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Segment Information
 9 Months Ended
Sep. 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 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
Third quarter ended September 30, 2022
Sales:
Third-party sales$683 $291 $193 $266 $1,433 
Inter-segment sales1 — 3 — 4 
Total sales$684 $291 $196 $266 $1,437 
Profit and loss:
Provision for depreciation and amortization$31 $11 $12 $10 $64 
Segment Adjusted EBITDA186 64 28 64 342 
Restructuring and other charges2 — 1 — 3 
Capital expenditures23 7 3 6 39 
Third quarter ended September 30, 2021
Sales:
Third-party sales$599 $254 $199 $231 $1,283 
Inter-segment sales1 — 1 — 2 
Total sales$600 $254 $200 $231 $1,285 
Profit and loss:
Provision for depreciation and amortization$31 $12 $12 $10 $65 
Segment Adjusted EBITDA151 59 26 72 308 
Restructuring and other charges5 3 — — 8 
Capital expenditures21 8 3 15 47 
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Nine months ended September 30, 2022
Sales:
Third-party sales$1,966 $832 $560 $792 $4,150 
Inter-segment sales3 — 5 — 8 
Total sales$1,969 $832 $565 $792 $4,158 
Profit and loss:
Provision for depreciation and amortization$93 $34 $36 $30 $193 
Segment Adjusted EBITDA538 176 77 206 997 
Restructuring and other charges (credits)9 (3)4 — 10 
Capital expenditures74 30 12 20 136 
Nine months ended September 30, 2021
Sales:
Third-party sales$1,677 $788 $535 $687 $3,687 
Inter-segment sales3 — 4 — 7 
Total sales$1,680 $788 $539 $687 $3,694 
Profit and loss:
Provision for depreciation and amortization$92 $37 $37 $29 $195 
Segment Adjusted EBITDA413 179 72 222 886 
Restructuring and other charges15 8 1 — 24 
Capital expenditures48 22 13 37 120 
The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.
Third quarter endedNine months ended
September 30,September 30,
2022202120222021
Total Segment Adjusted EBITDA$342 $308 $997 $886 
Segment provision for depreciation and amortization(64)(65)(193)(195)
Unallocated amounts:
Restructuring and other charges(4)(8)(12)(22)
Corporate expense(46)(30)(93)(68)
Operating income$228 $205 $699 $601 
Loss on debt redemption— (118)(2)(141)
Interest expense, net(57)(63)(172)(201)
Other expense, net (Q)
(67)(1)(67)(13)
Income before income taxes$104 $23 $458 $246 
The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.
Third quarter endedNine months ended
September 30,September 30,
2022202120222021
Total segment capital expenditures$39 $47 $136 $120 
Corporate3 — 12 18 
Capital expenditures$42 $47 $148 $138 
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
Third quarter ended September 30, 2022
Aerospace - Commercial$388 $156 $124 $— $668 
Aerospace - Defense 124 43 56 — 223 
Commercial Transportation— 63 — 266 329 
Industrial and Other171 29 13 — 213 
Total end-market revenue$683 $291 $193 $266 $1,433 
Third quarter ended September 30, 2021
Aerospace - Commercial$299 $126 $118 $— $543 
Aerospace - Defense 130 37 65 — 232 
Commercial Transportation— 59 — 231 290 
Industrial and Other170 32 16 — 218 
Total end-market revenue$599 $254 $199 $231 $1,283 
Nine months ended September 30, 2022
Aerospace - Commercial$1,079 $459 $341 $— $1,879 
Aerospace - Defense 384 112 176 — 672 
Commercial Transportation— 169 — 792 961 
Industrial and Other503 92 43 — 638 
Total end-market revenue$1,966 $832 $560 $792 $4,150 
Nine months ended September 30, 2021
Aerospace - Commercial$786 $403 $277 $— $1,466 
Aerospace - Defense 402 120 206 — 728 
Commercial Transportation— 154 — 687 841 
Industrial and Other489 111 52 — 652 
Total end-market revenue$1,677 $788 $535 $687 $3,687 
The Company derived 61% and 60% of its revenue from the aerospace market for the nine months ended September 30, 2022 and 2021, respectively.
General Electric Company represented approximately 13% of the Company’s third-party sales for both the nine months ended September 30, 2022 and 2021, primarily from Engine Products.