filings.toolsItem 1. Financial Statements and Supplementary Data.
119K characters. Original on sec.gov · Markdown
Item 1. Financial Statements and Supplementary Data.
Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share amounts)
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Sales (C) | $ | 2,089 | $ | 1,835 | $ | 6,084 | $ | 5,539 | |||||||||||||||
| Cost of goods sold (exclusive of expenses below) | 1,365 | 1,253 | 4,020 | 3,830 | |||||||||||||||||||
| Selling, general administrative, and other expenses | 100 | 85 | 274 | 270 | |||||||||||||||||||
| Research and development expenses | 10 | 9 | 27 | 26 | |||||||||||||||||||
| Provision for depreciation and amortization | 72 | 68 | 210 | 204 | |||||||||||||||||||
| Restructuring and other (credits) charges (D) | — | (1) | (4) | 21 | |||||||||||||||||||
| Operating income | 542 | 421 | 1,557 | 1,188 | |||||||||||||||||||
| Loss on debt redemption (N) | — | 6 | — | 6 | |||||||||||||||||||
| Interest expense, net | 37 | 44 | 114 | 142 | |||||||||||||||||||
| Other expense, net (F) | 10 | 17 | 33 | 49 | |||||||||||||||||||
| Income before income taxes | 495 | 354 | 1,410 | 991 | |||||||||||||||||||
| Provision for income taxes (G) | 110 | 22 | 274 | 150 | |||||||||||||||||||
| Net income | $ | 385 | $ | 332 | $ | 1,136 | $ | 841 | |||||||||||||||
| Amounts Attributable to Howmet Aerospace Common Shareholders (H): | |||||||||||||||||||||||
| Net income | $ | 384 | $ | 331 | $ | 1,134 | $ | 839 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.96 | $ | 0.81 | $ | 2.81 | $ | 2.06 | |||||||||||||||
| Diluted | $ | 0.95 | $ | 0.81 | $ | 2.79 | $ | 2.04 | |||||||||||||||
| Average Shares Outstanding (H): | |||||||||||||||||||||||
| Basic | 403 | 408 | 404 | 408 | |||||||||||||||||||
| Diluted | 405 | 410 | 406 | 411 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Comprehensive Income (unaudited)
(in millions)
| Third quarter ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 385 | $ | 332 | $ | 1,136 | $ | 841 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income, net of tax (I): | ||||||||||||||||||||||||||||||||||||||||||||
| Change in unrecognized net actuarial loss and prior service benefit related to pension and other postretirement benefits | 2 | 8 | 8 | 15 | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | (13) | 71 | 149 | 30 | ||||||||||||||||||||||||||||||||||||||||
| Net change in unrecognized gains (losses) on cash flow hedges | 6 | (19) | (33) | (13) | ||||||||||||||||||||||||||||||||||||||||
| Total Other comprehensive (loss) income, net of tax | (5) | 60 | 124 | 32 | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | $ | 380 | $ | 392 | $ | 1,260 | $ | 873 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 659 | $ | 564 | |||||||
| Receivables from customers, less allowances of $— in both 2025 and 2024 (J) | 884 | 689 | |||||||||
| Other receivables | 17 | 20 | |||||||||
| Inventories (K) | 1,975 | 1,840 | |||||||||
| Prepaid expenses and other current assets | 289 | 249 | |||||||||
| Total current assets | 3,824 | 3,362 | |||||||||
| Properties, plants, and equipment, net (L) | 2,551 | 2,386 | |||||||||
| Goodwill | 4,058 | 4,010 | |||||||||
| Deferred income taxes | 31 | 35 | |||||||||
| Intangibles, net | 462 | 475 | |||||||||
| Other noncurrent assets (M) | 251 | 251 | |||||||||
| Total assets | $ | 11,177 | $ | 10,519 | |||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable, trade (P) | $ | 957 | $ | 948 | |||||||
| Accrued compensation and retirement costs | 314 | 305 | |||||||||
| Taxes, including income taxes (G) | 71 | 60 | |||||||||
| Accrued interest payable | 32 | 59 | |||||||||
| Other current liabilities (M)(P) | 250 | 171 | |||||||||
| Long-term debt due within one year (N) | 1 | 6 | |||||||||
| Total current liabilities | 1,625 | 1,549 | |||||||||
| Long-term debt (N)(O) | 3,188 | 3,309 | |||||||||
| Accrued pension benefits (E) | 597 | 625 | |||||||||
| Accrued other postretirement benefits (E) | 50 | 54 | |||||||||
| Other noncurrent liabilities and deferred credits (M) | 574 | 428 | |||||||||
| Total liabilities | 6,034 | 5,965 | |||||||||
| Contingencies and commitments (P) | |||||||||||
| Equity | |||||||||||
| Howmet Aerospace shareholders’ equity: | |||||||||||
| Preferred stock | 55 | 55 | |||||||||
| Common stock | 403 | 405 | |||||||||
| Additional capital | 2,717 | 3,206 | |||||||||
| Retained earnings | 3,722 | 2,766 | |||||||||
| Accumulated other comprehensive loss (I) | (1,754) | (1,878) | |||||||||
| Total equity | 5,143 | 4,554 | |||||||||
| Total liabilities and equity | $ | 11,177 | $ | 10,519 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 1,136 | $ | 841 | |||||||
| Adjustments to reconcile net income to cash provided from operations: | |||||||||||
| Depreciation and amortization | 210 | 204 | |||||||||
| Deferred income taxes | 75 | 39 | |||||||||
| Restructuring and other (credits) charges | (4) | 21 | |||||||||
| Net realized and unrealized losses | 17 | 18 | |||||||||
| Net periodic pension cost (E) | 31 | 31 | |||||||||
| Stock-based compensation | 59 | 54 | |||||||||
| Loss on debt redemption (N) | — | 6 | |||||||||
| Other | 3 | 4 | |||||||||
| Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: | |||||||||||
| Increase in receivables (J) | (180) | (97) | |||||||||
| Increase in inventories (K) | (95) | (139) | |||||||||
| (Increase) decrease in prepaid expenses and other current assets | (11) | 9 | |||||||||
| Increase (decrease) in accounts payable, trade | 17 | (67) | |||||||||
| Decrease in accrued expenses | (2) | (42) | |||||||||
| Decrease in taxes, including income taxes | (3) | (5) | |||||||||
| Pension contributions | (30) | (33) | |||||||||
| Increase in noncurrent assets | (6) | (6) | |||||||||
| Increase (decrease) in noncurrent liabilities | 13 | (20) | |||||||||
| Cash provided from operations | 1,230 | 818 | |||||||||
| Financing Activities | |||||||||||
| Additions to debt (N) | — | 500 | |||||||||
| Repurchases and payments on debt (N) | (140) | (805) | |||||||||
| Debt issuance costs (N) | — | (5) | |||||||||
| Premiums paid on early redemption of debt (N) | — | (5) | |||||||||
| Repurchases of common stock | (500) | (310) | |||||||||
| Proceeds from exercise of employee stock options | 1 | 7 | |||||||||
| Dividends paid to shareholders | (131) | (76) | |||||||||
| Taxes paid for net share settlement of equity awards | (45) | (48) | |||||||||
| Other | (5) | — | |||||||||
| Cash used for financing activities | (820) | (742) | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures (C) | (329) | (219) | |||||||||
| Proceeds from the sale of assets and businesses (D) | 9 | 9 | |||||||||
| Additions to investments | (9) | — | |||||||||
| Sale of investments | 13 | — | |||||||||
| Other | — | 1 | |||||||||
| Cash used for investing activities | (316) | (209) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | (2) | |||||||||
| Net change in cash, cash equivalents and restricted cash | 95 | (135) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 565 | 610 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 660 | $ | 475 | |||||||
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Statement of Changes in Consolidated Equity (unaudited)
(in millions, except per-share amounts)
| Preferred stock | Common stock | Additional capital | Retained earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | 55 | $ | 408 | $ | 3,486 | $ | 2,186 | $ | (1,858) | $ | 4,277 | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 332 | — | 332 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (I) | — | — | — | — | 60 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred-Class A @ $0.9375 per share | — | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Common @ $0.16 per share | — | — | — | (64) | — | (64) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (H) | — | (1) | (101) | — | — | (102) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 16 | — | — | 16 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued: compensation plans | — | — | (15) | — | — | (15) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | 55 | $ | 407 | $ | 3,386 | $ | 2,453 | $ | (1,798) | $ | 4,503 |
