Slides
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Fourth Quarter and Full Year 2025 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Patrick Winterlich: EVP and Chief Financial Officer February 12, 2026
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Important Information 2 Forward–Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates“, "believes“, "could“, “envisions”, "estimates“, "expects“, "forecasts“, "goal“, "guidance“, "intends“, "may“, "outlook“, "plans“, "projects“, "seeks“, "sees“, "should“, "targets“, "will“, "would“, or other words of similar meaning. All statements that reflect Howmet Aerospace Inc.’s (“Howmet’s”) expectations, assumptions or projections about the future, other than statements of historical fact, are forward- looking statements, including, without limitation, statements, forecasts and outlook relating to: the condition of markets; future financial results or operating performance; future strategic actions; Howmet's strategies, outlook, and business and financial prospects; and any future dividends, debt issuances, debt reduction and repurchases of its common stock; and statements regarding the planned acquisition of Consolidated Aerospace Manufacturing, LLC (CAM) and the expected benefits and timing of such planned acquisition. These statements reflect beliefs and assumptions that are based on Howmet’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally, or unfavorable changes in the markets served by Howmet, including due to escalating tariff and other trade policies and the resulting impacts on Howmet’s supply and distribution chains, as well as on market volatility and global trade generally; (b) the impact of potential cyber attacks and information technology or data security breaches; (c) the loss of significant customers or adverse changes in customers’ business or financial conditions; (d) manufacturing difficulties or other issues that impact product performance, quality or safety; (e) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (f) failure to attract and retain a qualified workforce and key personnel, labor disputes or other employee relations issues; (g) the inability to achieve improvement in or strengthening of financial performance, operations or competitiveness anticipated or targeted; (h) inability to meet increased demand, production targets or commitments; (i) competition from new product offerings, disruptive technologies or other developments; (j) geopolitical, economic, and regulatory risks relating to Howmet’s global operations, including geopolitical and diplomatic tensions, instabilities, conflicts and wars, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (k) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (l) failure to comply with government contracting regulations; (m) adverse changes in discount rates or investment returns on pension assets; (n) the ability to consummate and realize expected benefits of acquisitions, including the CAM acquisition, on the anticipated time frame or at all; and (o) the other risk factors summarized in Howmet’s Form 10-K for the year ended December 31, 2024 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. Under its share repurchase program, Howmet may repurchase shares from time to time, in amounts, at prices, and at such times as it deems appropriate, subject to market conditions, legal requirements and other considerations. Howmet is not obligated to repurchase any specific number of shares or to do so at any particular time. The declaration of any future dividends is subject to the discretion and approval of Howmet’s Board of Directors after consideration of all factors it deems relevant and subject to applicable law. Howmet 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. Credit ratings are not a recommendation to buy or hold any Howmet securities, and they may be revised or revoked at any time at the sole discretion of the credit rating organizations. The statements in this presentation are made as of the date of this presentation, even if subsequently made available by Howmet on its website or otherwise. Howmet disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
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Important Information (continued) 3 Non-GAAP Financial Measures Some of the information included in this presentation is derived from Howmet Aerospace’s consolidated financial information but is not presented in Howmet Aerospace’s financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain of these data are considered “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non- GAAP financial measures can be found in the Appendix to this presentation. Howmet Aerospace has not provided reconciliations of any forward-looking non-GAAP financial measures (including Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Earnings per Share, each excluding special items, Free Cash Flow and Free Cash Flow Conversion) to the most directly comparable GAAP financial measures because such reconciliations, as well as the directly comparable GAAP measures, are not available without unreasonable efforts due to the variability and complexity of the charges and other components excluded from the non-GAAP measures, such as gains or losses on sales of assets, taxes, and any future restructuring or impairment charges. These reconciling items are in addition to the inherent variability already included in the GAAP measures, which includes, but is not limited to, price/mix and volume. Howmet Aerospace believes such reconciliations of forward- looking non-GAAP financial measures would imply a degree of precision that would be confusing or misleading to investors. Other Information In this presentation: where values are denoted, M=USD millions and B=USD billions; Howmet, Howmet Aerospace, or the Company=Howmet Aerospace Inc.; YTD=year to date; YoY=year over year; QoQ=quarter over quarter; Seq=sequential; FY=full year; Q=quarter; IGT=industrial gas turbine; bps=basis points; EPS=Earnings Per Share; FCF=Free Cash Flow; Free Cash Flow Conversion=Free Cash Flow divided by Net Income excluding Special Items; and references to performance by Howmet Aerospace or its segments as “record” mean its best result since April 1, 2020 when Howmet Aerospace Inc. (previously named Arconic Inc.) separated from Arconic Corporation.
