HWM 10-K & 10-Q changes, risk factors and insider trading

Geopolitical tensions, conflicts, and wars have impacted, and may in the future impact, global energy markets, leading to high volatility and increasing prices for crude oil, natural gas, and other energy supplies. Energy costs impact operating expenses at our manufacturing facilities, the expense of shipping raw materials to our facilities, and the expense of shipping products to our customers. The costs of certain raw materials (including, but not limited to, nickel, titanium, aluminum, cobalt, and superalloy materials) necessary for the manufacture of Howmet’s products and other manufacturing and operating costs are influenced by market forces, including inflation, supply and demand, and shortages. For example, as the Russia-Ukraine conflict continues, global titanium prices may continue to fluctuate or increase.fluctuate. Our customers’ failure to return titanium revert (reusable scrap) to Howmet can result in an increase of the amount of titanium purchased at inflated costs. Governmental constraints, including export restrictions, sanctions, new or increased import duties or tariffs, and countervailing or anti-dumping duties, also impact the cost of raw materials and other manufacturing and operating costs. The global trade landscape is growing more volatile, including,including as a result of the2025 recentand early 2026 executive orders in the U.S. for the imposition of new tariffs, the likelihood of further tariffs and retaliatory counter measures by other countries.countries and the likelihood and unpredictability of further tariffs and related countermeasures. We continually monitor the global trade environment and any changes in tariffs, trade agreements, restrictions, or sanctions that may impact the Company or our suppliers or customers, and work to mitigate potential impacts. Inflation worldwide and in the United States has resulted in an increase in the costs of materials and labor. While we generally intend to pass along higher raw material and energy costs to our customers through contractual agreements in the form of price increases, there can be a delay between an increase in our costs and our ability to increase the prices of our products. Additionally, we may not be able to increase the prices of our products due to competitive pricing pressure and other factors. If the Company is unable to pass through or offset significant cost increases through customer price increases, productivity improvements, cost reduction or other programs, Howmet’s business, operating results or financial condition could be materially adversely affected. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties and given the unpredictability and frequency of these changes, there can be no assurance we will be able to successfully mitigate the impacts of changes in the global trade environment and if the Company is unable to mitigate these impacts, Howmet’s business, operating results or financial condition could be materially adversely affected.

If Howmet’s operations, particularly at one of its key manufacturing facilities, were to be disrupted, including because of significant equipment failures, natural disasters, power outages, fires, explosions, terrorism, violence, theft, sabotage, adverse weather conditions, public health crises, labor disputes, labor shortages, or other reasons, Howmet may be unable to effectively meet its obligations to, or demand from, its customers. In addition, the manufacture of many of Howmet’s products is a complex process. Manufacturing problems arising from equipment failure or malfunction, inadvertent failure to follow regulatory or customer specifications and procedures, including those related to quality or safety, and problems with raw materials could have an adverse impact on the Company’s ability to fulfill orders or meet product quality or performance requirements, which may result in negative publicity and damage to our reputation, adversely impacting product demand and customer relationships. Interruptions in production capability could increase Howmet’s costs and reduce its sales, including causing the Company to incur costs for premium freight, make substantial capital expenditures, or purchase alternative material at higher costs to fulfill customer orders. Additionally, a delivery delay by us due to production interruptions could subject us to liability from customer claims that such delay resulted in losses to the customer. Furthermore, product manufacturing or performance issues could result in recalls, customer penalties, contract cancellation, and product liability exposure in addition to a material adverse effect on our business, financial condition or results of operations. Because of approval, license, and qualification requirements applicable to manufacturers and/or their suppliers, sources of alternatives to mitigate manufacturing disruptions may not be readily available to Howmet or its customers.

Howmet has long-term contracts with a significant number of its customers, some of which are subject to renewal, renegotiation, or re-pricing at periodic intervals or upon changes in competitive supply conditions. Howmet’s failure to successfully renew, renegotiate, or favorably re-price such agreements, or a material deterioration in or termination of these customer relationships, could result in a reduction or loss in customer revenue. Additionally, a significant downturn, adverse development or deterioration in the business or financial condition of a key customer, or the loss of a key customer, could adversely affect Howmet’s financial results. For example, quality control issues and a recent labor union work stoppage at The Boeing Company (“Boeing”) haverelating to which the Federal Aviation Administration did not approve production rate increases for the Boeing 737 MAX until October 2025 and a Boeing labor union work stoppage in late 2024 negatively impacted, and are expected to negatively impact,impacted narrow body and wide body production rates in the near term.rates. Boeing production rates have had and are expected to have a material impact on the financial performance of Howmet. Howmet’s customers may experience delays in the launch of new products, labor strikes, diminished liquidity or credit unavailability, weak demand for their products, decreases in production rates due to regulatory investigations or otherwise, supply chain constraints or other difficulties in their businesses. Howmet’s customers may also change their business strategies or modify their business relationships with Howmet, including to reduce the amount of Howmet’s products they purchase, to switch to alternative suppliers, or to enter into the markets themselves to compete with Howmet. If Howmet’s customers reduce, terminate or delay purchases from Howmet due to the foregoing factors or otherwise and Howmet is unsuccessful in enforcing its contract rights or replacing such business in whole or in part or replaces it with less profitable business, our financial condition and results of operations may be adversely affected.

