filings.toolsItem 1. Financial Statements and Supplementary Data.
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Item 1. Financial Statements and Supplementary Data.
Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share amounts)
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Sales (D) | $ | 2,313 | $ | 1,942 | |||||||||||||||||||
| Cost of goods sold (exclusive of expenses below) | 1,459 | 1,290 | |||||||||||||||||||||
| Selling, general administrative, and other expenses | 111 | 85 | |||||||||||||||||||||
| Research and development expenses | 9 | 8 | |||||||||||||||||||||
| Provision for depreciation and amortization | 74 | 69 | |||||||||||||||||||||
| Restructuring and other credits (E) | (93) | (4) | |||||||||||||||||||||
| Operating income | 753 | 494 | |||||||||||||||||||||
| Interest expense, net | 43 | 39 | |||||||||||||||||||||
| Other expense, net (G) | 2 | 9 | |||||||||||||||||||||
| Income before income taxes | 708 | 446 | |||||||||||||||||||||
| Provision for income taxes (H) | 128 | 102 | |||||||||||||||||||||
| Net income | $ | 580 | $ | 344 | |||||||||||||||||||
| Amounts Attributable to Howmet Aerospace Common Shareholders (I): | |||||||||||||||||||||||
| Net income | $ | 580 | $ | 343 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 1.45 | $ | 0.85 | |||||||||||||||||||
| Diluted | $ | 1.44 | $ | 0.84 | |||||||||||||||||||
| Average Shares Outstanding (I): | |||||||||||||||||||||||
| Basic | 401 | 405 | |||||||||||||||||||||
| Diluted | 403 | 407 |
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)
| First quarter ended | ||||||||||||||||||||||||||||||||||||||||||||
| March 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 580 | $ | 344 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income, net of tax (J): | ||||||||||||||||||||||||||||||||||||||||||||
| Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits | 4 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | (32) | 45 | ||||||||||||||||||||||||||||||||||||||||||
| Net change in unrecognized gains on cash flow hedges | 10 | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Other comprehensive (loss) income, net of tax | (18) | 48 | ||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income | $ | 562 | $ | 392 |
The accompanying notes are an integral part of the consolidated financial statements.
Howmet Aerospace Inc. and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,435 | $ | 742 | |||||||
| Receivables from customers, less allowances of $— in both 2026 and 2025 (K) | 940 | 779 | |||||||||
| Inventories (L) | 1,975 | 1,849 | |||||||||
| Prepaid expenses and other current assets | 307 | 409 | |||||||||
| Total current assets | 5,657 | 3,779 | |||||||||
| Properties, plants, and equipment, net (M) | 2,614 | 2,593 | |||||||||
| Goodwill | 4,078 | 4,022 | |||||||||
| Deferred income taxes | 35 | 40 | |||||||||
| Intangibles, net | 451 | 457 | |||||||||
| Other noncurrent assets (N) | 232 | 288 | |||||||||
| Total assets | $ | 13,067 | $ | 11,179 | |||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable, trade (Q) | $ | 1,058 | $ | 845 | |||||||
| Accrued compensation and retirement costs | 263 | 343 | |||||||||
| Taxes, including income taxes (H) | 81 | 77 | |||||||||
| Accrued interest payable | 39 | 47 | |||||||||
| Deferred revenue | 129 | 147 | |||||||||
| Other current liabilities (N)(Q) | 109 | 121 | |||||||||
| Long-term debt due within one year (O) | 186 | 191 | |||||||||
| Short-term borrowings (O) | 450 | — | |||||||||
| Total current liabilities | 2,315 | 1,771 | |||||||||
| Long-term debt, less amount due within one year (O)(P) | 4,050 | 2,859 | |||||||||
| Accrued pension benefits (F) | 533 | 546 | |||||||||
| Accrued other postretirement benefits (F) | 36 | 38 | |||||||||
| Other noncurrent liabilities and deferred credits (N) | 611 | 612 | |||||||||
| Total liabilities | 7,545 | 5,826 | |||||||||
| Contingencies and commitments (Q) | |||||||||||
| Equity | |||||||||||
| Howmet Aerospace shareholders’ equity: | |||||||||||
| Common stock | 401 | 402 | |||||||||
| Additional capital | 2,187 | 2,531 | |||||||||
| Retained earnings | 4,625 | 4,093 | |||||||||
| Accumulated other comprehensive loss (J) | (1,691) | (1,673) | |||||||||
| Total equity | 5,522 | 5,353 | |||||||||
| Total liabilities and equity | $ | 13,067 | $ | 11,179 |
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)
| First quarter ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 580 | $ | 344 | |||||||
| Adjustments to reconcile net income to cash provided from operations: | |||||||||||
| Depreciation and amortization | 74 | 69 | |||||||||
| Deferred income taxes | 15 | 18 | |||||||||
| Restructuring and other credits | (93) | (4) | |||||||||
| Net realized and unrealized losses | 4 | 5 | |||||||||
| Net periodic pension cost (F) | 11 | 10 | |||||||||
| Stock-based compensation | 21 | 14 | |||||||||
| Other | 3 | 3 | |||||||||
| Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: | |||||||||||
| Increase in receivables (K) | (164) | (189) | |||||||||
| Increase in inventories (L) | (110) | (49) | |||||||||
| (Increase) decrease in prepaid expenses and other current assets | (12) | 24 | |||||||||
| Increase in accounts payable, trade | 220 | 58 | |||||||||
| Decrease in accrued expenses | (100) | (91) | |||||||||
| Increase in taxes, including income taxes | 26 | 60 | |||||||||
| Increase in noncurrent assets | (5) | (1) | |||||||||
| Decrease in noncurrent liabilities | (17) | (18) | |||||||||
