount, primarily in the Engine Products and Fastening Systems segments, in support of expected revenue increases.
Pursuant to the Separation and Distribution Agreement, dated as of October 31, 2016, between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which had a fair value of $6 as of both December 31, 2023 and 2022, and were included in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet.
Pursuant to the Separation and Distribution Agreement, dated as of October 31, 2016, between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which were included in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet.
Financing Activities Cash used for financing activities was $868 in 2023 compared with $526 in 2022 and $1,444 in 2021.
Financing Activities Cash used for financing activities was $1,026 in 2024 compared with $868 in 2023 and $526 in 2022.
Engine Products 2023 2022 2021 Third-party sales $ 3,266 $ 2,698 $ 2,282 Segment Adjusted EBITDA 887 729 564 Segment Adjusted EBITDA Margin 27.2 % 27.0 % 24.7 % Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines (aerospace commercial and defense) and industrial gas turbine applications.
Engine Products 2024 2023 2022 Third-party sales $ 3,735 $ 3,266 $ 2,698 Segment Adjusted EBITDA 1,150 887 729 Segment Adjusted EBITDA Margin 30.8 % 27.2 % 27.0 % Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines (aerospace commercial and defense) and industrial gas turbine applications.
In 2022 , net income of $146 (after-tax) was recorded in other comprehensive loss, primarily due to the increase in the discount rate and amortization of actuarial losses, partially offset by plan asset returns that were less than expected.
In 2022 , net income of $146 (after-tax) was recorded in other comprehensive loss, primarily due to the increase in the discount rate and amortization of actuarial losses, partially offset by plan asset returns that were less than expected. Income Taxes. The provision (benefit) for income taxes is determined using the asset and liability approach of accounting for income taxes.
Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes 2023 2022 2021 Income before income taxes $ 975 $ 606 $ 324 Loss on debt redemption 2 2 146 Interest expense, net 218 229 259 Other expense, net (1) 8 82 19 Operating income $ 1,203 $ 919 $ 748 Segment provision for depreciation and amortization 262 258 261 Unallocated amounts: Restructuring and other charges 23 56 90 Corporate expense 99 119 101 Total Segment Adjusted EBITDA $ 1,587 $ 1,352 $ 1,200 (1) See Note F to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes 2024 2023 2022 Income before income taxes $ 1,383 $ 975 $ 606 Loss on debt redemption 6 2 2 Interest expense, net 182 218 229 Other expense, net (1) 62 8 82 Operating income $ 1,633 $ 1,203 $ 919 Segment provision for depreciation and amortization 270 262 258 Unallocated amounts: Restructuring and other charges 21 23 56 Corporate expense 85 99 119 Total Segment Adjusted EBITDA $ 2,009 $ 1,587 $ 1,352 (1) See Note F to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Areas that require significant judgments, estimates, and assumptions include the testing of goodwill, properties, plants, and equipment, and other intangible assets for impairment; estimating fair value of businesses acquired or divested; pension plans and other postretirement benefits obligations; stock-based compensation; income taxes; and litigation and contingent liabilities.
Areas that require significant judgments, estimates, and assumptions include the testing of goodwill, properties, plants, and equipment, and other intangible assets for impairment; pension plans and other postretirement benefits obligations; income taxes; and litigation and contingent liabilities.
Segment Adjusted EBITDA for the Forged Wheels segment increased $31, or 11%, in 2023 compared with 2022, primarily due to higher volumes in the commercial transportation market, partially offset by a supply chain disruption and unfavorable foreign currency movements.
The segment reduced approximately 160 net headcount since the end of 2023 as a result of lower production. Segment Adjusted EBITDA for the Forged Wheels segment increased $31, or 11%, in 2023 compared with 2022, primarily due to higher volumes in the commercial transportation market, partially offset by a supply chain disruption and unfavorable foreign currency movements.
Many of these purchase obligations contain variable pricing components, and, as a result, actual cash payments may differ from the estimates provided in the preceding table. The Company generally passes through metal costs in customer contracts with limited exceptions. As a result, the Company expects higher metal costs to contribute to increased sales in 2024.