Increased global cybersecurity vulnerabilities, threats, and more sophisticated and targeted cyberattacks pose a risk to the security of our systems and networks, and the confidentiality, availability, and integrity of our data, as well as those of our customers, suppliers, and other counterparties. The Company believes that it faces threats of cyberattacks due to the industries it serves, the locations of its operations, and its technological innovations. The Company has experienced cybersecurity attacks in the past, including breaches of its information technology systems in which information was taken, and may experience them in the future, potentially with more frequency or sophistication. Although past attacks did not result in known losses of any critical data or have a material impact on Howmet’s financial condition or results of operations, the scope and impact of any future incident cannot be predicted. The use of new and evolving technologies, such as artificial intelligence, or AI, presents risks and challenges that can impact our business. Unauthorized use or misuse of AI by the Company's employees, vendors or others may result in the disclosure of confidential companyCompany or customer data, reputational harm, privacy law violations, cybersecurity risks, and legal liability. Additionally, while the use of AI can be beneficial to the Company, AI algorithms are currently known to sometimes produce unexpected results or behave in unpredictable ways that can generate, among other things, irrelevant, nonsensical, inaccurate, harmful, discriminatory or infringing results, which could harm the Company’s business, reputation, or result in legal or regulatory actions.

As discussed in “Competitive Conditions” in Part I, Item 1 (Business) of this report, the markets for Howmet’s products are highly competitive. Howmet’s competitors include a variety of both U.S. and non-U.S. companies in our product markets, which could include existing customers. New entrants in our markets, new product offerings, new and/or emerging technologies in the marketplace, or new facilities may compete with or replace Howmet products. The willingness of customers to accept alternative solutions for the products sold by Howmet, pricing pressure from competitors, and technological advancements or other developmentsdevelopments, including the use of AI, by or affecting Howmet’s competitors or customers could adversely affect Howmet’s business, financial condition, or results of operations. Howmet’s competitive position and future performance depend, in part, on the Company’s ability to develop and innovate products, deploy technology initiatives, and implement advanced manufacturing technologies.technologies, including through the use of new and evolving technologies, including AI. The Company's competitors may adopt new technological initiatives and implement technological advancements using AI to pursue new or improved products and services more quickly, profitably, successfully and effectively than the Company. While Howmet intends to continue to develop innovative new products and services, and implement advanced technologies, including through the use of AI, it may not be able to successfully differentiate its products or services from those of its competitors or achieve and maintain technological advantages.

Share repurchases and the declaration of dividends fall within the discretion of Howmet’s Board of Directors (the “Board”), and the Board’s decision regarding such matters depends on many factors, including Howmet’s financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of the Company’s debt obligations, industry practice, legal requirements, regulatory constraints, and other factors that the Board deems relevant. There can be no assurance that the Company will declare dividends or repurchase stock in the future in any particular amounts, or at all. The Company may modify, suspend, or cancel its share repurchase program or itsany dividend policy in any manner and at any time that it may deem necessary or appropriate.

The manufacture and sale of our products expose Howmet to potential product liability, personal injury, property damage, and related claims. In the event that a Howmet product fails to perform as expected, regardless of fault, or is used in an unexpected manner, and such failure or use results in, or is alleged to result in, bodily injury and/or property damage or other losses, Howmet may be subject to product liability lawsuits and other claims, or may participate in a recall or other corrective action involving such product. In addition, if a Howmet product is perceived to be defective or unsafe, Howmet’s sales could decrease, its reputation could be adversely impacted and Howmet could be exposed to government investigations or regulatory enforcement actions. Howmet is also subject to a variety of global legal and regulatory compliance risks in connection with its business and products. These risks include, among other things, potential claims, class action lawsuits or compliance issues, including those relating to securities laws, employment laws, intellectual property rights, cyber, security and privacy, insurance, commercial matters, antitrust and competition, human rights, third-party relationships, ESGgovernance and sustainability (including climate-related/sustainability and other) rules and regulations, supply chain operations, and the manufacture and sale of products. In addition, laws and regulations focused on the development, use and provision of certain new technologies, such as AI (including generative AI) technologies, and the enforcement thereof are growing worldwide and may impose certain obligations on Howmet, may limit how we use these technologies and could result in reputational damage, monetary penalties or other regulatory actions to the extent Howmet uses such technologies and fails to comply with such obligations. Monitoring and responding to new and rapidly developing laws and regulations could be costly or have an adverse effect on our operations. An adverse outcome in one or more of proceedings or investigations, or unfavorable changes in laws, regulations or policies, or other contingencies that the Company cannot predict with certainty, could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows, including reputational harm, loss of customers, and substantial monetary damages and/or non-monetary penalties. For additional information regarding the legal proceedings involving the Company, see Note U to the Consolidated Financial Statements in Part II, Item 8.

Howmet owns important intellectual property, including patents, trademarks, copyrights, and trade secrets. The Company’s intellectual property plays an important role in maintaining Howmet’s competitive position in a number of the markets that the Company serves. Howmet’s competitors may develop technologies that are similar or superior to Howmet’s proprietary technologies, or design around the patents Howmet owns or licenses. Despite its controls and safeguards, Howmet’s technology may be misappropriated by its employees, its competitors or other third parties. Furthermore, unauthorized use, misuse or increased use of AI may increase the risk of a loss of intellectual property, including, for instance, if an employee inputs confidential information, such as trade secrets, into AI or machine learning technologies, resulting in such information becoming accessible by third parties, including competitors. The pursuit of remedies for any misappropriation of Howmet intellectual property is expensive and the ultimate remedies may be deemed insufficient. Further, in jurisdictions where the enforcement of intellectual property rights is less robust, the risk of misappropriation of Howmet intellectual property increases, despite efforts the Company undertakes to protect it. Developments or assertions by or against Howmet relating to intellectual property rights, and any inability to protect or enforce Howmet’s rights sufficiently, could adversely affect Howmet’s business and competitive position.