| Cash provided from operations | 453 | 253 | |||||||||
| Financing Activities | |||||||||||
| Net change in commercial paper (O) | 450 | — | |||||||||
| Additions to debt (O) | 1,200 | — | |||||||||
| Repurchases and payments on debt (O) | — | (1) | |||||||||
| Debt issuance costs (O) | (12) | — | |||||||||
| Repurchases of common stock | (300) | (125) | |||||||||
| Dividends paid to shareholders | (48) | (42) | |||||||||
| Taxes paid for net share settlement of equity awards | (64) | — | |||||||||
| Other | — | 1 | |||||||||
| Cash provided from (used for) financing activities | 1,226 | (167) | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures (D) | (94) | (119) | |||||||||
| Acquisitions, net of cash acquired (C) | (118) | — | |||||||||
| Proceeds from the sale of assets and businesses (C) | 225 | 5 | |||||||||
| Sale of investments | 2 | — | |||||||||
| Other | (1) | (1) | |||||||||
| Cash provided from (used for) investing activities | 14 | (115) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | 1 | |||||||||
| Net change in cash, cash equivalents and restricted cash | 1,693 | (28) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 743 | 565 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 2,436 | $ | 537 | |||||||
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 December 31, 2024 | $ | 55 | $ | 405 | $ | 3,206 | $ | 2,766 | $ | (1,878) | $ | 4,554 | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 344 | — | 344 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (J) | — | — | — | — | 48 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred-Class A @ $0.9375 per share | — | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Common @ $0.10 per share | — | — | — | (41) | — | (41) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (I) | — | (1) | (125) | — | — | (126) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 14 | — | — | 14 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | 55 | $ | 404 | $ | 3,095 | $ | 3,068 | $ | (1,830) | $ | 4,792 |
| Preferred stock | Common stock | Additional capital | Retained earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | — | $ | 402 | $ | 2,531 | $ | 4,093 | $ | (1,673) | $ | 5,353 | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 580 | — | 580 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss (J) | — | — | — | — | (18) | (18) | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common @ $0.12 per share | — | — | — | (48) | — | (48) | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock (I) | — | (1) | (301) | — | — | (302) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 21 | — | — | 21 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued: compensation plans | — | — | (64) | — | — | (64) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | — | $ | 401 | $ | 2,187 | $ | 4,625 | $ | (1,691) | $ | 5,522 |
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 2025 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, 2025 (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 first quarter ended March 31, 2026, the Company derived approximately 68% of its revenue from products sold to the commercial and defense aerospace markets. The timing and level of future aircraft builds by original equipment manufacturers (“OEMs”) are subject to changes and uncertainties, including but not limited to geopolitical tensions or volatility in global energy and raw material markets, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.
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 Issued Accounting Guidance
Issued
In December 2025, the Financial Accounting Standards Board (“FASB”) issued guidance to establish the recognition, measurement, and presentation of government grants received by business entities. These changes become effective for fiscal years beginning after December 15, 2028 for interim and annual reporting periods. Management has concluded these changes will not have a material impact on the Consolidated Financial Statements.
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 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.
C. Acquisitions and Divestitures
Acquisitions
On February 6, 2026, the Company acquired all of the stock of Brunner Manufacturing Co. Inc. (“Brunner”), a privately-held manufacturer of high-quality fastener products in Wisconsin, for an all-cash purchase price of approximately $120, net of cash and cash equivalents acquired of $2. The Company’s preliminary allocation of the purchase price, based upon the estimated fair value of assets acquired and liabilities assumed, is as follows:
| Assets Acquired | ||||||||
| Receivables from customers | $ | 6 | ||||||
| Inventories | 26 | |||||||
| Properties, plants, and equipment | 19 | |||||||
| Other noncurrent assets | 6 | |||||||
| Total Assets Acquired | 57 | |||||||
| Liabilities Assumed | 11 | |||||||
| Net Assets Acquired | $ | 46 | ||||||
| Goodwill | $ | 72 |
The final allocation of the purchase price will be based on management’s best estimates, including a valuation of the assets acquired and liabilities assumed, and may result in the identification of other intangible assets, and other studies related to potential environmental and contingent liabilities. The valuation is expected to be completed by the end of 2026. The Brunner acquisition has been included in the operations of the Fastening Systems segment since the date of acquisition, with revenue primarily included within Other in end-market revenue (See Note D).