| Preferred stock | Common stock | Additional capital | Retained earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | 55 | $ | 404 | $ | 2,898 | $ | 3,434 | $ | (1,749) | $ | 5,042 | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 385 | — | 385 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss (I) | — | — | — | — | (5) | (5) | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred-Class A @ $0.9375 per share | — | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Common @ $0.24 per share | — | — | — | (96) | — | (96) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (H) | — | (1) | (201) | — | — | (202) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 20 | — | — | 20 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | 55 | $ | 403 | $ | 2,717 | $ | 3,722 | $ | (1,754) | $ | 5,143 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Statement of Changes in Consolidated Equity (unaudited)
(U.S. dollars in millions, except per-share amounts)
| Preferred stock | Common stock | Additional capital | Retained earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 55 | $ | 410 | $ | 3,682 | $ | 1,720 | $ | (1,830) | $ | 4,037 | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 841 | — | 841 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (I) | — | — | — | — | 32 | 32 | |||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred-Class A @ $2.8125 per share | — | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||||||||||||||
| Common @ $0.26 per share | — | — | — | (106) | — | (106) | |||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (H) | — | (4) | (309) | — | — | (313) | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 54 | — | — | 54 | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued: compensation plans | — | 1 | (41) | — | — | (40) | |||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | 55 | $ | 407 | $ | 3,386 | $ | 2,453 | $ | (1,798) | $ | 4,503 |
| Preferred stock | Common stock | Additional capital | Retained earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 55 | $ | 405 | $ | 3,206 | $ | 2,766 | $ | (1,878) | $ | 4,554 | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 1,136 | — | 1,136 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (I) | — | — | — | — | 124 | 124 | |||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred-Class A @ $2.8125 per share | — | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||||||||||||||
| Common @ $0.44 per share | — | — | — | (178) | — | (178) | |||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (H) | — | (3) | (501) | — | — | (504) | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 59 | — | — | 59 | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued: compensation plans | — | 1 | (47) | — | — | (46) | |||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | 55 | $ | 403 | $ | 2,717 | $ | 3,722 | $ | (1,754) | $ | 5,143 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Notes to the Consolidated Financial Statements (unaudited)
(U.S. dollars in millions, except share and per-share amounts)
A. Basis of Presentation
The interim Consolidated Financial Statements of Howmet Aerospace Inc. and its subsidiaries (“Howmet” or the “Company” or “we” or “our”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2024 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”), which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation.
In the nine months ended September 30, 2025, the Company derived approximately 69% of its revenue from products sold to the commercial and defense aerospace markets. Aircraft production in the aerospace industry continues to grow based on increases in demand for new aircraft and engine spares. Aircraft backlogs remain at record levels. We expect our aerospace demand to continue to grow, including engine spares. The Boeing Company (“Boeing”) has been gradually increasing its production rates over the past several months, and Airbus SE (“Airbus”) has also signaled that its production rates are increasing, particularly in narrow body aircraft. In October 2025, Boeing and the Federal Aviation Administration jointly agreed to production rate increases for the Boeing 737 MAX from 38 aircraft per month to 42 aircraft per month. Boeing and Airbus are the primary original equipment manufacturers (“OEMs”) of aircraft airframes, and these companies’ production levels have had and are expected to have a material impact on the financial performance of Howmet. The timing and level of future aircraft builds by OEMs are subject to changes and uncertainties, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.
Recent, ongoing changes in U.S. and international government policies, including executive orders on tariffs and retaliatory trade measures, are expected to impact the pricing of our products, disrupt supply chains, and increase our costs. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties in all segments. While the tariff situation remains fluid, we expect to pass along the costs associated with tariffs to our customers in the form of a cost pass through mechanism. There may be a delay between an increase in our costs and our ability to recover the higher costs that could impact our margins.
The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market expectations, including considerations relating to changes in the aerospace industry. The impact of these changes, including the macroeconomic considerations, remains highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions.
B. Recently Adopted and Recently Issued Accounting Guidance
Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to enhance disclosures related to significant segment expenses and other matters related to reportable segments. These changes became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this new disclosure is reflected in Note C of the Consolidated Financial Statements.
Issued
In September 2025, the FASB issued guidance to simplify the requirements for the capitalization of costs surrounding internally-developed software. These changes become effective for fiscal years beginning after December 15, 2027 for interim and annual reporting periods. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements.
In July 2025, the FASB issued guidance to simplify the process of estimating credit losses for current contract assets and accounts receivable. These changes become effective for fiscal years beginning after December 15, 2025 for interim and annual reporting periods. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements.
In November 2024, the FASB issued guidance to improve disclosures about an entity’s expenses including more detailed information about the components of expenses in commonly presented expense captions. These changes become effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements.
In December 2023, the FASB issued guidance to enhance the transparency of annual income tax disclosures including additional details on the rate reconciliation and taxes paid by jurisdiction. These changes are effective for fiscal years beginning after December 15, 2024. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements and expects to disclose additional information as required by the standard.
C. Segment Information
Howmet is a global leader in lightweight metals engineering and manufacturing. 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. Segment performance under Howmet’s management reporting system is evaluated based on Segment Adjusted EBITDA. The Company’s Chief Executive Officer, who has been determined to be our Chief Operating Decision Maker (“CODM”), believes that Segment Adjusted EBITDA provides information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. 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. Special items, including Restructuring and other charges (credits), are excluded from net margin and Segment Adjusted EBITDA. The Company’s CODM considers forecast-to-actual variances for Segment Adjusted EBITDA when allocating resources across the Company’s reportable segments. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Differences between the total segment and consolidated totals are in Corporate.
Howmet’s operations consist of four worldwide reportable segments as follows:
Engine Products
Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbine applications. Engine Products produces rotating parts, as well as structural parts.
Fastening Systems
Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial, and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. Fastening Systems’ products are also critical components of commercial transportation vehicles and construction, industrial, and renewable energy equipment.
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, 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.
Forged Wheels
Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.