Howmet is subject to income taxes in both the United States and various non-U.S. jurisdictions. Its domestic and international tax liabilities are dependent upon the distribution of income among these different jurisdictions. Changes in applicable domestic or foreign tax laws and regulations, including enactment of the Organization for Economic Cooperation and Development’s Pillar 2 framework,framework and related safe harbors, or their interpretation and application, including the possibility of retroactive effect, could affect the Company’s tax expense and profitability. Howmet’s tax expense includes estimates of additional tax that may be incurred for tax exposures and reflects various estimates and assumptions. The assumptions include assessments of future earnings of the Company that could impact the valuation of its deferred tax assets. The Company’s future results of operations could be adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in the overall profitability of the Company, changes in tax legislation and rates, changes in generally accepted accounting principles, changes in the valuation of deferred tax assets and liabilities, the results of tax audits, and examinations of previously filed tax returns or related litigation and continuing assessments of its tax exposures.

Physical risks associated with climate change may result in an increase of the exposureclimate, to,such and impact of, events with damage due toas flooding, extreme winds, and extreme precipitationprecipitation, forexpose us to risks of damage of Howmet locations or those of its suppliers or customers. Prolonged periods of drought may result in wildfires and/or restrictions on process water use. These climate-related impacts may have an adverse effect on the production capacity of Howmet sites or those of its suppliers or customers. Climate change may result in an increase of such risks and the impact they have on our business. These types of incidents could have a material adverse effect on our results of operations and financial condition.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Part II, Item 8 (Financial Statements and Supplementary Data) of this Form 10-K.

Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which may include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, andgas industrialturbines, and other markets.

In 2024,2025, Sales increased 12%11% from 20232024 primarily as a result of higher volumesgrowth in the commercial aerospace, defense aerospace, and industrialgas and otherturbines markets, andincluding engine spares, favorable product pricing, and cost pass through, partially offset by lower volumes in the commercial transportation market. Product price increases are in excess of material and inflationary cost pass through to our customers.

Income before income taxes increased 42%33% from 2023.2024. Total Segment Adjusted EBITDA(1) increased 27%25% from 20232024 primarily due to favorable salesgrowth in the commercial aerospace, defense aerospace, and industrialgas turbines markets, and other markets as well as favorable product pricing.pricing, partially offset by lower volumes in the commercial transportation market.

•Sales of $7,430,$8,252, an increase of 12%11% from 2023,2024, driven by higher salesgrowth in the commercial aerospace, defense aerospace, and industrialgas and otherturbines markets, including engine spares, partially offset by lower salesvolumes in the commercial transportation market;

•Net income of $1,155,$1,508, an increase of 31%, or $2.81$3.71 per diluted shareshare, an increase of 32%, from 2024;

•Total debt of $3,315,$3,050, a net decrease of $391$265 from 2023,2024, reflecting repurchasesthe andearly redemption of $600 aggregate principal amount of the 6.875%5.900% Notes due MayFebruary 20252027 (the “20252027 Notes”), redemption of $205$625 aggregate principal amount ofand the 5.125% Notes due October 2024 (the “2024 Notes”), early partial prepayment of $60 aggregate principal amount of its USD termTerm loan,Loan Facility during various periods in 2025 of $140, partially offset by the November 2025 issuance of $500 aggregate principal amount of the 4.850%4.550% Notes due October 20312032 (the “20312032 Notes”), net of the cross-currency swap that synthetically converted the 2031 Notes into a lower fixed-interest-rate Euro liability; and

In 2025,2026, management projects sales to increase as we expect solid growth in the commercial aerospaceaerospace, market,defense aerospace, and gas turbines markets, and the Company’s strong position in thatthose marketmarkets is expected to continue, including enginesengine spares. Earnings per share is expected to grow as management continues to focus on revenue growth and operational performance. Cash provided from operations is expected to increase for the full year in 20252026 compared with 2024,2025, resulting from a continued focus on operating performance and on capital efficiency.performance. Capital expenditures are expected to increaseremain elevated with additional investments in capacity expansions.expansions to support aerospace and gas turbines market growth and share gains. Governmental policies, laws and regulations, and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow.

Sales. Sales for 20242025 were $7,430$8,252 compared with $6,640$7,430 in 2023,2024, an increase of $790,$822, or 12%.11%. The increase was primarily due to higher salesgrowth in the commercial aerospace, defense aerospace, and industrialgas and otherturbines markets, including engine spares, and favorable product pricing, and cost pass through, partially offset by lower volumes in the commercial transportation market. Product price increases are in excess of material and inflationary cost pass through to our customers.

Sales for 20232024 were $6,640$7,430 compared with $5,663$6,640 in 2022,2023, an increase of $977,$790, or 17%.12%. The increase was primarily due to higher sales in the commercial aerospace, defense aerospace, commercialand transportation,gas turbines markets, including engine spares, and industrial and other markets, favorable product pricing, andpartially anoffset increaseby lower volumes in materialthe costcommercial passtransportation through.market. Product price increases are in excess of inflationary cost pass through to our customers.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 68.9%65.8% in 20242025 compared with 71.9%68.9% in 2023.2024. The decrease was primarily due to higher volumes andvolumes, favorable product pricing,pricing and productivity gains, partially offset by increased net headcount, primarily in the Engine Products segment, in support of expected revenue increases. The Company had no COGS net reimbursements in 2025 compared to total COGS net reimbursements of $18 in 2024 due to the final settlement of the insurance claim related to a mechanical failure that occurred in 2022 resulting in substantial heat and fire-related damage to equipment at the Forged Wheels’ cast house in Barberton, Ohio (the “Barberton Cast House Incident”) in the second quarter of 2024 and the final settlement of the insurance claim related to the fires that occurred in 2019 at a Fastening Systems plant in France (the “France Plant Fire”) in the fourth quarter of 2024, compared to total COGS insurance claims reimbursements of $19 in 2023, partially offset by charges of $7 in 2023, related to the France Plant Fire and Barberton Cast House Incident. The insurance claims related to the Barberton Cast House Incident and the France Plant Fire have now been completed. All cash related to the insurance claims has been collected as of January 2025.2024.

