Howmet Aerospace · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(U.S. dollars in millions, except per share amounts)

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Part I, Item 1 (Financial Statements and Supplementary Data) of this Form 10-Q.

Overview

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.

In the six months ended June 30, 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.

For additional information regarding the ongoing risks related to our business, see section Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Results of Operations

Earnings Summary:

Sales. Sales were $2,547 in the second quarter of 2026 compared to $2,053 in the second quarter of 2025, and $4,860 in the six months ended June 30, 2026 compared to $3,995 in the six months ended June 30, 2025. The increase of $494, or 24%, in the second quarter of 2026 and the increase of $865, or 22% in the six months ended June 30, 2026, was primarily due to growth in the commercial and defense aerospace and gas turbines markets, including engine spares, favorable product pricing, cost pass through, and T1sales from the Consolidated Aerospace Manufacturing, LLC (“CAM”) and Brunner Manufacturing Co. Inc. (“Brunner”) acquisitions from the dates they were acquired by the Company, partially offset by T2lower volumes in the commercial transportation market and the disk forging facility divestiture on March 31, 2026. T3Product price increases are in excess of material and inflationary cost pass through to our customers.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 62.7% in the second quarter of 2026 compared to 66.5% in the second quarter of 2025 and 62.9% in the six months ended June 30, 2026 compared to 66.5% in the six months ended June 30, 2025. The decrease in the second quarter and six months ended June 30, 2026 was primarily due to growth in the commercial and defense aerospace and gas turbines markets, favorable product pricing, partially offset by lower volumes in the commercial transportation market, higher cost pass through, and increased net headcount, primarily in the Engine Products segment, in support of expected revenue increases.

Additionally, the decrease includes the impact of the acquisitions and divestiture completed this year, including amortization expense of inventory step-up recorded in accordance with the allocation of purchase price under accounting principles generally accepted in the United States of America (“GAAP”).

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $148 in the second quarter of 2026 compared to $89 in the second quarter of 2025 and $259 in the six months ended June 30, 2026 compared to $174 in the six months ended June 30, 2025. The increase of $59, or 66%, in the second quarter of 2026 and the increase of $85, or 49%, in the six months ended June 30, 2026 was primarily due to higher employment costs, including incremental headcount from the acquisitions, acquisition and acquisition-related costs, and various other administrative expenses.

Provision for depreciation and amortization (“D&A”). The provision for D&A was $84 in the second quarter of 2026 compared to $69 in the second quarter of 2025 and $158 in the six months ended June 30, 2026 compared to $138 in the six months ended June 30, 2025. The increase of $15, or 22%, in the second quarter of 2026 and the increase of $20, or 14%, in the six months ended June 30, 2026 was primarily due to higher depreciation from additional capital investments in capacity expansions within the Engine Products segment, the CAM and Brunner acquisitions from the dates they were acquired by the Company, and amortization expense of inventory step-up recorded in accordance with the allocation of purchase price under GAAP.

Restructuring and other credits. Restructuring and other charges were less than $1 in the second quarter of 2026 compared to Restructuring and other charges of less than $1 in the second quarter of 2025. Restructuring and other credits were $93 in the six months ended June 30, 2026 compared to Restructuring and other credits of $4 in the six months ended June 30, 2025. Restructuring and other credits for the six months ended June 30, 2026 were primarily due to a gain on the sale of the Company’s disk forging facility in Savannah, Georgia within Engineered Structures of $93. Restructuring and other charges for the second quarter of 2025 were primarily due to T4a charge for layoff costs of $3, partially offset by a gain on the sale of assets at a previously closed facility in Forged Wheels of $2 and a reversal of $1 for a layoff reserve related to a prior period.

Restructuring and other credits for the six months ended June 30, 2025 were primarily due to a gain on the sale of assets at a small U.K. manufacturing facility in Engineered Structures of $3, a gain on the sale of assets at a previously closed facility in Forged Wheels of $2, and a reversal of $2 for a layoff reserve related to a prior period, partially offset by a charge for layoff costs of $3.

See Note E to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional detail.

