Howmet Aerospace Inc.’s HWM first-quarter 2023 adjusted earnings of 42 cents per share beat the Zacks Consensus Estimate of earnings of 38 cents per share. The bottom line improved 35.5% year over year.
Total revenues of $1,603 million surpassed the Zacks Consensus Estimate of $1,495 million. The top line increased 21.1% from the year-ago quarter. The increase was backed by an improved commercial aerospace market and pricing actions.
The Engine Products segment’s revenues totaled $795 million, representing 49.6% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 26%, driven by growth in commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets.
The Fastening Systems segment generated revenues of $312 million, accounting for 19.5% of net revenues in the reported quarter. Revenues increased 18% year over year, driven by strength in the narrow-body commercial aerospace and defense aerospace markets.
The Engineered Structures segment’s revenues, representing 12.9% of net revenues, increased 14% year over year to $207 million. The results benefited from strength in the commercial aerospace market, partially offset by declines in the defense aerospace market.
Forged Wheels revenues totaled $289 million, representing 18% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 17%, driven by an increase in volume.
Howmet Aerospace Inc. Price, Consensus and EPS Surprise
Howmet Aerospace Inc. price-consensus-eps-surprise-chart | Howmet Aerospace Inc. Quote
In the reported quarter, Howmet’s cost of goods sold increased 22.5% year over year to $1,164 million. Selling, general, administrative and other expenses increased 8.7% year over year to $75 million. Research and development expenses were $9 million in the quarter.
Adjusted EBITDA, excluding special items, in the reported quarter was $360 million, up 20% year over year. Adjusted EBITDA margin decreased approximately 20 basis points (bps) year over year to 22.5%. Operating income increased 23.9% year over year to $285 million. The operating income margin increased 40 bps year over year to 17.8% in the reported quarter. Net interest expenses in the quarter totaled $57 million, down 1.7% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter of 2023, Howmet had cash and cash equivalents of $537 million, compared with $791 million at the end of December 2022. Long-term debt (less amount due within one year) was $3,988 million, compared with $4,162 million at the end of fourth-quarter 2022.
In the first three months of 2023, Howmet generated net cash of $23 million from operating activities, compared with $55 million generated in the year-ago period. Capital spending totaled $64 million, compared with $62 million a year ago. Free cash outflow was $41 million in the period.
Howmet paid out dividends of $17 million in the first three months of 2023, compared with $9 million in the year-ago period. Also, it repurchased shares worth $25 million in the year, compared with the $175 million buyback made a year ago.
For the second quarter of 2023, Howmet expects revenues of $1.6-$1.62 billion. The midpoint of the guided range — $1.61 billion — lies above the Zacks Consensus Estimate of $1.53 billion. Adjusted EBITDA is expected to be between $359 million and$365 million, while the margin is anticipated to be 22.4-22.5%. Adjusted earnings per share are estimated to be 41-43 cents in the second quarter. The midpoint of the guided range — 42 cents — lies above the Zacks Consensus Estimate of 40 cents.
For 2023, Howmet predicts revenues of $6.200-$6.325 billion compared with $6.000-$6.200 billion predicted earlier. The midpoint of the guided range — $6.250 billion — lies above the Zacks Consensus Estimate of $6.13 billion. Adjusted EBITDA is estimated to be $1.400-$1.435 billion, compared with $1.335-$1.415 billion anticipated earlier, while the margin is projected to be 22.6-22.7%, compared with 22.3-22.8% predicted earlier.
Adjusted earnings per share are forecasted in the band of $1.65-$1.70, compared with $1.53-$1.67 predicted earlier. The mid-point of the guided range — $1.67 — lies above the Zacks Consensus Estimate of $1.62. Free cash flow is expected to be $600-$670 million for 2023, compared with $580-$650 million anticipated earlier.
Zacks Rank & Stocks to Consider
HWM currently carries a Zacks Rank #3 (Hold). Some top-ranked companies from the Construction sector are discussed below:
TopBuild Corp. BLD presently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
BLD’s earnings surprise in the last four quarters was 16.8%, on average. In the past 60 days, estimates for TopBuild’s 2023 earnings have increased 0.2%. The stock has rallied 50.2% in the past six months.
Beazer Homes USA, Inc. BZH presently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 25.1%, on average.
In the past 60 days, estimates for Beazer Homes’ fiscal 2023 (ending September 2023) earnings have increased 11%. The stock has gained 79.8% in the past six months.
CEMEX, S.A.B. de C.V. CX presently carries a Zacks Rank of 2. CX’s earnings surprise in the last four quarters was 9.7%, on average.
In the past 60 days, CEMEX’s earnings estimates have increased 11.5% for 2023. The stock has gained 63.9% in the past six months.
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