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2025 Highlights 4 Full Year 2025 Balance Sheet and Cash Flow ▪ Free Cash Flow3 of $1.43B with Free Cash Flow Conversion4 93% ▪ Repurchased $700M of Common Stock at ~$161 Avg Price per Share; Repurchased $150M YTD 2026 ▪ Paid Down $265M of Debt; Annualized Interest Expense Savings ~$22M; Redeemed All Outstanding $55M Preferred Stock ▪ Paid $181M in Dividends; FY Common Stock Dividend at $0.44 Per Share, Up ~70% YoY ▪ Net Debt-to-LTM EBITDA5 Improved to a Record Low 1.0x; All Long-Term Debt Unsecured at Fixed Rates 1) Adj EBITDA, Adj Operating Income, Adj EBITDA Margin and Adj Operating Income Margin, each excluding special items; Net Income (GAAP): Q4 2024 = $314M, FY 2024 = $1,155M, Q3 2025 = $385M, Q4 2025 = $372M, FY 2025 = $1,508M; Operating income (GAAP): Q4 2024 = $445M, FY 2024 = $1,633M, Q3 2025 = $542M, Q4 2025 = $489M, FY 2025 = $2,046M; Operating income margin (GAAP): Q4 2024 = 23.5%, FY 2024 = 22.0%, Q3 2025 = 25.9%, Q4 2025 = 22.6%, FY 2025 = 24.8% 2) Adj Earnings Per Share excluding special items; EPS (GAAP): Q4 2024 = $0.77, FY 2024 = $2.81, Q3 2025 = $0.95, Q4 2025 = $0.92, FY 2025 = $3.71 3) Free Cash Flow = Cash provided from operations less Capital expenditures; FY 2025: Cash provided from operations = $1,884M, Cash used for financing activities = ($1,269M), Cash used for investing activities = ($438M) 4) FCF divided by Net Income: FY 2025 = 95% 5) Last twelve mo nths (LTM) Adj. EBITDA excluding special items See appendix for reconciliations Revenue and Profitability Excluding Special Items1,2 Q4 2024 Q3 2025 Q4 2025 Q4 YoY FY 2024 FY 2025 FY YoY Revenue $1.891B $2.089B $2.168B +15% $7.430B $8.252B +11% Adj EBITDA1 $507M $614M $653M +29% $1,914M $2,416M +26% Adj EBITDA Margin1 26.8% 29.4% 30.1% +330 bps 25.8% 29.3% +350 bps Adj Operating Income1 $434M $542M $580M +34% $1,637M $2,133M +30% Adj Operating Income Margin1 23.0% 25.9% 26.8% +380 bps 22.0% 25.8% +380 bps Adj Earnings Per Share2 $0.74 $0.95 $1.05 +42% $2.69 $3.77 +40%
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5 Q4 2025 Revenue Up 15% YoY, Commercial Aerospace Up 13% YoY Revenue by Market (% change) Q4 YoY FY YoY Commercial Aerospace 13% 12% Defense Aerospace 20% 21% Commercial Transportation 4% (5%) Gas Turbines1 32% 25% Other 4% (1%) Total Revenue 15% 11% Q4 2025 Revenue by Market (% of total) 53% 17% 14% 12%Gas Turbines $2.168B Total Revenue 4%Other Commercial Aerospace Defense Aerospace Commercial Transportation 1) Gas Turbines includes IGT and Oil & Gas
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▪ Free Cash Flow3 of $1.43B with Free Cash Flow Conversion4 93%; Ending Cash Balance of $743M ▪ Paid down $265M of Debt; Annualized Interest Expense Savings ~$22M; Redeemed $55M Preferred Stock ▪ Net Debt-to-LTM EBITDA5 Improved to a Record Low 1.0x ▪ All Credit Ratings Three Notches into Investment Grade 6 ▪ Record Revenue, Adj EBITDA1, Adj EBITDA Margin1, and Adj Earnings Per Share2 ▪ Revenue Up 11% YoY, driven by Commercial Aerospace Up 12% and Defense Aerospace Up 21% ▪ Adj EBITDA1 of $2.42B, Up 26% YoY. Adj EBITDA Margin1 of 29.3%, Up ~350 bps YoY ▪ Adj Earnings Per Share2 of $3.77, Up 40% YoY ▪ Capex of $453M, Up ~40% YoY; ~70% in Engine Products Segment ▪ Repurchased $700M of Common Stock at ~$161 Avg Price per Share; Repurchased $150M YTD 2026 ▪ Paid Quarterly Dividend at $0.12 per share of Common Stock in Q4, Q4 Up 50% YoY, FY Up ~70% YoY FY 2025 YoY: Revenue Up 11%, Adj EBITDA1 Up 26%, Adj EPS2 Up 40% Enhanced Profitability Strong Balance Sheet and Cash Flow Capital Deployment 1) Adj EBITDA, Adj Operating Income, Adj EBITDA Margin and Adj Operating Income Margin, each excluding special items; Net Income (GAAP): FY 2024 = $1,155M, FY 2025 = $1,508M; Operating income (GAAP): FY 2024 = $1,633M, FY 2025 = $2,046M; Operating income margin (GAAP): FY 2024 = 22.0%, FY 2025 = 24.8% 2) Adj Earnings Per Share excluding special items; EPS (GAAP): FY 2024 = $2.81, FY 2025 = $3.71 3) Free Cash Flow = Cash provided from operations less Capital expenditures; FY 2025: Cash provided from operations = $1,884M, Cash used for financing activities = ($1,269M), Cash used for investing activities = ($438M) 4) FCF divided by Net Income: FY 2025 = 95% 5) Last twelve months (LTM) Adj. EBITDA excluding special items See appendix for reconciliations
