Howmet Aerospace (HWM) 1 Aug 232023 Q2 Earnings call transcript

Good morning, and welcome to the Howmet Aerospace Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Paul Luther, Vice President, Investor Relations. ahead. go Please

Ken Good Ken, second Kate. by welcome the session. comments Officer; to Plant, Chief President Thank Officer. will Financial XXXX morning have results Aerospace After and Executive Chief quarter Chairman John joined Executive conference Howmet Vice Executive and and you, by and and Giacobbe, we call. John question-and-answer I’m a

forward-looking you statements to would remind that expectations. today’s will and like to relating contain future events I discussion

cause press the from recent could actual in can results in materially that You find most differ company’s these today’s to factors our filings. SEC presentation release, listed projections and earnings and

the and items included we’ve financial our today’s in references excluding measures measures discussion. These EPS in In release most the found in Reconciliations be financial adjusted today’s among today’s EBITDA in items. GAAP EPS press and to directly and non-GAAP adjusted presentation. can appendix excluding comparable special EBITDA that special presentation, to are mean the measures

like With that, John. to to over I’d call the turn

everyone. to sales good stronger year-over-year for XX% quarter Revenues Thanks, albeit, Howmet. production PT, effective QX strong another up QX X% than due is seasonally was traditionally were quarter sequentially, QX days. a more and and and morning,

rates, and are Commercial of quarter build and the slated anticipated the the soon. continues aerospace reflects to very scheduled XX% which increased highlight by year-over-year XXX Boeing some be increase to of the increases for

was shares generation. cash which of per EBITDA at started consecutive $XX strong and $XXX an This strong back year-over-year. cash used XX%. at per and at was also end a at cash increased $XXX of was sequentially. an were average was cash of plus flow high per balance million was price buy XX% of million, share. flow free to quarters of healthy exceeded and $XXX share share XX% sales $X.XX The up Earnings Defense increase up the to guidance. year-over-year million,

into times X.X exposure debt floating further fixed has Net provide at improved a which debt leverage future. to rate, interest is expenses bond negligible and to EBITDA the rate Howmet all interest rates. to predictable

billion favorable Regarding and while more to our revolver, credit net EBITDA our a realizing amended facility XXXX, debt fees lower and covenant. undrawn extended to we $X

item most settlement $XX which XXXX to back namely July a is XXXX. commercial for of Howmet, previously notable settlement settlement This in was than another paid significant million further residual with all Lastly, less the claim, dates a of claims XXXX. was million, in Lehman the $XX and reserved, litigation July we cash RemainCo, and

over cover I it Ken, additional to to want three items. turning Before

Howmet QX, profitability at in a Firstly, was lodged X effect billet and expect now plant a been for resolved. impacted Corporation, Hungary to has Arconic in to which strike $X had at days of claim to of of aluminum under Wheels an [ph] shortly. million with stoppage resolution Arconic is due approximately about The of interruption supply by the agreement, production we gain suppliers terms of our X-day unfavorable which the

reliance its assessing upon significant supply. this of is Howmet source Additionally,

call, The let our the address adding costs of first increases, did which rate issue. a in bottlenecks several result it back the rate profit commentaries Secondly, fell achieve. me we the facilities being production demand achieved. The for of people, essentially rate while main in cost was or was The was other the issue production mill at plant. one including backlog increases did quarters. rolling not segment additional due miss preparation and structures. The portion not unrecovered production finance margin were increase of not preparation time The furnace since to

was were F-XX and context results, Howmet up, increased also bulk the not second production which into burn burn But production reduced half. the to is backlog as plan rate with was, the our down overall in in This move material aggregate, again achieve not increases helpful. I we of earlier. as combined the down and it Naturally, inventory commented

Finally, to largest all backlog very ever orders the commercial an for for further increased. be and meetings generally adds of combination held for which able rates and the to huge was customers for airshow The are Howmet optimism -- Howmet, a the particular. June both be show with Paris both significant once successful aircraft, in at with the orders production industry with was to investors of the in Airshow fulfilled production fulfilled reflecting

segment the now call commentary. Ken, turn I'll to over and further market provide will who

Thank you, John.

continue X% sequentially. markets X growth X. in all to XX% XX% All aerospace lead continued revenue the with Let's of with quarter aerospace to increase up move by an Commercial to be segments. year-over-year, healthy and Slide driven year-over-year the