On April 6, 2026, Howmet completed its previously announced stock purchase of Consolidated Aerospace Manufacturing, LLC (“Consolidated Aerospace Manufacturing” or “CAM”), a wholly-owned subsidiary of Stanley Black & Decker, Inc. (“Stanley Black & Decker”), for a cash purchase price of approximately $1,800 (the “CAM Acquisition”), subject to customary adjustments. CAM is a global aerospace manufacturer focused on highly-engineered, mission-critical parts used in aerospace markets, such as fasteners, fluid fittings and connectors, and other engineered products. This acquisition expands Howmet’s aerospace fastening systems portfolio and increases exposure to key aircraft and defense programs. Howmet financed the CAM Acquisition through utilizing a variety of financing sources, which include the notes issued in March 2026, borrowings under its commercial paper program (See Note O), and cash on hand. The CAM operations will be included in the Fastening Systems segment in the second quarter of 2026. A portion of the goodwill relating to this transaction will be deductible for income tax purposes. The allocation of the purchase price has not yet been determined but will be based on management’s best estimates, including a valuation of the assets acquired and liabilities assumed, and may result in the identification of other intangible assets, and other studies related to potential environmental and contingent liabilities.
Divestitures
On March 31, 2026, the Company completed the sale of its disk forging facility in Savannah, Georgia for $230 (of which approximately $225 was received in the first quarter of 2026, with the remainder expected in the fourth quarter of 2026). This resulted in a gain of $93 in the first quarter of 2026 that was recorded in Restructuring and other credits in the Statement of Consolidated Operations. This business had net assets of approximately $92, and the sale resulted in a reduction of goodwill in the Engineered Structures reporting unit of approximately $41. The sale remains subject to certain post-closing adjustments. This business was reclassified to assets and liabilities of operations held for sale, primarily included in Prepaid expenses and other current assets in the fourth quarter of 2025.
D. 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, gas turbines, 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 is defined as Operating Income excluding Restructuring and other credits, Provision for depreciation and amortization, and Special items. Special items, including Restructuring and other credits, are excluded from Segment Adjusted EBITDA. Current and prior periods’ Segment Adjusted EBITDA calculations have not changed although the definitions have been simplified. 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.
In the first quarter of 2026, the Company’s CODM reorganized Howmet’s segments by moving a titanium alloy location from Engine Products to Engineered Structures as it better aligns with the operations of the Engineered Structures segment. The comparable periods of Engine Products and Engineered Structures have been recast to reflect the new alignment. The recasting had no impact on the Company’s consolidated results, financial position or cash flows.
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 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, and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum 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 | |||||||||||||||||||||||||
| First quarter ended March 31, 2026 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 1,253 | $ | 471 | $ | 294 | $ | 295 | $ | 2,313 | |||||||||||||||||||
| Inter-segment sales | 2 | — | 8 | — | 10 | ||||||||||||||||||||||||
| Total sales | $ | 1,255 | $ | 471 | $ | 302 | $ | 295 | $ | 2,323 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 765 | $ | 289 | $ | 226 | $ | 195 | $ | 1,475 | |||||||||||||||||||
| Other segment items(2) | 32 | 32 | 10 | 10 | 84 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 458 | $ | 150 | $ | 66 | $ | 90 | $ | 764 | |||||||||||||||||||
| Provision for depreciation and amortization | 38 | 13 | 10 | 11 | 72 | ||||||||||||||||||||||||
| Restructuring and other credits | — | — | (93) | — | (93) | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 59 | $ | 17 | $ | 12 | $ | 3 | $ | 91 | |||||||||||||||||||
| Total assets | 5,698 | 2,902 | 1,300 | 723 | 10,623 | ||||||||||||||||||||||||
| First quarter ended March 31, 2025 | |||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||
| Third-party sales | $ | 974 | $ | 412 | $ | 304 | $ | 252 | $ | 1,942 | |||||||||||||||||||
| Inter-segment sales | 2 | — | 7 | — | 9 | ||||||||||||||||||||||||
| Total sales | $ | 976 | $ | 412 | $ | 311 | $ | 252 | $ | 1,951 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Segment Adjusted cost of goods sold(1) | $ | 633 | $ | 256 | $ | 236 | $ | 174 | $ | 1,299 | |||||||||||||||||||
| Other segment items(2) | 25 | 29 | 8 | 10 | 72 | ||||||||||||||||||||||||
| Profit and loss: | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 318 | $ | 127 | $ | 67 | $ | 68 | $ | 580 | |||||||||||||||||||
| Provision for depreciation and amortization | 33 | 12 | 13 | 10 | 68 | ||||||||||||||||||||||||
| Restructuring and other credits | — | — | (4) | — | (4) | ||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||
| Capital expenditures | $ | 85 | $ | 10 | $ | 6 | $ | 15 | $ | 116 | |||||||||||||||||||
| Total assets | 5,279 | 2,741 | 1,469 | 728 | 10,217 | ||||||||||||||||||||||||
(1)Segment Adjusted cost of goods sold is exclusive of Provision for depreciation and amortization, Restructuring and other credits, 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 credits.