COGS as a percentage of Sales was 71.9%68.9% in 20232024 compared with 72.5%71.9% in 2022.2023. The decrease was primarily due to higher volumes,volumes and favorable product pricing, and lower costs related to three plant fires, partially offset by material cost pass through and increased net headcount, primarily in the Engine Products and Fastening Systems segments,segment, in support of expected revenue increases. The Company had total COGS net reimbursements of $18 in 2024 due to the final settlement of the Barberton Cast House Incident in the second quarter of 2024 and the final settlement of the insurance claim related to the France Plant Fire in the fourth quarter of 2024, compared to total COGS insurance claims reimbursements of $19 in 2023, partially offset by charges of $7,$7 in 2023, related to the France Plant Fire and Barberton Cast House Incident. All cash related to the completed insurance claims for the Barberton Cast House Incident, compared to total COGS charges of $59 in 2022, offset by partial insurance claims reimbursements of $23, related to a fire at a Forged Wheels plant in Barberton, Ohio in mid-February 2020 (the “Barberton Plant Fire”)Incident and the France Plant Fire. The insurance claims related to these three plant firesFire were incollected excessas of theJanuary insurance deductible. During the fourth quarter of 2022, the Company settled the insurance claim related to the Barberton Plant Fire.2025.

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $370, or 4.5% of Sales, in 2025 compared with $347, or 4.7% of Sales, in 2024 compared with $333, or 5.0% of Sales, in 2023.2024. The increase in SG&A of $14,$23, or 4%,7%, was primarily due to higher employment costs, other administrative expenses, and acquisition costs.

SG&A expenses were $347, or 4.7% of Sales, in 2024 compared with $333, or 5.0% of Sales, in 2023 compared with $288, or 5.1% of Sales, in 2022.2023. The increase in SG&A of $45,$14, or 16%,4%, was primarily due to higher employment costs and legal fees.costs.

Research and development expenses (“R&D”). R&D expenses were $33$37 in 20242025 compared with $36$33 in 2023.2024. The decreaseincrease of $3,$4, or 8%,12%, was primarily due to thean timingincrease ofin spending on technology projects.projects related to the aerospace and gas turbines markets.

R&D expenses were $36$33 in 20232024 compared with $32$36 in 2022.2023. The increasedecrease of $4,$3, or 13%,8%, was primarily due to higherthe timing of spending on technology projects to support the aerospace business.projects.

Provision for depreciation and amortization (“D&A”). The provision for D&A was $277$283 in 20242025 compared with $272$277 in 2023.2024. The increase of $5,$6, or 2%, was primarily driven by thehigher disposaldepreciation offrom unusedadditional assetscapital investments in capacity expansions within the Engine Products segment.

The provision for D&A was $272$277 in 20232024 compared with $265$272 in 2022.2023. The increase of $7,$5, or 3%,2%, was primarily driven by higherthe depreciationdisposal of unused assets in the Engine Products segment.

Restructuring and other charges in 20222025 consisted primarily of a$89 $58 chargecharges for U.K. and U.S. pension plans’plan settlement accounting and a $6$3 charge for variouslayoff other exit costs. These charges werecosts partially offset by a$5 gainin of $8gains on the salesales of assets at atwo small U.S.previously manufacturingclosed facility in Engine Products.facilities.

Interest expense, net. Interest expense, net was $182$151 in 20242025 compared with $218$182 in 2023.2024. The decrease of $36,$31, or 17%, was primarily due to the early redemptionsredemption of the 6.875%2027 Notes dueand May 2025 (the “2025early Notes”)prepayments of its USD Term Loan Facility during various periods in 2024, the early redemptions of the 5.125% Notes due October 2024 (the “2024 Notes”) during various periods during 2023 and 2024, and the early partial prepayment of its USD term loan,2025, partially offset by the AugustNovember 20242025 issuance of $500 aggregate principal amount of the 20312032 Notes, net of the cross-currency swap that synthetically converted the 2031 Notes into a lower fixed-interest-rate Euro liability.Notes. Long-term debt, including long-term debt due within one year, has been reduced by $847$656 from December 31, 20222023 to December 31, 2024.2025. On an annual basis, the debt reduction and refinancing activities in 20242025 will decrease Interest expense, net by approximately $37.$22, excluding impacts of financing future acquisitions.

Other expense, net. Other expense, net was $62$40 in 20242025 compared with $8$62 in 2023.2024. The increasedecrease in expense of $54$22 was primarily due to thean reversal in the second quarter ended June 30, 2023increase of $25,foreign currency translation gains, net of legal fees of $1, of the $65 pre-tax charge taken in the third quarter of 2022 related to the Lehman Brothers International (Europe) (“LBIE”) legal proceeding as a result of the final settlement of such proceeding in June 2023 (See Note U to the Consolidated Financial Statements in Part II, Item 8) (Financial Statements and Supplementary Data), increases in foreign currency losses, net of $15, and an increase in the impacts of deferred compensation arrangements of $5.$16. Non-service related net periodic benefit costs related to defined benefit plans and other postretirement benefit plans is expected to remain relatively flat from 20242025 to 2025.2026.