The operating results of the Company’s reportable segments were as follows:
| Engine Products | Fastening Systems | Engineered Structures | Forged Wheels | Total Segment | |||||||||||||||||||||||||
| Third quarter ended September 30, 2025 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 1,105 | $ | 448 | $ | 289 | $ | 247 | $ | 2,089 | |||||||||||||||||||
| Inter-segment sales | 1 | — | 2 | — | 3 | ||||||||||||||||||||||||
| Total sales | $ | 1,106 | $ | 448 | $ | 291 | $ | 247 | $ | 2,092 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 709 | $ | 280 | $ | 224 | $ | 162 | $ | 1,375 | |||||||||||||||||||
| Other segment items(2) | 29 | 30 | 9 | 12 | 80 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 368 | $ | 138 | $ | 58 | $ | 73 | $ | 637 | |||||||||||||||||||
| Provision for depreciation and amortization | 38 | 12 | 9 | 11 | 70 | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 74 | $ | 13 | $ | 9 | $ | 9 | $ | 105 | |||||||||||||||||||
| Third quarter ended September 30, 2024 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 945 | $ | 392 | $ | 253 | $ | 245 | $ | 1,835 | |||||||||||||||||||
| Inter-segment sales | 3 | — | 3 | — | 6 | ||||||||||||||||||||||||
| Total sales | $ | 948 | $ | 392 | $ | 256 | $ | 245 | $ | 1,841 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 616 | $ | 265 | $ | 210 | $ | 171 | $ | 1,262 | |||||||||||||||||||
| Other segment items(2) | 25 | 25 | 8 | 10 | 68 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 307 | $ | 102 | $ | 38 | $ | 64 | $ | 511 | |||||||||||||||||||
| Provision for depreciation and amortization | 34 | 12 | 10 | 10 | 66 | ||||||||||||||||||||||||
| Restructuring and other charges (credits) | 1 | 1 | (3) | — | (1) | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 55 | $ | 5 | $ | 5 | $ | 14 | $ | 79 | |||||||||||||||||||
| Engine Products | Fastening Systems | Engineered Structures | Forged Wheels | Total Segment | |||||||||||||||||||||||||
| Nine months ended September 30, 2025 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 3,157 | $ | 1,291 | $ | 861 | $ | 775 | $ | 6,084 | |||||||||||||||||||
| Inter-segment sales | 5 | — | 8 | — | 13 | ||||||||||||||||||||||||
| Total sales | $ | 3,162 | $ | 1,291 | $ | 869 | $ | 775 | $ | 6,097 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 2,039 | $ | 812 | $ | 663 | $ | 525 | $ | 4,039 | |||||||||||||||||||
| Other segment items(2) | 81 | 88 | 26 | 33 | 228 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 1,042 | $ | 391 | $ | 180 | $ | 217 | $ | 1,830 | |||||||||||||||||||
| Provision for depreciation and amortization | 107 | 36 | 31 | 31 | 205 | ||||||||||||||||||||||||
| Restructuring and other charges (credits) | — | 1 | (4) | (1) | (4) | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 235 | $ | 32 | $ | 20 | $ | 32 | $ | 319 | |||||||||||||||||||
| Total assets | 5,597 | 2,782 | 1,361 | 733 | 10,473 | ||||||||||||||||||||||||
| Nine months ended September 30, 2024 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 2,763 | $ | 1,175 | $ | 790 | $ | 811 | $ | 5,539 | |||||||||||||||||||
| Inter-segment sales | 6 | — | 7 | — | 13 | ||||||||||||||||||||||||
| Total sales | $ | 2,769 | $ | 1,175 | $ | 797 | $ | 811 | $ | 5,552 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 1,844 | $ | 798 | $ | 654 | $ | 558 | $ | 3,854 | |||||||||||||||||||
| Other segment items(2) | 77 | 82 | 28 | 32 | 219 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 848 | $ | 295 | $ | 115 | $ | 221 | $ | 1,479 | |||||||||||||||||||
| Provision for depreciation and amortization | 100 | 36 | 32 | 30 | 198 | ||||||||||||||||||||||||
| Restructuring and other charges | — | 3 | 15 | 1 | 19 | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 143 | $ | 17 | $ | 16 | $ | 35 | $ | 211 | |||||||||||||||||||
| Total assets | 5,181 | 2,750 | 1,379 | 737 | $ | 10,047 |
(1)Segment Adjusted cost of goods sold is exclusive of Provision for depreciation and amortization, Restructuring and other (credits) charges, and Corporate expenses.
(2)Other segment items includes Selling, general administrative, and other expenses, and Research and development expenses; exclusive of Provision for depreciation and amortization, and Restructuring and other (credits) charges.
The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total Segment Adjusted EBITDA | $ | 637 | $ | 511 | $ | 1,830 | $ | 1,479 | |||||||||||||||
| Segment provision for depreciation and amortization | (70) | (66) | (205) | (198) | |||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Restructuring and other credits (charges) | — | 1 | 4 | (21) | |||||||||||||||||||
| Corporate expense | (25) | (25) | (72) | (72) | |||||||||||||||||||
| Operating income | $ | 542 | $ | 421 | $ | 1,557 | $ | 1,188 | |||||||||||||||
| Loss on debt redemption | — | (6) | — | (6) | |||||||||||||||||||
| Interest expense, net | (37) | (44) | (114) | (142) | |||||||||||||||||||
| Other expense, net | (10) | (17) | (33) | (49) | |||||||||||||||||||
| Income before income taxes | $ | 495 | $ | 354 | $ | 1,410 | $ | 991 |
The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total segment capital expenditures | $ | 105 | $ | 79 | $ | 319 | $ | 211 | |||||||||||||||
| Corporate | 3 | 3 | 10 | 8 | |||||||||||||||||||
| Capital expenditures | $ | 108 | $ | 82 | $ | 329 | $ | 219 |
The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.
| Engine Products | Fastening Systems | Engineered Structures | Forged Wheels | Total Segment | |||||||||||||||||||||||||
| Third quarter ended September 30, 2025 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 603 | $ | 310 | $ | 196 | $ | — | $ | 1,109 | |||||||||||||||||||
| Aerospace - Defense | 232 | 44 | 81 | — | 357 | ||||||||||||||||||||||||
| Commercial Transportation | — | 54 | — | 247 | 301 | ||||||||||||||||||||||||
| Industrial and Other: | |||||||||||||||||||||||||||||
| Industrial Gas Turbine | 152 | — | — | — | 152 | ||||||||||||||||||||||||
| Oil and Gas | 89 | — | — | — | 89 | ||||||||||||||||||||||||
| General Industrial | 29 | 40 | 12 | — | 81 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 1,105 | $ | 448 | $ | 289 | $ | 247 | $ | 2,089 | |||||||||||||||||||
| Third quarter ended September 30, 2024 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 534 | $ | 245 | $ | 183 | $ | — | $ | 962 | |||||||||||||||||||
| Aerospace - Defense | 189 | 43 | 57 | — | 289 | ||||||||||||||||||||||||
| Commercial Transportation | — | 65 | — | 245 | 310 | ||||||||||||||||||||||||
| Industrial and Other: | |||||||||||||||||||||||||||||
| Industrial Gas Turbine | 124 | — | — | — | 124 | ||||||||||||||||||||||||
| Oil and Gas | 67 | — | — | — | 67 | ||||||||||||||||||||||||
| General Industrial | 31 | 39 | 13 | — | 83 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 945 | $ | 392 | $ | 253 | $ | 245 | $ | 1,835 | |||||||||||||||||||
| Nine months ended September 30, 2025 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 1,726 | $ | 882 | $ | 577 | $ | — | $ | 3,185 | |||||||||||||||||||
| Aerospace - Defense | 664 | 130 | 248 | — | 1,042 | ||||||||||||||||||||||||
| Commercial Transportation | — | 163 | — | 775 | 938 | ||||||||||||||||||||||||
| Industrial and Other: | |||||||||||||||||||||||||||||
| Industrial Gas Turbine | 431 | — | — | — | 431 | ||||||||||||||||||||||||
| Oil and Gas | 247 | — | — | — | 247 | ||||||||||||||||||||||||
| General Industrial | 89 | 116 | 36 | — | 241 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 3,157 | $ | 1,291 | $ | 861 | $ | 775 | $ | 6,084 | |||||||||||||||||||
| Nine months ended September 30, 2024 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 1,554 | $ | 740 | $ | 575 | $ | — | $ | 2,869 | |||||||||||||||||||
| Aerospace - Defense | 566 | 119 | 174 | — | 859 | ||||||||||||||||||||||||
| Commercial Transportation | — | 199 | — | 811 | 1,010 | ||||||||||||||||||||||||
| Industrial and Other: | |||||||||||||||||||||||||||||
| Industrial Gas Turbine | 359 | — | — | — | 359 | ||||||||||||||||||||||||
| Oil and Gas | 195 | — | — | — | 195 | ||||||||||||||||||||||||
| General Industrial | 89 | 117 | 41 | — | 247 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 2,763 | $ | 1,175 | $ | 790 | $ | 811 | $ | 5,539 |
The Company derived 69% and 67% of its revenue from the aerospace (commercial and defense) markets for the nine months ended September 30, 2025 and 2024, respectively.
