Howmet Aerospace (HWM) Tops Q4 EPS by 7c; Offers 1Q & FY21 EPS/Revenue Guidance Below Consensus

Howmet Aerospace (NYSE: HWM) reported Q4 EPS of $0.24, $0.07 better than the analyst estimate of $0.17. Revenue for the quarter came in at $1.2 billion versus the consensus estimate of $1.23 billion.

Fourth Quarter 2020 Highlights

• Revenue of $1.2 billion, down 29% year over year; up $104 million sequentially
• Income from continuing operations of $106 million, or $0.24 per share, versus $118 million, or $0.27 per share, in the fourth quarter 2019
• Income from continuing operations excluding special items of $92 million, or $0.21 per share, versus $164 million, or $0.37 per share, in the fourth quarter 2019
• Operating income of $221 million, down 22% year over year; up $148 million sequentially
• Operating income excluding special items of $215 million, down 28% year over year; up $115 million sequentially
• Generated positive cash from operations and positive adjusted free cash flow; Cash balance at end of quarter increased to $1.6 billion; Revolving credit facility undrawn at $1 billion

GUIDANCE:

Howmet Aerospace sees Q1 2021 EPS of $0.15-$0.19, versus the consensus of $0.20. Howmet Aerospace sees Q1 2021 revenue of $1.15-1.25 billion, versus the consensus of $1.3 billion.

Howmet Aerospace sees FY2021 EPS of $0.75-$0.89, versus the consensus of $0.92. Howmet Aerospace sees FY2021 revenue of $5.05-5.25 billion, versus the consensus of $5.44 billion.

Howmet Aerospace Executive Chairman and Co-Chief Executive Officer John Plant said, “Howmet Aerospace continued to manage effectively through the impact of the COVID-19 pandemic. While fourth quarter 2020 revenues declined 29% year over year, driven by a 51% reduction in commercial aerospace revenues, results surpassed our outlook and included strong cash generation. We generated improved decremental margins, and our fourth quarter 2020 adjusted EBITDA margin of 22.8% was the same as the fourth quarter 2019 despite the 29% revenue decline and unfavorable commercial aerospace mix. We continue to be highly focused on all aspects of operational performance and cash generation as we manage through the effects of COVID-19 and the Boeing build rate reductions on commercial aerospace.”

Mr. Plant continued, “Turning to 2021, our defense aerospace, commercial transportation, and industrial gas turbine markets continue to be healthy and growing. Commercial aerospace has less visibility, though we expect increased aircraft build as we move into 2022. We are positioning the Company to emerge from the pandemic in a stronger, more profitable position.”

“Our liquidity position is strong as a result of our strict and disciplined approach to costs and spending. We ended 2020 with approximately $1.6 billion of cash. Our $1 billion revolving credit facility remains undrawn and our next significant debt maturity is not until October 2024.”

For earnings history and earnings-related data on Howmet Aerospace (HWM) click here.

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