Commercial increase orders consecutive and to expected aerospace revenue. quarters and aircraft at of total developing of of to has stands due total for XX% X portion backlog aerospace widebody recovery, Commercial strong commercial revenue is grown the sequentially the continued are XX% at legacy fighter be Defense trending increase Spares in growth. XX% aerospace up F-XX levels driven and commercial approximately year-over-year, now programs. XXXX by for was spares to year-end. of to aerospace

up up was higher which year-over-year, Commercial sequentially driven X% engine by impacts products. both Systems driven and was the by X% year-over-year Wheels transportation, up aerospace defense segments, X% Fastening volumes. and Forged Sequentially,

up summary, driven other Sequentially, XX%; these XX%. IGT, up by IGT were XX%; up industrial and oil our were general In flat. all up X% and oil very year-over-year, industrial quarter strong X%; industrial, the and gas up Finally, general X%; with and gas, and markets. another of markets up across markets XX% up end

year-over-year. revenue, XX% all P&L the guidance in share, of end was which the builds XXX of additions and Starting per XX% employees, high X. exceeded up Revenue the made in Now including additions QX. second quarter. $X.XX on EBITDA approximately in billion, EBITDA up let's count move to enhanced profitability, net the $XXX million, head QX Slide earnings and was with year-over-year,

approximately margin year-over-year was was EBITDA targets. Adjusting training was $XX Earnings line up the while XX%, head and our Year-to-date, the production XXX, costs. which was flow-through XX.X%. of net EBITDA count recruiting, and to EBITDA revenue margin with XX% for are approximately million. $X.XX share pass-through absorbing XX.X% approximately of near-term which per year-over-year. cost incremental additions in was are inflationary

The quarter consecutive the revenue, eighth and share. of quarter per in growth represented EBITDA earnings second

the free cash The ending healthy $XXX balance was was to million generation. balance our $XXX flow cash sheet. which at free of flow Moving after of best generating QX million cash

flow of the to positive and We cash continue common million half of $XXX allocated expect repurchases to XXXX. strong cash in generation free flow was stock free second dividends.

provide rate future. expense rates, times, low debt Net to into of X.X of while and which is debt stability EBITDA interest the will to record unsecured a bond at improved fixed

bond next in XXXX. Our October is maturity of

we revolver fees amended realizing through Finally, undrawn. favorable more our covenant. The XXXX, revolver lower $X financial remains a billion while and

Moving to capital allocation.

in be to Capital support our continue us In COVID-XX capital puts the installed quarter, a continued good aerospace to balanced position We on approach. automation. million to prior expenditures commercial were in $XX focus a with recovery.

price $X quarter of approximately $XXX XXXX, Share stock the X.X separation common repurchases. retiring million. shares. the than an million per quarter, billion of repurchased of average the Directors common buyback in of $XX.XX of second approximately share, common ninth Since stock. $XXX Board we have stands In more repurchased from was at at consecutive stock authority we million This

stock confident doubled year. quarter after $X.XX in it be cash to dividend last per was free of was the the flow. continue We fourth the quarterly in share quarter, In second

cost issued interest our redeem lower tower The will a is on Finally, complete the million. by debt and expected XXXX $XXX with September we to hand. annualized our be $XX note million of at redemption cash to of end approximately

which quarter, approximately interest $X As expected $XX bonds you million. by lower costs million. we interest an repurchased decrease annualized bond will approximately recall, last by million year-to-date, repurchases will are $XXX annualized Therefore, costs of additional to

was consecutive to in of cover quarter. X as both and spares higher increase was EBITDA. quarter since to continued quarter were XX%, for the represented the IGT up million, year-over-year. second Now its driven rates strong. continues Commercial oil Slide the strong markets and gas move up to of year-over-year growth let's was an XX%, build Revenue up results XX%, the XX% by Engine up and was revenue demand XX%, was $XXX Products and performance and segment growth. aerospace be second eighth Defense/aerospace

production to year-over-year the despite the million. year-to-date costs. in of net Across QX. margin addition approximately new of XX.X%, headcount net recruiting, segments, ramp, XXX continued carry $XXX segment all of training was for employees but XX% aerospace EBITDA needed the record increased EBITDA for net the and additions are and do a near-term approximately XX additions revenue

team Finally, facility. Michigan agreement in Engine's five-year in our second bargaining collective quarter, finalized a the the Whitehall, new

Slide commercial was volume as XX% increased EBITDA to as net and new addition the by approximately segment take Year-over-year effect. increased move aerospace XX%. higher were up year-to-date was Commercial year-over-year was XX% aerospace XX%. revenue XXX industrial Systems to of offset recovery XX%, general up starts in up widebody was net additions aerospace XX% Defense and Fastening partially Let's QX. employees increases XXX X. the

were let's X% Now Engineered decreased build down head Defense Segment by gain. XXX bottlenecks rate to plant. basis corrections. in employees. rates approximately customer Structures XX approximately Russian unrecovered up as with year-over-year commercial titanium revenue in Slide well million up aerospace associated EBITDA year-over-year, increases, XX% to $XX higher points. costs production with was costs the were XX% share declined inventory headcount higher while which additions for count production EBITDA one by X. quarter additional move XX%, by margins driven planned aerospace was lower The year-over-year, as of Net driven operational was due driven in

which of team schedule. agreement four-year Finally, Structures' third facility, in quarter, bargaining Ohio the collective ahead finalized new was the at Niles, our a

let's Now XX. move Slide to

supplier, of by increase Segment The year-over-year revenue cost a raw plant year-over-year, now due interruption in increased was X% Margin points our the due and to basis in Corporation the revenue Arconic of nine-day Wheels year-over-year aluminum prices despite Forged material X% increased driven been million to for pass-through. Hungary EBITDA XX lower has volume. $XX which increased at X%. Wheels inflationary increase strike our resolved. in a impact

