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Segment Information
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Information Segment Information
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, and industrial and other markets. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer believes that Segment Adjusted EBITDA is now a better representation of its business because it provides additional 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 (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are also excluded from Net margin and Segment Adjusted EBITDA. 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.
Howmet’s operations consist of four worldwide reportable segments as follows:
Engine Products
Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts.
Fastening Systems
Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. Fastening Systems’ products are also critical components of commercial transportation vehicles, automobiles, construction and industrial equipment, and renewable energy sectors.
Engineered Structures
Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions, forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications.
Forged Wheels
Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.
The operating results of the Company’s reportable segments were as follows:
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Second quarter ended June 30, 2022
Sales:
Third-party sales$652 $277 $185 $279 $1,393 
Inter-segment sales1 — 1 — 2 
Total sales$653 $277 $186 $279 $1,395 
Profit and loss:
Provision for depreciation and amortization$31 $11 $12 $10 $64 
Segment Adjusted EBITDA179 56 26 75 336 
Restructuring and other charges4 — 1 — 5 
Capital expenditures24 8 2 5 39 
Second quarter ended June 30, 2021
Sales:
Third-party sales$544 $262 $160 $229 $1,195 
Inter-segment sales1 — 2 — 3 
Total sales$545 $262 $162 $229 $1,198 
Profit and loss:
Provision for depreciation and amortization$30 $13 $13 $9 $65 
Segment Adjusted EBITDA130 63 24 70 287 
Restructuring and other charges5 3 — — 8 
Capital expenditures16 9 5 13 43 
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Six months ended June 30, 2022
Sales:
Third-party sales$1,283 $541 $367 $526 $2,717 
Inter-segment sales2 — 2 — 4 
Total sales$1,285 $541 $369 $526 $2,721 
Profit and loss:
Provision for depreciation and amortization$62 $23 $24 $20 $129 
Segment Adjusted EBITDA352 112 49 142 655 
Restructuring and other charges (credits)7 (3)3 — 7 
Capital expenditures51 23 9 14 97 
Six months ended June 30, 2021
Sales:
Third-party sales$1,078 $534 $336 $456 $2,404 
Inter-segment sales2 — 3 — 5 
Total sales$1,080 $534 $339 $456 $2,409 
Profit and loss:
Provision for depreciation and amortization$61 $25 $25 $19 $130 
Segment Adjusted EBITDA262 120 46 150 578 
Restructuring and other charges10 5 1 — 16 
Capital expenditures27 14 10 22 73 
The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes:
Second quarter endedSix months ended
June 30,June 30,
2022202120222021
Total Segment Adjusted EBITDA$336 $287 $655 $578 
Segment provision for depreciation and amortization(64)(65)(129)(130)
Unallocated amounts:
Restructuring and other charges(6)(5)(8)(14)
Corporate expense(25)(10)(47)(38)
Operating income$241 $207 $471 $396 
Loss on debt redemption(2)(23)(2)(23)
Interest expense, net(57)(66)(115)(138)
Other income (expense), net1 (8)— (12)
Income before income taxes$183 $110 $354 $223 
Differences between the total segment and consolidated totals are in Corporate. The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows:
Second quarter endedSix months ended
June 30,June 30,
2022202120222021
Total segment capital expenditures$39 $43 $97 $73 
Corporate5 (7)9 18 
Capital expenditures$44 $36 $106 $91 
The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Second quarter ended June 30, 2022
Aerospace - Commercial$362 $155 $108 $— $625 
Aerospace - Defense 123 37 63 — 223 
Commercial Transportation— 53 — 279 332 
Industrial and Other167 32 14 — 213 
Total end-market revenue$652 $277 $185 $279 $1,393 
Second quarter ended June 30, 2021
Aerospace - Commercial$260 $129 $79 $— $468 
Aerospace - Defense 121 41 64 — 226 
Commercial Transportation— 49 — 229 278 
Industrial and Other163 43 17 — 223 
Total end-market revenue$544 $262 $160 $229 $1,195 
Six months ended June 30, 2022
Aerospace - Commercial$691 $303 $217 $— $1,211 
Aerospace - Defense 260 69 120 — 449 
Commercial Transportation— 106 — 526 632 
Industrial and Other332 63 30 — 425 
Total end-market revenue$1,283 $541 $367 $526 $2,717 
Six months ended June 30, 2021
Aerospace - Commercial$487 $277 $159 $— $923 
Aerospace - Defense 272 83 141 — 496 
Commercial Transportation— 95 — 456 551 
Industrial and Other319 79 36 — 434 
Total end-market revenue$1,078 $534 $336 $456 $2,404 
The Company derived 61% and 59% of its revenue from the aerospace market for the six months ended June 30, 2022 and 2021, respectively.
General Electric Company represented approximately 13% and 12% of the Company’s third-party sales for the six months ended June 30, 2022 and 2021, respectively, primarily from Engine Products.