Net income. Net income was $1,508, or $3.71 per diluted share, for 2025 compared to $1,155, or $2.81 per diluted share, for 2024 compared to $765, or $1.83 per diluted share, in 2023.2024. The increase in results of $390,$353, or 51%,31%, was primarily due to higher volumesgrowth in the commercial aerospace, defense aerospace, and industrialgas and otherturbines markets, including enginesengine spares, favorable product pricing, a reduction in interest expense due to lower long-term debt levels, and aan lower tax rate due to the completionincrease of anforeign R&Dcurrency study,translation gains, partially offset by lower volumes in the commercial transportation market and net impacts of foreign currency.market.

Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines (aerospace commercial and defense) and industrial gas turbine applications. Engine Products produces rotating parts as well as structural parts, which are sold directly to customers. Generally, the sales and costs and expenses of this segment are transacted in the local currency of the respective operations, which are mostly the U.S. dollar, British pound, euro, and Japanese yen.

Third-party sales for the Engine Products segment increased $469,$585, or 14%,16%, in 20242025 compared with 2023,2024, primarily due to growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbineturbines markets, including engine spares growth.

Third-party sales for the Engine Products segment increased $568,$469, or 21%,14%, in 20232024 compared with 2022,2023, primarily due to higher volumesgrowth in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets.turbines markets, including engine spares growth.

Segment Adjusted EBITDA for the Engine Products segment increased $263,$288, or 30%,25%, in 20242025 compared with 2023,2024, primarily due to growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbineturbines markets. The segment absorbed approximately 1,2051,445 net headcount sincethroughout the end of 2023year in support of expected revenue increases, resulting in unfavorable near-term recruiting, training, and operational costs.

Segment Adjusted EBITDA for the Engine Products segment increased $158,$263, or 22%,30%, in 20232024 compared with 2022,2023, primarily due to higher volumesgrowth in the commercial aerospace, defense aerospace, industrialand gas turbine, and oil and gasturbines markets. The segment absorbed approximately 1,0301,205 net headcount sincethroughout the end of 2022year in support of expected revenue increases, resulting in unfavorable near-term recruiting, training, and operational costs.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 360250 basis points in 20242025 compared with 2023,2024, primarily due to growth in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbineturbines markets.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 20360 basis points in 20232024 compared with 2022,2023, primarily due to higher volumesgrowth in the commercial aerospace, defense aerospace, industrial gas turbine, and oil and gas markets,turbines partially offset by an increase in headcount and inflationary costs.markets.

In 2025,2026, as compared to 2024,2025, demand in the commercial aerospace, defense aerospace, industrialand gas turbine, and oil and gasturbines markets is expected to increase.increase, including engine spares growth in commercial aerospace, defense aerospace and gas turbines. Governmental policies, laws and regulations, and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. Capital expenditures are expected to remain elevated with additional investments in capacity expansions to support aerospace and gas turbines market growth and share gains. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Third-partySegment salesAdjusted EBITDA for the Fastening Systems segment increased $232,$124, or 21%,31%, in 20232025 compared with 2022,2024, primarily due to highergrowth in the commercial aerospace market and productivity gains partially offset by lower volumes in the commercial aerospace,transportation including the emerging wide body recovery, commercial transportation, defense aerospace, and industrial markets.market.

In 2025,2026, as compared to 2024,2025, demand in the commercial aerospace market is expected to increase. Demand in the commercial transportation market is not expected to recoverremain before mid year of 2025low with somerecovery growth startingbeginning in the second half of 2025.2026, given tariff-related, economic, and regulatory uncertainty in North America. Governmental policies, laws and regulations, and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Third-party sales for the Engineered Structures segment increased $187,$83, or 21%,8%, in 20242025 compared with 2023,2024, primarily due to growth in the commercial aerospace and defense aerospace markets.market. The Engineered Structures segment is focusing on the optimization of its manufacturing footprint and rationalization of product mix in order to maximize profitability.

Third-party sales for the Engineered Structures segment increased $88,$187, or 11%,21%, in 20232024 compared with 2022,2023, primarily due to higher volumesgrowth in the commercial aerospace market, including Russian titanium share gains and the emerging wide body recovery, partially offset by lower volumes in the defense aerospace market associated with legacy fighter programs.markets.

In the firstsix quartermonths ended MarchJune 31,30, 2026, the Company derived approximately 68% of its revenue from products sold to the commercial and defense aerospace markets. The timing and level of future aircraft builds by original equipment manufacturers (“OEMs”) are subject to changes and uncertainties, including but not limited to geopolitical tensions or volatility in global energy and raw material markets, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

