According to Deloitte in its 2026 Aerospace and Defense Industry Outlook, Commercial aerospace has moved firmly from delivery recovery to installed-base monetization, a setup that directly benefits Howmet’s engine - and fastener-centric exposure. OEM backlogs remain near 14,000 aircraft, while production is constrained by engine durability issues at CFM and Pratt & Whitney, material shortages, and certification bottlenecks. With Boeing’s 737 MAX capped around 38 aircraft per month and freighter programs pushed into 2027–28, airlines are extending fleet lives and increasing utilization. As a result, global commercial MRO spend is projected to grow around 3-4% annually through the mid-2030s, with engine MRO rising to ~53% of total demand, reflecting the cost intensity and wear profile of next-generation engines.
Global defense spending exceeded $2.2 trillion in 2024, with US and allied budgets prioritizing aircraft availability, munitions replenishment, UAVs, and life-extension of aging fleets. These priorities sustain demand for certified replacement parts, specialty alloys, and high-temperature materials - segments where supply remains structurally tight due to persistent shortages in castings, forgings, titanium, and skilled labor, likely extending through 2027. Deloitte also highlights accelerating adoption of digital and AI tools in maintenance planning, logistics, and procurement, with 36% of industrial workflows potentially augmentable, while factory-floor disruption remains limited by certification and traceability requirements.
Howmet’s operations are organized across four product-led segments:
Engine Products - Howmet’s core business, supplying airfoils, seamless rolled rings, and rotating engine components for commercial and defense aerospace as well as industrial gas turbines. The segment is supported by tightly integrated casting, forging, coating, and machining capabilities.
Fastening Systems - Designs and manufactures high-specification aerospace and industrial fasteners used across airframes, engines, and selected energy applications, with products typically qualified early and retained for the life of the platform.
Engineered Structures - Provides titanium ingots, mill products, forgings, extrusions, and precision-machined parts for airframes, landing gear, and aero-engine structures, benefiting from scale and metallurgical expertise.
Forged Wheels - Serves commercial transportation through lightweight forged aluminum truck wheels under the Alcoa Wheels brand, improving payload efficiency, fuel economy, and durability versus steel alternatives.
Competition is global and highly technical where Howmet competes with diversified leaders like Precision Castparts, specialist materials producers such as VSMPO-AVISMA and ATI, and focused fastener groups including LISI Aerospace. It also faces casting and forging peers such as Doncasters, Aubert & Duval, Forgital, and Frisa, alongside captive manufacturing at OEMs like GE Aerospace and RTX. Howmet benefits from processes across castings, forgings, fasteners, and titanium at scale, reinforced by long-standing OEM approvals and targeted investment in airfoils, engine internals, and aerospace fasteners.
In Q3 2025, Howmet delivered strong results where revenue rose 14% YoY to $2.09B, with commercial aerospace up 15%, defense aerospace up 24%, and industrial markets up 18%, more than offsetting a modest decline in commercial transportation. Operating income increased 29% to $542 million, pushing operating margin to 25.9%, reflecting favorable mix, pricing, and operating leverage. Adjusted EBITDA reached $614 million, up 26% YoY, with margin expanding to 29.4%, led by Engine Products, which grew 17% YoY and delivered a 33.3% EBITDA margin. Net income rose to $385 million while FCF totaled $423 million despite continued growth capex. Strong cash generation enabled $200 million of share repurchases in the quarter, a 20% dividend increase, and $63 million of debt reduction.
Net sales are expected to grow from $6.6B in 2023 to just over $10.0B by 2027, while EBITDA is projected to more than double from $1.5B to $3.1B, with margins forecasting to expand from 22.7% in 2023 to over 31% by 2027, with EBIT margins rising from 18.1% to nearly 28%. Net income increases from $765M in 2023 to roughly $2.1B in 2027, lifting net margin from 11.5% to above 20%. ROE is improving from 20% in 2023 to above 31% by 2027.
In December 2025, Howmet agreed to acquire Consolidated Aerospace Manufacturing (CAM) from Stanley Black & Decker for $1.8 billion in cash, expanding its aerospace fasteners and fluid fittings business. CAM is expected to generate $485-495 million of FY 2026 revenue at EBITDA margins above 20%.
FCF is expected to rise from $682M in 2023 to nearly $1.9B by 2027, despite elevated capex that peaks above $430m in 2025–26 as the company invests into engine capacity. FCF margins are projected to improve from around 10% in 2023 to almost 19% by 2027, while leverage declines steadily, with net debt falling from $3.1B in 2023 to just above $2.0B and debt/EBITDA compressing from 2.05x to ~0.65x. The group’s valuation remains high with a P/E ratio of 56x for 2025, easing to 40x by 2027 as EPS grows from $1.83 in 2023 to over $5.25. EV/EBITDA is expected to normalize from the mid-30s in 2025 toward the high-20s by 2027.
Howmet’s risks are linked to ongoing strain in the aerospace supply chain with multi-tier complexity, material shortages, and uneven OEM production ramps. Those delays or quality issues at key programs can quickly pressure volumes and margins, especially given customer concentration. With elevated capex underway, returns depend on precise execution, timely ramps, and access to specialty alloys where pricing often lags costs. These challenges are further complicated by labor constraints, tighter certification requirements, exposure to trade policy, and geopolitics.
Tariffs have become a concrete operating issue for Howmet; by invoking force majeure after new US tariffs, the company signaled it would not shoulder sudden cost increases, even if shipments were delayed. In a supply chain where a single missing part can halt production, this has forced OEMs and operators to revisit who ultimately absorbs tariff costs - underscoring Howmet’s current leverage, but also its sensitivity to prolonged trade and geopolitical frictions.
Overall, Howmet is positioned as a high-quality aerospace compounder benefiting from constrained supply, long OEM backlogs, and a structural shift toward installed-base monetization. While execution risk remains elevated given tight supply chains and heavy capex, the outlook favors companies with certified capacity and pricing power, leaving Howmet well placed to sustain market expansion.