The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Total Segment Adjusted EBITDA | $ | 764 | $ | 580 | |||||||||||||||||||
| Segment provision for depreciation and amortization | (72) | (68) | |||||||||||||||||||||
| Unallocated amounts: | |||||||||||||||||||||||
| Restructuring and other credits | 93 | 4 | |||||||||||||||||||||
| Corporate expense(1) | (32) | (22) | |||||||||||||||||||||
| Operating income | $ | 753 | $ | 494 | |||||||||||||||||||
| Interest expense, net | (43) | (39) | |||||||||||||||||||||
| Other expense, net | (2) | (9) | |||||||||||||||||||||
| Income before income taxes | $ | 708 | $ | 446 |
(1) Corporate expense includes selling, general administrative and other expenses, costs of corporate headquarters, acquisition and acquisition-related costs, costs associated with closures, supply chain disruptions, and other items.
The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Total segment capital expenditures | $ | 91 | $ | 116 | |||||||||||||||||||
| Corporate | 3 | 3 | |||||||||||||||||||||
| Capital expenditures | $ | 94 | $ | 119 |
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 | |||||||||||||||||||||||||
| First quarter ended March 31, 2026 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 702 | $ | 322 | $ | 191 | $ | — | $ | 1,215 | |||||||||||||||||||
| Aerospace - Defense | 238 | 51 | 77 | — | 366 | ||||||||||||||||||||||||
| Commercial Transportation | — | 51 | — | 295 | 346 | ||||||||||||||||||||||||
| Gas Turbines | 284 | — | — | — | 284 | ||||||||||||||||||||||||
| Other | 29 | 47 | 26 | — | 102 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 1,253 | $ | 471 | $ | 294 | $ | 295 | $ | 2,313 | |||||||||||||||||||
| First quarter ended March 31, 2025 | |||||||||||||||||||||||||||||
| Aerospace - Commercial | $ | 535 | $ | 275 | $ | 206 | $ | — | $ | 1,016 | |||||||||||||||||||
| Aerospace - Defense | 211 | 42 | 80 | — | 333 | ||||||||||||||||||||||||
| Commercial Transportation | — | 53 | — | 252 | 305 | ||||||||||||||||||||||||
| Gas Turbines | 204 | — | — | — | 204 | ||||||||||||||||||||||||
| Other | 24 | 42 | 18 | — | 84 | ||||||||||||||||||||||||
| Total end-market revenue | $ | 974 | $ | 412 | $ | 304 | $ | 252 | $ | 1,942 | |||||||||||||||||||
The Company derived 68% and 69% of its revenue from the aerospace (commercial and defense) markets for the first quarter ended March 31, 2026 and 2025, respectively.
GE Aerospace and RTX Corporation represented approximately 14% and 10%, respectively, of the Company’s third-party sales in the first quarter ended March 31, 2026. RTX Corporation and GE Aerospace and each represented approximately 11% and 10%, respectively, of the Company’s third-party sales in the first quarter ended March 31, 2025. These sales were primarily from the Engine Products segment.
E. Restructuring and Other Credits
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Reversals of previously recorded layoff reserves | $ | — | $ | (1) | |||||||||||||||||||
| Net gains related to divestitures of assets and businesses (C) | (93) | (3) | |||||||||||||||||||||
| Total restructuring and other credits | $ | (93) | $ | (4) |
In the first quarter of 2026, the Company recorded Restructuring and other credits of $93, which were primarily due to a gain on the sale of its disk forging facility in Savannah, Georgia within Engineered Structures of $93.
In the first quarter of 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 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, 2025 | $ | 1 | $ | — | $ | 1 | |||||||||||
| Restructuring credits | — | (93) | (93) | ||||||||||||||
| Other(1) | — | 93 | 93 | ||||||||||||||
| Reserve balances at March 31, 2026 | $ | 1 | $ | — | $ | 1 |
(1)In the first quarter ended March 31, 2026, other for other exit costs were primarily due to a gain on the sale of the disk forging facility in Savannah, Georgia within Engineered Structures of $93.
The remaining reserves as of March 31, 2026 are expected to be paid in cash during the remainder of 2026.
F. Retirement and Other Postretirement Benefits
The components of net periodic cost (benefit) were as follows:
| First quarter ended | ||||||||||||||||||||||||||
| March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Pension benefits | ||||||||||||||||||||||||||
| Service cost | $ | — | $ | 1 | ||||||||||||||||||||||
| Interest cost | 16 | 19 | ||||||||||||||||||||||||
| Expected return on plan assets | (14) | (17) | ||||||||||||||||||||||||
| Recognized net actuarial loss | 9 | 7 | ||||||||||||||||||||||||
| Net periodic cost(1) | $ | 11 | $ | 10 | ||||||||||||||||||||||
| Other postretirement benefits | ||||||||||||||||||||||||||
| Service cost | $ | — | $ | — | ||||||||||||||||||||||
| Interest cost | 1 | 1 | ||||||||||||||||||||||||
| Recognized net actuarial gain | (2) | (2) | ||||||||||||||||||||||||
| Amortization of prior service benefit | (2) | (2) | ||||||||||||||||||||||||
| Net periodic benefit(1) | $ | (3) | $ | (3) | ||||||||||||||||||||||
(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.
For the first quarter ended March 31, 2026 and March 31, 2025, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $3 and $1, respectively.