RTX Corporation and GE Aerospace represented approximately 11% and 10%, respectively, of the Company’s third-party sales in the nine months ended September 30, 2025. GE Aerospace and RTX Corporation each represented approximately 10% of the Company’s third-party sales in the nine months ended September 30, 2024. These sales were primarily from the Engine Products segment.
D. Restructuring and Other (Credits) Charges
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Layoff costs | $ | — | $ | 1 | $ | 3 | $ | 8 | |||||||||||||||
| Reversals of previously recorded layoff reserves | — | (1) | (2) | (1) | |||||||||||||||||||
| Net (gain) losses related to divestitures of assets and businesses | (1) | (1) | (6) | 12 | |||||||||||||||||||
| Other | 1 | — | 1 | 2 | |||||||||||||||||||
| Total restructuring and other (credits) charges | $ | — | $ | (1) | $ | (4) | $ | 21 |
In the third quarter of 2025, the Company recorded Restructuring and other credits of less than $1, which were primarily due to a gain related to post-closing adjustments from the May 2024 sale of a small United Kingdom (“U.K.”) manufacturing facility in Engineered Structures of $1, partially offset by exit related costs, including accelerated depreciation, of $1.
In the nine months ended September 30, 2025, the Company recorded Restructuring and other credits of $4, which were primarily due to a gain on the sale of assets at a small U.K. manufacturing facility in Engineered Structures of $3, a gain on the sale of assets at a previously closed facility in Forged Wheels of $2, a reversal of $2 for layoff reserves related to a prior period, and a gain related to post-closing adjustments from the May 2024 sale of a small U.K. manufacturing facility in Engineered Structures of $1, partially offset by a charge for layoff costs of $3 including the separation of 106 employees (79 in Fastening Systems and 27 in Forged Wheels) and exit related costs, including accelerated depreciation, of $1.
In the third quarter of 2024, the Company recorded Restructuring and other credits of $1, which were primarily due to a $1 gain related to post-closing adjustments from the May 2024 sale of a small U.K. manufacturing facility in Engineered Structures and a reversal of $1 for a layoff reserve related to a prior period, partially offset by a $1 charge for layoff costs.
In the nine months ended September 30, 2024, the Company recorded Restructuring and other charges of $21, which were primarily due to a net loss on the May 2024 sale of a small U.K. manufacturing facility in Engineered Structures of $13, an $8 charge for layoff costs, including the separation of 293 employees (144 in Fastening Systems, 111 in Engineered Structures and 38 in Forged Wheels), and exit related costs, including accelerated depreciation, of $2, partially offset by a gain on the sale of assets at a small U.K. manufacturing facility in Engine Products of $1 and a reversal of $1 for a layoff reserve related to a prior period.
| Layoff costs | Other exit costs | Total | |||||||||||||||
| Reserve balances at December 31, 2024 | $ | 4 | $ | — | $ | 4 | |||||||||||
| Cash payments | (2) | (2) | (4) | ||||||||||||||
| Restructuring charges (credits) | 1 | (5) | (4) | ||||||||||||||
| Other(1) | — | 7 | 7 | ||||||||||||||
| Reserve balances at September 30, 2025 | $ | 3 | $ | — | $ | 3 |
(1)In the nine months ended September 30, 2025, other for other exit costs were primarily due to a gain on the sale of assets at a small U.K. manufacturing facility in Engineered Structures of $3 and a gain on the sale of assets at a previously closed facility in Forged Wheels of $2.
The remaining reserves as of September 30, 2025 are expected to be paid in cash during the remainder of 2025 and 2026.
E. Pension and Other Postretirement Benefits
The components of net periodic cost (benefit) were as follows:
| Third quarter ended | Nine months ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Pension benefits | ||||||||||||||||||||||||||
| Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||||||||||||
| Interest cost | 18 | 18 | 56 | 56 | ||||||||||||||||||||||
| Expected return on plan assets | (17) | (17) | (50) | (52) | ||||||||||||||||||||||
| Recognized net actuarial loss | 8 | 9 | 23 | 25 | ||||||||||||||||||||||
| Net periodic cost(1) | $ | 10 | $ | 11 | $ | 31 | $ | 31 | ||||||||||||||||||
| Other postretirement benefits | ||||||||||||||||||||||||||
| Service cost | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
| Interest cost | 1 | 1 | 3 | 4 | ||||||||||||||||||||||
| Recognized net actuarial gain | (2) | (1) | (6) | (2) | ||||||||||||||||||||||
| Amortization of prior service benefit | (2) | (2) | (7) | (7) | ||||||||||||||||||||||
| Net periodic benefit(1) | $ | (3) | $ | (2) | $ | (10) | $ | (5) | ||||||||||||||||||
(1)Service cost was included within Cost of goods sold; all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations.
In August 2025, the Company entered into an agreement to insure the remaining amount of its obligations in its U.K. pension plan. The Company also purchased a real estate debt investment from the U.K. pension plan’s trust for approximately $9. This security is considered a held-to-maturity investment and is reported at cost. In the third quarter ended September 30, 2025, approximately $3 of the investment was redeemed; the purchase and redemption are presented as Investing Activities in the Statement of Consolidated Cash Flows. The remaining balance will be redeemed at various periods through 2028. As of September 30, 2025, cost approximates fair value. This investment is valued at net asset value in the fair value hierarchy and approximately $4 and $2 are included in Prepaid expenses and other current assets and Other noncurrent assets, respectively, in the Consolidated Balance Sheet.
For the third quarter and nine months ended September 30, 2025, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $17 and $36, respectively. For the third quarter and nine months ended September 30, 2024, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $19 and $41, respectively.
F. Other Expense, Net
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Non-service costs - pension and other postretirement benefits (E) | $ | 6 | $ | 8 | $ | 19 | $ | 24 | |||||||||||||||
| Interest income | (5) | (4) | (13) | (15) | |||||||||||||||||||
| Foreign currency (gains) losses, net | (1) | 2 | (4) | 9 | |||||||||||||||||||
| Net realized and unrealized losses | 6 | 5 | 17 | 18 | |||||||||||||||||||
| Deferred compensation | 4 | 6 | 14 | 14 | |||||||||||||||||||
| Other, net | — | — | — | (1) | |||||||||||||||||||
| Total other expense, net | $ | 10 | $ | 17 | $ | 33 | $ | 49 |
G. Income Taxes
The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date, pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited, pre-tax losses.
The estimated annual effective tax rate, before discrete items, applied to ordinary income was 21.4% in both the third quarter and nine months ended September 30, 2025, and 20.9% in both the third quarter and nine months ended September 30, 2024.