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+ Commercial Aerospace Growth + Defense Aerospace Growth + Gas Turbines Growth + Spares Growth Across All Markets +/– Net Headcount up ~320 QoQ; up ~1,445 FY 7 $972M $996M $1,056M $1,105M $1,163M Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 +20% $302M $325M Q4 2024 Q1 2025 33.0% Q2 2025 33.3% Q3 2025 34.0% Q4 2025 $349M $368M $396M +31% Engine Products: Revenue Up 20% Q4 YoY; Adj EBITDA Margin 34.0% Q4 Revenue by Market (% of total) Segment Adjusted EBITDA and Margin 3rd Party Revenue Q4 2025 YoY 31.1% 32.6% 54% 20% 23% Commercial Aerospace Defense Aerospace Gas Turbines 3% Other
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8 $401M $412M $431M $448M $454M Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 +13% $111M $127M $138M $139M Q4 2024 Q1 2025 29.2% Q2 2025 Q3 2025 Q4 2025 $126M +25% Fastening Systems: Revenue Up 13% Q4 YoY; Adj EBITDA Margin 30.6% Q4 2025 YoY Segment Adjusted EBITDA and Margin 3rd Party Revenue + Commercial Aerospace Growth + Strong Productivity Gains + Net Headcount ~Flat QoQ - Commercial Transportation Market Down Q4 Revenue by Market (% of total) 71% 10% 10% 9% Commercial Aerospace Defense Aerospace Commercial Transportation Other 30.8% 27.7% 30.8% 30.6%
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$275M $282M $290M $289M $287M Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 +4% $51M $60M $62M $58M $63M Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 $58M +24% Engineered Structures: Revenue Up 4% Q4 YoY; Adj EBITDA Margin 22.0% 9 Segment Adjusted EBITDA and Margin 3rd Party Revenue + Defense Aerospace Growth + Net Headcount ~Flat QoQ +/– Product Rationalization Q4 Revenue by Market (% of total) 65% 30% 5% Commercial AerospaceDefense Aerospace Other Q4 2025 YoY 20.1%21.3% 18.5% 21.4% 22.0%
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$243M $252M $276M $247M $264M Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 +9% $73M $79M 27.2% Q4 2024 27.0% Q1 2025 27.5% Q2 2025 Q3 2025 Q4 2025 $66M $68M $76M +20% Forged Wheels: Revenue Up 9% Q4 YoY; Adj EBITDA Margin 29.9% 10 Segment Adjusted EBITDA and Margin 3rd Party Revenue Q4 2025 YoY - Commercial Transportation Market Down - Volume Down 10% + Cost Flexing + Net Headcount down ~50 QoQ +/– Higher Aluminum Cost Pass Through Q4 Revenue by Region (% of total) 50% 34% 16% North America Europe Other 29.6% 29.9%
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2026 Guidance 11 2026 Guidance excludes acquisitions 1) Excluding special items 2) Assumes ~$25M of miscellaneous other expenses in FY 2026 Q1 2026 Guidance FY 2026 Guidance What we expect in 2026 Low Baseline High Low Baseline High ▪ FY 2026 Revenue up ~10% vs. FY 2025 ▪ FY 2026 Adj EBITDA1 up ~14% vs. FY 2025 ▪ FY 2026 Adj EPS1,2 up ~18% vs. FY 2025 ▪ FY 2026 Capex of ~$470M, ~5% of Revenue ▪ FY 2026 Free Cash Flow Conversion ~90% Revenue $2.225B $2.235B $2.245B $9.000B $9.100B $9.200B Adj EBITDA1 $680M $685M $690M $2.710B $2.760B $2.810B Adj EBITDA Margin1 30.6% 30.6% 30.7% 30.1% 30.3% 30.5% Adj Earnings per Share1,2 $1.09 $1.10 $1.11 $4.35 $4.45 $4.55 Free Cash Flow $1.550B $1.600B $1.650B
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Summary 12 ▪ Free Cash Flow3 of $1.43B with Free Cash Flow Conversion4 93%; Ending Cash Balance of $743M ▪ Net Debt-to-LTM EBITDA5 Improved to a Record Low 1.0x ▪ Capital Deployment: ~$1.2B Common Stock Repurchases, Debt Paydown, Dividends, Preferred Stock Redemption ▪ Record Revenue, Adj EBITDA1, Adj EBITDA Margin1, and Adj Earnings Per Share2 ▪ Revenue of $8.25B, Up 11% YoY, driven by Commercial Aerospace Up 12% and Defense Aerospace Up 21% ▪ Adj EBITDA1 of $2.42B, Up 26% YoY. Adj EBITDA Margin1 of 29.3%, Up ~350 bps YoY ▪ Adj Earnings Per Share2 of $3.77, Up 40% YoY Revenue / Profit FY 2025 Cash Generation / Deployment FY 2025 Guidance Expectations FY 2026 ▪ Expect Revenue Up ~10% YoY, Adj EBITDA1 Up ~14% YoY, Adj Earnings Per Share2 Up ~18% YoY ▪ Expect Free Cash Flow3 of ~$1.6B, Up ~12% YoY, with Free Cash Flow Conversion4 of ~90% 1) Adj EBITDA, Adj Operating Income, Adj EBITDA Margin and Adj Operating Income Margin, each excluding special items; Net Income (GAAP): FY 2024 = $1,155M, FY 2025 = $1,508M; Operating income (GAAP): FY 2024 = $1,633M, FY 2025 = $2,046M; Operating income margin (GAAP): FY 2024 = 22.0%, FY 2025 = 24.8% 2) Adj Earnings Per Share excluding special items; EPS (GAAP): FY 2024 = $2.81, FY 2025 = $3.71 3) Free Cash Flow = Cash provided from operations less Capital expenditures; FY 2025: Cash provided from operations = $1,884M, Cash used for financing activities = ($1,269M), Cash used for investing activities = ($438M) 4) FCF divided by Net Income: FY 2025 = 95% 5) Last twelve months (LTM) Adj. EBITDA excluding special items See appendix for reconciliations
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Appendix
