10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-3610

HOWMET AEROSPACE INC.

(Exact name of registrant as specified in its charter)

Delaware	25-0317820
(State of incorporation)	(I.R.S. Employer Identification No.)

201 Isabella Street, Suite 200, Pittsburgh, Pennsylvania 15212-5872

(Address of principal executive offices)      (Zip code)

Investor Relations 412-553-1950

Office of the Secretary 412-553-1940

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	HWM	New York Stock Exchange
$3.75 Cumulative Preferred Stock, par value $100.00 per share	HWM PR	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ✓    No     

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ✓    No      

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No  x

As of October 27, 2022, there were 413,712,037 shares of common stock, par value $1.00 per share, of the registrant outstanding.

TABLE OF CONTENTS 

		Page
Part I
Item 1.	Financial Statements and Supplementary Data	3
	Statement of Consolidated Operations for the Third Quarter and Nine Months Ended September 30, 2022 and 2021	3
	Statement of Consolidated Comprehensive Income for the Third Quarter and Nine Months Ended September 30, 2022 and 2021	4
	Consolidated Balance Sheet as of September 30, 2022 and December 31, 2021	5
	Statement of Consolidated Cash Flows for the Nine Months Ended September 30, 2022 and 2021	6
	Statement of Changes in Consolidated Equity for the Third Quarter Ended September 30, 2022 and 2021	7
	Statement of Changes in Consolidated Equity for the Nine Months Ended September 30, 2022 and 2021	8
	Notes to the Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
Part II
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
	Signatures	34

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data.

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Operations (unaudited)

(U.S. dollars in millions, except per-share amounts)

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Sales (C)	$	1,433	$	1,283	$	4,150	$	3,687
Cost of goods sold (exclusive of expenses below)	1,056		928		2,993		2,658
Selling, general administrative, and other expenses	73		70		225		190
Research and development expenses	7		4		23		13
Provision for depreciation and amortization	65		68		198		203
Restructuring and other charges (D)	4		8		12		22
Operating income	228		205		699		601
Loss on debt redemption (N)	—		118		2		141
Interest expense, net	57		63		172		201
Other expense, net (F)(Q)	67		1		67		13
Income before income taxes	104		23		458		246
Provision (benefit) for income taxes (G)	24		(4)		100		65
Net income	$	80	$	27	$	358	$	181
Amounts Attributable to Howmet Aerospace Common Shareholders (H):
Net income	$	79	$	26	$	356	$	179
Earnings per share:
Basic	$	0.19	$	0.06	$	0.86	$	0.42
Diluted	$	0.19	$	0.06	$	0.84	$	0.41
Average Shares Outstanding (in millions) (H):
Basic	415		429		417		431
Diluted	420		434		422		437

The accompanying notes are an integral part of the consolidated financial statements.

3

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(U.S. dollars in millions)

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income	$	80	$	27	$	358	$	181
Other comprehensive income (loss), net of tax (I):
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits	7		13		39		90
Foreign currency translation adjustments	(128)		(36)		(273)		(62)
Net change in unrecognized gains (losses) on cash flow hedges	2		(4)		(14)		4
Total Other comprehensive (loss) income, net of tax	(119)		(27)		(248)		32
Comprehensive (loss) income	$	(39)	$	—	$	110	$	213

The accompanying notes are an integral part of the consolidated financial statements.

4

Howmet Aerospace Inc. and subsidiaries

Consolidated Balance Sheet (unaudited)

(U.S. dollars in millions)

	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	453	$	720
Receivables from customers, less allowances of $— in both 2022 and 2021 (J)	550		367
Other receivables (J)	50		53
Inventories (K)	1,612		1,402
Prepaid expenses and other current assets	181		195
Total current assets	2,846		2,737
Properties, plants, and equipment, net (L)	2,288		2,467
Goodwill	3,965		4,067
Deferred income taxes	106		184
Intangibles, net	523		549
Other noncurrent assets (M)	201		215
Total assets	$	9,929	$	10,219
Liabilities
Current liabilities:
Accounts payable, trade	$	812	$	732
Accrued compensation and retirement costs	204		198
Taxes, including income taxes	56		61
Accrued interest payable	68		74
Other current liabilities (M)(Q)	240		183
Short-term debt (N)	1		5
Total current liabilities	1,381		1,253
Long-term debt, less amount due within one year (N)(O)	4,170		4,227
Accrued pension benefits (E)	689		771
Accrued other postretirement benefits (E)	147		153
Other noncurrent liabilities and deferred credits (M)	269		307
Total liabilities	6,656		6,711
Contingencies and commitments (Q)
Equity
Howmet Aerospace shareholders’ equity:
Preferred stock	55		55
Common stock	414		422
Additional capital	3,998		4,291
Retained earnings	917		603
Accumulated other comprehensive loss (I)	(2,111)		(1,863)
Total equity	3,273		3,508
Total liabilities and equity	$	9,929	$	10,219

The accompanying notes are an integral part of the consolidated financial statements.

5

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(U.S. dollars in millions)

	Nine months ended
	September 30,
	2022		2021
Operating activities
Net income	$	358	$	181
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization	198		203
Deferred income taxes	58		24
Restructuring and other charges	12		22
Net realized and unrealized losses	12		7
Net periodic pension cost (E)	17		13
Stock-based compensation	43		28
Loss on debt redemption (N)	2		141
Other	26		28
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
Increase in receivables (J)	(246)		(382)
(Increase) decrease in inventories	(271)		49
Decrease in prepaid expenses and other current assets	5		6
Increase in accounts payable, trade	130		63
Increase (decrease) in accrued expenses	18		(121)
Decrease in taxes, including income taxes	(1)		(15)
Pension contributions	(34)		(68)
Increase in noncurrent assets	(5)		(1)
Decrease in noncurrent liabilities	(44)		(32)
Cash provided from operations	278		146
Financing Activities
Net change in short-term borrowings (original maturities of three months or less)	(4)		—
Additions to debt (original maturities greater than three months) (N)	—		700
Payments on debt (original maturities greater than three months) (N)	(60)		(1,491)
Debt issuance costs (N)	—		(11)
Premiums paid on early redemption of debt (N)	(2)		(133)
Repurchase of common stock	(335)		(225)
Proceeds from exercise of employee stock options	14		17
Dividends paid to shareholders	(27)		(11)
Other	(23)		(20)
Cash used for financing activities	(437)		(1,174)
Investing Activities
Capital expenditures (C)	(148)		(138)
Proceeds from the sale of assets and businesses	42		8
Sale of debt securities	—		5
Cash receipts from sold receivables (J)	—		267
Other	—		2
Cash (used for) provided from investing activities	(106)		144
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3)		(1)
Net change in cash, cash equivalents and restricted cash	(268)		(885)
Cash, cash equivalents and restricted cash at beginning of period	722		1,611
Cash, cash equivalents and restricted cash at end of period	$	454	$	726

The accompanying notes are an integral part of the consolidated financial statements.

6

Howmet Aerospace Inc. and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(U.S. dollars in millions, except per-share amounts)

	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at June 30, 2021	$	55	$	429	$	4,481	$	517	$	(1,884)	$	3,598
Net income	—		—		—		27		—		27
Other comprehensive loss (I)	—		—		—		—		(27)		(27)
Cash dividends declared:
Preferred-Class A @ $0.9375 per share	—		—		—		(1)		—		(1)
Common @ $0.02 per share	—		—		—		(9)		—		(9)
Repurchase and retirement of common stock	—		(1)		(24)		—		—		(25)
Stock-based compensation	—		—		14		—		—		14
Common stock issued: compensation plans	—		—		2		—		—		2
Balance at September 30, 2021	$	55	$	428	$	4,473	$	534	$	(1,911)	$	3,579

	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at June 30, 2022	$	55	$	416	$	4,079	$	863	$	(1,992)	$	3,421
Net income	—		—		—		80		—		80
Other comprehensive loss (I)	—		—		—		—		(119)		(119)
Cash dividends declared:
Preferred-Class A @ $0.9375 per share	—		—		—		(1)		—		(1)
Common @ $0.06 per share	—		—		—		(25)		—		(25)
Repurchase and retirement of common stock	—		(3)		(97)		—		—		(100)
Stock-based compensation	—		—		14		—		—		14
Common stock issued: compensation plans	—		1		2		—		—		3
Balance at September 30, 2022	$	55	$	414	$	3,998	$	917	$	(2,111)	$	3,273

The accompanying notes are an integral part of the consolidated financial statements.