The 2025 rate was higher than the U.S. federal statutory rate of 21% primarily due to incremental state income tax, additional U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher than the U.S. federal statutory rate of 21%, partially offset by a U.S. deduction on Foreign Derived Intangible Income (“FDII”), a net benefit related to U.S. federal and state research and development (“R&D”) credits, and a U.S. tax benefit recognized for foreign tax credits. The 2024 rate was lower than the U.S. federal statutory rate of 21% primarily due to a net benefit related to U.S. federal and state R&D credits, a U.S. deduction on FDII, and a U.S. tax benefit recognized for foreign tax credits, partially offset by additional U.S. tax on GILTI, incremental state tax, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher that the U.S. federal statutory rate of 21%. The 2025 rate was higher than the 2024 rate primarily due to higher state income taxes and non-deductible amounts in 2025 relative to increased profit before taxes.
For the third quarter of 2025 and 2024, the tax rate including discrete items was 22.2% and 6.2%, respectively. In the third quarter of 2025, the Company recorded a discrete net tax benefit of $1 for other small items. In the third quarter of 2024, the Company recorded a discrete net tax benefit of $46 primarily attributable to a $44 net benefit related to additional U.S. federal and state R&D credits claimed for prior years upon completion of the Company’s R&D study, the substantial portion of which are U.S. federal credits which have been approved under audit by the U.S. Internal Revenue Service, and a $2 excess tax benefit for stock compensation.
For the nine months ended September 30, 2025 and 2024, the tax rate including discrete items was 19.4% and 15.1%, respectively. In the nine months ended September 30, 2025, the Company recorded a discrete net tax benefit of $27 attributable to $17 in benefits related to U.S. tax accounting method changes for the deduction of certain prior period transaction and other costs, a $14 excess benefit for stock compensation, and a $5 net benefit related to U.S. federal and state R&D credits claimed for prior years, reduced by a $6 net charge related to the expiration of a tax holiday in China, a $2 charge for a tax reserve established in Germany, and a $1 net charge for other small items. In the nine months ended September 30, 2024, the Company recorded a discrete net tax benefit of $58 primarily attributable to a $44 net benefit related to additional U.S. federal and state R&D credits claimed for prior years upon completion of the Company’s R&D study, the substantial portion of which are U.S. federal credits which have been approved under audit by the U.S. Internal Revenue Service, a $9 excess tax benefit for stock compensation, a $6 benefit to release a valuation allowance related to U.S. foreign tax credits, and a net tax charge of $1 for other small items.
The One Big Beautiful Bill Act (“OBBB”), which was enacted on July 4, 2025, has not had a material impact on our estimated annual effective tax rate in 2025. Management continues to evaluate elections available under the OBBB which could impact the amount and timing of the Company’s U.S. tax deductions, as well as the recognition of its deferred tax assets and related valuation allowances.
The tax provision was comprised of the following:
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Pre-tax income at estimated annual effective income tax rate before discrete items | $ | 106 | $ | 74 | $ | 301 | $ | 207 | |||||||||||||||
| Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income | 5 | (5) | — | — | |||||||||||||||||||
| Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized | — | (1) | — | 1 | |||||||||||||||||||
| Other discrete items | (1) | (46) | (27) | (58) | |||||||||||||||||||
| Provision for income taxes | $ | 110 | $ | 22 | $ | 274 | $ | 150 |
H. Earnings Per Share and Common Stock
Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.
The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions in the table below):
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | 385 | $ | 332 | $ | 1,136 | $ | 841 | |||||||||||||||
| Less: preferred stock dividends declared | 1 | 1 | 2 | 2 | |||||||||||||||||||
| Net income available to Howmet Aerospace common shareholders - basic and diluted | $ | 384 | $ | 331 | $ | 1,134 | $ | 839 | |||||||||||||||
| Average shares outstanding - basic | 403 | 408 | 404 | 408 | |||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock and performance awards | 2 | 2 | 2 | 3 | |||||||||||||||||||
| Average shares outstanding - diluted | 405 | 410 | 406 | 411 |
Common stock outstanding as of September 30, 2025 and 2024 was 403 million and 407 million, respectively.
As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases and issuances is not fully realized in EPS in the period of repurchase or issuance since share activity may occur at varying points during a period.
The Company has a share repurchase program (the “Share Repurchase Program”) that has approximately $1,597 in Board authorization remaining available as of October 30, 2025, after giving effect to the additional $100 share repurchases made in October 2025 at an average price per share of $191.86, which retired approximately 0.5 million shares. The Share Repurchase Program was authorized by the Company’s Board of Directors on August 18, 2021 at $1,500, which was increased by the Board by $2,000 on July 30, 2024. Under 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. There is no stated expiration for the Share Repurchase Program. Under the Share Repurchase Program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements, and other considerations. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Program may be suspended, modified, or terminated at any time without prior notice.
The following table provides details for share repurchases made for the periods presented:
| Number of shares**(1)** | Average price per share**(2)** | Total | |||||||||||||||
| Q1 2025 open market repurchase | 1,006,102 | $ | 124.24 | $ | 125 | ||||||||||||
| Q2 2025 open market repurchase | 1,229,313 | $ | 142.36 | $ | 175 | ||||||||||||
| Q3 2025 open market repurchase | 1,097,686 | $ | 182.20 | $ | 200 | ||||||||||||
| 2025 Share repurchases as of September 30, 2025 | 3,333,101 | $ | 150.01 | $ | 500 | ||||||||||||
| Q1 2024 open market repurchase | 2,243,259 | $ | 66.87 | $ | 150 | ||||||||||||
| Q2 2024 open market repurchase | 734,737 | $ | 81.66 | $ | 60 | ||||||||||||
| Q3 2024 open market repurchase | 1,061,323 | $ | 94.22 | $ | 100 | ||||||||||||
| 2024 Share repurchases as of September 30, 2024 | 4,039,319 | $ | 76.75 | $ | 310 |
(1)All of the shares repurchased have been retired.
(2)Excludes commissions cost.
The Inflation Reduction Act of 2022 imposed a 1% excise tax on net stock repurchases after December 31, 2022. The Company recorded additional capital for excise tax on net repurchases of $2 in the third quarter and $4 in the nine months ended September 30, 2025 and $2 in the third quarter and $3 in the nine months ended September 30, 2024.
There were no shares relating to outstanding stock options excluded from the calculation of average shares outstanding - diluted for the third quarter and nine months ended September 30, 2025 and 2024.
Common stock dividends declared were $0.24 per share in the third quarter of 2025 (of which $0.12 per share were paid) and $0.44 per share in the nine months ended September 30, 2025 (of which $0.32 per share were paid). Common stock dividends declared were $0.16 per share in the third quarter of 2024 (of which $0.08 per share were paid) and $0.26 per share in the nine months ended September 30, 2024 (of which $0.18 per share were paid).