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2026 Assumptions 15 Assumptions exclude special items and acquisitions Full Year 2026 2026 Comments Corporate Overhead ~$100M ▪ Included in Adj EBITDA Depreciation and Amortization ~$300M Interest Expense ~$135M ▪ Excludes future potential impact of the Consolidated Aerospace Manufacturing, LLC (CAM) acquisition, as well as any potential borrowing, breakage, and redemption/tender fees Operational Tax Rate 20.5% - 21.5% ▪ Cash Tax Rate ~19% Pension / OPEB Expense ~$35M ▪ ~$5M Service Costs (included in Adj EBITDA) ▪ ~$30M Non-Service Costs (excluded from Adj EBITDA) Miscellaneous Other Expenses ~$25M ▪ Included in Other expense (income), net ▪ Examples are deferred compensation and foreign currency impacts Pension / OPEB Contributions ~$65M Capex $450M - $490M ▪ Engine Products Capacity Expansions Diluted Share Count Average ~403M ▪ Q4 2025 Diluted Share exit rate of ~404M ▪ Common share buyback 2026 YTD: $150M ▪ Excludes any potential additional common stock repurchases
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$200M $400M $600M $800M 2026 2027 2028 2029 2030 2031 2032 2037 2042 Nov ~1.8% $191 Jan 6.75% $300 Jan 3.0% $700 Oct 3.72%1 $500 Nov 4.55% $500 Feb 5.95% $625 Aug 4.75% $250 16 Robust Liquidity; Each Debt Tower Below Annual Free Cash Flow Expectations As of December 31, 2025 1) After cross-currency swap to synthetically convert notes into Euro liability of ~€458M with a fixed interest rate of 3.72% Redeemed Dec 2025 $0 ▪ Q3 YTD 2025: Redeemed ~$140M 2026 US Term Loan with Cash on Hand ▪ Q4 2025: Issued $500M 2032 Notes; Redeemed $625M 2027 Notes ▪ FY 2025: Debt Actions Drive Annualized Interest Expense Savings of ~$22M
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17 Reconciliation of Net Income and Diluted EPS Excluding Special Items ($ in millions, except per-share amounts) Q4 2024 Q3 2025 Q4 2025 FY 2024 FY 2025 Net income $314 $385 $372 $1,155 $1,508 Diluted Earnings Per Share ("EPS") $0.77 $0.95 $0.92 $2.81 $3.71 Average number of diluted shares 408 405 404 410 406 Special items: Restructuring and other charges(1) $— $— $88 $21 $84 Loss on debt redemption — — 15 6 15 Acquisition costs — — 2 — 2 Plant fire reimbursements, net (12) — — (18) — Costs associated with closures, supply chain disruptions, and other items 1 — 1 1 1 Subtotal: Pre-tax special items $(11) $— $106 $10 $102 Tax impact of Pre-tax special items(2) 2 — (26) 1 (25) Subtotal $(9) $— $80 $11 $77 Discrete and other tax special items(3) $(2) $— $(26) $(59) $(52) Total: After-tax special items $(11) $— $54 $(48) $25 Net income excluding Special items $303 $385 $426 $1,107 $1,533 Diluted EPS excluding Special items $0.74 $0.95 $1.05 $2.69 $3.77 Net income excluding Special items and Diluted EPS excluding Special items are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews the operating results of the Company excluding the impacts of Restructuring and other charges, Discrete tax items, and Other special items (collectively, “Special items”). There can be no assurances that additional Special items will not occur in future periods. To compensate for this limitation, management believes that i t is appropriate to consider both Net income and Diluted EPS determined under GAAP as well as Net income excluding Special items and Diluted EPS excluding Special items. (1) Restructuring and other charges for Q4 2025 and FY 2025 included a non-cash pension settlement charge of $89 primarily resulting from the purchase of group annuity contracts with a third -party carrier to pay and administer future annuity payments for its U.K. pension plan which reduced gross pension obligations . Restructuring and other charges for FY 2024 included a net loss on the sale of a small U.K. manufacturing facility in Engineered Structures of $13 and a charge for layoff costs of $10. (2) The Tax impact of Pre-tax special items is based on the applicable statutory rates whereby the difference between such rates an d the Company's consolidated estimated annual effective tax rate is itself a Special item. (3) Discrete tax items for Q4 2025, FY 2024, and FY 2025 are discussed further in the Reconciliation of the Operational Tax Rate. Discrete tax items for Q4 2024 included a benefit to release a valuation allowance related to U.S. state tax losses and credits ($6), an excess tax benefit for stock compensation ($1), a c harge for prior year audit assessments and tax adjustments $4, and a charge to adjust a valuation allowance related to U.S. foreign tax credits $2. Discrete tax items for Q3 2025 included a net benefit for other small items ($1).