Finally, let's Slide XX. to move

of unsecured our after billion million is with be the down to $X.XX July, XXXX after and to in with July, costs to expected $XXX be debt $X.X Since cash XXXX, we billion in expected issued tower including to a the debt lowered less annualized hand tower the in fixed in on rates. redemption of we by to million be paid notice completed The September, is $XXX on of it redemption. long-term XXXX be than announced would our million. cash than September. continues redemption by debt end more have be our $XXX the approximately will Gross continue improving hand, approximately interest just while the and debt capital liquidity. debt structure In October which We on separation focused redeem

more and favorable found Finally, we Details amended remains later through facility expected revolving our be is can undrawn. $X billion The be covenants. which unsecured fees XX-Q, to credit revolver provides five-year the amendment The XXXX. in filed today. lower

in me before Lastly, turning the item slide to our covers back rate, which let It highlight it for was on XX. XX.X% the appendix operational approximately John, tax quarter. one

rate The tax point in second quarter improvement in XXX since a operational approximately the the separation represents basis rate XXXX.

to summary. me turn let outlook Now, back John and for the it

let's particular, for in supported, Thanks to extraordinary Ken Howmet number commercial continues and of and outlook be move The orders Boeing XX. and backlog slide by at both Airbus. the to aircraft very strong

technology increased Pratt have come in market the all XXXX, go for This absolute aircraft increases & markets. beyond. sophistication and being and is further the GE by of would growth constrained aircraft moved Demand to to right, both to revenue quantity by production, increases enhanced engine narrow-body brought the XXXX, to current Whitney further by upgrades in well

fasteners. These widebody on the of much issues, Howmet's again turbine of upcoming with differentiated value the composite products. improvements increases wing which value in the technology, time how production, structures address of and titanium fuel differentiated efficiency This which features and increasingly combines products improvement well enhance which

for Wide-body spares as be content significantly the completed Defense we continue envisage visits to continue increase. XXXX and destocking increase shop and for as aircraft the also feature markets improved company. to engine aerospace going robust, into increased revenue engine is bulkheads

XXX of Israel, backlog and continues XXX XX approximately government XX% Czech orders for aircraft with F-XX a increase US The for Republic. plus aircraft joint the aircraft further Kroger for office, the to to recent

particular. QX in offset the plants due in for revenue France, are feature a be to particular. Europe seasonal aerospace grow which European demand and Wheels for revenue vacations, to QX, be and outlook also albeit current to our is also continues approximately healthy Industrial Germany, continues for notably This between Hungary, And in both it IGT for is quarter QX -- underlying in million seemed revenue strong, gas, to both in weakest QX. of and $XX the effect of oil the and quarter. The seasonal

spares we spares, closing comment approximately market markets and of XX% defense see with spares we XXXX XXXX of close higher for the in of in XXX% come increasing as we at final as levels rates IGT of is levels levels. This on commercial puts year by out and XXXX rates to aggregate year. regarding see the this year-end excess the aircraft where the My

relative for and trucks has aircraft is commercial to the The XXXX. QX half of the the more taken been demand quarter clear cautious parts stance in for first until

While we inventory the achieved. backlog impact, not find planning that's increases is the for there, in difficulty if and rate

we step. again significant once by Specifically, another guidance for are raising year the

the not but assumption for parts of near and of of XX intentionally -- moving we you also half. per give from nudged is number month rate guidance an example the given the To the into XXX lack the business our XX second lifted all over XXs, MAX and it clarity very This assumptions, anywhere the soon. the have

productivity when to half, we increasing as use the hope plan at a in for And the come. to improvements we we are first people further, half second the reduced rate recruitment but

per Regarding plus minus $XXX EBITDA, $X.X earnings be million; QX, or $XX share revenue million, minus $X plus or minus expected plus to or $X.XX. of billion, $X.XX is million;

significant increased million or year, share billion, cash is around is increase. minus plus absorbed Brothers to billion EBITDA $X.XX a $X.XX million, to Lehman revenues has held the then $XXX range. let's increased And the settlement $XX million. plus from flow $X.XX, or say, Regarding minus that to billion, free $X.XX $XX $XX at plus or claim. and having minus $X.XX, for the And million, per Earnings increased

we're to supplemented commentary, excellent In conclusion very to future. in further come increases optimistic outlooks QX outlook achievements, both my pleased solid demonstrate to the with by