Sales. Sales were $2,313$2,547 in the firstsecond quarter of 2026 compared to $1,942$2,053 in the firstsecond quarter of 2025, and $4,860 in the six months ended June 30, 2026 compared to $3,995 in the six months ended June 30, 2025. The increase of $371,$494, or 19%,24%, in the firstsecond quarter of 2026 and the increase of $865, or 22% in the six months ended June 30, 2026, was primarily due to growth in the commercial aerospace,and defense aerospace,aerospace and gas turbines markets, including engine spares, favorable product pricing, and cost pass through, and sales from the Consolidated Aerospace Manufacturing, LLC (“CAM”) and Brunner Manufacturing Co. Inc. (“Brunner”) acquisitions from the dates they were acquired by the Company, partially offset by lower volumes in the commercial transportation market.market and the disk forging facility divestiture on March 31, 2026. Product price increases are in excess of material and inflationary cost pass through to our customers.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 63.1%62.7% in the firstsecond quarter of 2026 compared to 66.4%66.5% in the firstsecond quarter of 2025 and 62.9% in the six months ended June 30, 2026 compared to 66.5% in the six months ended June 30, 2025. The decrease in the firstsecond quarter ofand six months ended June 30, 2026 was primarily due to growth in the commercial and defense aerospace and gas turbines markets, favorable product pricing and volume growth,pricing, partially offset by lower volumes in the commercial transportation market, higher cost pass throughthrough, and increased net headcount, primarily in the Engine Products segment, in support of expected revenue increases. Additionally, the decrease includes the impact of the acquisitions and divestiture completed this year, including amortization expense of inventory step-up recorded in accordance with the allocation of purchase price under accounting principles generally accepted in the United States of America (“GAAP”).

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $111$148 in the firstsecond quarter of 2026 compared to $85$89 in the firstsecond quarter of 2025 and $259 in the six months ended June 30, 2026 compared to $174 in the six months ended June 30, 2025. The increase of $26,$59, or 31%,66%, in the firstsecond quarter of 2026 and the increase of $85, or 49%, in the six months ended June 30, 2026 was primarily due to higher employment costs, including incremental headcount from the acquisitions, acquisition and acquisition-related costs, and various other administrative expenses.

Interest expense, net. Interest expense, net was $43$51 in the firstsecond quarter of 2026 compared to $39$38 in the firstsecond quarter of 2025 and $94 in the six months ended June 30, 2026 compared to $77 in the six months ended June 30, 2025. The increase of $4,$13, or 10%,34%, in the firstsecond quarter of 2026 and $17, or 22%, in the six months ended June 30, 2026 was primarily due to the March 2026 issuance of $1,200 inaggregate totalprincipal amount of notes withthat have interest rates ranging from 3.750% to 4.750% and the November 2025 issuance of $500 of 4.550% Notes,Notes due 2032, partially offset by the early prepayment of the JPY Term Loan Facility, the cross-currency swap that synthetically converted the 6.750% Bonds due 2028 into a lower fixed-interest-rate Japanese Yen liability, the early redemption of $625 of 5.900% Notes in December 2025, and prepayments of the USD Term Loan Facility during various periods in 2025. On an annual basis, the current year additionsdebt to Long-term debtactions are expected to increase Interest expense, net by approximately $50.$38.

Other expense, net. Other expense, net was $2$11 in the firstsecond quarter of 2026 compared to $9$14 in the firstsecond quarter of 2025 and $13 in the six months ended June 30, 2026 compared to $23 in the six months ended June 30, 2025. The decrease in expense of $7$3 in the firstsecond quarter of 2026 and $10 in the six months ended June 30, 2026 was primarily due to an increase in interest income of $6 resulting from additional cash on hand prior to the acquisition of Consolidated Aerospace Manufacturing.CAM. Non-service related net periodic benefit costs related to defined benefit plans and other postretirement benefit plans isare expected to increase by approximately $5 for the full year 2026 versus 2025.

Provision for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 21.1%20.9% in the firstsecond quarter ended MarchJune 31,30, 2026 compared to 20.8% in the firstsecond quarter ended MarchJune 31,30, 2025. The tax rate including discrete items was 18.1%17.7% in the firstsecond quarter of 2026 compared to 22.9%13.2% in the firstsecond quarter of 2025. A discrete net tax benefit of $21, primarily for stock-based compensation,$20 was recorded in the firstsecond quarter of 2026 compared to a discrete net tax chargebenefit of $9$35 in the firstsecond quarter of 2025. The tax rate including discrete items was 17.9% in the six months ended June 30, 2026 and June 30, 2025. A discrete net tax benefit of $41 was recorded in the six months ended June 30, 2026 compared to a discrete net tax benefit of $26 recorded in the six months ended June 30, 2025. The 2026 estimated annual effective tax rate wasremains higherconsistent thanwith the 2025 rate primarily due to increased state income tax and nondeductible expenses.rate.

Net income. Net income was $580,$534, or $1.44$1.33 per diluted share, in the firstsecond quarter of 2026 compared to $344,$407, or $0.84$1.00 per diluted share, in the firstsecond quarter of 2025 and $1,114, or $2.77 per diluted share, in the six months ended June 30, 2026 compared to $751, or $1.84 per diluted share, in the six months ended June 30, 2025. The increase of $236$127 in the firstsecond quarter of 2026 and $363 in the six months ended June 30, 2026 was primarily due to growth in the commercial aerospace,and defense aerospace,aerospace and gas turbines markets, including engine spares, as well as favorable product pricing,pricing and the CAM and Brunner acquisitions, partially offset by lower volumes in the commercial transportation market.

The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. Segment performance under Howmet’s management reporting system is evaluated based on Segment Adjusted EBITDA. The Company’s Chief Executive Officer, who has been determined to be our Chief Operating Decision Maker (“CODM”), believes that Segment Adjusted EBITDA provides information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Howmet’s definition of Segment Adjusted EBITDA is defined as Operating Income excluding Restructuring and other credits, Provision for depreciation and amortization, and Special items. Special items, including Restructuring and other credits, are excluded from Segment Adjusted EBITDA. Current and prior periods’ Segment Adjusted EBITDA calculations have not changed although the definitions have been simplified. The Company’s CODM considers forecast-to-actual variances for Segment Adjusted EBITDA when allocating resources across the Company’s reportable segments. 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. (See Note D to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of each segment).