7

Howmet Aerospace Inc. and subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(U.S. dollars in millions, except per-share amounts)

	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at December 31, 2020	$	55	$	433	$	4,668	$	364	$	(1,943)	$	3,577
Net income	—		—		—		181		—		181
Other comprehensive income (I)	—		—		—		—		32		32
Cash dividends declared:
Preferred-Class A @ $2.8125 per share	—		—		—		(2)		—		(2)
Common @ $0.02 per share	—		—		—		(9)		—		(9)
Repurchase and retirement of common stock	—		(7)		(218)		—		—		(225)
Stock-based compensation	—		—		28		—		—		28
Common stock issued: compensation plans	—		2		(5)		—		—		(3)
Balance at September 30, 2021	$	55	$	428	$	4,473	$	534	$	(1,911)	$	3,579

 

	Preferred stock		Common stock		Additional capital		Retained earnings		Accumulated other comprehensive loss		Total Equity
Balance at December 31, 2021	$	55	$	422	$	4,291	$	603	$	(1,863)	$	3,508
Net income	—		—		—		358		—		358
Other comprehensive loss (I)	—		—		—		—		(248)		(248)
Cash dividends declared:
Preferred-Class A @ $2.8125 per share	—		—		—		(2)		—		(2)
Common @ $0.10 per share	—		—		—		(42)		—		(42)
Repurchase and retirement of common stock	—		(10)		(325)		—		—		(335)
Stock-based compensation	—		—		43		—		—		43
Common stock issued: compensation plans	—		2		(11)		—		—		(9)
Balance at September 30, 2022	$	55	$	414	$	3,998	$	917	$	(2,111)	$	3,273

The accompanying notes are an integral part of the consolidated financial statements.

8

Howmet Aerospace Inc. and subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(U.S. dollars in millions, except per-share amounts)

A. Basis of Presentation

The interim Consolidated Financial Statements of Howmet Aerospace Inc. and subsidiaries (“Howmet” or the “Company” or “we” or “our”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2021 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation.

In the third quarter of 2022, the Company derived approximately 47% of its revenue from products sold to the commercial aerospace market which is substantially less than the pre-pandemic 2019 annual rate of approximately 60%. Due to the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there has been a decrease in domestic and international air travel, which in turn has adversely affected demand for narrow-body and wide-body aircraft. Although domestic air travel is increasing, it is still below pre-pandemic 2019 levels on an average monthly basis. Year-to-date international travel also continues to be lower than pre-pandemic 2019 levels. Narrow-body demand is returning faster than wide-body demand and the commercial wide-body aircraft market is taking longer to recover, which is creating a shift in our product mix compared to pre-pandemic conditions. In addition to the impact from the pandemic, the timing and level of future aircraft builds by original equipment manufacturers are subject to changes and uncertainties, such as declines in Boeing 787 production rates due to delays in its recertification, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19 and changes in the aerospace industry as a result of the pandemic. The impact of these changes is rapidly changing and of unknown duration and macroeconomic impact and, as a result, these considerations remain highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19 and changes in the aerospace industry.

B. Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, 2021, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other guidance to simplify several other income tax accounting matters. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The FASB is currently working on a project to extend the date to December 31, 2024. Management does not believe that the impact of these changes will have a material impact on the Consolidated Financial Statements.

In September 2022, the FASB issued guidance to enhance the transparency of disclosures regarding supplier finance programs. These changes become effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

9

C. Segment Information

Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer believes that Segment Adjusted EBITDA is now a better representation of its business because it provides additional 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 (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are excluded from Net margin and Segment Adjusted EBITDA. 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.

Howmet’s operations consist of four worldwide reportable segments as follows:

Engine Products

Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts.

Fastening Systems

Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. Fastening Systems’ products are also critical components of commercial transportation vehicles, automobiles, construction and industrial equipment, and renewable energy sectors.

Engineered Structures

Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions, forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications.

Forged Wheels

Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.

10

The operating results of the Company’s reportable segments were as follows:

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Sales:
Third-party sales	$	683	$	291	$	193	$	266	$	1,433
Inter-segment sales	1		—		3		—		4
Total sales	$	684	$	291	$	196	$	266	$	1,437
Profit and loss:
Provision for depreciation and amortization	$	31	$	11	$	12	$	10	$	64
Segment Adjusted EBITDA	186		64		28		64		342
Restructuring and other charges	2		—		1		—		3
Capital expenditures	23		7		3		6		39
Third quarter ended September 30, 2021
Sales:
Third-party sales	$	599	$	254	$	199	$	231	$	1,283
Inter-segment sales	1		—		1		—		2
Total sales	$	600	$	254	$	200	$	231	$	1,285
Profit and loss:
Provision for depreciation and amortization	$	31	$	12	$	12	$	10	$	65
Segment Adjusted EBITDA	151		59		26		72		308
Restructuring and other charges	5		3		—		—		8
Capital expenditures	21		8		3		15		47
	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Nine months ended September 30, 2022
Sales:
Third-party sales	$	1,966	$	832	$	560	$	792	$	4,150
Inter-segment sales	3		—		5		—		8
Total sales	$	1,969	$	832	$	565	$	792	$	4,158
Profit and loss:
Provision for depreciation and amortization	$	93	$	34	$	36	$	30	$	193
Segment Adjusted EBITDA	538		176		77		206		997
Restructuring and other charges (credits)	9		(3)		4		—		10
Capital expenditures	74		30		12		20		136
Nine months ended September 30, 2021
Sales:
Third-party sales	$	1,677	$	788	$	535	$	687	$	3,687
Inter-segment sales	3		—		4		—		7
Total sales	$	1,680	$	788	$	539	$	687	$	3,694
Profit and loss:
Provision for depreciation and amortization	$	92	$	37	$	37	$	29	$	195
Segment Adjusted EBITDA	413		179		72		222		886
Restructuring and other charges	15		8		1		—		24
Capital expenditures	48		22		13		37		120

11

The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total Segment Adjusted EBITDA	$	342	$	308	$	997	$	886
Segment provision for depreciation and amortization	(64)		(65)		(193)		(195)
Unallocated amounts:
Restructuring and other charges	(4)		(8)		(12)		(22)
Corporate expense	(46)		(30)		(93)		(68)
Operating income	$	228	$	205	$	699	$	601
Loss on debt redemption	—		(118)		(2)		(141)
Interest expense, net	(57)		(63)		(172)		(201)
Other expense, net (Q)	(67)		(1)		(67)		(13)
Income before income taxes	$	104	$	23	$	458	$	246

The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total segment capital expenditures	$	39	$	47	$	136	$	120
Corporate	3		—		12		18
Capital expenditures	$	42	$	47	$	148	$	138

12

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Aerospace - Commercial	$	388	$	156	$	124	$	—	$	668
Aerospace - Defense	124		43		56		—		223
Commercial Transportation	—		63		—		266		329
Industrial and Other	171		29		13		—		213
Total end-market revenue	$	683	$	291	$	193	$	266	$	1,433
Third quarter ended September 30, 2021
Aerospace - Commercial	$	299	$	126	$	118	$	—	$	543
Aerospace - Defense	130		37		65		—		232
Commercial Transportation	—		59		—		231		290
Industrial and Other	170		32		16		—		218
Total end-market revenue	$	599	$	254	$	199	$	231	$	1,283
Nine months ended September 30, 2022
Aerospace - Commercial	$	1,079	$	459	$	341	$	—	$	1,879
Aerospace - Defense	384		112		176		—		672
Commercial Transportation	—		169		—		792		961
Industrial and Other	503		92		43		—		638
Total end-market revenue	$	1,966	$	832	$	560	$	792	$	4,150
Nine months ended September 30, 2021
Aerospace - Commercial	$	786	$	403	$	277	$	—	$	1,466
Aerospace - Defense	402		120		206		—		728
Commercial Transportation	—		154		—		687		841
Industrial and Other	489		111		52		—		652
Total end-market revenue	$	1,677	$	788	$	535	$	687	$	3,687

The Company derived 61% and 60% of its revenue from the aerospace market for the nine months ended September 30, 2022 and 2021, respectively.

General Electric Company represented approximately 13% of the Company’s third-party sales for both the nine months ended September 30, 2022 and 2021, primarily from Engine Products.

