Howmet Aerospace (HWM) Q2 FY26 earnings call: guidance and Q&A

Given the extraordinary IGT demand and Howmet's high market share, how is the company responding to capacity needs and leveraging its technology advantage?

John Plant detailed Howmet's >50% global market share in IGT turbine blades and ongoing capacity expansions in Japan, Europe, and Virginia. He highlighted new applications and technology shifts (Equiax to DS to single crystal) expected to further increase market share. He also addressed the long-term (2040s-2050s) viability of space-based data centers as a potential threat, deeming it highly challenging.

“Howmet has a market share in excess of 50% globally for turbine blades in the IGT market. And therefore, the growth of that market is dependent upon our willingness to invest, which we're doing.”

asked by Sheila Kahyaoglu · answered by John Plant

How quickly can Howmet respond to new IGT demand, especially with long lead times for equipment, given the rapid growth in terrestrial capacity needs?

John Plant explained that 2026 growth exceeded expectations due to yield improvements and prior investments. New capacity from recent commitments will come online progressively, with some already logged for 2027 and major steps into 2028-2029. He noted that demand patterns are being revisited, suggesting further potential growth not yet built into future plans, and that new commitments would take at least two years to bring online.

“if we started now, you can assume that it's a brand-new new commitments in, let's say, August of '26, you can say it's earliest August of '28, if you just like say, okay, what's the next piece of machine equipment that we could build or we can get from our machine to all suppliers.”

asked by Doug Harned · answered by John Plant

What is Howmet seeing in the aerospace OEM wide-body market, and does it have enough capacity for targeted rates?

John Plant stated that most manufacturing equipment is flexible for both narrow-body and wide-body aircraft. He expects wide-body increases over the next couple of years, with demand signaled for the Boeing 787 (up to rate 10) and Airbus A350 (moving to rates 8-9). Howmet is prepared with additional capacity and recently committed to a new plant expansion to support this growth.

“we are poised with additional capacities we've already prepared. And I think I just referenced a new plant that we committed to last week, a major expansion and building out of one of the sites we have to create the opportunity for that further expansion that's going to be required.”

asked by Robert Stallard · answered by John Plant

Can you provide an update on fastener operations, particularly wide-body demand pull, and the cutovers for LEAP-1A/B and GTF Advantage engines?

John Plant confirmed seeing demand fill in for increased 787 rates (targeting 9-10 by late 2027) for the fasteners business. He stated the LEAP-1B cutover to the new technology blade is likely Q1 2027, with inventory build-up. GTF Advantage production is increasing each quarter, with full legacy blade volume for H2 2026 and a significant ramp-up into 2027 for new engines and retrofit programs.

“the 1A, B cutover to the new technology blade has not yet occurred. Now we have polled a lot of it, not all of it, and we'll see increased builds during the second half of 2026. So I expect we'll do the same as we did on the LEAP-1A and have a few hundred engine sets ready in either our or our customers' inventory such that the cutover, which I think will probably more likely be the first half of or first quarter of 2027.”

asked by Myles Walton · answered by John Plant

How is the heavy utilization of the F-35 fleet in Iran impacting defense spares demand and the need for incremental CapEx at Engine Products?

John Plant clarified that a significant increase in defense spares demand from current conflicts is *anticipated* for 2027, but has not yet been seen in Q3/Q4 2026 and is not assured by specific orders. He noted that missile programs are very active with requests for rate increases (PAC-3, FAD, Tomahawk, classified programs), competing for space in the Virginia facility, but no formal agreements are in place yet for these build-outs.

“I don't necessarily think it's like -- it's not going to be in Q3 of 2026. So I don't know about Q4 yet. It's more likely at 2027 items that is anticipated but not assured because we don't have specific orders in hand or anti-space requirements in hand.”

asked by Scott Mikus · answered by John Plant

What is the timeline for realizing synergies from the CAM acquisition and its impact on Fastening Systems margins?

John Plant stated that the first three months post-acquisition focused on IT systems and asset base assessment. Operating synergies are expected to begin in H2 2026, with the majority realized in 2027, including distribution programs. He noted that CAM was a 20% margin company, initially diluting Howmet's legacy 30% Fasteners margin, but expects a positive EPS effect from the acquisition starting in 2027.

“But I think the majority of it comes in 2027, it takes a little while to turn down some prior commitments both in the supply base and also in the customer arena.”

asked by Peter Arment · answered by John Plant

Given Howmet's strong operational execution and free cash flow, what is management's vision for future M&A opportunities and capital deployment?

John Plant affirmed a willingness to examine further bolt-on M&A opportunities, similar in size to the CAM and Brunner acquisitions (~$2 billion total), but not currently envisaging mega-large deals. He expects more share buybacks in 2027 than in 2026, and the dividend increase is considered settled for the next 12 months. The company aims to maintain optionality by returning to target leverage levels by year-end.

“I think we have a willingness to examine further M&A opportunities and feel quite predisposed to doing it albeit it would follow our RMO trying to buy what we think is a fundamentally quality company.”

asked by John Godyn · answered by John Plant