EBITDA Revenue up the XX.X% was for at continues summary EBITDA was a to was direction. XX. XX%, servicing and in strong and to share And quarter margin move another Howmet. earnings material per pass-through Let's XX% slide QX on for XX%. heading be strong healthy

with to we've And quarter. positive that in continued as repayment flow second half, to healthy the in we've cash second quarter. third with debt free the to share Liquidity very see, you to in repurchase deploy cash is the come turned more and both can

stated. the and cash flow increased Guidance expect and per expect share has Also, positive been quarters. annual we EBITDA we earnings year-over-year fourth very in and improvement free as in third revenue, generation

mentioned net $XXX improvements, that complete by leverage in we'll two QX levered improvements of we'll the in And million. we and debt, and and we times year. see with about heading half that and we the Regarding times what debt-to-EBITDA the as the then EBITDA be QX towards end record talked our two the improving QX, from

the $X.XX common then dividend $X.XX to And the XXXX. expect finally, quarterly from to we XX% share by a a in increase quarter share of fourth

much. all very you Thank

question-and-answer. to across move Let's

go ahead. Jefferies. Sheila We will the question now The [Operator begin from Please session. of is first question-and-answer Kahyaoglu Instructions]

guys, one you Good first here. and morning maybe for thank you. John,

have to to the at at Do into system, build rate, XX% decade given wait in think it convert forward, structures how XX% about the last put for least and a as converts cost on you'll climbing just obviously, aerospace difficult than higher do when XX%-plus it are go Just build about quarter, rates commented here. a you be you higher the operating rates the in middle QX. the peak we after when through How And into given profitability? to is quarter you you to convert where incrementals revenue? profit that of to

Sheila. you, Okay. Thank

the more by driving productivity been certainly during extraordinary weighed most overcome First things the probably what difficult has labor than yield we And the levels recruitment couple of all of years been through and us. but upon scrap been of last of And wait, the also that and have the doing, amongst we of don't difficult. it's all, volume. driving we've we've certainly on way have believe to

QX. If And at improved takes employees the account that the to slowing what midpoint bigger we've got denominators a And about and incremental XX% hopeful we're ratios believe recruitment guidance, to XX% going of and believe we QX. taken you we raise of be look hopefully, to the we as an are our about in of at in of retention on.

hopefully improve and the optimistic we're recently so, again denominator effective combined from widebody. the employees then in the the drop-through the that mix say, And incremental begins improve bigger and I'd automation the of 'XX to programs, with the pull-through volume, -- recruited

a it's it, in future very stability we if improvements had that we be We're had We're planning So, but we're statement. for disappointed hopeful wait optimistic. to I'll drop-through. until for

the color. for you Thank

Just a follow-up.

In terms that do margins How we in up structures the quarter, it how does quickly improve? think half? in bumping second the of about the

like my So, bring I relentless think -- was to mean machine. commentary. trying I I is more when about Howmet -- to a color

delivered is nine-day the us of overcame stoppage So tissue the the one that machine well, and like I aluminum that But of proud not which we really in know. in forward noise itself billet, the But straight as work our paper delivering at Chinese relentless wet it, thing time, flash costs yet business. is heavy we firecrackers. you we within our to way overcame, rolling suppliers results. think full consequences in last time I marked one fairly didn’t solid and of and there so and QX, of this strike I'm through tried margins which that and jumping wheels bang We're

regard. great performance I think by that has So, that really in Howmet

hit we of of took the of much bigger than lack a the the the in Conversely, and margin rate strike when I think achievement volume. structures,

thought $XX the achieve bottlenecked We Howmet think, on we labor more just in put I say, our the improvements think I'm and in thought proud plans in thought one like place. what and well. rolling by myself, completely there. the mills then and face really the, We let's want we'd begun didn't prepped made to taglines, I our if well. We million in work that basically improve planted to And a the, throughput put play in it And you furnaces I'll to complete we'd business. structures we'd got use area, of didn't I not And so business. almost say,

of me, you but the, supplier despite of it, never all so So let's a done a guide the out-delivered call And but if combination we -- EBITDA. of -- on and excuse when planting multiples. like, space to all and I one strike, said that, like want any structure those is and

So we rate talk XX million. hardly when that's like like of worth points margin We worth it's about commenting on. basis felt $X difference,

And that. a really from we me saying, like so bit did it's yeah, apart good

So I'm did say, But great your I'll I be question. was And plant. to and responsive not to. structures big choose generally wheels face a to trying

a you plan. march like my read to relentless I'm than with It's go going rather mind. base

thanks So for that.

you. Thank

The Vertical go next Stallard of Research. question is from Please ahead. Robert

Good so Thanks much. morning.