D. Restructuring and Other Charges

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Layoff costs	$	—	$	—	$	—	$	2
Reversals of previously recorded layoff reserves	—		—		(1)		(1)
Pension and Other post-retirement benefits - net settlements (E)	3		3		7		9
Non-cash asset impairments	—		4		—		8
Net loss related to divestitures of assets and businesses (P)	—		—		—		4
Other	1		1		6		—
Restructuring and other charges	$	4	$	8	$	12	$	22

In the third quarter of 2022, the Company recorded Restructuring and other charges of $4, which were primarily due to charges

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for U.S. and Canadian pension plan settlements of $3 and exit related costs, including accelerated depreciation, of $1.

In the nine months ended September 30, 2022, the Company recorded Restructuring and other charges of $12, which were primarily due to charges for U.S. pension plan settlements of $7 and exit related costs, including accelerated depreciation, of $6, partially offset by a reversal of $1 for a layoff reserve related to a prior period.

In the third quarter and nine months ended September 30, 2021, the Company recorded Restructuring and other charges of $8 and $22, respectively, which were primarily due to charges for pension plan settlements and exit related costs.

	Layoff costs		Other exit costs		Total
Reserve balances at December 31, 2021	$	17	$	2	$	19
Cash payments	(9)		(5)		(14)
Restructuring charges	6		6		12
Other(1)	(7)		(1)		(8)
Reserve balances at September 30, 2022	$	7	$	2	$	9

(1)In the nine months ended September 30, 2022, other for layoff costs included a $7 charge for U.S. pension plan settlements and for other exit costs included a $1 charge for accelerated depreciation.

The majority of the layoff cost and other exit cost reserves is expected to be paid in cash during the remainder of 2022 and 2023, with small amounts to be paid in 2024.

E. Pension and Other Postretirement Benefits

The components of net periodic cost (benefit) were as follows:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension benefits
Service cost	$	1	$	1	$	3	$	3
Interest cost	13		12		38		36
Expected return on plan assets	(20)		(23)		(61)		(69)
Recognized net actuarial loss	12		14		37		43
Settlements	3		3		7		9
Net periodic cost(1)	$	9	$	7	$	24	$	22
Other postretirement benefits
Service cost	$	—	$	—	$	1	$	1
Interest cost	1		1		3		4
Recognized net actuarial loss	—		1		1		1
Amortization of prior service benefit	(2)		(3)		(7)		(7)
Net periodic benefit(1)	$	(1)	$	(1)	$	(2)	$	(1)

 

(1)Service cost was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations.

Pension benefits

The Company applied settlement accounting to certain small U.S. and Canadian pension plans due to lump sum payments made to participants, which resulted in settlement charges of $3 and $7 in the third quarter and nine months ended September 30, 2022, respectively, and $3 and $9 in the third quarter and nine months ended September 30, 2021, respectively, that were recorded in Restructuring and other charges in the Statement of Consolidated Operations.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA 2021”) was signed into law in the United States. ARPA 2021, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974. For the third quarter and nine months ended

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September 30, 2022, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $18 and $43, respectively. For the third quarter and nine months ended September 30, 2021, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $10 and $79, respectively.

Other postretirement benefits

In the first quarter of 2021, the Company announced a plan administration change of certain of its Medicare-eligible prescription drug benefits to an Employer Group Waiver Plan with a wrap-around secondary plan effective July 1, 2021. The administration change is expected to reduce costs to the Company through the usage of Medicare Part D and drug manufacturer subsidies. Due to this amendment, along with the associated plan remeasurements, the Company recorded a decrease to its Accrued other postretirement benefits liability of $39, which was offset in Accumulated other comprehensive loss in the Consolidated Balance Sheet.

F. Other Expense, Net

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Non-service related net periodic benefit cost	$	4	$	2	$	11	$	8
Interest income	(2)		(1)		(3)		(2)
Foreign currency (gains) losses, net	(3)		(2)		(7)		1
Net realized and unrealized losses	5		3		12		7
Deferred compensation	(2)		(1)		(11)		5
Other, net	65		—		65		(6)
Other expense, net	$	67	$	1	$	67	$	13

In the third quarter and nine months ended September 30, 2022, Other, net primarily includes the $65 adverse judgment related to Lehman Brothers International (Europe) swaps that were entered into in 2007 and 2008, which were assumed as part of the Firth Rixson acquisition in 2014 (see Note Q).

G. Income Taxes

The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

The estimated annual effective tax rate, before discrete items, applied to ordinary income was 24.3% in both the third quarter and nine months ended September 30, 2022 and 29.7% in both the third quarter and nine months ended September 30, 2021. The 2022 and 2021 rates were higher than the U.S. federal statutory rate of 21% primarily due to additional estimated U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, and nondeductible expenses.

For the third quarter of 2022 and 2021, the tax rate including discrete items was 23.1% (provision on income) and 17.4% (benefit on income), respectively. For the third quarter of 2022, the Company recorded a discrete tax benefit of $2 for other small items. For the third quarter of 2021, the Company recorded a discrete tax benefit of $12 related to a net $13 benefit from prior year amended returns and audit settlements and a net $1 charge for other small items.

For the nine months ended September 30, 2022 and 2021, the tax rate including discrete items was 21.8% and 26.4%, respectively. For the nine months ended September 30, 2022, the Company recorded a discrete tax benefit of $11 attributable to a $6 benefit to release a valuation allowance related to an interest carryforward tax attribute in the U.K. and a $5 excess benefit for stock compensation. For the nine months ended September 30, 2021, the Company recorded a discrete tax benefit of $9 attributable to a net $13 benefit related to prior year amended returns and audit settlements, a $2 charge for a U.K. tax rate change, and a net $2 charge for other small items.

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The tax provision (benefit) was comprised of the following:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pre-tax income at estimated annual effective income tax rate before discrete items	$	24	$	7	$	111	$	73
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	2		1		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	—		—		—		1
Other discrete items	(2)		(12)		(11)		(9)
Provision (benefit) for income taxes	$	24	$	(4)	$	100	$	65

H. Earnings Per Share and Common Stock

Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions):

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income attributable to common shareholders	$	80	$	27	$	358	$	181
Less: preferred stock dividends declared	1		1		2		2
Net income available to Howmet Aerospace common shareholders - basic and diluted	$	79	$	26	$	356	$	179
Average shares outstanding - basic	415		429		417		431
Effect of dilutive securities:
Stock and performance awards	5		4		5		5
Stock options	—		1		—		1
Average shares outstanding - diluted	420		434		422		437

Common stock outstanding at September 30, 2022 and 2021 was approximately 414 million and 428 million, respectively.

On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 of the Company's outstanding common stock. In the quarter ended September 30, 2022, the Company repurchased approximately 3 million shares of its common stock at an average price of $36.17 per share (excluding commissions cost) for $100 in cash. For the nine months ended September 30, 2022, the Company repurchased approximately 10 million shares for $335 in cash. All of the shares repurchased have been retired. After giving effect to the share repurchases made through September 30, 2022, approximately $1,012 Board authorization remains available. Under the Company’s share repurchase programs (the “Share Repurchase Programs”), the Company may repurchase shares 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 and/or accelerated share repurchase agreements, or other derivative transactions. There is no stated expiration for the Share Repurchase Programs. Under its Share Repurchase Programs, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations, including limits under its Five-Year Revolving Credit Agreement (the “Credit Agreement”) (see Note N). The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Programs may be suspended, modified or terminated at any time without prior notice.

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The approximately 14 million decrease in average shares outstanding (basic) for the third quarter of 2022 compared to the third quarter of 2021 was primarily due to the approximately 16 million shares repurchased between October 1, 2021 and September 30, 2022. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not realized in EPS in the third quarter and nine months ended September 30, 2022 as share repurchases occurred at varying points during the quarter.

There were no stock options shares excluded from the calculation of average shares outstanding – diluted for the third quarter and nine months ended September 30, 2022 and 2021.

Common stock dividends declared were $0.06 per share in the third quarter of 2022 (of which $0.02 per share was paid) and $0.10 per share in the nine months ended September 30, 2022 (of which $0.06 per share was paid). Common stock dividends declared and paid were $0.02 per share for both the third quarter and nine months ended September 30, 2021.

