Timing correction: HWM is scheduled to report today, Thursday, August 6, 2026—not tomorrow. Results and slides are due at approximately 7:00 a.m. ET, followed by a 10:00 a.m. ET conference call.
Howmet enters 2Q26 with substantial operating momentum: commercial aerospace and engine spares are strong, industrial gas-turbine demand is accelerating, defense remains healthy, and the CAM acquisition adds a new growth leg in Fastening Systems. The counterweight is that these positives are well understood and reflected in the stock: HWM closed at $291.46 on August 5, up roughly 37.7% year to date and 6.9% since the 1Q26 results release. At that price, it trades at about 59x the midpoint of its FY26 adjusted-EPS guidance.
Accordingly, investors should focus on whether HWM can raise FY26 expectations again, preserve its exceptional margin profile while incorporating CAM, and substantiate a 2027 growth runway led by next-generation aero programs and gas-turbine capacity additions.
| Metric | 1Q26 actual | 2Q26 company guidance | FY26 company guidance |
|---|---|---|---|
| Revenue | $2.313B | $2.390B–$2.410B | $9.575B–$9.725B |
| Adjusted EBITDA | $740M | $760M–$770M | $3.025B–$3.095B |
| Adjusted EBITDA margin | 32.0% | 31.8%–32.0% | 31.6%–31.8% |
| Adjusted EPS | $1.22 | $1.22–$1.24 | $4.88–$5.00 |
| Free cash flow | $359M | — | $1.70B–$1.80B |
HWM beat the high end of its 1Q guide across revenue, adjusted EBITDA, margin, and adjusted EPS, then raised its full-year outlook. For 2Q, the midpoint implies $2.40B of revenue, $765M of adjusted EBITDA, and $1.23 of adjusted EPS—or a still-exceptional 31.9% EBITDA margin.
The FY26 midpoint, after 1Q actuals and 2Q midpoint guidance, implies roughly $4.94B of 2H revenue, $1.56B of adjusted EBITDA, and about 31.5% EBITDA margin. In other words, management’s standing outlook already anticipates continued growth but modest margin normalization in the back half, partly reflecting acquisition mix and continued capacity investment.
Engine Products is the core earnings driver. In 1Q, segment sales rose 29% year over year, adjusted EBITDA rose 44%, and margin expanded 400 bps to 36.6%.
The drivers were powerful:
For 2Q, the key question is not whether demand is good—it clearly is—but whether output, yield gains, pricing/content, and operational execution continue to support margins near record levels.
Investor watch items - Commercial-aerospace growth relative to the approximately 20% range management discussed for 2026. - Whether engine-spares growth stays elevated after a 48% increase in 1Q. - Gas-turbine growth and, importantly, management’s commentary on capacity, yield, and customer commitments. - Segment-margin progression from the 36.6% achieved in 1Q.
The gas-turbine opportunity has evolved from a cyclical power-market exposure into a structural growth theme tied to data-center power demand, grid constraints, LNG, and broader electricity-generation needs.
Management has characterized its gas-turbine opportunity as potentially growing from roughly $1B of revenue toward $2B over three to five years, while emphasizing that it will not build capacity indiscriminately. It has reached commercial arrangements with most major customers and is investing behind contracted demand, with more capacity expected to come online during the second half of 2026 and more materially in 2027–29.
The near-term issue is capacity. Management indicated that first-half 2026 growth would rely heavily on yield and production-flow improvements, with new Japanese capacity only beginning to contribute late in the year. Thus, strong 2Q gas-turbine growth would reinforce the view that HWM is extracting more output from its installed base before the larger capital program bears fruit.
What would be bullish - Gas-turbine growth remaining near or above management’s full-year 25%–30% framework. - Confirmation that new capacity is on schedule. - Incremental customer commitments or longer-duration contractual protections. - Confidence that increased CapEx still supports the company’s long-term cash-conversion objective.
What would be less constructive - Yield or labor constraints. - Deferred capacity timing. - Commentary that upstream supply-chain bottlenecks—not HWM’s own capacity—are limiting deliveries.
The April 6 acquisition of Consolidated Aerospace Manufacturing (CAM) is central to 2Q because this will be the first quarter with CAM included for nearly the full period. HWM acquired CAM for approximately $1.8B, adding aerospace fasteners, fluid fittings, connectors, and related engineered products to Fastening Systems.
Management previously estimated that the combined CAM and Brunner transactions, net of the Savannah divestiture, would add approximately $275M of revenue and $60M of EBITDA over the remainder of 2026. It expects the EPS effect in 2026 to be roughly neutral because of financing costs, with accretion beginning in 2027.
This creates a reporting nuance: Fastening Systems revenue should benefit materially from acquisition consolidation, but organic growth and segment margin will be the more informative measures. CAM was described as having margins nearer the 20% range at acquisition, below legacy Fastening Systems’ 31.8% 1Q26 margin.
Questions for the call - What was CAM’s 2Q revenue contribution? - Is integration proceeding as planned? - What are the initial cost, commercial, and distribution synergies? - How much dilution to Fastening Systems margin should investors expect in 2H26? - Has management’s 2027 accretion expectation changed?
HWM’s aero outlook rests on more than OEM build rates:
Management has been measured on wide-body recovery. It expected 787 production around seven aircraft per month in 2026, rising to eight in 4Q, while remaining cautious on the timing of a more meaningful A350 and wide-body ramp. That suggests investors should not expect wide-body strength to be essential for a strong 2Q result—but upside in rate assumptions would improve the 2027 setup.
Forged Wheels delivered a surprisingly strong 1Q result despite a soft truck market: segment revenue rose 17%, but underlying commercial-transportation volumes fell 11%. Aluminum and tariff pass-through, cost actions, premium-product mix, and FX supported results, driving segment margin up 350 bps to 30.5%.
For 2Q, the central question is whether volumes have begun to recover. Management had pointed to improving schedules and some potential pre-buy ahead of 2027 North American regulations but embedded a cautious assumption of less than 5% market growth for the year.
A sequential improvement in wheel volumes would be helpful, but investors should distinguish between: - reported revenue growth, which can be flattered by aluminum/tariff pass-through; and - unit-volume recovery, which would signal healthier underlying truck demand.
HWM generated a record $359M of first-quarter free cash flow despite growth investment. For FY26, it guides to $1.75B at the midpoint, after higher CapEx, which management has indicated could approach $500M as it funds aerospace and gas-turbine capacity.
The CAM financing increased leverage, but management entered 2Q expecting net leverage of approximately 1.6x and has said it expects rapid deleveraging over the balance of the year. This quarter should provide the first meaningful look at the post-CAM balance sheet, working capital, cash conversion, and ongoing repurchase capacity.
Capital deployment remains a positive differentiator: - $300M of stock repurchases in 1Q; - another $150M repurchased in April; - approximately $1.05B remained under the authorization as of early May; - a quarterly dividend of $0.12 per share.
The preferred outcome is evidence that HWM can simultaneously fund organic capacity expansion, integrate CAM, delever, and continue returns to shareholders. That has been management’s stated objective; 2Q is an important test.
HWM is one of the highest-quality aerospace-and-power compounders heading into 2Q, supported by a rare combination of commercial-aero OE, aftermarket, defense, and gas-turbine demand. The company’s 2Q guide already calls for another record-scale quarter, so merely meeting it may not be enough for an enthusiastic market response.
The decisive factors will be:
The result is likely to be judged primarily on the durability of the 2027 earnings runway, rather than on a few cents of 2Q adjusted EPS.