G. Other Expense, Net
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Non-service costs - pension and other postretirement benefits (F) | $ | 8 | $ | 6 | |||||||||||||||||||
| Interest income | (10) | (4) | |||||||||||||||||||||
| Foreign currency losses, net | 1 | — | |||||||||||||||||||||
| Net realized and unrealized losses | 4 | 5 | |||||||||||||||||||||
| Deferred compensation | (1) | 2 | |||||||||||||||||||||
| Total other expense, net | $ | 2 | $ | 9 |
H. 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 21.1% in the first quarter ended March 31, 2026, and 20.8% in the first quarter ended March 31, 2025.
The 2026 rate was higher than the U.S. federal statutory rate of 21% primarily due to incremental state income tax, 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 Deduction Eligible Income (“FDDEI”) formerly known as Foreign-Derived Intangible Income (“FDII”), and a net benefit related to U.S. federal and state research and development (“R&D”) credits. The 2025 rate was lower than the U.S. federal statutory rate of 21% primarily due to a U.S. deduction on FDII, a net benefit related to U.S. federal and state R&D credits, and a U.S. tax benefit recognized for foreign tax credits, partially offset by 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%. The 2026 rate was higher than the 2025 rate primarily due to increased state income tax and nondeductible expenses.
For the first quarter of 2026 and 2025, the tax rate including discrete items was 18.1% and 22.9%, respectively. In the first quarter of 2026, the Company recorded a discrete excess tax benefit of $21 for stock compensation. In the first quarter of 2025, the Company recorded a discrete net tax charge of $9 primarily attributable to 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 net tax charge of $1 for other small items.
The tax provision was comprised of the following:
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Pre-tax income at estimated annual effective income tax rate before discrete items | $ | 149 | $ | 93 | |||||||||||||||||||
| Other discrete items | (21) | 9 | |||||||||||||||||||||
| Provision for income taxes | $ | 128 | $ | 102 |
I. 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):
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | 580 | $ | 344 | |||||||||||||||||||
| Less: preferred stock dividends declared | — | 1 | |||||||||||||||||||||
| Net income available to Howmet Aerospace common shareholders - basic and diluted | $ | 580 | $ | 343 | |||||||||||||||||||
| Average shares outstanding - basic | 401 | 405 | |||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock and performance awards | 2 | 2 | |||||||||||||||||||||
| Average shares outstanding - diluted | 403 | 407 |
There were no shares relating to outstanding stock options excluded from the calculation of average shares outstanding - diluted for the first quarter ended March 31, 2026 and 2025.
Common stock outstanding as of March 31, 2026 and 2025 was 401 million and 404 million, respectively. Howmet redeemed all outstanding shares of its $3.75 Cumulative Class A Preferred Stock on December 17, 2025. There is no preferred stock outstanding as of March 31, 2026.
The Company has a Share Repurchase Program (the “Share Repurchase Program”) under which 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 | |||||||||||||||
| 2026 open market repurchases as of March 31, 2026 | 1,301,914 | $ | 230.43 | $ | 300 | ||||||||||||
| 2025 open market repurchases as of March 31, 2025 | 1,006,102 | $ | 124.24 | $ | 125 |
(1)All of the shares repurchased have been retired.
(2)Excludes commissions cost.
The Share Repurchase Program was authorized by the Company’s Board of Directors in August 2021 at $1,500, which was increased by the Board by $2,000 in July 2024 to a total authorization of $3,500. As of May 4, 2026, the Company has approximately $1,047 in Board authorization remaining available after giving effect to the additional $150 share repurchases made in April 2026 at an average price per share of $246.18, which retired approximately 0.6 million additional shares.
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 recorded $2 in the first quarter ended March 31, 2026 and $1 in the first quarter ended March 31, 2025 to additional capital for excise tax on net repurchases.
J. Accumulated Other Comprehensive Loss
The following table details the activity of the three components that comprise Accumulated other comprehensive loss:
| First quarter ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Pension and other postretirement benefits (F) | |||||||||||||||||||||||
| Balance at beginning of period | $ | (592) | $ | (672) | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Unrecognized net actuarial loss and prior service benefit | — | (1) | |||||||||||||||||||||
| Tax benefit | — | 1 | |||||||||||||||||||||
| Total Other comprehensive income before reclassifications, net of tax | — | — | |||||||||||||||||||||
| Amortization of net actuarial loss and prior service benefit(1) | 5 | 3 | |||||||||||||||||||||
| Tax expense(2) | (1) | — | |||||||||||||||||||||
| Total amount reclassified from Accumulated other comprehensive loss, net of tax(3) | 4 | 3 | |||||||||||||||||||||
| Total Other comprehensive income | 4 | 3 | |||||||||||||||||||||
| Balance at end of period | $ | (588) | $ | (669) | |||||||||||||||||||
| Foreign currency translation | |||||||||||||||||||||||
| Balance at beginning of period | $ | (1,052) | $ | (1,207) | |||||||||||||||||||
| Other comprehensive (loss) income(4) | (32) | 45 | |||||||||||||||||||||
| Balance at end of period | $ | (1,084) | $ | (1,162) | |||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||
| Balance at beginning of period | $ | (29) | $ | 1 | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Net change from periodic revaluations(5) | 13 | (1) | |||||||||||||||||||||
| Tax expense | (3) | — | |||||||||||||||||||||
| Total Other comprehensive income (loss) before reclassifications, net of tax | 10 | (1) | |||||||||||||||||||||
| Net amount reclassified to earnings(6) | — | 2 | |||||||||||||||||||||
| Tax expense(2) | — | (1) | |||||||||||||||||||||
| Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(3) | — | 1 | |||||||||||||||||||||
| Total Other comprehensive income | 10 | — | |||||||||||||||||||||
| Balance at end of period | $ | (19) | $ | 1 | |||||||||||||||||||
| Accumulated other comprehensive loss | $ | (1,691) | $ | (1,830) |
(1)These amounts were recorded in Other expense, net (See Note G) in the Statement of Consolidated Operations.