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18 Reconciliation of 2025 and 2024 Operational Tax Rate ($ in millions) Q4 2025 FY 2024 FY 2025 Effective tax rate, as reported Special items(1)(3) Operational tax rate, as adjusted Effective tax rate, as reported Special items(2)(3) Operational tax rate, as adjusted Effective tax rate, as reported Special items(2)(3) Operational tax rate, as adjusted Income before income taxes $430 $106 $536 $1,383 $10 $1,393 $1,840 $102 $1,942 Provision for income taxes $58 $52 $110 $228 $58 $286 $332 $77 $409 Tax rate 13.5% 20.5% 16.5% 20.5% 18.0% 21.1% Operational tax rate is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because m anagement reviews the operating results of the Company excluding the impacts of Special items. There can be no assurances that additional Special items will not occur in future per iods. To compensate for this limitation, management believes that it is appropriate to consider both the Effective tax rate determined under GAAP as well as the Operational tax rate. (1) Pre-tax special items for Q4 2025 included Restructuring and other charges $88, Loss on debt redemption $15, Acquisition costs $2, and Costs associated with closures, supply chain disruptions, and other items $1. (2) Pre-tax special items for FY 2024 included Restructuring and other charges $21, Loss on debt redemption $6, Costs associated wit h closures, supply chain disruptions, and other items $1, partially offset by Plant fire reimbursements, net ($18). Pre-tax special items for FY 2025 included Restructuring and other charges $84, Loss on debt redemption $15, Acquisition costs $2, and Costs associated with closures, supply chain disruptions, and other items $1. (3) Tax Special items includes discrete tax items, the tax impact on Special items based on the applicable statutory rates, the d ifference between such rates and the Company’s consolidated estimated annual effective tax rate and other tax related items. Discrete tax items for each period included the following: • for Q4 2025, a benefit to release a valuation allowance related to U.S. foreign tax credits ($8), a benefit to release a valuation allowance related to U.S. state tax losses and credits ($6), a net benefit for prior year tax adjustments ($4), an excess benefit for stock compensation ($3), a benefit related to re-establishing a tax holiday in China ($4), a net benefit for other small items ($2), and a charge related to the expiration of a tax holiday in China $2; • for FY 2024, a net benefit related to additional U.S. federal and state research and development ("R&D") credits claimed for prior years upon completion of the Company's R&D study ($44), an excess tax benefit for stock compensation ($10), a benefit to release a valuation allowance related to U.S. state tax losses and credits ($6), a benefit to release a valuation allowance related to U.S. foreign tax credits ($4), a net charge for prior year audit assessments and tax adjustments $4, and a charge for other s mall items $1; and • for FY 2025, an excess tax benefit for stock compensation ($18), benefits related to U.S. tax accounting method changes for certain prior period transaction and other costs ($17), a benefit to release a valuation allowance related to U.S. foreign tax credits ($8), a benefit to release a valuation allowance related to U.S. state tax losses and credits ($6), a net benefit related to U.S. federal and state R&D credits claimed for prior years ($5), a net benefit for prior year tax adjustments ($3), a net benefit for other small items ($3), and a net charge related to the expiration of a tax holiday in China $8.
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19 Calculation of Segment Markets Revenue ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Engine Products Aerospace - Commercial $ 492 $ 528 $ 534 $ 537 $ 2,091 $ 549 $ 574 $ 603 $ 629 $ 2,355 Aerospace - Defense $ 185 $ 192 $ 189 $ 200 $ 766 $ 215 $ 217 $ 232 $ 236 $ 900 Commercial Transportation $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Gas Turbines $ 177 $ 186 $ 191 $ 201 $ 755 $ 204 $ 233 $ 241 $ 266 $ 944 Other $ 31 $ 27 $ 31 $ 34 $ 123 $ 28 $ 32 $ 29 $ 32 $ 121 Total end-market revenue $ 885 $ 933 $ 945 $ 972 $ 3,735 $ 996 $ 1,056 $ 1,105 $ 1,163 $ 4,320 Fastening Systems Aerospace - Commercial $ 244 $ 251 $ 245 $ 266 $ 1,006 $ 275 $ 297 $ 310 $ 320 $ 1,202 Aerospace - Defense $ 39 $ 37 $ 43 $ 43 $ 162 $ 42 $ 44 $ 44 $ 46 $ 176 Commercial Transportation $ 66 $ 68 $ 65 $ 55 $ 254 $ 53 $ 56 $ 54 $ 46 $ 209 Gas Turbines $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Other $ 40 $ 38 $ 39 $ 37 $ 154 $ 42 $ 34 $ 40 $ 42 $ 158 Total end-market revenue $ 389 $ 394 $ 392 $ 401 $ 1,576 $ 412 $ 431 $ 448 $ 454 $ 1,745 Engineered Structures Aerospace - Commercial $ 192 $ 200 $ 183 $ 199 $ 774 $ 192 $ 189 $ 196 $ 188 $ 765 Aerospace - Defense $ 56 $ 61 $ 57 $ 62 $ 236 $ 76 $ 91 $ 81 $ 85 $ 333 Commercial Transportation $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Gas Turbines $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Other $ 14 $ 14 $ 13 $ 14 $ 55 $ 14 $ 10 $ 12 $ 14 $ 50 Total end-market revenue $ 262 $ 275 $ 253 $ 275 $ 1,065 $ 282 $ 290 $ 289 $ 287 $ 1,148 Forged Wheels Commercial Transportation $ 288 $ 278 $ 245 $ 243 $ 1,054 $ 252 $ 276 $ 247 $ 264 $ 1,039 Total end-market revenue $ 288 $ 278 $ 245 $ 243 $ 1,054 $ 252 $ 276 $ 247 $ 264 $ 1,039 Total Sales $ 1,824 $ 1,880 $ 1,835 $ 1,891 $ 7,430 $ 1,942 $ 2,053 $ 2,089 $ 2,168 $ 8,252 Revenue includes impacts of foreign currency and material and other inflationary cost pass through.
