Howmet Aerospace Inc. (NYSE: HWM) reported record financial results for the fourth quarter and full year 2025, driven by a double-digit expansion in its core aerospace markets and significant margin improvements. The Pittsburgh-based specialized engineering firm also issued an optimistic outlook for 2026, forecasting continued growth in revenue and profitability as the commercial aviation recovery remains robust.
Record Performance Driven by Aerospace Demand
For the quarter ended December 31, 2025, Howmet generated revenue of $2.17 billion, a 15% increase compared to the same period in 2024. This performance was underpinned by a 13% year-over-year rise in commercial aerospace revenue and a 20% surge in defense aerospace. The company’s engine products segment, its largest division, saw revenue grow 20% to $1.16 billion, supported by high demand for spares and components across all end markets.
Profitability metrics reached new highs during the period. Adjusted EBITDA for the fourth quarter rose 29% to $653 million, while the adjusted EBITDA margin expanded by 330 basis points to reach 30.1%. Adjusted earnings per share (EPS) for the quarter stood at $1.05, representing a 42% increase from the prior-year period.
Full Year 2025 Financial Summary
Howmet’s full-year performance reflected a similar trajectory of disciplined growth and operational efficiency:
Total Revenue: $8.25 billion, up 11% year-over-year.
Adjusted EBITDA: $2.42 billion, a 26% increase from 2024.
Adjusted EBITDA Margin: 29.3%, an improvement of approximately 350 basis points.
Adjusted EPS: $3.77, up 40% compared to $2.69 in the previous year.
Free Cash Flow: $1.43 billion, with a conversion rate of 93% relative to adjusted net income.
The company utilized its strong cash generation to strengthen its balance sheet and return value to shareholders. During 2025, Howmet repurchased $700 million of common stock and paid $181 million in dividends. It also reduced its debt by $265 million, bringing its net debt-to-LTM EBITDA ratio to a record low of 1.0x.
Segment Analysis and Market Dynamics
The growth was broad-based across most business units, though some sectors faced headwinds:
Engine Products: Represented 54% of fourth-quarter revenue, benefiting from the ongoing recovery in international travel and increased demand for defense platforms.
Fastening Systems: Revenue increased 13% to $454 million, with strong productivity gains pushing segment margins to 30.6%.
Engineered Structures: Posted a 4% revenue increase to $287 million, primarily due to higher defense demand, though commercial aerospace in this segment was slightly lower.
Forged Wheels: Despite a 10% decline in volume due to a weaker commercial transportation market, revenue rose 9% to $264 million, aided by higher aluminum cost pass-throughs and cost-flexing initiatives.
Executive Chairman and CEO, John Plant, highlighted the company’s ability to navigate market shifts, noting that headcount was increased by approximately 1,445 during the year to meet rising production requirements.
2026 Outlook and Strategic Direction
Howmet provided 2026 guidance that anticipates further expansion across its key financial indicators. The company expects full-year revenue to range between $9.0 billion and $9.2 billion, representing approximately 10% growth. Adjusted EBITDA is forecasted to rise roughly 14% to a midpoint of $2.76 billion, while adjusted EPS is projected to increase 18% to approximately $4.45.
Strategic priorities for the coming year include capacity expansions within the Engine Products segment, with capital expenditures projected at approximately $470 million. Additionally, the company is moving forward with the planned acquisition of Consolidated Aerospace Manufacturing, LLC (CAM), which is expected to bolster its position in the aerospace fastener market.
The aerospace sector continues to benefit from a substantial backlog of aircraft orders and a focus on fuel-efficient engine technology, providing a favorable backdrop for Howmet’s specialized component portfolio. However, the company remains cautious regarding potential macro risks, including supply chain stability and geopolitical tensions that could impact global trade.
Reasons to Pass on HWM
- High aerospace concentration: Performance remains heavily tied to commercial and defense aerospace demand, increasing exposure to cyclical swings in aircraft production and travel trends.
- Engine Products dependency: The Engine Products segment accounted for 54% of Q4 revenue, heightening reliance on a single division.
- Commercial transportation weakness: Forged Wheels volumes declined 10% due to softer commercial transportation markets.
- Cost pass-through reliance: Revenue growth in Forged Wheels was supported in part by higher aluminum cost pass-throughs, which may not translate into structural demand gains.
- Rising capital intensity: 2026 capital expenditures are projected at approximately $470 million to support capacity expansion.
- Acquisition execution risk: The planned acquisition of Consolidated Aerospace Manufacturing (CAM) introduces integration and operational risks.
- Workforce expansion: Headcount increased by roughly 1,445 employees in 2025, raising fixed cost exposure if demand moderates.
- Macro and geopolitical sensitivity: Operations remain exposed to supply chain disruptions, geopolitical tensions, and global trade uncertainties.
- Defense exposure variability: Strong recent defense growth (up 20% in Q4) could moderate depending on government budget dynamics.
- Elevated growth expectations: 2026 guidance implies continued double-digit earnings expansion, raising the bar for execution amid a record performance base.