(2)These amounts were included in Provision for income taxes (See Note H) in the Statement of Consolidated Operations.
(3)A positive amount indicates a corresponding charge 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 4.850% Notes due October 2031 (See Note O). 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.
K. 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 first quarter ended March 31, 2026 or March 31, 2025.
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 March 31, 2026 and December 31, 2025, of which $250 was drawn as of both March 31, 2026 and December 31, 2025. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which were $287 and $217 as of March 31, 2026 and December 31, 2025, respectively.
The Company sold $357 and $470 of its receivables without recourse and received cash funding under this program during the first quarter of 2026 and 2025, 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 in changes in receivables within operating activities in the Statement of Consolidated Cash Flows.
Other Customer Receivable Sales
In the first quarter ended March 31, 2026 and March 31, 2025, the Company sold certain customers’ receivables without recourse of $323 and $183, respectively, in exchange for cash. $223 and $192 of other customer receivables sold were outstanding from customers as of March 31, 2026 and March 31, 2025, respectively. 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.
L. Inventories
| March 31, 2026 | December 31, 2025 | ||||||||||
| Finished goods | $ | 475 | $ | 462 | |||||||
| Work-in-process | 924 | 885 | |||||||||
| Purchased raw materials | 492 | 424 | |||||||||
| Operating supplies | 84 | 78 | |||||||||
| Total inventories | $ | 1,975 | $ | 1,849 |
As of March 31, 2026 and December 31, 2025, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was $668 and $642, respectively. If valued on an average-cost basis, total inventories would have been $348 and $333 higher as of March 31, 2026 and December 31, 2025, respectively.
M. Properties, Plants, and Equipment, net
| March 31, 2026 | December 31, 2025 | ||||||||||
| Land and land rights | $ | 85 | $ | 85 | |||||||
| Structures | 1,139 | 1,134 | |||||||||
| Machinery and equipment | 4,333 | 4,275 | |||||||||
| 5,557 | 5,494 | ||||||||||
| Less: accumulated depreciation and amortization | 3,279 | 3,236 | |||||||||
| 2,278 | 2,258 | ||||||||||
| Construction work-in-progress | 336 | 335 | |||||||||
| Properties, plants, and equipment, net | $ | 2,614 | $ | 2,593 |
The Company had unpaid capital expenditures of $60, $101, and $77 as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively, which results in cash outflows within investing activities in the Statement of Consolidated Cash Flows in subsequent periods.
N. Leases
Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $19 and $17 in the first quarter of 2026 and 2025, respectively.
Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Right-of-use assets classified in Other noncurrent assets | $ | 162 | $ | 162 | |||||||||||||
| Current portion of lease liabilities classified in Other current liabilities | $ | 44 | $ | 42 | |||||||||||||
| Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits | 118 | 121 | |||||||||||||||
| Total lease liabilities | $ | 162 | $ | 163 |
O. Debt
| March 31, 2026 | December 31, 2025 | ||||||||||
| JPY Term Loan Facility, due 2026(1) | $ | 186 | $ | 191 | |||||||
| 6.750% Bonds, due 2028 | 300 | 300 | |||||||||
| 3.750% Notes, due 2028 | 400 | — | |||||||||
| 3.000% Notes, due 2029 | 700 | 700 | |||||||||
| 3.900% Notes, due 2029 | 300 | — | |||||||||
| 4.850% Notes, due 2031(2) | 500 | 500 | |||||||||
| 4.550% Notes, due 2032 | 500 | 500 | |||||||||
| 4.750% Notes, due 2036 | 500 | — | |||||||||
| 5.950% Notes, due 2037 | 625 | 625 | |||||||||
| 4.750% Iowa Finance Authority Loan, due 2042 | 250 | 250 | |||||||||
| Short-term borrowings | 450 | — | |||||||||
| Other, net(3) | (25) | (16) | |||||||||
| 4,686 | 3,050 | ||||||||||
| Less: amounts due within one year | 636 | 191 | |||||||||
| Total long-term debt | $ | 4,050 | $ | 2,859 |
(1)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% as of both March 31, 2026 and December 31, 2025, based on the Company’s long-term debt ratings. The amounts outstanding under the JPY Term Loan Facility are due in November 2026.
(2)The Company 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%.
(3)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.
Debt
Term Loan Facility. The Company maintains a Japanese yen-denominated, senior unsecured term loan facility (the “JPY Term Loan Facility”), which matures on November 22, 2026 unless earlier terminated in accordance with the provisions of the term loan agreement. The term loan agreement relating to this facility contains respective covenants, including, among others, a limitation requiring the ratio of Consolidated Net Debt to Consolidated EBITDA (as defined in the 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 March 31, 2026 and December 31, 2025, the Company was in compliance with all applicable covenants under the JPY Term Loan Facility.
