Benzinga | Nov 4, 2021 09:17AM EDT

Howmet Aerospace Clocks 13% Revenue Growth In Q3, Tightens FY21 Adjusted EPS Outlook

* Howmet Aerospace Inc (NYSE:HWM) reported third-quarter revenue growth of 13% year-over-year to $1.28 billion, missing the consensus of $1.3 billion.

* The increase was primarily driven by growth in the commercial transportation, commercial aerospace, and industrial gas turbine markets and favorable product pricing, partially offset by declines in the defense aerospace market.

* Q3 revenue increased 7% sequentially, driven by growth in the commercial aerospace market.

* Segment sales: Engine Products $599 million (+24% Y/Y), Fastening Systems $254 million (-6% Y/Y), Engineered Structures $199 million (-3% Y/Y) and Forged Wheels $231 million (+34% Y/Y).

* Adjusted EPS improved to $0.27 compared to $0.03 in 3Q20, above the consensus of $0.25.

* The operating income increased to $205 million (+180.8% Y/Y), and the margin expanded by 954 bps to 16%. Adjusted margin expanded to 17.5% from 8.8% a year ago.

* Howmet Aerospace generated cash from operating activities year-to-date of $146 million, compared to cash used $142 million a year ago. Adjusted free cash flow was $275 million.

* Adjusted EBITDA Margin, excluding special items, was flat at 22.8%.

* The company's cash balance at the end of the quarter was $726 million.

* During the quarter, the company repurchased ~770,000 shares for $25 million. As of September 30, 2021, the total share repurchase authorizations available were $1.55 billion.

* Q4 Outlook: Howmet Aerospace expects revenue of $1.295 billion - $1.325 billion (consensus $1.39 billion) and adjusted EPS of $0.27- $0.30 (consensus $0.30).

* It expects adjusted EBITDA of $290 million - $310 million and an Adjusted EBITDA margin of 22.4%- 23.4%.

* FY21 Outlook: Howmet Aerospace revenue of ~$4.980 billion-$5.010 billion (prior $5.05 billion-$5.15 billion), versus the consensus of $5.11 billion.

* Adjusted EPS of $0.98-$1.01 (previous $0.95-$1.02) versus the consensus of $0.99.

* The company expects FY21 adjusted EBITDA of $1.125 billion-$1.145 billion (prior 1.145 billion-$1.185 billion) and an Adjusted EBITDA margin of 22.6%- 22.9%.

* Price Action: HWM shares are trading higher by 0.56% at $30.6 during the premarket session on Thursday.