Hey, Rob.

cut wanted John, add? Is off to it else sound like I you there you there. something

role away. Obviously, was a I and carried probably on getting

done. So no, I'm

You want. you if firecrackers can how carry many out

questions no, I please like over don’t so, start Yes, asking down and dish this.

indirect Thank GTF you. within Okay. further on latest the But whether rate to -- issue could relation was I Thanks about made this what Airbus direct on update that, your have rates changes any risk this or noted either Boeing you to any you if flow the assumptions. said through XXX from and Airbus MAX Howmet? guidance? in And build for wondering

Yeah.

changes struggling production healthier. QX delivery But assumption I rate mean, close, Airbus been, much their numbers. was certainly, but has the plowing no ahead, getting get say, elsewhere. to all, for I'll to of First

getting believing We and think ready rate things it. it. trying is when really, to or we've everybody of going it's get for better think question higher that And we're a prepped increases. to think And so generally, I are see I

of originally, and We we had, want May we're be have to July is built rate We we've all say, and And capacity XXX, terms. be not and then just capacity. XXs into Jan just not as capability done Xst where XX Xst. cautious. achieved. goes why until nudging early machine ready, see put it's willing and But I know, Xst, labor to going going supplying, capable on clear it but to That's to be be and the say you it's

to And just anything follow-up, issues? the say to on GTF

sort plan it this them work aircraft seems that we engines a of powder about of we at I of wing Well, and think out crack. looking about from those sure that taking to have metal down don't certainly, I'm in be detail issue level read that historical. because got good for

in for the engines has impact, not bigger is negative the say, the impact point the both think life LEAP for I is better I they're impact and where their for -- -- the I'll are of positive, predecessor of to engines, well the compared while each which on say, impact is relative Howmet word exit the think, wing of current ETF CFMXX because and time might I them, is, the that VXXXX the engine. I mean, below still cycle high doing that previous narrowbodies issue, point the present

leading to the will combining also, help I in that replacement so detail, And was is improvements parts. we sufficient not in itself that increased maybe referred the issues. become for have to demand what to what resolve we on it's worked which And with believe

from, say, and holes have degradation sufficient let's them have turbine high-pressure that So block issues. been elevated up left don't the combustors temperatures then seeing blades causing to after

issue describe for LEAP improvements. in, I'd particularly and I'll with And climates say say, is East intimate we -- Middle those that Far another I East are

them. on worked have We

introduction the to combined prepping And assessing is moving XXXX. with their the are increased with for We commensurate our how the XXXX, are demand increased is for customers' demand needs. we moving and wide-body now to then that wide-body

all so well. setting And it's up

demand good good where is terms I aircraft production what less demand. clearly increases, In is of think

want of time. a period is for a where put you could it's part if replacement to, You a

and discussions down. where maybe cautious capacity in rather into are XXXX happen. to that to And achieve that And into our take say then XXXX capacity doesn't need we're increase rapidly customers -- back therefore, is on more deep into we I'll it don't And up with that. ensure the, then commercial say, that and we months in take certainly want to we to coming

introduce us. So those improvement powder no a the that to as growth sort the Nothing blades sophisticated -- long some And is fuel more looking leading it's wing, efficiency indicated robustness certainly talk do improvements us. or as turbine about deploy which those the technology for engine. future we to engines the metal, with elsewhere to we've way of and things of powder at content for issue on for metal to It's done Howmet. we seeking the great of and advanced engines saying make GTF that, and also to good

Thanks lot great. a That's John.

Thank you.

The from next is from ahead. question David go Please Strauss Barclays.

Thanks. Good morning.

David. Hey,

John. Hey,

on So the to wanted just I MAX. clarify

So XXs, you're into upped guidance today? at a month Boeing in actually while shipping XX what from the you've terms XX you of the are the

upon the based assumption increase But parts out deliberately my supplied, while XX It they were I'd like saying, scenario, achieve bloated Xst July. XX together is XX That's received my way for should case. but rate schedule We parts. that don't mean they think the which recognize depends parts will it, different then say inventories, but because would not they XXXX that parts. -- as and -- we've -- from I the loose that not September, taken about where rate that full them clear of upon be it average I'm the is rate guidance my we some take of out is, blending December November, supply is that I is the to that increasing schedules all October, just I same I the parts of being in is not then rate, will I'm – very our that

believe to say I at confident don't going feel be tried to remaining guidance I I the on And to to more do to that in be describe year. I about months love that rely -- guidance, reduced. point, inventory that mean during past, upon. see wrong that comfortable then because I'd feel that the you tends our I and it, them not Boeing our the can of want it do takeout can I'll then we're of to do mean side it. aircraft And but the few I to something

Okay. last QX after It I got you're through side, what erring year, I like went sounds the of cautious you on got it. in just it.

good. QX last year mean, good. The really I pretty was was Yes. year

not it's all I'm putting so -- just I? worrying. not there. it out would Why It's And

Okay.

dig within a As on I the can the seen pickup on you follow-up, business in -- what's a a revenue pretty little good on mean on going at the Fasteners? we've here side. we've there aero drop in the kind of rates through know in lack margin but are still Fasteners? low, the XXX I the that seen drop of through or thereof terms

know so-called But really like partners, really Chinese Well, steps. but it's Yes. don't it don't I Chinese using where the about. the -- begins small with

balance the increase year. large of for of the ingestation the in labor did QX, Our margin despite rate

a It's hostage I'm revenue and going that in the of accretion feeling both second we're to fortune, confident bit beyond half a see QX. to but always margin

business, pleased rate been with that the and in the I'm sense, that months able say to I really So wouldn't of ago. have six direction

that, confident going feeling mean, to saying there's I'm publicly, our margin increase. you to I so rate is be increasingly And

So that's pretty good.