Interest expense, net. Interest expense, net was $51 in the second quarter of 2026 compared to $38 in the second quarter of 2025 and $94 in the six months ended June 30, 2026 compared to $77 in the six months ended June 30, 2025. The increase of $13, or 34%, in the second quarter of 2026 and $17, or 22%, in the six months ended June 30, 2026 was primarily due to the March 2026 issuance of $1,200 aggregate principal amount of notes that have interest rates ranging from 3.750% to 4.750% and the November 2025 issuance of $500 of 4.550% Notes due 2032, partially offset by the early prepayment of the JPY Term Loan Facility, the cross-currency swap that synthetically converted the 6.750% Bonds due 2028 into a lower fixed-interest-rate Japanese Yen liability, the early redemption of $625 of 5.900% Notes in December 2025, and prepayments of the USD Term Loan Facility during various periods in 2025. On an annual basis, the current year debt actions are expected to increase Interest expense, net by approximately $38.

See Note O to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional detail related to the Company’s debt.

Other expense, net. Other expense, net was $11 in the second quarter of 2026 compared to $14 in the second quarter of 2025 and $13 in the six months ended June 30, 2026 compared to $23 in the six months ended June 30, 2025. The decrease in expense of $3 in the second quarter of 2026 and $10 in the six months ended June 30, 2026 was primarily due to an increase in interest income resulting from additional cash on hand prior to the acquisition of CAM. Non-service related net periodic benefit costs related to defined benefit plans and other postretirement benefit plans are expected to increase by approximately $5 for the full year 2026 versus 2025.

See Note G to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional detail.

Provision for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 20.9% in the second quarter ended June 30, 2026 compared to 20.8% in the second quarter ended June 30, 2025. The tax rate including discrete items was 17.7% in the second quarter of 2026 compared to 13.2% in the second quarter of 2025. A discrete net tax benefit of $20 was recorded in the second quarter of 2026 compared to a discrete net tax benefit of $35 in the second quarter of 2025. The tax rate including discrete items was 17.9% in the six months ended June 30, 2026 and June 30, 2025.

A discrete net tax benefit of $41 was recorded in the six months ended June 30, 2026 compared to a discrete net tax benefit of $26 recorded in the six months ended June 30, 2025. The 2026 estimated annual effective tax rate remains consistent with the 2025 rate.

See Note H to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional detail.

Net income. Net income was $534, or $1.33 per diluted share, in the second quarter of 2026 compared to $407, or $1.00 per diluted share, in the second quarter of 2025 and $1,114, or $2.77 per diluted share, in the six months ended June 30, 2026 compared to $751, or $1.84 per diluted share, in the six months ended June 30, 2025. The increase of $127 in the second quarter of 2026 and $363 in the six months ended June 30, 2026 was primarily due to growth in the commercial and defense aerospace and gas turbines markets, including engine spares, as well as favorable product pricing and the CAM and Brunner acquisitions, partially offset by lower volumes in the commercial transportation market.

Segment Information

The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. 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.

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. (See Note D to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of each segment).

The Company has aligned its operations consistent with how the Chief Executive Officer assesses operating performance and allocates capital.

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. The recast historical segment information is available in Exhibit 99.1 to the Company’s Current Report on Form 8-K dated May 28, 2026.

Engine Products

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Third-party sales for the Engine Products segment increased $335, or 32%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to T5growth in the commercial and defense aerospace and gas turbines markets, including engine spares growth.

Third-party sales for the Engine Products segment increased $614, or 31%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to growth in the commercial and defense aerospace and gas turbines markets, including engine spares growth.

Segment Adjusted EBITDA for the Engine Products segment increased $174, or 51%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to growth in the commercial and defense aerospace and gas turbines markets. The segment absorbed approximately 485 net headcount in the second quarter of 2026 in support of expected revenue increases.

Segment Adjusted EBITDA for the Engine Products segment increased $314, or 48%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to growth in the commercial and defense aerospace and gas turbines markets. The segment absorbed approximately 720 net headcount in the six months ended June 30, 2026, in support of expected revenue increases.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 470 basis points in the second quarter of 2026 compared to the second quarter of 2025, primarily due to growth in the commercial and defense aerospace and gas turbines markets.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 420 basis points in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to growth in the commercial and defense aerospace and gas turbines markets.

In 2026, as compared to 2025, demand in the commercial and defense aerospace and gas turbines markets is expected to increase, including engine spares growth in these markets. T6Capital expenditures are expected to remain elevated, with additional investments in capacity expansions to support aerospace and gas turbines market growth. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. T7The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Fastening Systems

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Third-party sales for the Fastening Systems segment increased $158, or 37%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to the CAM and Brunner acquisitions as well as growth in the commercial aerospace and defense aerospace markets.

Third-party sales for the Fastening Systems segment increased $217, or 26%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to the CAM and Brunner acquisitions as well as growth in the commercial aerospace and defense aerospace markets.