I. Accumulated Other Comprehensive Loss

The following table details the activity of the three components that comprise Accumulated other comprehensive loss:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension and other postretirement benefits (E)
Balance at beginning of period	$	(767)	$	(903)	$	(799)	$	(980)
Other comprehensive income:
Unrecognized net actuarial gain and prior service cost/benefit	(3)		1		13		68
Tax expense	—		—		(3)		(15)
Total Other comprehensive (loss) income before reclassifications, net of tax	(3)		1		10		53
Amortization of net actuarial loss and prior service cost(1)	13		15		38		46
Tax expense(2)	(3)		(3)		(9)		(9)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	10		12		29		37
Total Other comprehensive income	7		13		39		90
Balance at end of period	$	(760)	$	(890)	$	(760)	$	(890)
Foreign currency translation
Balance at beginning of period	$	(1,207)	$	(992)	$	(1,062)	$	(966)
Other comprehensive loss	(128)		(36)		(273)		(62)
Balance at end of period	$	(1,335)	$	(1,028)	$	(1,335)	$	(1,028)
Cash flow hedges
Balance at beginning of period	$	(18)	$	11	$	(2)	$	3
Other comprehensive (loss) income:
Net change from periodic revaluations	(6)		1		(17)		20
Tax income (expense)	2		—		4		(4)
Total Other comprehensive (loss) income before reclassifications, net of tax	(4)		1		(13)		16
Net amount reclassified to earnings	9		(7)		(1)		(15)
Tax (expense) benefit(2)	(3)		2		—		3
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(3)	6		(5)		(1)		(12)
Total Other comprehensive income (loss)	2		(4)		(14)		4
Balance at end of period	$	(16)	$	7	$	(16)	$	7
Accumulated other comprehensive loss	$	(2,111)	$	(1,911)	$	(2,111)	$	(1,911)

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(1)These amounts were recorded in Other expense, net (see Note F) and Restructuring and other charges (see Note D) in the Statement of Consolidated Operations.

(2)These amounts were included in Provision (benefit) for income taxes (see Note G) in the Statement of Consolidated Operations.

(3)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

J. Receivables

Sale of Receivables Programs

The Company maintains an accounts receivables securitization arrangement through a wholly-owned special purpose entity (“SPE”). The Company previously had a second arrangement which terminated on August 30, 2021. The net cash funding from the sale of accounts receivable was neither a use of cash nor a source of cash for any quarter of 2022 or 2021.

The terminated arrangement was with financial institutions to sell certain customer receivables without recourse on a revolving basis. The Company had $44 net cash repayments ($41 in draws and $85 in repayments) for the nine months ended September 30, 2021 in connection with this arrangement. The total cash receipts from both customer payments on sold receivables (which were cash receipts on the underlying trade receivables that had been previously sold) and net cash repayments under the program were presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows for the nine months ended September 30, 2021.

The current accounts receivables securitization arrangement is one in which the Company, through an SPE, has a receivables purchase agreement (the “Receivables Purchase Agreement”) such that the SPE may sell certain receivables to financial institutions until the earlier of August 30, 2024 or a termination event. The Receivables Purchase Agreement also contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. This accounts receivable securitization arrangement totaled $325 at both September 30, 2022 and December 31, 2021 of which $250 was drawn as of both September 30, 2022 and December 31, 2021. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which were $161 and $79 at September 30, 2022 and December 31, 2021, respectively.

The Company sold $453 and $1,354 of its receivables without recourse and received cash funding under this program during the third quarter and nine months ended September 30, 2022, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. Costs associated with the sales of receivables are reflected in the Company’s Statement of Consolidated Operations for the periods in which the sales occur. Cash receipts from sold receivables under the Receivables Purchase Agreement are presented within operating activities in the Statement of Consolidated Cash Flows.

Other Customer Receivable Sales

In the third quarter and nine months ended September 30, 2022, the Company sold $127 and $350, respectively, of certain customers’ receivables in exchange for cash ($123 was outstanding from customers at September 30, 2022), the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. In the third quarter and nine months ended September 30, 2021, the Company sold $103 and $267, respectively, of certain customers’ receivables in exchange for cash, the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows.

K. Inventories

	September 30, 2022		December 31, 2021
Finished goods	$	493	$	478
Work-in-process	758		631
Purchased raw materials	314		256
Operating supplies	47		37
Total inventories	$	1,612	$	1,402

At September 30, 2022 and December 31, 2021, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was $668 and $523, respectively. These amounts exclude the effects of LIFO valuation reductions, which were $206 and $192 at September 30, 2022 and December 31, 2021, respectively.

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L. Properties, Plants, and Equipment, net

	September 30, 2022		December 31, 2021
Land and land rights(1)	$	84	$	91
Structures(1)	960		1,034
Machinery and equipment	3,851		3,932
	4,895		5,057
Less: accumulated depreciation and amortization(1)	2,765		2,772
	2,130		2,285
Construction work-in-progress	158		182
Properties, plants, and equipment, net	$	2,288	$	2,467

(1)In the first quarter of 2022, the Company entered into an agreement to sell the corporate headquarters in Pittsburgh, PA. The proceeds from the sale of the corporate headquarters, which closed in June 2022, were $44, excluding $3 of transaction costs, and the carrying value at the time of sale was $41. A loss of less than $1 was recorded in Restructuring and other charges in the Statement of Consolidated Operations upon finalization of the sale in the second quarter of 2022. The Company entered into a 12-year lease with the purchaser for a portion of the property.

The Company incurred capital expenditures which remained unpaid at September 30, 2022 and September 30, 2021 of $30 and $42, respectively, and will result in cash outflows within investing activities in the Statement of Consolidated Cash Flows in subsequent periods.

M. Leases

Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $16 and $15 in the third quarter of 2022 and 2021, respectively. Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $46 and $48 in the nine months ended September 30, 2022 and 2021, respectively.

Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:

	September 30, 2022		December 31, 2021
Right-of-use assets classified in Other noncurrent assets	$	106	$	108
Current portion of lease liabilities classified in Other current liabilities	$	31	$	33
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits	80		81
Total lease liabilities	$	111	$	114

N. Debt

	September 30, 2022		December 31, 2021
5.125% Notes, due 2024	$	1,090	$	1,150
6.875% Notes, due 2025	600		600
5.900% Notes, due 2027	625		625
6.750% Bonds, due 2028	300		300
3.000% Notes, due 2029	700		700
5.950% Notes, due 2037	625		625
4.750% Iowa Finance Authority Loan, due 2042	250		250
Other(1)	(19)		(18)
	4,171		4,232
Less: amount due within one year	1		5
Total long-term debt	$	4,170	$	4,227

(1)Includes various financing arrangements related to subsidiaries, unamortized debt discounts, and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above.

19

Public Debt

On January 15, 2021, the Company completed the early redemption of all the remaining $361 of its 5.400% Notes due 2021 at par and paid $5 in accrued interest.

On May 3, 2021, the Company completed the early redemption of all the remaining $476 aggregate principal amount of its 5.870% Notes due 2022 and paid an aggregate of $503, including $5 of accrued interest. The Company also incurred an early termination premium and other costs of $23, which was recorded in Loss on debt redemption in the Statement of Consolidated Operations.

On September 1, 2021, the Company completed an offering of $700 aggregate principal amount of 3.000% Notes due 2029, the proceeds of which have been used to fund the cash tender offer noted below and to pay related transaction fees, including applicable premiums and expenses.

On September 2, 2021, the Company completed a cash tender offer and repurchased approximately $600 aggregate principal amount of its 6.875% Notes due 2025. The amount of tender premium and accrued interest associated with the notes accepted for settlement were $105 and $14, respectively, which were recorded in Loss on debt redemption and Interest expense, net, respectively, in the Statement of Consolidated Operations.

In the third quarter of 2021, the Company repurchased in the open market approximately $53 aggregate principal amount of its 5.125% Notes due 2024 (the “5.125% Notes”) and paid approximately $59, including an early termination premium and accrued interest of approximately $5 and $1, respectively, which were recorded in Loss on debt redemption and Interest expense, net, respectively.

In the second quarter of 2022, the Company repurchased in the open market approximately $60 aggregate principal amount of its 5.125% Notes and paid approximately $62, including an early termination premium of approximately $2, which was recorded in Loss on debt redemption in the Statement of Consolidated Operations.

Credit Facility

On September 28, 2021, the Company amended and restated its Credit Agreement. The Credit Agreement provides a $1,000 senior unsecured revolving credit facility that matures on September 28, 2026, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Capitalized terms used in this “Credit Facility” section but not otherwise defined shall have the meanings given to such terms in the Credit Agreement.