I got take the Thanks. I’ll it. hand.

is Peter from question next go Arment Baird. of The Please ahead.

John, morning, Good Ken. thanks. Yes,

Hi, Pete.

Hi, John.

Just within tracking right the like million Engineered gain Russian Structures, the seems it $XX year-to-date share, your expectations. titanium towards on it's

thoughts your on we go Thanks. updated And about So into how any just should that that? of as think maybe next year? we

for and then last terms multiply I it of the was on, four QX XXXX given year, add by XX%. I've think, previous for metric demand, million $XX In

little in did you $XX $XXX that than now, about a So took if million around that. it's I'm actually million feeling HX, $XX in to mark. more you confident HX. million And implicit, therefore, Right bit

XX% to And the lift, can a I potentially see so demand there. Certainly, is a XX% us lift. instead I think of about getting

won $XXX well business I've that share to to commercially. the got making above and So market standing think $XXX and we're structure is see going we've above million, And going thing the then the And -- we've realize to and it's be the stuff. million. obtained I up the

healthy a had the moment, team say, or commercial we structures to we hiccup proud of that win -- what myself what do. at or is of our repeat So the and, myself, trying did demand in QX, say, position I'll are with neither they didn't which

Appreciate the color. you. Thank

Thank you.

question Research. of Please Spingarn go Robert next is ahead. The from Melius

morning. good Hey,

Rob. Hi,

follow-up what discussed. on just Two things you

improvements the titanium. the That's question. affecting LEAP, or do your to your on And Shipset then question factor just the first these how GTF on of First, into content LTAs? how changes impacting the and those and are

about XX% when we talk further maybe uplift, Can Boeing I these greater are as imagine targeting about that? rise, XXXX talked As talk let's ahead, move and higher you But about even uplift. rates rates, Airbus you would wide-body the

I'll order. do in Yeah, it reverse

the case -- of skins personal the Fasteners, correct, us, the and titanium So value say higher for where the delivered in both then terms is I'll and our of composite the value proposition Fastener set absolutely combining structures. up, wide-body of with business you're highly sophistication both from additional in say is value just to for delivered. that of what's substantially for going that our I'm the And Structures moves go as sets business, the beneficial

we feeling for the to I at go All but titanium I not least and I'll then I rate I'm bring to So then, our assuming that. above think, and assuming meet just X% that to is bear really demand expecting going rate similarly and lot XX by X% some plate, to to more, they that X healthy to market And to say, also sheet close think, straightforward be for the Boeing or month, that's higher forgings, for because to AXXX, that And more business. are a than the X% XX. get maybe which the up demand. from we'll in XXXX had able of fundamental X% is a optimistic to think a

so And optimism an that. it's for

we've everything to -- commented And from again, us teens won VSMPO if structures not the to from restriction got the see now towards neither also as happen And issue, way our issues, as the there make of that by part moving decade, we of could demand the the demand opportunity middle tariff then I what and is titanium wide-body margins, and second the volume, for move that is do the because it, do. the to mix, see I increasing of high the potentially wide-body. or and have for but you everything just

that sophistication referred I'll shipset say, goes value. to, of that the terms yeah, I to In increased,

we the value as for the the engine for supply say, we forward, the which we're we as see the we making and GTF So for shipset which playing in is -- similarly, there. the -- advantage for increase are on will on I'll issues for the solution LEAP. required And the the it, Howmet we'll move part to increase value for improvements changes are move engine products the

upgrade every As you while very long to five about six engines, items, in run do we normally know, normally years.

are, the solutions And drive necessarily able not had to found and you bit then say, improve as have enhanced basically last I'll of -- to of with the terms been our because one shop issues so customer, upgrades durability which but even And on, on plans a we are call little with because in issues but problems the got se, it, of the an wing. turbine, let's be per time the that temperatures up part those upgrade more given through. parts that require particulates our of generation with

Thanks, John.