Segment Adjusted EBITDA for the Fastening Systems segment increased $51, or 40%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to growth in the commercial aerospace and defense aerospace markets as well as the CAM and Brunner acquisitions.

Segment Adjusted EBITDA for the Fastening Systems segment increased $74, or 29%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to growth in the commercial aerospace and defense aerospace markets as well as the CAM and Brunner acquisitions.

Segment Adjusted EBITDA Margin for the Fastening Systems segment increased approximately 90 basis points in the second quarter of 2026 compared to the second quarter of 2025, primarily due to growth in the commercial aerospace market, partially offset by the impacts of the CAM and Brunner acquisitions.

Segment Adjusted EBITDA Margin for the Fastening Systems segment increased approximately 80 basis points in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to growth in the commercial aerospace and defense aerospace markets, partially offset by the impacts of the CAM and Brunner acquisitions.

In 2026, as compared to 2025, demand in the commercial aerospace and defense aerospace markets is expected to increase, and results will also include the impacts of the CAM and Brunner acquisitions. Modest recovery in the commercial transportation market began in the second quarter of 2026 and is expected to continue into the second half of 2026, amid energy-related, economic, and regulatory uncertainty in North America. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

The Brunner acquisition has been included in the operations of the Fastening Systems segment starting in February 2026. The CAM acquisition has been included in our Fastening Systems segment starting in the second quarter of 2026.

Engineered Structures

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Third-party sales for the Engineered Structures segment decreased $39, or 13%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to the disk forging facility divestiture and product rationalization. The Engineered Structures segment continues to focus on the optimization of its manufacturing footprint and rationalization of product mix in order to maximize profitability.

Third-party sales for the Engineered Structures segment decreased $49, or 8%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to the disk forging facility divestiture and product rationalization. The Engineered Structures segment is focusing on the optimization of its manufacturing footprint and rationalization of product mix in order to maximize profitability.

Segment Adjusted EBITDA for the Engineered Structures segment decreased $4, or 6%, in the second quarter of 2026 compared to the second quarter of 2025 due to the disk forging facility divestiture and product rationalization, partially offset by productivity gains.

Segment Adjusted EBITDA for the Engineered Structures segment decreased $5, or 4% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 due to the disk forging facility divestiture and product rationalization, partially offset by productivity gains.

Segment Adjusted EBITDA Margin for the Engineered Structures segment increased approximately 170 basis points in the second quarter of 2026 compared to the second quarter of 2025, primarily due to operational improvement efforts and lower net headcount.

Segment Adjusted EBITDA Margin for the Engineered Structures segment increased approximately 100 basis points in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to operational improvement efforts and lower net headcount.

The Engineered Structures segment continues to focus on the optimization of its manufacturing footprint, including the sale of its disk forging facility in Savannah, Georgia on March 31, 2026, and rationalization of product mix in order to maximize profitability. In 2026, as compared to 2025, this is expected to result in lower revenue in the commercial aerospace and defense aerospace markets. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Forged Wheels

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Third-party sales for the Forged Wheels segment increased $40, or 14%, in the second quarter of 2026 compared to the second quarter of 2025 primarily due to an increase in aluminum and other inflationary cost pass through, partially offset by lower volumes in the commercial transportation market.

Third-party sales for the Forged Wheels segment increased $83, or 16%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to an increase in aluminum and other inflationary cost pass through and favorable foreign currency exchange rates, partially offset by lower volumes in the commercial transportation market.

Segment Adjusted EBITDA for the Forged Wheels segment increased $12, or 16%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to cost reductions, including lower net headcount, partially offset by lower volumes in the commercial transportation market.

Segment Adjusted EBITDA for the Forged Wheels segment increased $34, or 24%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to cost reductions, including lower net headcount, as well as favorable foreign currency exchange rates, partially offset by lower volumes in the commercial transportation market.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately 30 basis points in the second quarter of 2026 compared to the second quarter of 2025, primarily due to cost reductions, including lower net headcount in response to lower volumes in the commercial transportation market, partially offset by higher aluminum and other inflationary cost pass through.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately 180 basis points in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to cost reductions, including lower net headcount in response to lower volumes in the commercial transportation market, as well as favorable foreign currency exchange rates, partially offset by higher aluminum and other inflationary cost pass through.