Under the Credit Agreement, the Company’s ratio of Consolidated Net Debt to Consolidated EBITDA as of the end of each fiscal quarter for the period of the four fiscal quarters of the Company most recently ended, is required to be no greater than 3.50 to 1.00; provided, however, that during the Covenant Relief Period through December 31, 2022 (unless the Company elects to terminate the Covenant Relief Period earlier in accordance with the Credit Agreement), the Company’s Consolidated Net Debt to Consolidated EBITDA ratio cannot exceed the levels set forth below:

	No greater than
(i) for the quarter ending September 30, 2022	4.25 to 1.00
(ii) for the quarter ending December 31, 2022	3.75 to 1.00

During the Covenant Relief Period, common stock dividends and share repurchases (see Note H) are permitted only if no loans under the Credit Agreement are outstanding at the time and are limited to an aggregate amount not to exceed $500 during the year ending December 31, 2022. Common stock dividends and share repurchases were $377 for the nine months ended September 30, 2022.

There were no amounts outstanding under the Credit Agreement at September 30, 2022 or December 31, 2021, and no amounts were borrowed during 2022 or 2021 under the Credit Agreement. At September 30, 2022, the Company was in compliance with all covenants under the Credit Agreement. Availability under the Credit Agreement could be reduced in future periods if the Company fails to maintain the required ratios referenced above.

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O. Fair Value of Financial Instruments

The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

	September 30, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value
Long-term debt, less amount due within one year	$	4,170	$	3,905	$	4,227	$	4,707

Restricted cash, which is included in Prepaid expenses and other current assets in the Consolidated Balance Sheet, was $1 and $2 at September 30, 2022 and December 31, 2021, respectively.

P. Divestiture

2021 Divestiture

On March 15, 2021, the Company reached an agreement to sell a small manufacturing plant in France within the Fastening Systems segment, which resulted in a charge of $4 related to the non-cash impairment of the net book value of the business, primarily goodwill, in the first quarter of 2021 which was recorded in Restructuring and other charges in the Statement of Consolidated Operations. On June 1, 2021, the Company completed the sale for $10 (of which $8 of cash was received in the second quarter of 2021). In the third quarter of 2022, $1 was received, and the remaining $1 in escrow is expected to be received in the third quarter of 2023.

Q. Contingencies and Commitments

Contingencies

The following information supplements and, as applicable, updates the discussion of the contingencies and commitments in Note V to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”), and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Environmental Matters. Howmet participates in environmental assessments and cleanups at more than 30 locations. These include owned or operating facilities and adjoining properties, previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.

The Company’s remediation reserve balance was $15 at both September 30, 2022 and December 31, 2021, and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $7 and $6, respectively, was classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were less than $1 in the third quarter ended September 30, 2022 and included expenditures currently mandated, as well as those not required by any regulatory authority or third party.

Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be less than 1% of Cost of goods sold.

21

Indemnified Matters. The Separation and Distribution Agreement, dated October 31, 2016, that the Company entered into with Alcoa Corporation in connection with its separation from Alcoa Corporation, provides for cross-indemnities between the Company and Alcoa Corporation for claims subject to indemnification. The Separation and Distribution Agreement, dated March 31, 2020, that the Company entered into with Arconic Corporation in connection with its separation from Arconic Corporation, provides for cross-indemnities between the Company and Arconic Corporation for claims subject to indemnification. Among other claims that are covered by these indemnities, Arconic Corporation indemnifies the Company (f/k/a Arconic Inc. and f/k/a Alcoa Inc.) for all potential liabilities associated with the fire that occurred at the Grenfell Tower in London, U.K. on June 14, 2017, including the following legal proceedings, as updated from the Form 10-K:

United Kingdom Litigation (various claims on behalf of survivors and estates of decedents). The suits are stayed. A case management conference was held during the week of April 26, 2022. On July 28, 2022, the stay was extended.

Behrens et al. v. Arconic Inc. et al. (various claims on behalf of survivors and estates of decedents). On September 16, 2020, the court dismissed the U.S. case, determining that the U.K. is the appropriate jurisdiction for the case. On July 8, 2022, the Third Circuit Court of Appeals affirmed the dismissal. A petition for a rehearing was filed before the Third Circuit Court, which the Third Circuit Court denied on October 7, 2022.

Howard v. Arconic Inc. et al. (securities law related claims). The court held a status conference on September 14, 2022, and the parties are currently awaiting an order from the court setting the schedule for class certification briefing and discovery.

With respect to the Raul v. Albaugh, et al. (derivative related claim) proceeding, the regulatory investigations and the stockholder demands specified in the Form 10-K, there are no updates.

Lehman Brothers International (Europe) (“LBIE”) Legal Proceeding. On June 26, 2020, Lehman Brothers International (Europe) (“LBIE”) filed proceedings in the High Court of Justice, Business and Property Courts of England and Wales (the “Court”) against two subsidiaries of the Company, FR Acquisitions Corporation (Europe) Ltd and JFB Firth Rixson Inc. (collectively, the “Firth Rixson Entities”). The proceedings concern two interest rate swap transactions with LBIE (collectively, the “ISDAs”). In 2007 and 2008, the Firth Rixson Entities, then owned by Oak Hill, entered into the ISDAs in order to meet their obligation to hedge interest rate exposure under a lending agreement with LBIE. When LBIE went into bankruptcy in 2008, the Firth Rixson Entities entered into alternative swap agreements with another counterparty in order to meet this hedging obligation. The Firth Rixson Entities were acquired by the Company as part of its acquisition of the Firth Rixson business from Oak Hill in 2014. In the LBIE legal proceeding, LBIE claims the amounts owing by the Firth Rixson Entities under the ISDAs to be approximately $64, plus applicable interest. The Court issued its ruling in these proceedings on October 11, 2022 (the “Judgment”). In its ruling, the Court determined that the event of default under the ISDAs caused by LBIE as a result of its insolvency in 2008 and other defaults will conclude upon LBIE’s expected emergence from administration under the Insolvency Act of 1986. The Court ruled that upon such future event and other relevant steps being completed, the timing of which is unknown, the Firth Rixson Entities will be obligated to pay amounts due under the ISDAs. The Company recorded $65 in Other current liabilities in the Consolidated Balance Sheet, and took a pre-tax charge of this amount in Other expense, net in the Statement of Consolidated Operations in the third quarter and nine months ended September 30, 2022. The matter of interest was not specifically addressed in the proceeding and no related amounts have been reserved. The Company vigorously disagrees with the ruling including as to any payment obligation in respect of the principal as well as any interest. The Company intends to apply to appeal the Judgment to the Court of Appeal and will request that payment of all amounts be stayed until the appeal is concluded. This application is expected to be addressed at a hearing before the Court by the end of this year, and any appeal proceedings would continue into 2023.

Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, safety and health, employment, tax and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.

Commitments

Guarantees

At September 30, 2022, Howmet had outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, energy contracts, and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between 2022 and 2040, was $11 at September 30, 2022.

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Pursuant to the Separation and Distribution Agreement, dated as of October 31, 2016, between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which had a fair value of $6 at both September 30, 2022 and December 31, 2021, and were included in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet. The remaining guarantee, for which the Company and Arconic Corporation are secondarily liable in the event of a payment default by Alcoa Corporation, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation facility. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. The Company and Arconic Corporation are required to provide a guarantee up to an estimated present value amount of approximately $1,406 at both September 30, 2022 and December 31, 2021 in the event of an Alcoa Corporation default. In December 2021, a surety bond with a limit of $80 relating to this guarantee was obtained by Alcoa Corporation to protect Howmet’s obligation. This surety bond will be renewed on an annual basis by Alcoa Corporation.

Letters of Credit

The Company has outstanding letters of credit primarily related to workers’ compensation, environmental obligations, and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2022 and 2023, was $123 at September 30, 2022.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to retain letters of credit of $53 (which are included in the $123 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation and letters of credit fees paid by the Company are proportionally billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively. Also, the Company was required to provide letters of credit for certain Arconic Corporation environmental obligations and, as a result, the Company has $17 of outstanding letters of credit relating to such liabilities (which are also included in the $123 in the above paragraph).

Surety Bonds

The Company has outstanding surety bonds primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these annual surety bonds, which expire and automatically renew at various dates, primarily in 2022 and 2023, was $43 at September 30, 2022.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of $22 (which are included in the $43 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation claims and surety bond fees paid by the Company are proportionately billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively.

R. Subsequent Events

Management evaluated all activity of Howmet and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:

See Note Q for the unfavorable judgment related to the LBIE legal proceeding.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(U.S. dollars in millions, except per share amounts)

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 I, Item 1 (Financial Statements and Supplementary Data) of this Form 10-Q.