The amounts outstanding under the JPY Term Loan Facility were ¥29,702 million ($186) and ¥29,702 million ($191) as of March 31, 2026 and December 31, 2025, respectively.
Public Debt. On March 3, 2026 the Company completed the offerings of aggregate principal amounts of $400 of 3.750% Notes due 2028 (the “2028 Notes”), $300 of 3.900% Notes due 2029 (the “2029” Notes) and $500 of 4.750% Notes due 2036 (the “2036 Notes”). The Company utilized the net proceeds of $1,193 from these debt issuances as part of the financing for the CAM Acquisition (see Note C).
Short-term Borrowings
Commercial Paper**.** The Company maintains a $1,000 commercial paper program, under which $450 was outstanding with a weighted average interest rate of 3.983% as of March 31, 2026, and no amounts were outstanding as of December 31, 2025. The Company had no commercial paper borrowings with original maturities greater than 90 days in 2026 or 2025. Amounts outstanding under the commercial paper program are supported by the unused commitments under the Company’s $600 364-Day Revolving Credit Facility and $1,000 5-Year Revolving Credit Facility.
Credit Agreements
Credit Facilities. On February 9, 2026, the Company entered into the Third Amended and Restated Five-Year Revolving Credit Agreement (as so amended and restated, the “5-Year Revolving Credit Agreement”) and the 364-Day Revolving Credit Agreement (the “364-Day Revolving Credit Agreement”). The 364-Day Revolving Credit Agreement and the 5-Year Revolving Credit Agreement are jointly referred to as the “Revolving Credit Agreements.”
The 5-Year Revolving Credit Agreement provides a $1,000 senior unsecured revolving credit facility (the “5-Year Revolving Credit Facility”) that matures on February 7, 2031, unless extended or earlier terminated in accordance with the provisions of the 5-Year Revolving Credit Agreement. The Company may make two one-year extension requests during the term of the 5-Year Revolving Credit Facility, with any extension being subject to the lender consent requirements set forth in the 5-Year Revolving Credit Agreement. Subject to the terms and conditions of the 5-Year Revolving Credit Agreement, the Company may from time to time request increases in commitments under the 5-Year Revolving Credit Facility, not to exceed $500 in aggregate principal amount, and may also request the issuance of letters of credit, subject to a letter of credit sublimit of $500 of the 5-Year Revolving Credit Facility. Under the provisions of the 5-Year Revolving Credit Agreement, based on Howmet’s current long-term debt ratings, Howmet pays an annual fee of 0.090% of the total commitment to maintain the 5-Year Revolving Credit Facility.
The 364-Day Revolving Credit Agreement provides a $600 senior unsecured revolving credit facility (the “364-Day Revolving Credit Facility” and, together with the 5-Year Revolving Credit Facility, the “Revolving Credit Facilities”) that matures on February 8, 2027, unless extended or earlier terminated in accordance with the provisions of the 364-Day Revolving Credit Agreement. Under the provisions of the 364-Day Revolving Credit Agreement, based on Howmet’s current long-term debt ratings, Howmet pays an annual fee of 0.070% of the total commitment to maintain the 364-Day Revolving Credit Facility.
The Revolving Credit Facilities are unsecured and amounts payable under them will rank pari passu with all other unsecured, unsubordinated indebtedness of the Company. U.S. dollar denominated loans under the Revolving Credit Facilities will bear interest at a base rate, or a rate equal to the Term Secured Overnight Financing Rate (“SOFR”) plus adjustment and Euro-denominated loans will bear interest at the Euro inter-bank offered rate (“EURIBOR”), plus in each case, an applicable margin based on the credit ratings of the Company’s outstanding senior unsecured long-term debt. Based on the Company’s current long-term debt ratings, which are subject to change, there would be no applicable margin on base rate loans for either of the Revolving Credit Facilities. The applicable margin on Term SOFR and EURIBOR loans would be 0.910% per annum for the 5-Year Revolving Credit Facility and 0.930% per annum for the 364-Day Revolving Credit Facility. Loans under the Revolving Credit Facilities may be prepaid without premium or penalty, subject to customary breakage costs.
The obligation of the Company to pay amounts outstanding under the Revolving Credit Facilities may be accelerated upon the occurrence of an “Event of Default” as defined in the applicable Revolving Credit Agreement. Such Events of Default include, among others, (a) non-payment of obligations; (b) breach of any representation or warranty in any material respect; (c) non-performance of covenants and obligations; (d) with respect to other indebtedness in a principal amount in excess of $100, a default thereunder that causes such indebtedness to become due prior to its stated maturity or a default in the payment at maturity of any principal of such indebtedness; (e) the bankruptcy or insolvency of Howmet; and (f) a change in control of the Company.