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20 Calculation of Segment Information ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Engine Products Third-party sales $ 885 $ 933 $ 945 $ 972 $ 3,735 $ 996 $ 1,056 $ 1,105 $ 1,163 $ 4,320 Inter-segment sales $ 2 $ 1 $ 3 $ 1 $ 7 $ 2 $ 2 $ 1 $ 2 $ 7 Provision for depreciation and amortization $ 33 $ 33 $ 34 $ 39 $ 139 $ 34 $ 35 $ 38 $ 39 $ 146 Segment Adjusted EBITDA $ 249 $ 292 $ 307 $ 302 $ 1,150 $ 325 $ 349 $ 368 $ 396 $ 1,438 Segment Adjusted EBITDA Margin 28.1 % 31.3 % 32.5 % 31.1 % 30.8 % 32.6 % 33.0 % 33.3 % 34.0 % 33.3 % Depreciation and amortization % of Revenue 3.7 % 3.5 % 3.6 % 4.0 % 3.7 % 3.4 % 3.3 % 3.4 % 3.4 % 3.4 % Restructuring and other (credits) charges $ — $ (1) $ 1 $ 1 $ 1 $ — $ — $ — $ 88 $ 88 Capital expenditures $ 55 $ 33 $ 55 $ 76 $ 219 $ 86 $ 75 $ 74 $ 84 $ 319 Fastening Systems Third-party sales $ 389 $ 394 $ 392 $ 401 $ 1,576 $ 412 $ 431 $ 448 $ 454 $ 1,745 Inter-segment sales $ — $ — $ — $ 1 $ 1 $ — $ — $ — $ 1 $ 1 Provision for depreciation and amortization $ 11 $ 13 $ 12 $ 11 $ 47 $ 12 $ 12 $ 12 $ 12 $ 48 Segment Adjusted EBITDA $ 92 $ 101 $ 102 $ 111 $ 406 $ 127 $ 126 $ 138 $ 139 $ 530 Segment Adjusted EBITDA Margin 23.7 % 25.6 % 26.0 % 27.7 % 25.8 % 30.8 % 29.2 % 30.8 % 30.6 % 30.4 % Depreciation and amortization % of Revenue 2.8 % 3.3 % 3.1 % 2.7 % 3.0 % 2.9 % 2.8 % 2.7 % 2.6 % 2.8 % Restructuring and other charges (credits) $ — $ 2 $ 1 $ 2 $ 5 $ — $ 1 $ — $ (1) $ — Capital expenditures $ 7 $ 5 $ 5 $ 9 $ 26 $ 10 $ 9 $ 13 $ 20 $ 52
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21 Calculation of Segment Information (continued) ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Engineered Structures Third-party sales $ 262 $ 275 $ 253 $ 275 $ 1,065 $ 282 $ 290 $ 289 $ 287 $ 1,148 Inter-segment sales $ 1 $ 3 $ 3 $ 3 $ 10 $ 3 $ 3 $ 2 $ 1 $ 9 Provision for depreciation and amortization $ 11 $ 11 $ 10 $ 10 $ 42 $ 12 $ 10 $ 9 $ 10 $ 41 Segment Adjusted EBITDA $ 37 $ 40 $ 38 $ 51 $ 166 $ 60 $ 62 $ 58 $ 63 $ 243 Segment Adjusted EBITDA Margin 14.1 % 14.5 % 15.0 % 18.5 % 15.6 % 21.3 % 21.4 % 20.1 % 22.0 % 21.2 % Depreciation and amortization % of Revenue 4.2 % 4.0 % 4.0 % 3.6 % 3.9 % 4.3 % 3.4 % 3.1 % 3.5 % 3.6 % Restructuring and other charges (credits) $ — $ 18 $ (3) $ (3) $ 12 $ (4) $ — $ — $ — $ (4) Capital expenditures $ 6 $ 5 $ 5 $ 4 $ 20 $ 5 $ 6 $ 9 $ 13 $ 33 Forged Wheels Third-party sales $ 288 $ 278 $ 245 $ 243 $ 1,054 $ 252 $ 276 $ 247 $ 264 $ 1,039 Provision for depreciation and amortization $ 10 $ 10 $ 10 $ 12 $ 42 $ 10 $ 10 $ 11 $ 11 $ 42 Segment Adjusted EBITDA $ 82 $ 75 $ 64 $ 66 $ 287 $ 68 $ 76 $ 73 $ 79 $ 296 Segment Adjusted EBITDA Margin 28.5 % 27.0 % 26.1 % 27.2 % 27.2 % 27.0 % 27.5 % 29.6 % 29.9 % 28.5 % Depreciation and amortization % of Revenue 3.5 % 3.6 % 4.1 % 4.9 % 4.0 % 4.0 % 3.6 % 4.5 % 4.2 % 4.0 % Restructuring and other charges (credits) $ — $ 1 $ — $ — $ 1 $ — $ (1) $ — $ — $ (1) Capital expenditures $ 12 $ 9 $ 14 $ 10 $ 45 $ 15 $ 8 $ 9 $ 4 $ 36