Many of these purchase obligations contain variable pricing components, and, as a result, actual cash payments may differ from the estimates provided in the preceding table. The Company generally passes through material costs in customer contracts with limited exceptions. In connection with the Arconic Inc.
SG&A expenses were $333, or 5.0% of Sales, in 2023 compared with $288, or 5.1% of Sales, in 2022. The increase in SG&A of $45, or 16%, was primarily due to higher employment costs and legal fees. SG&A expenses were $288, or 5.1% of Sales, in 2022 compared with $251, or 5.0% of Sales, in 2021.
The increase in SG&A of $14, or 4%, was primarily due to higher employment costs. SG&A expenses were $333, or 5.0% of Sales, in 2023 compared with $288, or 5.1% of Sales, in 2022.
For further details regarding the Company’s debt reduction and refinancing activities and stock repurchases, see Note Q and Note I , respectively, to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K.
These items were partially offset by proceeds from the exercise of employee stock options of $16. For further details regarding the Company’s debt reduction and refinancing activities and stock repurchases, see Note Q and Note I , respectively, to the Consolidated Financial Statements in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K.
Segment Adjusted EBITDA for the Engine Products segment increased $158, or 22%, in 2023 compared with 2022, primarily due to higher volumes in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets.
Segment Adjusted EBITDA for the Engine Products segment increased $263, or 30%, in 2024 compared with 2023, primarily due to growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbine markets.
The Company had total COGS insurance claims reimbursements of $19 in 2023, partially offset by charges of $7, related to fires that occurred in 2019 at a Fastening Systems plant in France (the “France Plant Fire”) and a mechanical failure resulting in substantial heat and fire-related damage to equipment at the Company’s cast house in Barberton, Ohio in the third quarter of 2022 (the “Barberton Cast House Incident”), compared to total COGS charges of $59 in 2022, offset by partial insurance claims reimbursements of $23, related to a fire at a Forged Wheels plant in Barberton, Ohio in mid-February 2020 (the “Barberton Plant Fire”) and the France Plant Fire.
The Company had total COGS net reimbursements of $18 in 2024 due to the final settlement of the insurance claim related to a mechanical failure that occurred in 2022 resulting in substantial heat and fire-related damage to equipment at the Forged Wheels’ cast house in Barberton, Ohio (the “Barberton Cast House Incident”) in the second quarter of 2024 and the final settlement of the insurance claim related to the fires that occurred in 2019 at a Fastening Systems plant in France (the “France Plant Fire”) in the fourth quarter of 2024, compared to total COGS insurance claims reimbursements of $19 in 2023, partially offset by charges of $7 in 2023, related to the France Plant Fire and Barberton Cast House Incident.
A dividend of $0.17 per share on the Company’s common stock was paid in 2023 ($0.04 per share in each of the first, second, and third quarters of 2023 and $0.05 in the fourth quarter of 2023). Fully diluted shares outstanding as of December 31, 2023 were 412,897,456.
A dividend of $0.26 per share on the Company’s common stock was paid in 2024 ($0.05 per share in each of the first and second quarters of 2024 and $0.08 in the third and fourth quarters of 2024). Fully diluted shares outstanding as of December 31, 2024 were 408 million.
Howmet’s funded status under the Employee Retirement Income Security Act was approximately 70% as of January 1, 2023. The interest rate used to discount future estimated liabilities for the U.S. is determined using a Company-specific yield curve model (above-median) developed with the assistance of an external actuary, while both the U.K. and Canada utilize models developed by the respective actuary.
The interest rate used to discount future estimated liabilities for the U.S. is determined using a Company-specific yield curve model (above-median) developed with the assistance of an external actuary, while both the U.K. and Canada utilize models developed by the respective actuary.
The increase of $4, or 13%, was primarily due to higher spending on technology projects intending to support the aerospace business. R&D expenses were $32 in 2022 compared with $17 in 2021. The increase of $15, or 88%, was primarily due to higher spending on technology projects across all segments. Provision for depreciation and amortization (“D&A”).
R&D expenses were $36 in 2023 compared with $32 in 2022. The increase of $4, or 13%, was primarily due to higher spending on technology projects to support the aerospace business. Provision for depreciation and amortization (“D&A”). The provision for D&A was $277 in 2024 compared with $272 in 2023.