I. Accumulated Other Comprehensive Loss
The following table details the activity of the three components that comprise Accumulated other comprehensive loss:
| Third quarter ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Pension and other postretirement benefits (E) | |||||||||||||||||||||||
| Balance at beginning of period | $ | (666) | $ | (682) | $ | (672) | $ | (689) | |||||||||||||||
| Other comprehensive (loss) income: | |||||||||||||||||||||||
| Unrecognized net actuarial (gain) loss and prior service benefit | (1) | 4 | (1) | 3 | |||||||||||||||||||
| Tax (expense) benefit | — | (1) | 1 | (1) | |||||||||||||||||||
| Total Other comprehensive (loss) income before reclassifications, net of tax | (1) | 3 | — | 2 | |||||||||||||||||||
| Amortization of net actuarial loss and prior service benefit(1) | 4 | 6 | 10 | 16 | |||||||||||||||||||
| Tax expense(2) | (1) | (1) | (2) | (3) | |||||||||||||||||||
| Total amount reclassified from Accumulated other comprehensive loss, net of tax(3) | 3 | 5 | 8 | 13 | |||||||||||||||||||
| Total Other comprehensive income | 2 | 8 | 8 | 15 | |||||||||||||||||||
| Balance at end of period | $ | (664) | $ | (674) | $ | (664) | $ | (674) | |||||||||||||||
| Foreign currency translation | |||||||||||||||||||||||
| Balance at beginning of period | $ | (1,045) | $ | (1,177) | $ | (1,207) | $ | (1,136) | |||||||||||||||
| Other comprehensive (loss) income(4) | (13) | 71 | 149 | 30 | |||||||||||||||||||
| Balance at end of period | $ | (1,058) | $ | (1,106) | $ | (1,058) | $ | (1,106) | |||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||
| Balance at beginning of period | $ | (38) | $ | 1 | $ | 1 | $ | (5) | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Net change from periodic revaluations(5) | 8 | (25) | (42) | (22) | |||||||||||||||||||
| Tax (expense) benefit | (2) | 6 | 9 | 5 | |||||||||||||||||||
| Total Other comprehensive income (loss) before reclassifications, net of tax | 6 | (19) | (33) | (17) | |||||||||||||||||||
| Net amount reclassified to earnings(6) | — | 1 | — | 6 | |||||||||||||||||||
| Tax expense(2) | — | (1) | — | (2) | |||||||||||||||||||
| Total amount reclassified from Accumulated other comprehensive (loss) income, net of tax(3) | — | — | — | 4 | |||||||||||||||||||
| Total Other comprehensive income (loss) | 6 | (19) | (33) | (13) | |||||||||||||||||||
| Balance at end of period | $ | (32) | $ | (18) | $ | (32) | $ | (18) | |||||||||||||||
| Accumulated other comprehensive loss | $ | (1,754) | $ | (1,798) | $ | (1,754) | $ | (1,798) |
(1)These amounts were recorded in Other expense, net (See Note F) in the Statement of Consolidated Operations.
(2)These amounts were included in Provision for income taxes (See Note G) in the Statement of Consolidated Operations.
(3)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.
(4)In all periods presented, no amounts were reclassified to earnings.
(5)Includes the change in the cross-currency swap related to the 2031 Notes (See Note N). In all periods presented, no amounts related to this change were reclassified to earnings. The cross-currency swap was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet.
(6)These amounts were recorded in Cost of goods sold in the Statement of Consolidated Operations.
J. Receivables
Sale of Receivables Programs
The Company maintains an accounts receivables securitization arrangement through a wholly-owned special purpose entity (“SPE”). The net cash funding from the sale of accounts receivable was neither a use of cash nor a source of cash for the third quarter or nine months ended September 30, 2025 or September 30, 2024.
The accounts receivables securitization arrangement is one in which the Company, through an SPE, has a receivables purchase agreement (the “Receivables Purchase Agreement”) pursuant to which the SPE may sell certain receivables to financial institutions. On October 9, 2025, the Company extended the Receivables Purchase Agreement to the earlier of October 8, 2027 or a termination event.
The Receivables Purchase Agreement contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. The Receivables Purchase Agreement also contains a provision that allows the Company to increase the facility limit to $325.
The facility limit under the Receivables Purchase Agreement was $250 as of both September 30, 2025 and December 31, 2024, of which $250 was drawn as of both September 30, 2025 and December 31, 2024. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which were $238 and $201 as of September 30, 2025 and December 31, 2024, respectively.
The Company sold $403 and $1,232 of its receivables without recourse and received cash funding under this program during the third quarter and nine months ended September 30, 2025, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. The Company sold $503 and $1,233 of its receivables without recourse and received cash funding under this program during the third quarter and nine months ended September 30, 2024, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. Costs associated with the sales of receivables are reflected in the Company’s Statement of Consolidated Operations in Other expense, net for the periods in which the sales occur. Cash receipts from sold receivables under the Receivables Purchase Agreement are presented within operating activities in the Statement of Consolidated Cash Flows.
Other Customer Receivable Sales
In the third quarter and nine months ended September 30, 2025, the Company sold certain customers’ receivables without recourse of $234 and $640, respectively, in exchange for cash (of which $231 was outstanding from customers as of September 30, 2025). In the third quarter and nine months ended September 30, 2024, the Company sold certain customers’ receivables without recourse of $172 and $517, respectively, in exchange for cash (of which $167 was outstanding from customers as of September 30, 2024). The Company has no continuing involvement in the aforementioned amounts sold or outstanding, resulting in the derecognition of the receivables from the Company’s Consolidated Balance Sheet. The net proceeds are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows and the costs associated with the sales of receivables are reflected in the Company’s Statement of Consolidated Operations in Other expense, net for the periods in which the sales occur.
K. Inventories
| September 30, 2025 | December 31, 2024 | ||||||||||
| Finished goods | $ | 478 | $ | 458 | |||||||
| Work-in-process | 964 | 903 | |||||||||
| Purchased raw materials | 453 | 408 | |||||||||
| Operating supplies | 80 | 71 | |||||||||
| Total inventories | $ | 1,975 | $ | 1,840 |
As of September 30, 2025 and December 31, 2024, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was $627 and $544, respectively. If valued on an average-cost basis, total inventories would have been $310 and $280 higher as of September 30, 2025 and December 31, 2024, respectively.
L. Properties, Plants, and Equipment, net
| September 30, 2025 | December 31, 2024 | ||||||||||
| Land and land rights | $ | 86 | $ | 84 | |||||||
| Structures | 1,149 | 1,025 | |||||||||
| Machinery and equipment | 4,368 | 4,118 | |||||||||
| 5,603 | 5,227 | ||||||||||
| Less: accumulated depreciation and amortization | 3,355 | 3,150 | |||||||||
| 2,248 | 2,077 | ||||||||||
| Construction work-in-progress | 303 | 309 | |||||||||
| Properties, plants, and equipment, net | $ | 2,551 | $ | 2,386 |
The Company incurred capital expenditures which remained unpaid as of September 30, 2025 and September 30, 2024 of $72 and $71, respectively, which will result in cash outflows within investing activities in the Statement of Consolidated Cash Flows in subsequent periods.
M. Leases
Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $19 and $18 in the third quarter of 2025 and 2024, respectively, and $54 and $50 in the nine months ended September 30, 2025 and 2024, respectively.
Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||
| Right-of-use assets classified in Other noncurrent assets | $ | 163 | $ | 155 | |||||||||||||
| Current portion of lease liabilities classified in Other current liabilities | $ | 41 | $ | 37 | |||||||||||||
| Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits | 122 | 119 | |||||||||||||||
| Total lease liabilities | $ | 163 | $ | 156 |
N. Debt
| September 30, 2025 | December 31, 2024 | ||||||||||
| USD Term Loan Facility, due 2026(1) | $ | — | $ | 140 | |||||||
| JPY Term Loan Facility, due 2026(2) | 200 | 188 | |||||||||
| 5.900% Notes, due 2027 | 625 | 625 | |||||||||
| 6.750% Bonds, due 2028 | 300 | 300 | |||||||||
| 3.000% Notes, due 2029 | 700 | 700 | |||||||||
| 4.850% Notes, due 2031(3) | 500 | 500 | |||||||||
| 5.950% Notes, due 2037 | 625 | 625 | |||||||||
| 4.750% Iowa Finance Authority Loan, due 2042 | 250 | 250 | |||||||||
| Other, net(4) | (11) | (13) | |||||||||
| 3,189 | 3,315 | ||||||||||
| Less: long-term debt due within one year | 1 | 6 | |||||||||
| Total long-term debt | $ | 3,188 | $ | 3,309 |
(1)The Company completed the early prepayment of the remaining amount outstanding under the USD Term Loan Facility in 2025. The Company had entered into an interest rate swap to exchange the floating interest rate of this term loan facility to a fixed interest rate of 5.670% as of December 31, 2024, based on the Company’s long-term debt ratings. This swap was settled upon the prepayment of the USD Term Loan Facility with an immaterial impact to the Consolidated Financial Statements.
(2)The Company entered into an interest rate swap to exchange the floating interest rate of the JPY Term Loan Facility to a fixed interest rate of 1.794% and 1.919% as of September 30, 2025 and December 31, 2024, respectively, based on the Company’s long-term debt ratings. The amounts outstanding under the JPY Term Loan Facility are due in November 2026.
(3)The Company concurrently entered into a cross-currency swap to synthetically convert the 4.850% Notes due October 2031 (the “2031 Notes”) into a Euro liability of approximately €458 million with a fixed annual interest rate of 3.720%.
(4)Includes unamortized debt discounts and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above and various financing arrangements related to subsidiaries.
Term Loan Facilities
The Company (i) maintained a U.S. dollar-denominated, senior unsecured term loan facility (the “USD Term Loan Facility”) and (ii) maintains a Japanese yen-denominated, senior unsecured term loan facility (the “JPY Term Loan Facility”), each of which matures on November 22, 2026 unless earlier terminated in accordance with the provisions of the applicable term loan agreement. The term loan agreements relating to these facilities contain respective covenants, including, among others, a limitation requiring the ratio of Consolidated Net Debt to Consolidated EBITDA (as defined in the agreements) as of the end of each fiscal quarter for the period of the four fiscal quarters most recently ended, to be less than or equal to 3.75 to 1.00.
The amounts outstanding under the USD Term Loan Facility were $0 and $140 as of September 30, 2025 and December 31, 2024, respectively.
On June 11, 2025, the Company completed an early partial prepayment of its USD Term Loan Facility in the aggregate principal amount of $75. This partial prepayment was made at par value plus accrued interest of less than $1. Additionally, the Company made a quarterly repayment of a portion of the outstanding principal amount of the USD Term Loan Facility in accordance with the provisions of the applicable term loan agreement.
On September 18, 2025, the Company completed the early prepayment of the remaining amount outstanding under the USD Term Loan Facility in the aggregate principal amount of $63. This prepayment was made at par value plus accrued interest of less than $1.
The amounts outstanding under the JPY Term Loan Facility were ¥29,702 million ($200) and ¥29,702 million ($188) as of September 30, 2025 and December 31, 2024, respectively.
As of September 30, 2025 and December 31, 2024, the Company was in compliance with all applicable covenants under the USD Term Loan Facility and JPY Term Loan Facility.
Public Debt
In the second quarter of 2024, the Company repurchased approximately $23 aggregate principal amount of the 6.875% Notes due May 2025 (the “2025 Notes”) through an open market repurchase (“OMR”). The OMR was settled at slightly more than par value.
On July 1, 2024, the Company completed the early redemption of all of the remaining outstanding principal amount of $205 of the 5.125% Notes due October 2024 (the “2024 Notes”). The Company redeemed the 2024 Notes at par value plus accrued interest. The 2024 Notes were redeemed with cash on hand at an aggregate redemption price of approximately $208, including accrued interest of approximately $3.
On August 22, 2024, the Company completed an offering of $500 aggregate principal amount of the 2031 Notes.
On August 23, 2024, the Company completed the early redemption of all of the remaining outstanding principal amount of approximately $577 of its 2025 Notes in accordance with the terms of the notes. The Company completed the redemption with the net proceeds from the aforementioned offering of its 2031 Notes and cash on hand at an aggregate redemption price of approximately $594, including accrued interest and an early termination premium of approximately $12 and $5, respectively, which were recorded in Interest expense, net, and Loss on debt redemption, respectively, in the Statement of Consolidated Operations.
Credit Facility
The Company has entered into a Five-Year Revolving Credit Agreement (the “Credit Agreement”) that provides a $1,000 senior unsecured revolving credit facility that matures on July 27, 2028. The Credit Agreement contains covenants, including, among others, a limitation requiring the ratio of Consolidated Net Debt to Consolidated EBITDA (as defined in the Credit Agreement) as of the end of each fiscal quarter for the period of the four fiscal quarters most recently ended, to be less than or equal to 3.75 to 1.00. As of September 30, 2025 and December 31, 2024, the Company was in compliance with all covenants under the Credit Agreement.
There were no amounts outstanding under the Credit Agreement as of September 30, 2025 or December 31, 2024, and no amounts were borrowed during 2025 or 2024 under the Credit Agreement.
Commercial Paper
On April 4, 2024, the Company established a commercial paper program under which the Company may issue unsecured commercial paper notes (“commercial paper”) from time to time up to a maximum aggregate face amount of $1,000 outstanding at any time. The maturities of the commercial paper may vary but will not exceed 397 days from the date of issue and will rank equal in right of payment with all other unsecured senior indebtedness of the Company. The proceeds of the commercial paper will be used for general corporate purposes.
There were no amounts outstanding under the commercial paper program as of September 30, 2025 or December 31, 2024.
O. Fair Value of Financial Instruments
The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, and Long-term debt due within one year included in the Consolidated Balance Sheet approximate their fair value. The aforementioned derivatives are included in Prepaid expenses and other current assets, Other noncurrent assets, Other current liabilities, and Other noncurrent liabilities and deferred credits in the Consolidated Balance sheet, as applicable. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities and are carried at fair value based on quoted market prices, and of which $10 were sold in the nine months ended September 30, 2025. The aforementioned securities are classified in Level 1 of the fair value hierarchy and are included in Other noncurrent assets in the Consolidated Balance Sheet. The fair value of Long-term debt, less long-term debt due within one year, was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||||||||
| Long-term debt, less long-term debt due within one year | $ | 3,188 | $ | 3,262 | $ | 3,309 | $ | 3,298 |
Restricted cash, which is included in Prepaid expenses and other current assets in the Consolidated Balance Sheet, was $1 as of both September 30, 2025 and December 31, 2024.
P. Contingencies, Commitments, and Other Liabilities
Contingencies
The following information supplements and, as applicable, updates the discussion of the contingencies and commitments in Note U to the Consolidated Financial Statements in our Form 10-K, and should be read in conjunction with the complete descriptions provided in the Form 10-K.
Environmental Matters. Howmet participates in environmental assessments and/or cleanups at more than 30 locations. These include owned or operating facilities and adjoining properties, previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)) sites.
A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.
The Company’s remediation reserve balance was $17 and $19 as of September 30, 2025 and December 31, 2024, respectively, and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $7 and $10, respectively, was classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were $1 and $4 in the third quarter and nine months ended September 30, 2025, respectively, and included expenditures currently mandated, as well as those not required by any regulatory authority or third party.
Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be less than 1% of Cost of goods sold.
