Segment Information

3 Months Ended

Mar. 31, 2024

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 turbine applications. 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, 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 Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
First quarter ended March 31, 2024
Sales:
Third-party sales	$	885	$	389	$	262	$	288	$	1,824
Inter-segment sales	2		—		1		—		3
Total sales	$	887	$	389	$	263	$	288	$	1,827
Profit and loss:
Provision for depreciation and amortization	$	33	$	11	$	11	$	10	$	65
Segment Adjusted EBITDA	249		92		37		82		460
Capital expenditures	55		7		6		12		80
First quarter ended March 31, 2023
Sales:
Third-party sales	$	795	$	312	$	207	$	289	$	1,603
Inter-segment sales	2		—		—		—		2
Total sales	$	797	$	312	$	207	$	289	$	1,605
Profit and loss:
Provision for depreciation and amortization	$	32	$	11	$	12	$	9	$	64
Segment Adjusted EBITDA	212		58		30		79		379
Restructuring and other charges	—		—		1		—		1
Capital expenditures	33		9		10		9		61

The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.

	First quarter ended
	March 31,
	2024		2023
Total Segment Adjusted EBITDA	$	460	$	379
Segment provision for depreciation and amortization	(65)		(64)
Unallocated amounts:
Restructuring and other charges	—		(1)
Corporate expense	(26)		(29)
Operating income	$	369	$	285
Loss on debt redemption	—		(1)
Interest expense, net	(49)		(57)
Other expense, net	(17)		(7)
Income before income taxes	$	303	$	220

The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.

	First quarter ended
	March 31,
	2024		2023
Total segment capital expenditures	$	80	$	61
Corporate	2		3
Capital expenditures	$	82	$	64

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
First quarter ended March 31, 2024
Aerospace - Commercial	$	492	$	244	$	192	$	—	$	928
Aerospace - Defense	185		39		56		—		280
Commercial Transportation	—		66		—		288		354
Industrial and Other	208		40		14		—		262
Total end-market revenue	$	885	$	389	$	262	$	288	$	1,824
First quarter ended March 31, 2023
Aerospace - Commercial	$	432	$	170	$	152	$	—	$	754
Aerospace - Defense	163		44		44		—		251
Commercial Transportation	—		63		—		289		352
Industrial and Other	200		35		11		—		246
Total end-market revenue	$	795	$	312	$	207	$	289	$	1,603

The Company derived 66% and 63% of its revenue from the aerospace (commercial and defense) markets for the first quarter ended March 31, 2024 and 2023, respectively.

General Electric Company and RTX Corporation represented approximately 12% and 9%, respectively, of the Company’s third-party sales in the first quarter ended March 31, 2024. General Electric Company and RTX Corporation represented approximately 13% and 10%, respectively, of the Company’s third-party sales in the first quarter ended March 31, 2023. These sales were primarily from the Engine Products segment.