In the first quarter of 2026, the Company’s CODM reorganized Howmet’s segments by moving a titanium alloy location from Engine Products to Engineered Structures as it better aligns with the operations of the Engineered Structures segment. The comparable periods of Engine Products and Engineered Structures have been recast to reflect the new alignment. The recasting had no impact on the Company’s consolidated results, financial position or cash flows. The recast historical segment information is available in Exhibit 99.1 to the Company’s Current Report on Form 8-K dated May 28, 2026.

Third-party sales for the Engine Products segment increased $279,$335, or 29%,32%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily due to growth in the commercial aerospace,and defense aerospace,aerospace and gas turbines markets, including engine spares growth.

SegmentThird-party Adjusted EBITDA Marginsales for the Engine Products segment increased approximately$614, 400or basis points31%, in the firstsix quartermonths ofended June 30, 2026 compared to the firstsix quartermonths ofended June 30, 2025, primarily due to growth in the commercial aerospace,and defense aerospace,aerospace and gas turbines markets.markets, including engine spares growth.

In 2026, as compared to 2025, demand in the commercial aerospace,and defense aerospace,aerospace and gas turbines markets is expected to increase, including engine spares growth in these markets. Capital expenditures are expected to remain elevated, with additional investments in capacity expansions to support aerospace and gas turbines market growth. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Third-party sales for the Fastening Systems segment increased $59,$158, or 14%,37%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily due to the CAM and Brunner acquisitions as well as growth in the commercial aerospace and defense aerospace markets.

SegmentThird-party Adjusted EBITDAsales for the Fastening Systems segment increased $23,$217, or 18%,26%, in the firstsix quartermonths ofended June 30, 2026 compared to the firstsix quartermonths ofended June 30, 2025, primarily due to the CAM and Brunner acquisitions as well as growth in the commercial aerospace and defense aerospace markets.

Segment Adjusted EBITDA Margin for the Fastening Systems segment increased approximately$51, 100or basis points40%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily due to growth in the commercial aerospace and defense aerospace markets.markets as well as the CAM and Brunner acquisitions.

In 2026, as compared to 2025, demand in the commercial aerospace marketand defense aerospace markets is expected to increase.increase, Demandand results will also include the impacts of the CAM and Brunner acquisitions. Modest recovery in the commercial transportation market is expected to remain low with modest recoverybegan in the second quarter of 2026 and is expected to continue into the second half of 2026, amid energy-related, economic, and regulatory uncertainty in North America. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

The Brunner acquisition has been included in the operations of the Fastening Systems segment starting in February 2026. The CAM operationsacquisition willhas bebeen included in our Fastening Systems segment starting in the second quarter of 2026.

Third-party sales for the Engineered Structures segment decreased $10,$39, or 3%,13%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily due to furtherthe disk forging facility divestiture and product rationalization. The Engineered Structures segment continues to focus on the optimization of its manufacturing footprint and rationalization of product mix in order to maximize profitability.

Segment Adjusted EBITDA for the Engineered Structures segment wasdecreased flat$4, or 6%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025.2025 due to the disk forging facility divestiture and product rationalization, partially offset by productivity gains.

Segment Adjusted EBITDA Margin for the Engineered Structures segment increaseddecreased approximately$5, 40or basis points4% in the firstsix quartermonths ofended June 30, 2026 compared to the firstsix quartermonths ofended 2025,June primarily30, 2025 due to operationalthe improvementdisk effortsforging facility divestiture and lowerproduct netrationalization, headcount.partially offset by productivity gains.

The Engineered Structures segment continues to focus on the optimization of its manufacturing footprint, including the recent sale of its disk forging facility in Savannah, Georgia,Georgia on March 31, 2026, and rationalization of product mix in order to maximize profitability. In 2026, as compared to 2025, this is expected to result in lower revenue in the commercial aerospace and defense aerospace markets. Governmental policies, laws and regulations, and other geopolitical and economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Third-party sales for the Forged Wheels segment increased $43,$40, or 17%,14%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 primarily due to an increase in aluminum and other inflationary cost pass through and favorable foreign currency exchange rates,through, partially offset by lower volumes in the commercial transportation market.

SegmentThird-party Adjusted EBITDAsales for the Forged Wheels segment increased $22,$83, or 32%,16%, in the firstsix quartermonths ofended June 30, 2026 compared to the firstsix quartermonths ofended June 30, 2025, primarily due to an increase in aluminum and other inflationary cost reductions,pass includingthrough lower net headcount, as well asand favorable foreign currency exchange rates, partially offset by lower volumes in the commercial transportation market.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately$12, 350or basis points16%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily due to cost reductions, including lower net headcountheadcount, inpartially responseoffset toby lower volumes in the commercial transportation market, as well as favorable foreign currency exchange rates, partially offset by higher aluminum and other inflationary cost pass through.market.

In 2026, as compared to 2025, demand in the commercial transportation markets served by Forged Wheels is expected to remain lowlow. with modestModest recovery in the commercial transportation market began in the second quarter and is expected to continue into the second half of 2026, amid volatile aluminum metal pricing and energy-related, economic, and regulatory uncertainty in North America. Governmental policies, laws and regulations, and geopolitical and other economic factors, including inflation, customer requirements, tariffs, and fluctuations in foreign currency exchange rates and interest rates, may affect future results of operations and cash flow. The timing, extent, application, and level of tariffs by various governments and our ability to recover tariffs are subject to changes and uncertainties.