In 2023, Sales increased 17% over 2022 primarily as a result of higher sales from the commercial aerospace, defense aerospace, commercial transportation, and industrial and other markets, favorable product pricing of $105, and an increase in inflationary cost pass through of approximately $90. Product price increases are in excess of material and inflationary cost pass through to our customers.
In 2024, Sales increased 12% from 2023 primarily as a result of higher volumes in the commercial aerospace, defense aerospace, and industrial and other markets, and favorable product pricing, partially offset by lower volumes in the commercial transportation market. Product price increases are in excess of material and inflationary cost pass through to our customers.
The increase in cash provided from operations of $284, or 63%, between 2022 and 2021 was due to lower working capital of $165, higher operating results of $89, and lower pension contributions of $53, partially offset by higher payments on noncurrent liabilities of $37.
The increase in cash provided from operations of $168, or 23%, between 2023 and 2022 was due to higher operating results of $303, lower payments on noncurrent liabilities of $26, and lower pension contributions of $7, partially offset by higher working capital of $163.
The components of the change in working capital included favorable changes in receivables of $176, including collections of employee retention credit receivables, accrued expenses of $169, accounts payable of $102, and taxes, including income taxes, of $29, partially offset by inventories of $294 and prepaid expenses and other current assets of $17.
The components of the change in working capital included unfavorable changes in accounts payable of $253, prepaid expenses and other current assets of $18, and receivables of $3, including collections of employee retention credit receivables, partially offset by inventories of $92, accrued expenses of $14 and taxes, including income taxes, of $5.
The increase was primarily due to higher sales in the commercial aerospace market, an increase in material cost pass through of $225, and favorable product pricing of $67, partially offset by lower sales in the defense aerospace market. Product price increases are in excess of inflationary pass through to our customers. Cost of goods sold (“COGS”).
The increase was primarily due to higher sales in the commercial aerospace, defense aerospace, and industrial and other markets, including engine spares, and favorable product pricing, partially offset by lower volumes in the commercial transportation market. Product price increases are in excess of inflationary cost pass through to our customers.
See below for the reconciliation of Total Segment Adjusted EBITDA to Income before income taxes. The following information provides Sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each reportable segment for each of the three years in the period ended December 31, 2023.
The following information provides Sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each reportable segment for each of the three years in the period ended December 31, 2024.
Interest related to total debt is based on fixed interest rates in effect as of December 31, 2023 and is calculated on debt with maturities that extend to 2042.
Interest related to total debt with maturities that extend to 2042, including cross-currency and interest rate swaps, is based on fixed rates as of December 31, 2024.
In December 2021, December 2022, and December 2023, a surety bond with a limit of $80 relating to this guarantee was obtained by Alcoa Corporation to protect Howmet’s obligation. This surety bond will be renewed on an annual basis by Alcoa Corporation. Howmet has outstanding letters of credit primarily related to workers’ compensation, environmental obligations, and insurance obligations, among others.
In December 2022, December 2023, and December 2024, a surety bond with a limit of $80 relating to this guarantee was obtained by Alcoa Corporation to protect Howmet's obligation. This surety bond will be renewed on an annual basis by Alcoa Corporation.
The provision for D&A was $272 in 2023 compared with $265 in 2022. The increase of $7, or 3%, was primarily driven by higher depreciation in the Engine Products segment. 22 Table of Contents The provision for D&A was $265 in 2022 compared with $270 in 2021.
The increase of $5, or 2%, was primarily driven by the disposal of unused assets in the Engine Products segment. The provision for D&A was $272 in 2023 compared with $265 in 2022. The increase of $7, or 3%, was primarily driven by higher depreciation in the Engine Products segment. Restructuring and other charges.
Non-service related net periodic benefit costs related to defined benefit plans is expected to increase by approximately $15 from 2023 to 2024. Other expense, net was $82 in 2022 compared with $19 in 2021.
Non-service related net periodic benefit costs related to defined benefit plans and other postretirement benefit plans is expected to remain relatively flat from 2024 to 2025. Other expense, net was $8 in 2023 compared with $82 in 2022.
In addition, Howmet has operating activities in numerous countries and regions outside of North America and Europe, including China and Japan. Governmental policies, laws and regulations, and other economic factors, including inflation and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in countries with such activities.