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22 Reconciliation of Total Segment Adj. EBITDA to Income Before Income Taxes ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Income before income taxes $303 $334 $354 $392 $1,383 $446 $469 $495 $430 $1,840 Loss on debt redemption — — 6 — 6 — — — 15 15 Interest expense, net 49 49 44 40 182 39 38 37 37 151 Other expense, net 17 15 17 13 62 9 14 10 7 40 Operating income $369 $398 $421 $445 $1,633 $494 $521 $542 $489 $2,046 Segment provision for depreciation and amortization 65 67 66 72 270 68 67 70 72 277 Unallocated amounts: Restructuring and other charges (credits) — 22 (1) — 21 (4) — — 88 84 Corporate expense(1) 26 21 25 13 85 22 25 25 28 100 Total Segment Adjusted EBITDA $460 $508 $511 $530 $2,009 $580 $613 $637 $677 $2,507 Total Segment third-party sales 1,824 1,880 1,835 1,891 7,430 1,942 2,053 2,089 2,168 8,252 Total Segment Adjusted EBITDA margin 25.2% 27.0% 27.8% 28.0% 27.0% 29.9% 29.9% 30.5% 31.2% 30.4% Total Segment Adjusted EBITDA and Total Segment Adjusted EBITDA margin are non-GAAP financial measures. Management believes that these measures are meaningful to investors because Total Segment Adjusted EBITDA and Total Segment Adjusted EBITDA margin provide additional information with respect to the Company's operating performance and the Company’s ability to meet its financial obligations. The Total Segment Adjusted EBITDA presented may not be comparable to similarly titled measures of othe r companies. Howmet’s definition of Total 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. Special items, including Restructuring and other charges (credits), are excluded from net margin and Segment Adjusted EBITDA. Differences between the total segment and consolidated t otals are in Corporate. (1) Pre-tax special items included in Corporate expense Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Plant fire reimbursements, net $— $(6) $— $(12) $(18) $— $— $— $— $— Acquisition costs — — — — — — — — 2 2 Costs (benefits) associated with closures, supply chain disruptions, and other items 1 — (1) 1 1 1 (1) — 1 1 Total Pre-tax special items included in Corporate expense $1 $(6) $(1) $(11) $(17) $1 $(1) $— $3 $3
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23 Reconciliation of Adj. Corporate Exp. Excluding Depreciation and Special Items ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Corporate expense $26 $21 $25 $13 $85 $22 $25 $25 $28 $100 Provision for depreciation and amortization 2 2 2 1 7 1 2 2 1 6 Adjusted Corporate expense excluding depreciation $24 $19 $23 $12 $78 $21 $23 $23 $27 $94 Special items: Plant fire reimbursements, net $— $(6) $— $(12) $(18) $— $— $— $— $— Acquisition costs — — — — — — — — 2 2 Costs (benefits) associated with closures, supply chain disruptions, and other items 1 — (1) 1 1 1 (1) — 1 1 Adjusted Corporate expense excluding depreciation and Special items $23 $25 $24 $23 $95 $20 $24 $23 $24 $91 Adjusted Corporate expense excluding depreciation and Adjusted Corporate expense excluding depreciation and Special items are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews the operating results of the Company excluding the impa cts of Special items. There can be no assurances that additional Special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Corporate expense determined under GAAP as well as Adjusted Corporate expense excluding depreciation and Adjusted Corporate expense excluding depreciation and S pecial items.