Tax. In December 2013 and 2014, the Company received audit assessment notices from the French Tax Authority (“FTA”) for the 2010 through 2012 tax years. In 2016, the Company appealed to the Committee of the Abuse of Tax Law, where it received a favorable nonbinding decision. The FTA disagreed with the Committee of the Abuse of Tax Law’s opinion, and the Company appealed to the Montreuil Administrative Court, where in 2020 the Company prevailed on the merits. The FTA appealed this decision to the Paris Administrative Court of Appeal in 2021. On March 31, 2023, the Company received an adverse decision from the Paris Administrative Court of Appeal. The Company appealed this decision to the French Administrative Supreme Court. The assessment amount was $17 (€16 million), including $10 (€9 million) of tax and interest up through 2017 and $7 (€7 million) of penalties. The Company estimated additional interest to be $2 (€2 million). On July 23, 2024, the Company received the French Administrative Supreme Court’s decision. That decision upheld the assessment of $10 (€9 million) of tax and interest, while cancelling the penalties of $7 (€7 million) and remanding the penalty assessment issue to the Paris Administrative Court of Appeal for reexamination. As a result, the Company has no further right to appeal the assessment of tax and interest but will continue to protest the penalties.
In 2023, the Company recorded an income tax reserve in Provision for income taxes in the Statement of Consolidated Operations of $21 (€19 million), which includes tax, estimated interest and penalties, for the 2010 through 2012 tax years, as well as the remaining tax years open for reassessment (2020-2023). In accordance with FTA dispute resolution practices, the Company paid the assessment amount including tax, interest, and penalties, to the FTA in December 2023. The Company is expecting to pay the additional interest related to the assessment in 2025. The Company also paid the estimated tax related to the 2020-2023 tax years in 2023. As of the third quarter of 2024, the Company no longer recorded an uncertain tax position related to the tax and interest assessed. In October 2024, the Company received a refund of the penalties that were remanded. We will continue to record an income tax reserve for penalties determined more than likely to be upheld, until the uncertain tax position is settled.
Indemnified Matters. The Separation and Distribution Agreement, dated October 31, 2016, that the Company entered into with Alcoa Corporation in connection with its separation from Alcoa Corporation, and the Separation and Distribution Agreement, dated March 31, 2020, that the Company entered into with Arconic Corporation in connection with its separation from Arconic Corporation, provide for cross-indemnities for claims subject to indemnification between the Company and Alcoa Corporation and between the Company and Arconic Corporation, respectively. To date, Alcoa Corporation and Arconic Corporation have fulfilled their respective indemnification obligations to the Company, and claims subject to indemnification by Alcoa Corporation or Arconic Corporation have not impacted the Company financially. Among other claims that are covered by these indemnities, Arconic Corporation indemnifies the Company (previously named Arconic Inc. and, prior to that, Alcoa Inc.) for all potential liabilities associated with the fire that occurred at the Grenfell Tower in London, U.K. on June 14, 2017, including the following legal proceedings, as updated from the Form 10-K:
United Kingdom Litigation. All personal injury claims on behalf of survivors and estates of decedents have been settled pursuant to terms of confidential settlement agreements and are discontinued and closed. On June 21, 2024, the Company was joined as a party to proceedings initiated by the Royal Borough of Kensington and Chelsea (RBKC) and Chelsea Tenant Management Organisation Ltd. (KCTMO) against Arconic Architectural Products SAS (AAP SAS) and Whirlpool. On February 14, 2025, RBKC and KCTMO served their Particulars of Claim and Schedule of Loss on the defendants. On July 18, 2025, the Company and AAP SAS filed their defense and counterclaim against RBKC and KCTMO, and contribution claims against various co-defendants and other third-parties. A case management conference is scheduled for December 8, 2025.
Raul v. Albaugh, et al. (derivative related claim). On October 22, 2024, the parties executed a settlement term sheet that set forth the material terms and conditions associated with the resolution of this derivative action. On October 28, 2024, November 27, 2024, January 27, 2025, March 28, 2025, and May 12, 2025, the parties filed joint status reports regarding this development. On May 23, 2025, the parties executed a Stipulation of Settlement, including all exhibits thereto (the “Stipulation of Settlement”), which is subject to court approval, and notified the court of this development. On May 30, 2025, plaintiff filed an unopposed motion for preliminary approval of the settlement and accompanying papers, which included the Stipulation of Settlement. On June 9, 2025, after continuing their fee negotiations with the assistance of a mediator, the parties mutually accepted the mediator’s proposal for an agreed fee and expense amount for plaintiff’s counsel, which is also subject to court approval. On June 25, 2025, the parties executed and filed with the court an addendum to the Stipulation of Settlement, including amended exhibits to the stipulation, which described these developments. The Stipulation of Settlement remains subject to court approval. On October 8, 2025, the court granted preliminary approval of the settlement and set February 10, 2026 as the date of the final settlement approval hearing. The Stipulation of Settlement and a Notice of Pendency and Proposed Settlement of Shareholder Derivative Action are available on the investor relations page of the Company’s website, under the “Shareholder Information” tab. See Part II, Item 1 of this Form 10-Q for further information. The Stipulation of Settlement has no material impact on the Company’s results of operations.
With respect to the regulatory investigations in the U.K. described in the Form 10-K, there are no updates.
Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, safety and health, employment, tax, and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.
Commitments
Guarantees. As of September 30, 2025, Howmet had outstanding bank guarantees related to customs duties, plant expansion, rental, and environmental obligations. The total amount committed under these guarantees, which expire at various dates between 2025 and 2027, was $3 as of September 30, 2025.
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. The remaining guarantee which had a fair value of $5 as of September 30, 2025 and $6 as of December 31, 2024, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation facility, for which the Company is secondarily liable in the event of a payment default by Alcoa Corporation. If the Company incurs any liability under this guarantee, Arconic Corporation is obligated to indemnify the Company for 50% of such liability. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. The Company is required to provide a guarantee up to an estimated present value amount of approximately $1,121 as of both September 30, 2025 and December 31, 2024 in the event of an Alcoa Corporation default. In the fourth quarter of 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.
Letters of Credit. The Company has outstanding letters of credit primarily related to workers’ compensation, environmental obligations, tax matters, and insurance obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, primarily in 2025 and 2026, was $78 as of September 30, 2025.
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 $43, which are included in the $78 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. Arconic Corporation and Alcoa Corporation workers’ compensation and letters of credit fees paid by the Company are proportionally billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively. 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 $9 of outstanding letters of credit relating to such liabilities, which are also included in the $78 in the above paragraph.
Surety Bonds. The Company has outstanding surety bonds primarily related to workers’ compensation, customs duties, environmental-related matters, and contract performance. 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 September 30, 2025.
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 $19, 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. 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.
Other Liabilities
Supplier Financing Arrangements. We offer voluntary supplier finance programs to suppliers who may elect to sell their receivables to third parties at the sole discretion of both the suppliers and the third parties. The program is at no cost to the Company and provides additional liquidity to our suppliers, if they desire, at their cost. Under these programs, the Company pays the third-party bank, rather than the supplier, the stated amount of the confirmed invoices on the original maturity date of the invoices. The Company or the third-party bank may terminate a program upon at least 30 days’ notice. Supplier invoices under the program require payment in full no more than approximately 120 days of the invoice date. As of September 30, 2025 and December 31, 2024, supplier invoices that are subject to future payment under these programs were $263 and $268, respectively, and are included in Accounts payable, trade in the Consolidated Balance Sheet.
Q. Subsequent Events
Management evaluated all activity of Howmet and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:
See Note H regarding share repurchases made in October 2025.
See Note J regarding the extension of the Receivables Purchase Agreement made in October 2025.
Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.