Thank you.

ahead. from Please of next The is Myles Wolfe Walton question Research. go

Thanks. Good morning. John. Hey,

Myles. Hi,

some I you'd put did bit on the a $XX a $XX way I aero, you sales, on industrial gave but about that was imply to or as little you million wheels, million? add the million finer know the hoping point $XXX $XXX is maybe on million The think from the bulk on color, it. guidance back and raise

didn't break it I down. really

as are move an that stages I assumption. really is spares aggregate strong. example. we I see increases, the rates, Defense and early robust a of XXXX, proving see we beginning and that's is in through XXX F-XX think strong. to and positive I the the feeling we quite spares to mean, XX% QX think increases my defense printed as of go commercial see in begin XXXX particular, for into And the is we top we'll on what

in So now continue think to books than prior for for I assumptions are good defense think, And closed. Wheels, us. again, has been we see XXXX QX. really stronger Order we that.

yet truck picture a the final outcomes order And so book manufacturers close XXXX for And for the not out. XXXX. clearer the for even book much getting we're order have opened the

guesstimated XX the better trailer and previously slightly the hoping North on that. I than relative say, read anticipated. We're there'll market. truck aggregate, a some in got in distribution and is robust. be the haven't in market, we that some American be months, my possibly strength let's European in the they're But there'll market So truck weakness picture in But coming, some weakness

way the that a was the counting the rates in coming than. to up of just And some the in having to assumptions on conservative good bottleneck structures to one on orders. any through It's are OEMs go quickly the bottleneck. a and result hesitation quick and not have purchase But

No.

Okay.

added We're adding people. we people. No, more

double triple example, and for money the in we're and way customers additional the didn't everything we're So added a wish what And furnace I'll I capacity for some it We to we say, capacity mill We increase automation moving our as there. We say, I'll work that optimistic by our, out. added requirements throughputs. -- got furnaces. an we to spent volume said, are rolling sticks of, improving as stick people. thought

issue. stand it's and said, didn't in at don't to accept just and we that a things up we I face planned. do It's volume so pretend a issue. demand But go it. and it, exactly planted. know not I future not for to we And past. do sometimes the that least as It's for us It's that it yes, now it's That's management do going sure. stuff. life, to we've says in I got than proud. just to be make think But we always every And better. expecting -- business, we're the do for QX the guess we But better don't I cannot so mean in QX. we're

the for color. Thanks

you. Thank

Operator: Stanley. question from ahead. Kristine of Liwag Thank is Please Morgan The next you. go

guys. morning, Good Hey.

Hey, Kristine.

segments? you bottleneck? is, caused think depending we problem would plant see that to that? what on other Like specific the more the spread John, how details out on we And could be there on other you do a that about all about called the we Engineered part think can this that provide actually on just Structures, is issue recovery? the And to then risk the what do how

work labor. starved idle. and the down with then say But And exceeded the to totally of It's absolutely risk achieve. process a stages ended X to in all, just plant. at It ease -- and inside in a no not contagious. to for wasn't segment, of other sort huge thing of was that, of to like topic. inside Well, best for does a plant. X irrelevant spreading our said first achieved, subsequently make it we airtime we everything segments. as months. progress, that It's one I've of down disease, not think up three during my buffers like results and I it's We that done every that come on is recruited process the there's broke going course to getting we in standing Howmet this we already excessive we The sequencing titanium subsequent what within total equipment every process, I'll early working. -- of the of we're question probably which around dance And it's the what

like production work we've there's product. And once which scrutiny buffer particular track. my progress, stage so we detailed, we going last again, of of again recently, a got every on it rereviewing is in an back things analysis important I just week, that into for believe every

of engagement in of that of that's high get a too daylight to so and work-in-progress management, away of the while carried the worthy for unit stages, each for terms high their plant head it's being operations, me if which, leadership again, say, then were business pretty a the for -- I'll of bestest buffers level scrutinizing, degree production scrutiny the by about. something, and And be to of infectant comment

it's with to brute sophistication quarter. well, improvements and hopefully, respond. make some hopeful alone, will it it's going as I'm of we If bit force this respond. So, a might

mean Thanks helpful a segment. that like John. specific really very I color. That's it isolated issue for sounds

of where points margins higher. quarter, were you think get like terms XXX how the this largely like XQ? issue by XXX pace, for long usually resolved, does in recovery we like How of this like was this to last resolved that pace back In your recovery? it Is about should basis to

large And what because of XX% I restoration don't XX% if segment long doing that it, But F-XX it. margin commentary. -- be thick business. in it for at was volume to then give want we'll as of thin, business improved Yes, through upset call we've way XXX the and that, bulkheads, and that us I'd hard and we do XX% matter a we'd at we're into that the least no drop establish let's assuming not in thrown to and to QX work line held see done by nothing

and it not and about and hard to we tracked improvement in then to do substantial think But as to and play again got do. at Everybody then do. didn't we volume good. straightforward just know long make be what they're we And say, do more we it's we've we've what in QX did We to was And best it make going QX. and soon as knows good. sure succeed that what got the to I we least

you provided the John. detail really I Thanks. appreciate

Thank you.