Corporate expense increased $10,$27, or 45%,108%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 primarily due to employmentacquisition and acquisition-related costs of $22 as well as acquisition and acquisition-relatedemployment costs.

Cash provided from operations was $453$1,036 in the firstsix quartermonths ended MarchJune 31,30, 2026 compared to $253$699 in the firstsix quartermonths ended MarchJune 31,30, 2025. The increase of $200,$337, or 79%,48%, was primarily due to higher operating results of $156$311 and lower working capital of $47.$17, partially offset by higher pension contributions of $6. The components of the change in working capital primarily included favorable changes in accounts payable of $162 and receivables of $25,$205, partially offset by unfavorable changes in inventories of $61,$84, prepaid expenses and other current assets of $36,$59, taxes, including income taxes,receivables of $34, and$26, other accrued expenses, including timing of interest payments on long-term debt and deferred revenue, of $9.$12, and taxes, including income taxes, of $7.

Cash provided from financing activities was $1,226$685 in the firstsix quartermonths ended MarchJune 31,30, 2026 compared to cash used for financing activities of $167$506 in the firstsix quartermonths ended MarchJune 31,30, 2025. The increase of $1,393,$1,191, or 834%,235%, was primarily due to additions to debt of $1,200,$1,200 and a net increase in commercial paper of $450, partially offset by increased common stock repurchases of $175,$300, increased payments on debt of $109, increased taxes paid for the net share settlement of equity awards of $64$21 primarily due to the timing of payments year over year, debt issuance costs of $12, and increased dividends paid to common stock shareholders of $6$14 due to a $0.02 increase in dividends per common share, from $0.10 per share in the firstsecond quarter of 2025 to $0.12 per share in the firstsecond quarter of 2026.2026, and debt issuance costs of $12. On an annual basis, the current year additionsdebt to Long-term debtactions are expected to increase Interest expense, net by approximately $50.$38.

The Company has entered intomaintains a Five-Year Revolving Credit Agreement that provides a $1,000 senior unsecured revolving credit facility (the “5-Year Revolving Credit Facility”) and a 364-Day Revolving Credit Agreement that provides a $600 senior unsecured revolving credit facility (the “364-Day Revolving Credit Facility” and, together with the 5-Year Revolving Credit Facility, the “Revolving Credit Facilities”) with a syndicate of lenders and issuers named therein (See Note O to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference). There were no amounts outstanding as of MarchJune 31,30, 2026 or December 31, 2025, and no amounts were borrowed during 2026 or 2025 under these revolving credit agreements.

The Company has a commercial paper program under which the Company may issue unsecured commercial paper from time to time up to a maximum aggregate face amount of $1,000. The Company had $450 of commercial paper outstanding as of MarchJune 31,30, 2026, and no amounts were outstanding under the commercial paper program as of December 31, 2025. The Company had no commercial paper borrowings with original maturities greater than 90 days in 2026 or 2025. The Company’s commercial paper is sold on customary terms in the U.S. commercial paper market on a private placement basis. The proceeds of the commercial paper are used for general corporate purposes, including the CAM acquisition. In conjunction with the commercial paper program, the Company was assigned short-term credit ratings by Moody’s Investors Service, Inc., S&P Global Ratings, and Fitch Ratings, Inc.

The Company has an effective shelf registration statement on Form S-3, filed with the SEC, which allows for offerings of debt securities from time to time. The Company may opportunistically issue new debt securities in accordance with securities laws or utilize commercial paper in order to, but not limited to, refinance existing indebtedness. The Company continues to evaluate whether, when, and to what extent it may access capital markets, including any plans to refinance the JPY$300 Termmillion Loanaggregate Facilityprincipal amount of its 6.750% Bonds due NovemberJanuary 2026.2028 (the “2028 Bonds”). Our ability to refinance our indebtedness or enter into alternative financings in adequate amounts on commercially reasonable terms, or terms acceptable to us, may be affected by circumstances and economic events outside of our control. In the event that a refinancing does not occur before the November 2026 maturity date of the JPY2028 Term Loan Facility,Bonds, the Company believes that its projected cash on hand, and/or availability under the Revolving Credit Facilities will enable the Company to repay the JPY2028 Term Loan Facility.Bonds.

In the future, the Company may, from time to time, redeem portions of its debt securities or repurchase portions of its debt or equity securities, in either the open market or through privately negotiated transactions, in accordance with applicable SEC and other legal requirements. The timing, prices, and sizes of purchases depend upon prevailing trading prices, general economic and market conditions, and other factors, including applicable securities laws. Such purchasessecurities repurchases may be completed by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases, tender offers, and/or accelerated share repurchase agreements, or other derivative transactions.

Cash providedused fromfor investing activities was $14$1,900 in the firstsix quartermonths ended MarchJune 31,30, 2026 compared to $212 in the six months ended June 30, 2025. The increase of $1,688, or 796%, was primarily due to cash used for investingthe activitiesCAM and Brunner acquisitions, net of $115cash in the first quarter ended March 31, 2025. The increaseacquired, of $129,$1,929, orpartially 112%,offset was primarily due toby an increase in proceeds from the sale of assets and businesses of $220,$217, primarily due to the sale of its disk forging facility, and a decrease in capital expenditures of $25, partially offset by acquisitions, net of cash acquired, of $118.$23.

Total capital expenditures are anticipated to be approximately 5% of sales in 2026.2026 including continued growth investments in the Engine Products segment.