Howmet Aerospace Inc.

Howmet Aerospace had a strong first quarter with revenues of $1.6 billion, up 6% sequentially and 21% over the previous year. Commercial aerospace sales increased 29% year on year, led by Engine Products, Engineered Structures, and Fastening Systems. Defence Aerospace increased 11% year on year, led by the F-35 program and increases in legacy spares. Defense aerospace fell sequentially because of strong year-end seasonality. The growth in commercial transportation, which has an influence on both the Forged Wheels and Fastening Systems divisions, was also significant, driven by greater volumes. The demand for aircraft is quite high, and both the narrow-body and wide-body manufacturers’ backlogs are in excellent condition. The market for business jets and spare parts volume both remain robust. The defense market outlook remained positive, with higher budgets and robust demand for F-35s, drones, rocket motor, and Howitzer parts. IGT turbine blade demand is consistent, while turbine demand from the oil and gas sector is quite high. We give Howmet Aerospace, Inc. a ‘Hold’ rating with a revised target price.