In 2026, as compared to 2025, demand in the commercial transportation markets served by Forged Wheels is expected to remain low. Modest recovery in the commercial transportation market began in the second quarter and is expected to continue into the second half of 2026, amid volatile aluminum metal pricing and energy-related, economic, and regulatory uncertainty in North America. Governmental policies, laws and regulations, and geopolitical and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes

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(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.

Total Segment Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Differences between the total segment and consolidated totals are in Corporate.

See Restructuring and other credits discussion above under “Results of Operations” for reference.

Corporate expense increased $27, or 108%, in the second quarter of 2026 compared to the second quarter of 2025 primarily due to acquisition and acquisition-related costs of $22 as well as employment costs.

Corporate expense increased $37, or 79%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to acquisition and acquisition-related costs of $28 as well as employment costs.

Environmental Matters

See the Environmental Matters section of Note Q to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Subsequent Events

See Note R to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for subsequent events.

Liquidity and Capital Resources

Operating Activities

Cash provided from operations was $1,036 in the six months ended June 30, 2026 compared to $699 in the six months ended June 30, 2025. The increase of $337, or 48%, was primarily due to higher operating results of $311 and lower working capital of $17, partially offset by higher pension contributions of $6. The components of the change in working capital primarily included favorable changes in accounts payable of $205, partially offset by unfavorable changes in inventories of $84, prepaid expenses and other current assets of $59, receivables of $26, other accrued expenses, including timing of interest payments on long-term debt and deferred revenue, of $12, and taxes, including income taxes, of $7.

Management expects Howmet’s estimated pension contributions and other postretirement benefit payments in 2026 to be approximately $65.

Financing Activities

Cash provided from financing activities was $685 in the six months ended June 30, 2026 compared to cash used for financing activities of $506 in the six months ended June 30, 2025. The increase of $1,191, or 235%, was primarily due to additions to debt of $1,200 and a net increase in commercial paper of $450, partially offset by T8increased common stock repurchases of $300, increased payments on debt of $109, increased taxes paid for the net share settlement of equity awards of $21 primarily due to the timing of payments year over year, and increased dividends paid to common stock shareholders of $14 due to a $0.02 increase in dividends per common share, from $0.10 per share in the second quarter of 2025 to $0.12 per share in the second quarter of 2026, and debt issuance costs of $12. On an annual basis, the current year debt actions are expected to increase Interest expense, net by approximately $38.

The declaration of future common stock dividends is subject to the discretion and approval of the Board of Directors of Howmet after the Board’s consideration of all factors it deems relevant and subject to applicable law.

The Company maintains a Five-Year Revolving Credit Agreement that provides a $1,000 senior unsecured revolving credit facility (the “5-Year Revolving Credit Facility”) and a 364-Day Revolving Credit Agreement that 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”) with a syndicate of lenders and issuers named therein (See Note O to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference). There were no amounts outstanding as of June 30, 2026 or December 31, 2025, and no amounts were borrowed during 2026 or 2025 under these revolving credit agreements.

The Company has a commercial paper program under which the Company may issue unsecured commercial paper from time to time up to a maximum aggregate face amount of $1,000. The Company had $450 of commercial paper outstanding as of June 30, 2026, and no amounts were outstanding under the commercial paper program as of December 31, 2025. The Company had no commercial paper borrowings with original maturities greater than 90 days in 2026 or 2025. The Company’s commercial paper is sold on customary terms in the U.S. commercial paper market on a private placement basis. The proceeds of the commercial paper are used for general corporate purposes, including the CAM acquisition. In conjunction with the commercial paper program, the Company was assigned short-term credit ratings by Moody’s Investors Service, Inc., S&P Global Ratings, and Fitch Ratings, Inc.

The Company has an effective shelf registration statement on Form S-3, filed with the SEC, which allows for offerings of debt securities from time to time. The Company may opportunistically issue new debt securities in accordance with securities laws or utilize commercial paper in order to, but not limited to, refinance existing indebtedness. The Company continues to evaluate whether, when, and to what extent it may access capital markets, including any plans to refinance the $300 million aggregate principal amount of its 6.750% Bonds due January 2028 (the “2028 Bonds”). Our ability to refinance our indebtedness or enter into alternative financings in adequate amounts on commercially reasonable terms, or terms acceptable to us, may be affected by circumstances and economic events outside of our control.

In the event that a refinancing does not occur before the maturity date of the 2028 Bonds, the Company believes that its projected cash on hand, and/or availability under the Revolving Credit Facilities will enable the Company to repay the 2028 Bonds.