Khanna from Cowen. question next of Gautam is go ahead. The Please

good Thanks guys. Hey morning.

Hey Gautam.

think was follow-up, to Sheila's wanted I I question. it

margin directionally, a you've as of looking year, people big at not headwind the next already given potential, opined like. the of past, incrementally, Just hiring in get that's you've more done lot incremental and on productive those and as a

that? that did opined of heading And year? Wheels you, to XX% the next crosscurrents then the on and same confidence you that you XX% incrementals Forged do kind this of the year you One into have what have in

is of results for, I'll couple about deliver color when do giving the our That's years. most levels of of when imagining most We've XXXX results. suspect that pretty, that It's we XXXX. achieve comment November we question soon I'll we say, we outlook QX and done so be XXXX get to much say, last and on don't some and for interesting revenue? demand make question. And the I QX like the I of give give I'll to some sort you decide XXXX interesting time think

let's where that's because that not is a and planes wide-body equal, say, know, getting a all being be, significant don't billion couple things a probably of we hundred down to there's hundred $X.X couple planes mix will be things might towards drag. I be as being up, all mind, narrow-body going all in bear know, and And of revenue it's it's unequal drag

is like XXXX do of year a it? But therefore, me, with And and shares question can early, we've the is driving get it just about of so we terms I'll we price, whole be stuff the all improving content, that, our the rest And overcome all that of, say, that fascinating. in say, and most will about interesting for all through I'll been talking there.

too I'm not Of asking early. question. answer it's because giving the course, the you I'm

X% I of terms margins, XXXX. In it that XX% appropriate clearly heading it's for -- more plus And XXXX or say was I'll like think minus we way, maybe in a talking minus when was in to that or XX% for plus were XXXX.

see of that the the in me together to problem wide-body of and in for with whole start productivity going the the hopefully from our coming volume, as to are some come the upon belongs with too fundamental having say is sophisticated early demand. that retention parts recruitment trading times seeing which benefits add some bore a to Again, depend workforce that turning of like on therefore, workforce on should it's and I'll are problem, of combine more through and through so that rest stable the down say just really elevated, positive productivity the and XX% we

So, a lot parts, Gautam. moving of

I at and it's analysis, of without plus no don't XX% you. where talking with more than any any detailed financial I therefore, around that that's like me But or the I a but directionally just we, thinking minus moment, range benefit are it, know mean more it's yet. think

I how appreciate do that, And just year-to-year, of just you changes that. pricing part as think

in be able with but published we've the our everything question, to haven't QX QX, and will this line it. with the before what Nobody's We was is we in afternoon, see before year be told and you line what said you'll in yet. asked Q said

everything XXXX on so completed in is front. negotiations. that essentially for now order And is

is going it's and and be order, in rapidly that coming and all I again, with on similar XXXX is what similar to XXXX good. said commensurate and call So, good, the last is into focus

Thank John. Appreciate you, it.

Thank you.

is next of Please of ahead. Epstein from question America. go Ronald Bank The

good Hey, morning guys.

So, has asked. I much been pretty think everything

I where a XX minds earnings evolution here. on company follow-on to a go out rates XX maybe maybe can the XXXs, quick way actually of get or get think they down help think about that's as because to how Because then? for the could When of So the incrementals ramp draw the it higher on the ultimately goes? top cash we of trajectory road, or just of lot investors' and the flow should

Yes.

curves down us learning last, do all think stabilize most very over think -- most that, fundamental I right ultimately, if those that tested and quality look all say, it our business if now been of -- all high of and that the years, supply they I that when one then we've probably our which for parts see to to front. paramount difficult deliver let's the difficult thing the to grappled on labor extremely the as have -- labor, we've or hard how customers, issues good us it faced each that I productivity post-COVID two through we have things chain, trying you bring in we them we're COVID three what's is has stop start, of stop -- start,

the schedule. about from that very meet to industry needs. heard to not little any customers' inability think And to meet Howmet we've And I

higher through everything thing deliver rate XX as be rate the, achieving in things from that And that place, much is productive the smooth let's at hopeful XXX it, towards to So Boeing to help towards XXs to out. something improved move out going moves Airbus that's early a as labor XX, and I'm a seeing into condition productivity smooth will that at call level.

Similarly increases. with wide-body the

smoothed I XXXX. pricing right close of state out, not do it content I've the but second into maybe Grace. a half sure which volumes apt we really call see increasing, in grace that of that it is to move where is, shape. the I'm So increasing, as of productivity phrase state used how We get production

margins And to improve optimal to cash and hopefully and then so begin and continue we just XXXX flow then in further print XXXX. a increase rate as

the tells fundamentally we overcome, So I got that me currently same which everything protracted. the optimistic. most labor is time, be is of we've to the issues -- At most think been should -- used

Thank Got it. you.

you. Thank

This today's presentation. Thank you concludes today's session attending conference. and our question-and-answer for

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