Governmental policies, laws and regulations, and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, affect the results of operations in countries with such activities.
On October 8, 2021, the Organization for Economic Cooperation and Development (“OECD”) released the Pillar Two model rules introducing a 15% global minimum tax under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. Jurisdictions where the Company operates have started to enact Pillar Two legislation effective January 1, 2024, and other jurisdictions are expected to enact legislation prospectively.
On October 8, 2021, the Organization for Economic Cooperation and Development (“OECD”) released the Pillar Two model rules introducing a 15% global minimum tax under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. The Pillar Two directive has been implemented, or is expected to be implemented, through domestic legislation in multiple countries where the Company operates.
The Company had total COGS charges of $59 in 2022, offset by partial insurance claims reimbursements of $23, related to the France Plant Fire, Barberton Plant Fire, and the Barberton Cast House Incident, compared to total COGS charges of $28 in 2021, offset by partial insurance claims reimbursements of $32, related to the France Plant Fire and the Barberton Plant Fire.
The Company had total COGS insurance claims reimbursements of $19 in 2023, partially offset by charges of $7, related the France Plant Fire and the Barberton Cast House Incident, compared to total COGS charges of $59 in 2022, offset by partial insurance claims reimbursements of $23, related to a fire at a Forged Wheels plant in Barberton, Ohio in mid-February 2020 (the “Barberton Plant Fire”) and the France Plant Fire.
The pension and other postretirement benefits obligation was $1,695 and $1,719, with a funded status of $(770) and $(749) as of December 31, 2023 and 2022, respectively. The total benefit obligation reduction of $24 was primarily driven by benefit payments and plan settlements.
The pension and other postretirement benefits obligation was $1,556 and $1,695, with a funded status of $(670) and $(770) as of December 31, 2024 and 2023, respectively. The total benefit obligation reduction of $133 was primarily driven by benefit payments. The improvement in the funded status of $100 was primarily driven by contributions and changes in discount rates.
Additionally, in the fourth quarter of 2022, the Company sold the property of a manufacturing facility in the Engine Products segment. The proceeds from the sale of this property were $15 and a carrying value of $7.
Additionally, in the fourth quarter of 2022, the Company sold the property of a manufacturing facility in the Engine Products segment.
Amounts for uncertain tax positions in which the timing of future potential payments are not reasonably estimable are included in the “Thereafter” column. If a tax authority agrees with the tax position taken or expected to be taken or the applicable statute of limitations expires, then additional payments will not be necessary.
If a tax authority agrees with the tax position taken or expected to be taken or the applicable statute of limitations expires, then additional payments will not be necessary.
The amount of the impairment loss to be recorded is measured as the excess of the carrying value of the assets (asset group) over their fair value, with fair value determined using the best information available, which generally is a DCF model. 33 Table of Contents The determination of what constitutes an asset group, the associated estimated undiscounted net cash flows, and the estimated useful lives of the assets also require significant judgments.
The amount of the impairment loss to be recorded is measured as the excess of the carrying value of the assets (asset group) over their fair value, with fair value determined using the best information available, which generally is a DCF model.
Interest expense, net was $229 in 2022 compared with $259 in 2021. The decrease of $30, or 12%, was primarily due to a reduced average level of debt for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The decrease of $11, or 5%, was primarily due to a reduced average level of debt for the year ended December 31, 2023 compared to the year ended December 31, 2022.
In order to better understand Howmet’s outstanding contractual obligations, the table below represents a summary of these commitments as of December 31, 2023 (these contractual obligations are grouped in the same manner as they are classified in the Statement of Consolidated Cash Flows in order to provide a better understanding of the nature of the obligations and to provide a basis for comparison to historical information): Total 2024 2025-2026 2027-2028 Thereafter Operating activities: Raw material purchase obligations $ 257 $ 220 $ 37 $ — $ — Purchase and other payment obligations 55 49 6 — — Operating leases 162 39 53 30 40 Interest related to total debt 1,205 198 311 191 505 Estimated minimum required pension funding 333 52 137 144 — Other postretirement benefit payments 90 11 20 18 41 Layoff and other restructuring payments 7 7 — — — Uncertain tax positions 3 2 — — 1 Financing activities: Total debt 3,716 205 1,011 925 1,575 Dividends to shareholders 21 21 — — — Investing activities: Capital projects 230 169 61 — — Totals $ 6,079 $ 973 $ 1,636 $ 1,308 $ 2,162 Obligations for Operating Activities Raw material purchase obligations consist mostly of aluminum, titanium, cobalt, nickel, and various other metals with expiration dates ranging from less than one year to five years.