Overview

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

In the third quarter of 2022, the Company derived approximately 47% of its revenue from products sold to the commercial aerospace market which is substantially less than the pre-pandemic 2019 annual rate of approximately 60%. Due to the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there has been a decrease in domestic and international air travel, which in turn has adversely affected demand for narrow-body and wide-body aircraft. Although domestic air travel is increasing, it is still below pre-pandemic 2019 levels on an average monthly basis. Year-to-date international travel also continues to be lower than pre-pandemic 2019 levels. Narrow-body demand is returning faster than wide-body demand and the commercial wide-body aircraft market is taking longer to recover, which is creating a shift in our product mix compared to pre-pandemic conditions. In addition to the impact from the pandemic, the timing and level of future aircraft builds by original equipment manufacturers are subject to changes and uncertainties, such as declines in Boeing 787 production rates due to delays in its recertification, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

For additional information regarding the ongoing risks related to our business, see section Part I, Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Results of Operations

Earnings Summary:

Sales. Sales were $1,433 in the third quarter of 2022 compared to $1,283 in the third quarter of 2021 and $4,150 in the nine months ended September 30, 2022 compared to $3,687 in the nine months ended September 30, 2021. The increase of $150, or 12%, in the third quarter of 2022 was primarily due to higher sales of 23% from the commercial aerospace market, an increase in material cost pass through of approximately $70, and favorable product pricing of $17, partially offset by lower sales in the defense aerospace market. The increase of $463, or 13%, in the nine months ended September 30, 2022 was primarily due to higher sales of 28% from the commercial aerospace market, an increase in material cost pass through of approximately $170, and favorable product pricing of $50, partially offset by lower sales in the defense aerospace market.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 73.7% in the third quarter of 2022 compared to 72.3% in the third quarter of 2021 and 72.1% in both the nine months ended September 30, 2022 and September 30, 2021. The increase in the third quarter of 2022 was primarily due to total COGS charges of $25 in the third quarter of 2022 related to fires that occurred at a Fastening Systems plant in France in 2019 (the “France Plant Fire”) and at a Forged Wheels plant in Barberton, Ohio in 2020 (the “Barberton Plant Fire”), and a mechanical failure resulting in substantial heat and fire-related damage to equipment at the Company’s cast house in Barberton, Ohio in the third quarter of 2022 (the “Barberton Cast House Incident”), compared to total COGS charges of $1 related to the France Plant Fire and Barberton Plant Fire in the third quarter of 2021, as well as material cost pass through and increased headcount, primarily in the Engine Products segment, in anticipation of future revenue increases, partially offset by higher volumes and favorable product pricing. COGS was flat in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to COGS charges of $32 in the nine months ended September 30, 2022 related to the France Plant Fire, Barberton Plant Fire, and Barberton Cast House Incident, compared to net charges of $7 in the nine months ended September 30, 2021 related to the France Plant Fire and the Barberton Plant Fire, as well as material cost pass through and increased headcount, primarily in the Engine Products and Fastening Systems segments, in anticipation of future revenue increases, offset by higher volumes and favorable product pricing. The Company has submitted insurance claims related to these plant fires. The Company anticipates additional charges of approximately $25 to $30 in the fourth quarter of 2022, with further impacts in subsequent quarters as the businesses continue to recover from the fires.

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Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $73 in the third quarter of 2022 compared to $70 in the third quarter of 2021 and $225 in the nine months ended September 30, 2022 compared to $190 in the nine months ended September 30, 2021. The increase of $3, or 4%, in the third quarter of 2022 was primarily due to higher employment costs. The increase of $35, or 18%, in the nine months ended September 30, 2022 was primarily due to higher employment and legacy costs, as well as legal and other advisory reimbursements received in 2021 that did not occur in 2022.

Research and development expenses (“R&D”). R&D expenses were $7 in the third quarter of 2022 and $4 in the third quarter of 2021, an increase of $3, or 75%. R&D expenses were $23 in the nine months ended September 30, 2022 and $13 in the nine months ended September 30, 2021, an increase of $10, or 77%. The increase in the third quarter and nine months ended September 30, 2022 was primarily due to higher spending on technology projects.

Restructuring and other charges. Restructuring and other charges were $4 in the third quarter of 2022 compared to $8 in the third quarter of 2021 or a decrease of $4. Restructuring and other charges were $12 in the nine months ended September 30, 2022 compared to $22 in the nine months ended September 30, 2021 or a decrease of $10. Restructuring and other charges for the third quarter of 2022 were primarily due to charges for U.S. and Canadian pension plan settlements of $3 and exit related costs, including accelerated depreciation, of $1. Restructuring and other charges for the nine months ended September 30, 2022 were primarily due to charges for U.S. pension plan settlements of $7 and exit related costs, including accelerated depreciation, of $6, partially offset by a reversal of $1 for a layoff reserve related to a prior period. Restructuring and other charges for the third quarter and nine months ended September 30, 2021 were primarily due to charges for pension plan settlements and exit related costs. Most of the Company’s global pension plans currently offer lump-sum payment options.

See Note D to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Interest expense, net. Interest expense, net was $57 in the third quarter of 2022 compared to $63 in the third quarter of 2021 and $172 in the nine months ended September 30, 2022 compared to $201 in the nine months ended September 30, 2021. The decrease of $6, or 10%, in the third quarter of 2022 and $29, or 14%, in the nine months ended September 30, 2022 was primarily due to a reduced average level of debt for the third quarter and nine months ended September 30, 2022.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Loss on debt redemption. Debt redemption or tender premiums include the cost to redeem or repurchase certain of the Company’s notes at a price which may be equal to the greater of the principal amount or the sum of the present values of the remaining scheduled payments, discounted using a defined treasury rate plus a spread, or a price based on the market price of its notes. Loss on debt redemption was zero in the third quarter of 2022 compared to $118 in the third quarter of 2021 and $2 in the nine months ended September 30, 2022 compared to $141 in the nine months ended September 30, 2021. The decrease of $118 in the third quarter of 2022 and $139 in the nine months ended September 30, 2022 was primarily due to the debt premiums paid on the 6.875% Notes due 2025 and the 5.125% Notes due 2024 in the third quarter of 2021, and the 5.870% Notes due 2022 in the second quarter of 2021.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Other expense, net. Other expense, net was $67 in the third quarter of 2022 compared to $1 in the third quarter of 2021 and Other expense, net was $67 in the nine months ended September 30, 2022 compared to $13 in the nine months ended September 30, 2021. The increase of $66 in the third quarter of 2022 was primarily due to the adverse judgment of $65 related to Lehman Brothers International (Europe) (“LBIE”) swaps that were entered into in 2007 and 2008, which were assumed as part of the Firth Rixson acquisition in 2014. The increase of $54 in the nine months ended September 30, 2022 was primarily due to the adverse judgment related to the LBIE legal proceeding of $65 and an increase from net realized and unrealized losses of $5, primarily due to unrecognized losses on debt securities investments, partially offset by impacts of deferred compensation arrangements of $16 and an increase in foreign currency gains of $8.

Provision (benefit) for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 24.3% in both the third quarter and nine months ended September 30, 2022 compared to 29.7% in both the third quarter and nine months ended September 30, 2021. The tax rate including discrete items was 23.1% (provision on income) in the third quarter of 2022 compared to 17.4% (benefit on income) in the third quarter of 2021. A discrete tax benefit of $2 was recorded in the third quarter of 2022 compared to a discrete tax benefit of $12 in the third quarter of 2021. The tax rate including discrete items was 21.8% in the nine months ended September 30, 2022 compared to 26.4% in the nine months ended September 30, 2021. A discrete tax benefit of $11 was recorded in the nine months ended September 30, 2022 compared to a discrete tax benefit of $9 in the nine months ended September 30, 2021. The estimated annual effective tax rate is a reflection of global income across numerous jurisdictions. As a result of the recovery in domestic profitability, the annual effective tax rate has decreased. Furthermore, on August 16, 2022, the U.S. enacted the Inflation Reduction Act (“IRA”), which is not expected to

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have a material impact on the income tax provision. Management is currently evaluating provisions of the IRA that may have an impact on the 2023 Consolidated Financial Statements.

