Howmet Aerospace Inc. · NYSE:HWM
Howmet Aerospace — Q1 2020 Earnings Presentation
18 slides from Howmet Aerospace's earnings presentation, Apr 14, 2020
Slide 1: First Quarter 2020 Preliminary Earnings Call
First Quarter 2020 Preliminary Earnings Call John Plant – Chairman and Co-Chief Executive Officer Ken Giacobbe – EVP and Chief Financial Officer April 14, 2020 Formerly Arconic Inc.
Slide 2: Important Information
Important Information Preliminary Unaudited Financial Information for 1Q2020 The preliminary unaudited financial information presented herein is based upon information available as of April 14, 2020 and is subject to change and finalization based on completion of all quarter end close processes. For
Slide 3: Important Information (continued)
Important Information (continued) On April 1, 2020, Arconic Inc. completed the separation of its business into two independent, publicly-traded companies: Howmet Aerospace Inc. (the new name for Arconic Inc.) and Arconic Corporation. References herein to “Arconic Inc.” refer to Howmet Aerospace prio
Slide 4: Legal Separation completed on April 1
Legal Separation completed on April 1 Arconic Inc. EP&F GRP Engineered Products & Forgings Global Rolled Products Pre Separation Engine Products Global Rolled Products Fastening Systems Aluminum Extrusions (1Q 2020) Engineered Structures Building and Construction Systems Forged Wheels Post Separatio
Slide 5: Revenue – 1Q 2020
Revenue – 1Q 2020 ~(9%) ▪ Revenue expected to decrease ~9% YoY ~(6%) organic Arconic Inc. ▪ Organic Revenue expected to decrease ~6% YoY Revenue $3.54B ~$3.22B ▪ Declines in Commercial Trans, Automotive, and Aerospace driven by COVID-19 and 737 MAX production declines partially offset by growth in I
Slide 6: Operating Profit – 1Q 2020
Operating Profit – 1Q 2020 ~20% + Net Cost reductions Arconic Inc. + Lower raw material costs including aluminum price ~$475M Up ~350 Adjusted $397M bps YoY + Growth in Industrial volume Operating 11.2% ~14.7% Up ~160 – Declines in Commercial Transportation, Automotive, Aerospace bps QoQ Profit1 – C
Slide 7: Adjusted Earnings Per Share and Special Items – 1Q 2020
Adjusted Earnings Per Share and Special Items – 1Q 2020 ~42% Arconic Inc. $0.60 - $0.62 Adjusted $0.43 Earnings Per 14.7% ▪ Above high end of guidance of $0.47 - $0.53 11.2% Diluted Share1 1Q19 1Q20 Income before Net Earnings per 1Q 2020 Special Items ($M) income taxes2 Income2 diluted share Expecte
Slide 8: Liquidity
Liquidity Arconic Inc. (pre-separation) • 1Q 2020 ending cash balance of ~$2.65B1 prior to Separation Howmet Aerospace (post-separation) • Current cash balance of ~$850M after $1.3B early debt repayment and allocation of $500M to Arconic Corporation at Separation. More than 2x the amount necessary t
Slide 9: 2020 Outlook: Howmet Aerospace
2020 Outlook: Howmet Aerospace • COVID-19 future impact uncertain and guidance withdrawn • Commenced plans to reduce costs at Howmet Aerospace by a further $100M on a run rate basis; incremental to 2019 cost reduction actions • Evaluating capital expenditure reductions due to lower volumes • Tempora
Slide 10: rr) HOWMET
rr) HOWMET LJ AEROSPACE
Slide 11: Appendix
Appendix fri HOWMET UJ AEROSPACE
Slide 12: Reconciliation of Net income excluding Special items
Reconciliation of Net income excluding Special items ($ in millions, except per-share amounts) Net income excluding Special items Diluted EPS excluding Special items Quarter ended Quarter ended Estimated Estimated March 31, 2019 March 31, 2020 March 31, 2019 March 31, 2020 Net income $187 ~$205-215
Slide 13: Calculation of Engineered Products and Forgings Segment Operating Profit Margin
Calculation of Engineered Products and Forgings Segment Operating Profit Margin ($ in millions) 1Q19 Est. 1Q20 Segment operating profit $313 ~$340 Third-party sales $1,756 ~$1,640 Segment operating profit margin 17.8% ~20.8% Segment performance under Howmet’s management reporting system is evaluated
Slide 14: Calculation of Global Rolled Products Segment Operating Profit Margin
Calculation of Global Rolled Products Segment Operating Profit Margin ($ in millions) 1Q19 Est. 1Q20 Segment operating profit $135 ~$170 Third-party sales $1,784 ~$1,580 Segment operating profit margin 7.6% ~10.7% Third-party aluminum shipments (kmt) 331 ~312 Segment performance under Howmet’s manag
Slide 15: Calculation of Total Segment Operating Profit Margin
Calculation of Total Segment Operating Profit Margin ($ in millions) 1Q19 Est. 1Q20 Sales – Engineered Products and Forgings $1,756 ~$1,640 Sales – Global Rolled Products 1,784 ~1,580 Total segment sales $3,540 ~$3,220 Total segment operating profit(1) $448 ~$510 Total segment operating profit margi
Slide 16: Reconciliation of Total segment operating profit to Consolidated income before income taxes
Reconciliation of Total segment operating profit to Consolidated income before income taxes ($ in millions) 1Q19 Est. 1Q20 Total segment operating profit $448 ~$510 Unallocated amounts: Restructuring and other charges (12) ~(20) Corporate expense(1) (62) ~(90) Consolidated operating income (loss) $3
Slide 17: Reconciliation of Operating Income Excluding Special Items and Operating Income Margin
Reconciliation of Operating Income Excluding Special Items and Operating Income Margin, Excluding Special Items ($ in millions) 1Q19 4Q19 Est. 1Q20 Operating income (loss) $374 $416 ~$400 Special items: Restructuring and other charges 12 (10) ~20 Costs associated with planned separation 3 34 38 Envi
Slide 18: Reconciliation of Organic Revenue
Reconciliation of Organic Revenue ($ in millions) Quarter ended March 31, 2019 Est. 2020 Arconic Sales $3,541 ~$3,220 Less: Sales – UK forgings 32 — Sales – Itapissuma 40 ~11 Sales – South Korea 13 ~8 Aluminum price impact n/a ~(55) Foreign currency impact n/a ~(4) Arconic Organic revenue $3,456 ~$3