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Segment Information
 6 Months Ended
Jun. 30, 2023
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. 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
Second quarter ended June 30, 2023
Sales:
Third-party sales$821 $329 $200 $298 $1,648 
Inter-segment sales5 — 1 — 6 
Total sales$826 $329 $201 $298 $1,654 
Profit and loss:
Provision for depreciation and amortization$32 $12 $12 $10 $66 
Segment Adjusted EBITDA223 64 20 81 388 
Restructuring and other (credits) charges(1)— 5 — 4 
Capital expenditures21 5 5 7 38 
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 
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Six months ended June 30, 2023
Sales:
Third-party sales$1,616 $641 $407 $587 $3,251 
Inter-segment sales7 — 1 — 8 
Total sales$1,623 $641 $408 $587 $3,259 
Profit and loss:
Provision for depreciation and amortization$64 $23 $24 $19 $130 
Segment Adjusted EBITDA435 122 50 160 767 
Restructuring and other (credits) charges(1)— 6 — 5 
Capital expenditures54 14 15 16 99 
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 
The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.
Second quarter endedSix months ended
June 30,June 30,
2023202220232022
Total Segment Adjusted EBITDA$388 $336 $767 $655 
Segment provision for depreciation and amortization(66)(64)(130)(129)
Unallocated amounts:
Restructuring and other charges(3)(6)(4)(8)
Corporate expense(34)(25)(63)(47)
Operating income$285 $241 $570 $471 
Loss on debt redemption— (2)(1)(2)
Interest expense, net(55)(57)(112)(115)
Other income, net13 1 6 — 
Income before income taxes$243 $183 $463 $354 
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,
2023202220232022
Total segment capital expenditures$38 $39 $99 $97 
Corporate3 5 6 9 
Capital expenditures$41 $44 $105 $106 
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, 2023
Aerospace - Commercial$446 $184 $141 $— $771 
Aerospace - Defense 174 46 42 — 262 
Commercial Transportation— 62 — 298 360 
Industrial and Other201 37 17 — 255 
Total end-market revenue$821 $329 $200 $298 $1,648 
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 
Six months ended June 30, 2023
Aerospace - Commercial$878 $354 $293 $— $1,525 
Aerospace - Defense 337 90 86 — 513 
Commercial Transportation— 125 — 587 712 
Industrial and Other401 72 28 — 501 
Total end-market revenue$1,616 $641 $407 $587 $3,251 
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 
The Company derived 63% and 61% of its revenue from the aerospace (commercial and defense) market for the six months ended June 30, 2023 and 2022, respectively.
General Electric Company and RTX Corporation represented approximately 13% and 10%, respectively, of the Company’s third-party sales for the six months ended June 30, 2023. General Electric Company and RTX Corporation represented approximately 13% and 9%, respectively, of the Company’s third-party sales for the six months ended June 30, 2022. These sales were primarily from the Engine Products segment.