See Note G to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Net income. Net income was $80, or $0.19 per diluted share, in the third quarter of 2022 compared to $27, or $0.06 per diluted share, in the third quarter of 2021 and $358, or $0.84 per diluted share, in the nine months ended September 30, 2022 compared to $181, or $0.41 per diluted share, in the nine months ended September 30, 2021. The increase of $53 in the third quarter of 2022 was primarily due to higher sales in the commercial aerospace market, favorable product pricing, a decrease in the Loss on debt redemption, a decrease in Interest expense, net, due to lower long-term debt levels, and a decrease in Restructuring and other charges, partially offset by lower sales in the defense aerospace market, the adverse judgment related to the LBIE legal proceeding, and an increase in Research and development expenses. The increase of $177 in the nine months ended September 30, 2022 was primarily due to higher sales in the commercial aerospace market, favorable product pricing, a decrease in the Loss on debt redemption, a decrease in Interest expense, net, due to lower long-term debt levels, and a decrease in Restructuring and other charges, partially offset by lower sales in the defense aerospace market, an increase in material and other inflationary costs, the adverse judgment related to the LBIE legal proceeding, an increase in the provision for income taxes primarily driven by an increase in income before income taxes, and an increase in Research and development expenses.

Segment Information

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 a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer (“CEO”) believes that Segment Adjusted EBITDA is now a better representation of its business because it provides additional 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 (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are excluded from Net margin and Segment Adjusted EBITDA. 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 C to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of each segment).

The Company has aligned its operations consistent with how the CEO assesses operating performance and allocates capital.

The Company produces aerospace engine parts and components and aerospace fastening systems for Boeing 737 MAX (“737 MAX”) airplanes. In late December 2019, Boeing announced a temporary suspension of the production of 737 MAX airplanes. This decline in production had a negative impact on sales and Segment Adjusted EBITDA in the Engine Products, Fastening Systems, and Engineered Structures segments in 2020 and the first half of 2021. While regulatory authorities in the United States and certain other jurisdictions lifted grounding orders beginning in late 2020, our sales remained at lower levels through the first half of 2021 due to the residual impacts of the 737 MAX grounding.

The Company also produces aerospace engine parts and components and aerospace fastening systems for Boeing 787 airplanes. In 2020 and 2021, Boeing reduced production rates of the 787 airplanes. Boeing paused deliveries of its 787 aircraft in May 2021. The significant decline in Boeing 787 production rates had a negative impact on sales and Segment Adjusted EBITDA in the Engine Products, Fastening Systems, and Engineered Structures segments in 2021 and the first three quarters of 2022. We expect reduced production rates to continue to have a negative impact on our sales and Segment Adjusted EBITDA for 2022.

Engine Products

	Third quarter ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Third-party sales	$	683		$	599		$	1,966		$	1,677
Segment Adjusted EBITDA	186			151			538			413
Segment Adjusted EBITDA Margin	27.2		%	25.2		%	27.4		%	24.6		%

Third-party sales for the Engine Products segment increased $84, or 14%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as an increase in material cost pass through.

Third-party sales for the Engine Products segment increased $289, or 17%, in the nine months ended September 30, 2022

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compared to the nine months ended September 30, 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as an increase in material cost pass through.

Segment Adjusted EBITDA for the Engine Products segment increased $35, or 23%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as strong productivity gains. The segment added approximately 260 net headcount in the third quarter of 2022 in anticipation of future revenue increases.

Segment Adjusted EBITDA for the Engine Products segment increased $125, or 30%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as strong productivity gains. The segment added approximately 1,040 net headcount in the nine months ended September 30, 2022 in anticipation of future revenue increases.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 200 basis points in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as strong productivity gains, partially offset by an increase in material cost pass through.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 280 basis points in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes in the commercial aerospace and oil and gas markets as well as strong productivity gains, partially offset by an increase in material cost pass through.

For the full year 2022 compared to 2021, demand in the commercial aerospace, industrial gas turbine, and oil and gas markets is expected to increase. An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.

Fastening Systems

	Third quarter ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Third-party sales	$	291		$	254		$	832		$	788
Segment Adjusted EBITDA	64			59			176			179
Segment Adjusted EBITDA Margin	22.0		%	23.2		%	21.2		%	22.7		%

Third-party sales for the Fastening Systems segment increased $37, or 15%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the commercial aerospace market, with narrow body recovery more than offsetting Boeing 787 production declines, and an increase in material cost pass through.

Third-party sales for the Fastening Systems segment increased $44, or 6%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes in the commercial aerospace market, with narrow body recovery more than offsetting Boeing 787 production declines, higher volumes in the commercial transportation market, and an increase in material cost pass through, partially offset by lower volumes in the defense aerospace and industrial markets.

Segment Adjusted EBITDA for the Fastening Systems segment increased $5, or 8%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to favorable volumes in the narrow body commercial aerospace market, partially offset by Boeing 787 production declines.

Segment Adjusted EBITDA for the Fastening Systems segment decreased $3, or 2%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to Boeing 787 production declines, lower volumes in the defense aerospace and industrial markets, and inflationary costs, partially offset by favorable volumes in the narrow body commercial aerospace and commercial transportation markets. The segment added approximately 410 net headcount in the nine months ended September 30, 2022 in anticipation of future revenue increases.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately 120 basis points in the third quarter of 2022 compared to the third quarter of 2021, primarily due to Boeing 787 production declines, partially offset by favorable volumes in the narrow body commercial aerospace market.

Segment Adjusted EBITDA Margin for the Fastening Systems segment decreased approximately 150 basis points in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to Boeing 787 production declines, lower volumes in the defense aerospace and industrial markets, and inflationary costs, partially offset by favorable volumes in the narrow body commercial aerospace and commercial transportation markets.

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For the full year 2022 compared to 2021, demand in the commercial aerospace and commercial transportation markets is expected to increase. An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.

Engineered Structures

	Third quarter ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Third-party sales	$	193		$	199		$	560		$	535
Segment Adjusted EBITDA	28			26			77			72
Segment Adjusted EBITDA Margin	14.5		%	13.1		%	13.8		%	13.5		%

Third-party sales for the Engineered Structures segment decreased $6, or 3%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to lower volumes in the defense aerospace market and Boeing 787 production declines, partially offset by higher volumes in the narrow body commercial aerospace market and an increase in material cost pass through.

Third-party sales for the Engineered Structures segment increased $25, or 5%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes in the narrow body commercial aerospace market and an increase in material cost pass through, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines.

Segment Adjusted EBITDA for the Engineered Structures segment increased $2, or 8%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the narrow body commercial aerospace market, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines.

Segment Adjusted EBITDA for the Engineered Structures segment increased $5, or 7%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, with higher volumes in the narrow body commercial aerospace market, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines as well as inflationary costs.

Segment Adjusted EBITDA Margin for the Engineered Structures segment increased approximately 140 basis points in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher volumes in the narrow body commercial aerospace market, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines.

Segment Adjusted EBITDA Margin for the Engineered Structures segment increased approximately 30 basis points in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher volumes in the narrow body commercial aerospace market, partially offset by lower volumes in the defense aerospace market and Boeing 787 production declines as well as continued inflationary cost pressures.

For the full year 2022 compared to 2021, demand in the commercial aerospace market is expected to increase. However, demand in the defense aerospace market is expected to be down. An increase in material costs is expected to contribute to an increase in sales as the Company generally passes through these costs.

Forged Wheels

	Third quarter ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Third-party sales	$	266		$	231		$	792		$	687
Segment Adjusted EBITDA	64			72			206			222
Segment Adjusted EBITDA Margin	24.1		%	31.2		%	26.0		%	32.3		%

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Third-party sales for the Forged Wheels segment increased $35, or 15%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to an increase in aluminum material and other inflationary cost pass through and a 2% increase in volumes, partially offset by unfavorable foreign currency movements.

Third-party sales for the Forged Wheels segment increased $105, or 15%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to an increase in aluminum material and other inflationary cost pass through and higher volumes, partially offset by unfavorable foreign currency movements.

Segment Adjusted EBITDA for the Forged Wheels segment decreased $8, or 11%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to unfavorable foreign currency movements, partially offset by higher volumes.

Segment Adjusted EBITDA for the Forged Wheels segment decreased $16, or 7%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to unfavorable foreign currency movements, partially offset by higher volumes.

Segment Adjusted EBITDA Margin for the Forged Wheels segment decreased approximately 710 basis points in the third quarter of 2022 compared to the third quarter of 2021, primarily due to aluminum material and European energy cost pass through as well as unfavorable foreign currency movements, partially offset by higher volumes.

Segment Adjusted EBITDA Margin for the Forged Wheels segment decreased approximately 630 basis points in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to aluminum material and European energy cost pass through as well as unfavorable foreign currency movements, partially offset by higher volumes.