In order to better understand Howmet’s outstanding contractual obligations, the table below represents a summary of these commitments as of December 31, 2024 (these contractual obligations are grouped in the same manner as they are classified in the Statement of Consolidated Cash Flows in order to provide a better understanding of the nature of the obligations and to provide a basis for comparison to historical information): Total 2025 2026-2027 2028-2029 Thereafter Operating activities: Raw material purchase obligations $ 379 $ 218 $ 82 $ 79 $ — Purchase and other payment obligations 30 19 11 — — Operating leases 189 46 68 36 39 Interest related to total debt 1,133 165 298 189 481 Estimated minimum required pension funding 352 45 154 153 — Other postretirement benefit payments 56 6 12 12 26 Layoff and other restructuring payments 4 4 — — — Uncertain tax positions 6 — — — 6 Financing activities: Total debt 3,328 5 948 1,000 1,375 Dividends to shareholders 42 42 — — — Investing activities: Capital projects 417 270 147 — — Totals $ 5,936 $ 820 $ 1,720 $ 1,469 $ 1,927 Obligations for Operating Activities Raw material purchase obligations consist mostly of aluminum, titanium, cobalt, nickel, and various other metals with expiration dates ranging from less than one year to five years.
A change in the assumption for the expected long-term rate of return on plan assets of 1/4 of 1% would impact earnings by approximately $3 for 2024 . In 2023 , net loss of $36 (after-tax) was recorded in other comprehensive loss, primarily due to the decrease in the discount rate.
A change in the assumption for the expected long-term rate of return on plan assets of 1/4 of 1% would impact earnings by approximately $3 for 2025 .
These charges were partially offset by a gain of $8 on the sale of assets at a small U.S. manufacturing facility in Engine Products.
Restructuring and other charges in 2022 consisted primarily of a $58 charge for U.K. and U.S. pension plans’ settlement accounting and a $6 charge for various other exit costs. These charges were partially offset by a gain of $8 on the sale of assets at a small U.S. manufacturing facility in Engine Products.
The Company may opportunistically issue new debt securities in accordance with securities laws or utilize commercial paper in order to, but not limited to, refinance existing indebtedness.
The Company has an effective shelf registration statement on Form S-3, filed with the SEC, which allows for offerings of debt securities from time to time. The Company may opportunistically issue new debt securities in accordance with securities laws or utilize commercial paper in order to, but not limited to, refinance existing indebtedness.
In connection with the Arconic Inc. Separation Transaction , the Company entered into several agreements with Arconic Corporation that govern the relationship between the Company and Arconic Corporation following the separation, including raw material supply agreements.
Separation Transaction , the Company entered into several agreements with Arconic Corporation that govern the relationship between the Company and Arconic Corporation following the separation, including raw material supply agreements. Purchase and other payment obligations include public utility purchase obligations, and future payments of tax-related interest and penalties.
The Company has closed some small manufacturing facilities and may in the future close additional small facilities in order to consolidate operations, reduce fixed costs, and exit less profitable businesses. Restructuring and other charges in 2022 consisted primarily of a $58 charge for U.K. and U.S. pension plans’ settlement accounting and a $6 charge for various other exit costs.
The Company has closed or sold some small manufacturing facilities including three in the U.K. and may, in the future, close additional small facilities in order to consolidate operations, reduce fixed costs, and exit less profitable businesses.
The remaining guarantee, for which the Company and Arconic Corporation are secondarily liable in the event of a payment default by Alcoa Corporation, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation facility. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote.
The remaining guarantee, which had a fair value of $6 as of both December 31, 2024 and 2023, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation f acility, for which the Company is secondarily liable in the event of a payment default by Alcoa Corporation.
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