Howmet Aerospace (NYSE: HWM) reported Q2 EPS of $0.12, $0.06 better than the analyst estimate of $0.06. Revenue for the quarter came in at $1.25 billion versus the consensus estimate of $1.12 billion.

Second Quarter 2020 Highlights

• Revenue of $1.25 billion, down 31% year over year
• Loss from Continuing Operations of $84 million, or $0.19 per share, versus $136 million, or $0.31 per share, in the second quarter 2019
• Income from Continuing Operations excluding special items of $55 million, or $0.12 per share, versus $147 million, or $0.32 per share, in the second quarter 2019
• Operating income of $74 million vs. an operating loss of $176 million in the second quarter 2019
• Operating income excluding special items of $180 million, down 42% year over year
• Generated positive cash from operations and positive adjusted free cash flow; Cash balance at end of quarter $1.28 billion
• Refinanced near-term debt maturities; Net proceeds of approximately $420 million cash added to balance sheet
• Revolving credit facility undrawn at $1 billion

Howmet Aerospace Executive Chairman and Co-Chief Executive Officer John Plant said, “The full impact of the COVID-19 pandemic was felt across our businesses in the second quarter, reflected in a 31% decline in year-over-year revenues. Nevertheless, the Howmet Aerospace team undertook swift cost and cash containment actions in response to COVID-19 and the associated market declines, and drove an Adjusted EBITDA margin of 19.7% and Adjusted Free Cash Flow of $76 million excluding separation costs. These cost reduction actions will continue to take effect into the third and fourth quarters of 2020.”

Mr. Plant continued, “We are monitoring global air traffic trends and aircraft build rates that underpin our outlook for the remainder of the year; however we recognize there are significant uncertainties regarding the external environment, such as risk of further COVID-19 spikes, customer inventory corrections, and aircraft build rate changes. We expect that third quarter 2020 revenue and earnings will represent the low point for the year, while fourth quarter 2020 revenue is expected to recover with margins rebounding to levels similar to the second quarter 2020. Howmet Aerospace remains focused on the trajectory of margins as we exit 2020 and move into 2021. Our liquidity position is strong with $1.3B of cash, and our $1 billion revolving credit facility remains undrawn. We also refinanced the majority of our 2021 and 2022 bonds to 2025.”

GUIDANCE:

Howmet Aerospace sees Q3 2020 revenue of $1.05-1.15 billion, versus the consensus of $1.15 billion.

Howmet Aerospace sees FY2020 EPS of $0.60-$0.72, versus the consensus of $0.69. Howmet Aerospace sees FY2020 revenue of $5.1-5.3 billion, versus the consensus of $5.15 billion.

• Full year 2020: Revenue $5.10 billion - $5.30 billion, Adjusted EBITDA $995 million - $1.065 billion, Adjusted EBITDA Margin 19% - 21%, Earnings Per Share Excluding Special Items $0.60 - $0.72
• Third quarter 2020: Revenue $1.050 billion – $1.150 billion
• Second quarter 2020 to fourth quarter 2020: Adjusted Free Cash Flow $350 million - $450 million

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