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24 Reconciliation of Adj. EBITDA and Adj. EBITDA Margin Both Excluding Special Items ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Third-party sales $1,824 $1,880 $1,835 $1,891 $7,430 $1,942 $2,053 $2,089 $2,168 $8,252 Operating income $369 $398 $421 $445 $1,633 $494 $521 $542 $489 $2,046 Operating income margin 20.2% 21.2% 22.9% 23.5% 22.0% 25.4% 25.4% 25.9% 22.6% 24.8% Net income $243 $266 $332 $314 $1,155 $344 $407 $385 $372 $1,508 Add: Provision for income taxes $60 $68 $22 $78 $228 $102 $62 $110 $58 $332 Other expense, net 17 15 17 13 62 9 14 10 7 40 Loss on debt redemption — — 6 — 6 — — — 15 15 Interest expense, net 49 49 44 40 182 39 38 37 37 151 Restructuring and other charges (credits) — 22 (1) — 21 (4) — — 88 84 Provision for depreciation and amortization 67 69 68 73 277 69 69 72 73 283 Adjusted EBITDA $436 $489 $488 $518 $1,931 $559 $590 $614 $650 $2,413 Add: Plant fire reimbursements, net $— $(6) $— $(12) $(18) $— $— $— $— $— Acquisition costs — — — — — — — — 2 2 Costs (benefits) associated with closures, supply chain disruptions, and other items 1 — (1) 1 1 1 (1) — 1 1 Adjusted EBITDA excluding Special items $437 $483 $487 $507 $1,914 $560 $589 $614 $653 $2,416 Adjusted EBITDA margin excluding Special items 24.0% 25.7% 26.5% 26.8% 25.8% 28.8% 28.7% 29.4% 30.1% 29.3% Adjusted EBITDA, Adjusted EBITDA excluding Special items, and Adjusted EBITDA margin excluding Special items are non -GAAP financial measures. Management believes that these measures are meaningful to investors because they provide additional information with respect to the Company's operating performance and t he Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. The Company's definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the foll owing items: Cost of goods sold, Selling, general administrative, and other expenses, Research and development expenses, and Provision for depreciation and amortization. Special items, including Restructuring and other charges (credits), are excluded from Adjusted EBITDA.
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25 Reconciliation of Adj. Operating Income and Margin Both Excluding Special Items ($ in millions) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Third-party sales $1,824 $1,880 $1,835 $1,891 $7,430 $1,942 $2,053 $2,089 $2,168 $8,252 Operating income $369 $398 $421 $445 $1,633 $494 $521 $542 $489 $2,046 Operating income margin 20.2% 21.2% 22.9% 23.5% 22.0% 25.4% 25.4% 25.9% 22.6% 24.8% Add: Restructuring and other charges (credits) $— $22 $(1) $— $21 $(4) $— $— $88 $84 Plant fire reimbursements, net — (6) — (12) (18) — — — — — Acquisition costs — — — — — — — — 2 2 Costs (benefits) associated with closures, supply chain disruptions, and other items 1 — (1) 1 1 1 (1) — 1 1 Adjusted operating income excluding Special items $370 $414 $419 $434 $1,637 $491 $520 $542 $580 $2,133 Adjusted operating income margin excluding Special items 20.3% 22.0% 22.8% 23.0% 22.0% 25.3% 25.3% 25.9% 26.8% 25.8% Adjusted operating income excluding Special items and Adjusted operating income margin excluding Special items are non -GAAP financial measures. Special items, including Restructuring and other charges (credits), are excluded from Adjusted operating income. Management believes that these measures are meaningful to investors because management reviews the operating results of the Company excluding the impacts of Special items. There can be no assurances that additional Special items will not occur i n future periods. To compensate for this limitation, management believes that it is appropriate to consider both Operating income and Operating Income margin determined under GAAP as well a s Adjusted operating income excluding Special items and Adjusted operating income margin excluding Special items.
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26 Reconciliation of Free Cash Flow ($ in millions) Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Cash provided from operations $253 $446 $531 $654 $1,884 Capital expenditures (119) (102) (108) (124) (453) Free cash flow (a) $134 $344 $423 $530 $1,431 Net income (b) $344 $407 $385 $372 $1,508 Free cash flow conversion as a percentage of Net income(1) (a)/(b) 95% Net income excluding Special items(2) (c) $351 $371 $385 $426 $1,533 Free cash flow conversion as a percentage of Net income excluding Special items (1) (a)/(c) 93% The Accounts Receivable Securitization program remains unchanged at $250 outstanding. Free cash flow and Free cash flow conversion as a percentage of Net income excluding Special Items are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations after taking into consideration capit al expenditures (due to the fact that these expenditures are considered necessary to maintain and expand the Company's asset base and are expected to generate future cash flows from oper ations). It is important to note that Free cash flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. (1) We compute free cash flow conversion on an annual basis only due to the cycle of our businesses. (2) Please refer to the Reconciliation of Net income excluding Special items for the reconciliation from Net income to Net income excluding Special items.
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27 Reconciliation of Net Debt to Adjusted EBITDA Excluding Special Items ($ in millions) Trailing-12 months ended December 31, 2025 Net income $1,508 Add: Provision for income taxes 332 Other expense, net 40 Loss on debt redemption 15 Interest expense, net 151 Restructuring and other charges 84 Provision for depreciation and amortization 283 Adjusted EBITDA $2,413 Add: Acquisition costs 2 Costs associated with closures, supply chain disruptions, and other items 1 Adjusted EBITDA excluding Special items $2,416 Long-term debt due within one year $191 Long-term debt $2,859 Total Debt, at period end $3,050 Less: Cash, cash equivalents, and restricted cash, at period end $743 Net Debt, at period end $2,307 Total Debt to Net Income 2.0 Net Debt to Adjusted EBITDA excluding Special items 1.0 Net debt, Net debt to Adjusted EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding Special items are non-GAAP financial measures. The Company's definition of 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; Resea rch and development expenses; and Provision for depreciation and amortization. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. Management believes that these measures are meaningful to investors because management assesses the Company's leverage positi on after factoring in cash that could be used to repay outstanding debt, and also because they provide additional information with respect to the Company’s o perating performance and the Company’s ability to meet its financial obligations.