In the future, the Company may, from time to time, redeem portions of its debt securities or repurchase portions of its debt or equity securities, in either the open market or through privately negotiated transactions, in accordance with applicable SEC and other legal requirements. The timing, prices, and sizes of purchases depend upon prevailing trading prices, general economic and market conditions, and other factors, including applicable securities laws. Such securities repurchases may be completed 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, tender offers, and/or accelerated share repurchase agreements, or other derivative transactions.

The Company’s costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short-term and long-term debt ratings assigned to the Company by the major credit rating agencies. The Company believes that its projected cash on hand and availability of its Revolving Credit Facilities, its commercial paper program, and its accounts receivables securitization program will continue to be sufficient to fund our operating and capital allocation activities.

The three major credit rating agencies have rated Howmet’s debt with investment grade ratings. The Company’s most recent short-term and long-term credit ratings, as well as the current outlook from the three major credit rating agencies are as follows:

Short-Term

Long-Term

Outlook

S&P Global Ratings (“S&P”)

A-2

BBB+

Stable

Moody’s Investors Service, Inc. (“Moody’s”)

P-2

Baa1

Positive

Fitch Ratings, Inc. (“Fitch”)

F1

A-

Stable

On May 7, 2026, Moody’s updated Howmet’s rating outlook from stable to positive, citing strong demand for aerospace components, potential for free cash flow growth and sustained, low financial leverage.

On February 13, 2026, Fitch upgraded Howmet’s long-term debt rating from BBB+ to A-, citing conservative capital allocation and strong deleveraging momentum.

On September 8, 2025, S&P upgraded Howmet’s long-term debt rating from BBB to BBB+, and affirmed the current short-term debt rating and outlook at A-2 and stable, respectively, citing strong demand for commercial aerospace components, margin gains, and debt reduction.

Investing Activities

Cash used for investing activities was $1,900 in the six months ended June 30, 2026 compared to $212 in the six months ended June 30, 2025. The increase of $1,688, or 796%, was primarily due to cash used for the CAM and Brunner acquisitions, net of cash acquired, of $1,929, partially offset by an increase in proceeds from the sale of assets and businesses of $217, primarily due to the sale of its disk forging facility, and a decrease in capital expenditures of $23.

Total capital expenditures are anticipated to be approximately 5% of sales in 2026 including continued growth investments in the Engine Products segment.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Forward-Looking Statements

This report contains (and oral communications made by Howmet may contain) statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “envisions,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Howmet’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of markets; future financial results or operating performance; future strategic actions; Howmet’s strategies, outlook, and business and financial prospects; any future dividends, debt issuances, debt reduction and repurchases of its common stock; and statements regarding any acquisitions, including expected benefits.

These statements reflect beliefs and assumptions that are based on Howmet’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally, or unfavorable changes in the markets served by Howmet, including due to escalating tariff and other trade policies and energy costs, and the resulting impacts on Howmet’s supply and distribution chains, as well as on market volatility and global trade generally; (b) the impact of potential cyber attacks and information technology or data security breaches; (c) the loss of significant customers or adverse changes in customers’ business or financial conditions; (d) manufacturing difficulties or other issues that impact product performance, quality or safety; (e) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (f) failure to attract and retain a qualified workforce and key personnel, labor disputes or other employee relations issues; (g) the inability to achieve anticipated or targeted financial performance, operations or competitiveness, or realization of expected benefits from acquisitions, including the effective integration of acquired businesses; (h) inability to meet increased demand, production targets or commitments; (i) competition from new product offerings, disruptive technologies or other developments; (j) geopolitical, economic, and regulatory risks relating to Howmet’s global operations, including geopolitical and diplomatic tensions, instabilities, conflicts and wars, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (k) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (l) failure to comply with government contracting regulations; (m) adverse changes in discount rates or investment returns on pension assets; and (n) the other risk factors summarized in Howmet’s Form 10-K for the year ended December 31, 2025 and other reports filed with the U.S.

Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. Under its share repurchase program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as it 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. The declaration of any future dividends is subject to the discretion and approval of the Board of Directors after the Board’s consideration of all factors it deems relevant and subject to applicable law. The Company may modify, suspend, or cancel its share repurchase program or any dividend policy in any manner and at any time that it may deem necessary or appropriate.

Credit ratings are not a recommendation to buy or hold any Howmet Aerospace securities, and they may be revised or revoked at any time at the sole discretion of the credit rating organizations. The statements in this report are made as of the date of the filing of this report. Howmet disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.