The Revolving Credit Agreements contain covenants, including, among others, (a) limitations on the Company’s ability to incur liens securing indebtedness for borrowed money; (b) limitations on the Company’s ability to consummate a consolidation, merger or sale of all or substantially all of its assets; (c) limitations on the Company’s ability to change the nature of its business; and (d) a limitation requiring the ratio of Consolidated Net Debt to Consolidated EBITDA (each as defined in the Revolving Credit Agreements, as applicable) 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, which may be increased to 4.25 to 1.00, at Howmet’s option, upon the occurrence of a material acquisition for the four consecutive fiscal quarters following the consummation thereof.
As of March 31, 2026 and December 31, 2025, the Company was in compliance with all covenants under the Revolving Credit Agreements.
There were no amounts outstanding as of March 31, 2026 or December 31, 2025, and no amounts were borrowed during 2026 or 2025 under the Revolving Credit Agreements.
P. Fair Value of Financial Instruments
The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, Long-term debt due within one year, and short-term borrowings included in the Consolidated Balance Sheet approximate their fair value. The aforementioned derivatives were 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 available-for-sale, exchange-traded fixed income securities, which were included in Other noncurrent assets in the Consolidated Balance Sheet.
The Company holds a held-to-maturity, real estate debt investment purchased from the U.K. pension plan’s trust in 2025, of which $2 was redeemed during the first quarter of 2026. These activities are presented as Investing Activities in the Statement of Consolidated Cash Flows and the remaining investment was included in Prepaid expenses and other current assets and Other noncurrent assets, in the Consolidated Balance Sheet. The investment is valued at net asset value and reported at cost, which approximates the fair value as of March 31, 2026.
The fair value of Long-term debt, less long-term debt due within one year, was based on quoted market prices for public debt with similar terms, interest rates and maturities available to Howmet.
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Carrying value | Fair value | Carrying value | Fair value | |||||||||||||||||||||||
| Available-for-sale securities | Level 1 | $ | 17 | $ | 17 | $ | 18 | $ | 18 | |||||||||||||||||
| Held-to-maturity investments | Level 2 | $ | 3 | $ | 3 | $ | 5 | $ | 5 | |||||||||||||||||
| Long-term debt, less long-term debt due within one year | Level 2 | $ | 4,050 | $ | 4,054 | $ | 2,859 | $ | 2,919 |
Restricted cash, which is included in Prepaid expenses and other current assets in the Consolidated Balance Sheet, was $1 as of both March 31, 2026 and December 31, 2025.
Q. 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 $16 as of both March 31, 2026 and December 31, 2025 and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $7 as of both March 31, 2026 and December 31, 2025 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 less than $1 and $3 in the first quarter of 2026 and 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. On April 16, 2026, the Paris Administrative Court of Appeal reduced the penalties assessed to $4 (€3 million).
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 2026. 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. Based on the April 2026 decision, the Company is expecting to pay the reduced penalties in 2026.
Legal Proceedings.
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 AAP SAS and Whirlpool. On February 14, 2025, RBKC and KCTMO served their Particulars of Claim and Schedule of Loss on the defendants, which they updated on February 27, 2026. 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, as updated on March 13, 2026. The next case management conference is scheduled for December 13, 2027. Trial is anticipated to occur between October 2028 and July 2029.
Raul v. Albaugh, et al. (United States District Court for the District of Delaware). On June 22, 2018, a derivative complaint was filed nominally on behalf of Arconic Inc. by a purported Arconic Inc. stockholder against the then members of Arconic Inc.’s Board of Directors, Klaus Kleinfeld and Ken Giacobbe, naming Arconic Inc. as a nominal defendant. The complaint alleged violations of the federal securities laws relating to the Grenfell Fire, as well as claims under Delaware state law for breaches of fiduciary duty, gross mismanagement and abuse of control, and also alleges that the defendants improperly authorized the sale of Reynobond PE for unsafe uses. On February 10, 2026, the court held a final settlement approval hearing, and the Stipulation of Settlement was approved. The Stipulation of Settlement had no material impact on the Company’s results of operations or cash flows.
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 March 31, 2026, Howmet had outstanding bank guarantees related to customs duties, rental, plant expansion, and environmental obligations. The total amount committed under these guarantees, which expire at various dates between 2026 and 2028, was $3 as of March 31, 2026.
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 both March 31, 2026 and December 31, 2025, 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 $1,141 as of both March 31, 2026 and December 31, 2025 in the event of an Alcoa Corporation default. In the fourth quarter of 2025, 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 2026 and 2027, was $75 as of March 31, 2026.
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 $75 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 $75 in the above paragraph. Arconic Corporation and Alcoa Corporation are being billed for these letter of credit fees paid by the Company and will reimburse the Company for any payments made under these letters of credit.
Surety Bonds. The Company has outstanding surety bonds primarily related to workers’ compensation, customs duties, environmental-related matters, pension, and contract performance. The total amount committed under these annual surety bonds, which automatically renew or expire at various dates, primarily in 2026 and 2027, was $43 as of March 31, 2026.
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 $43 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 March 31, 2026 and December 31, 2025, supplier invoices that are subject to future payment under these programs were $307 and $266, respectively, and are included in Accounts payable, trade in the Consolidated Balance Sheet.
R. 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 C regarding the completed acquisition of Consolidated Aerospace Manufacturing. See Note I regarding share repurchases made in April 2026.
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