For the full year 2022 compared to 2021, demand in the commercial transportation markets served by Forged Wheels is expected to increase in most regions. An increase in aluminum material and other inflationary costs are expected to contribute to an increase in sales as the Company generally passes through these costs. However, sales in the Forged Wheels segment could be negatively impacted by non-wheel component supply chain constraints at our customers.

Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Income before income taxes	$	104	$	23	$	458	$	246
Loss on debt redemption	—		118		2		141
Interest expense, net	57		63		172		201
Other expense, net(1)	67		1		67		13
Operating income	$	228	$	205	$	699	$	601
Segment provision for depreciation and amortization	64		65		193		195
Unallocated amounts:
Restructuring and other charges	4		8		12		22
Corporate expense	46		30		93		68
Total Segment Adjusted EBITDA	$	342	$	308	$	997	$	886

(1)See the Contingencies section of Note Q to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Total Segment Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Differences between the total segment and consolidated totals are in Corporate.

See Restructuring and other charges, Interest expense, net, Loss on debt redemption, and Other expense, net discussions above, under Results of Operations for reference.

Corporate expense increased $16, or 53%, in the third quarter of 2022 compared to the third quarter of 2021, primarily due to higher costs related to the France Plant Fire, the Barberton Plant Fire, and the Barberton Cast House Incident of $24, partially offset by 2021 costs of $9 associated with closures, shutdowns, and other items which did not recur in 2022.

29

Corporate expense increased $25, or 37%, in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher costs related to the France Plant Fire, the Barberton Plant Fire, and the Barberton Cast House Incident of $24, higher legal and other advisory reimbursements received in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2022 of $1, and higher employment and legacy costs, partially offset by 2021 costs of $8 associated with closures, shutdowns, and other items which did not recur in 2022.

Environmental Matters

See the Environmental Matters section of Note Q to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Subsequent Events

See Note R to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for subsequent events.

30

Liquidity and Capital Resources

Operating Activities

Cash provided from operations was $278 in the nine months ended September 30, 2022 compared to $146 in the nine months ended September 30, 2021. The increase of $132, or 90%, was primarily due to higher operating results of $79, a decrease in working capital of $35, and lower pension contributions of $34. The components of the change in working capital primarily included accrued expenses of $139, favorable changes in receivables of $136, including employee retention credit receivables, a change in accounts payable of $67, and taxes, including income taxes, of $14, partially offset by inventories of $320 and prepaid expenses and other current assets of $1.

Management expects Howmet’s estimated pension contributions and other postretirement benefit payments in 2022 to be approximately $60.

Financing Activities

Cash used for financing activities was $437 in the nine months ended September 30, 2022 compared to $1,174 in the nine months ended September 30, 2021. The decrease of $737, or 63%, was primarily due to less payments made in connection with the redemption of long-term debt of $1,431 (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference), a reduction in the premiums paid on the early redemption of debt of $131, and a reduction in debt issuance costs of $11, partially offset by debt issuances in the third quarter of 2021 of $700 (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference), incremental common stock repurchases of $110, and increased dividends paid to common stock shareholders of $16. On an annual basis, the debt repurchases in 2022 will decrease Interest expense, net by approximately $3.

The Company maintains a credit facility pursuant to its Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and issuers named therein (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference).

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 under such registration statement or otherwise in accordance with securities laws, including but not limited to in order to refinance existing indebtedness.

The Company may in the future repurchase additional portions of its debt or equity securities from time to time, 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 purchases 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.

The Company’s costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short and long-term debt ratings assigned to the Company by the major credit rating agencies.

The Company’s credit ratings from the three major credit rating agencies are as follows:

	Issuer Rating	Outlook	Date of Last Update
Standard and Poor’s Ratings Service (“S&P”)	BB+	Stable	December 3, 2021
Moody’s Investors Service (“Moody’s”)	Ba1	Stable	April 27, 2022
Fitch Investors Service (“Fitch”)	BBB-	Stable	March 22, 2022

On April 27, 2022, Moody’s upgraded Howmet’s long-term debt rating from Ba2 to Ba1 citing the Company’s ability to improve its financial leverage, strong cash generation, and well-balanced financial policies and affirmed the current outlook as stable.

On March 22, 2022, Fitch affirmed the following ratings for Howmet: long-term debt at BBB- and the current outlook as stable.

Investing Activities

Cash used for investing activities was $106 in the nine months ended September 30, 2022 compared to cash provided from investing activities of $144 in the nine months ended September 30, 2021. The change of $250 was primarily due to cash receipts from sold receivables of $267 in 2021, which did not have activity in the current year as a result of the termination of an accounts receivables securitization program in August 2021, and an increase in capital expenditures of $10. The net cash funding from the sale of accounts receivable was neither a use of cash nor a source of cash during 2022 and 2021. These changes were partially offset by incremental proceeds from the sale of assets of $34, which was primarily due to the sale of the

31

corporate center. In the second quarter of 2022, the Company sold the corporate headquarters in Pittsburgh, PA. The proceeds from the sale of the corporate headquarters were $44, excluding $3 of transaction costs, and a carrying value of $41. The Company entered into a 12-year lease with the purchaser for a portion of the property.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Forward-Looking Statements

This report contains (and oral communications made by Howmet Aerospace may contain) statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of end markets; future financial results or operating performance; future strategic actions; Howmet Aerospace’s strategies, outlook, and business and financial prospects; and any future repurchases of its debt or equity securities. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) uncertainty of the duration, extent and impact of the COVID-19 pandemic on Howmet Aerospace’s business, results of operations, and financial condition; (b) deterioration in global economic and financial market conditions generally (including as a result of COVID-19 and its effects, among other things, on global supply, demand, and distribution disruptions); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the impact of potential cyber attacks and information technology or data security breaches; (e) the loss of significant customers or adverse changes in customers’ business or financial conditions; (f) manufacturing difficulties or other issues that impact product performance, quality or safety; (g) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (h) the inability to achieve revenue growth, cash generation, cost savings, restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations anticipated or targeted; (i) inability to meet increased demand, production targets or commitments; (j) competition from new product offerings, disruptive technologies or other developments; (k) geopolitical, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including geopolitical and diplomatic tensions, instabilities and conflicts, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (l) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; (m) failure to comply with government contracting regulations; (n) adverse changes in discount rates or investment returns on pension assets; and (o) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2021 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. The statements in a presentation or document are made as of the date of such presentation or document. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not material.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

32

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

See Note Q to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents information with respect to the Company’s repurchases of its common stock during the quarter ended September 30, 2022:

	(in millions except share and per share amounts)
Period	Total Number of Shares Purchased	Average Price Paid Per Share(1)	Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2)
July 1 - July 31, 2022	931,118	$32.22	931,118	$1,082
August 1 - August 31, 2022	1,833,728	$38.17	1,833,728	$1,012
September 1 - September 30, 2022	—	$—	—	$1,012
Total for quarter ended September 30, 2022	2,764,846	$36.17	2,764,846

(1)Excludes commissions cost.

(2)On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 million of the Company's outstanding common stock. After giving effect to the share repurchases made through September 30, 2022, approximately $1,012 million Board authorization remains available. Under the Company’s share repurchase programs (the “Share Repurchase Programs”), the Company may repurchase shares 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 and/or accelerated share repurchase agreements or other derivative transactions. There is no stated expiration for the Share Repurchase Programs. Under its Share Repurchase Programs, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations, including limits under the Company’s Five-Year Revolving Credit Agreement (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference). The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Programs may be suspended, modified or terminated at any time without prior notice.

33

Item 6. Exhibits.

31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104.	Cover Page Interactive Data File - the cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Howmet Aerospace Inc.
October 31, 2022	/s/ Ken Giacobbe
Date	Ken Giacobbe
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)
October 31, 2022	/s/ Barbara L. Shultz
Date	Barbara L. Shultz
	Vice President and Controller
	(Principal Accounting Officer)

34

EX-31

Exhibit 31

Certifications

I, John C. Plant, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Howmet Aerospace Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2022

/s/ John C. Plant

John C. Plant

Executive Chairman and Chief Executive Officer

I, Ken Giacobbe, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Howmet Aerospace Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2022

/s/ Ken Giacobbe

Ken Giacobbe

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Howmet Aerospace Inc., a Delaware corporation (the “Company”), does hereby certify that:

The Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 31, 2022	/s/ John C. Plant
		John C. Plant
		Executive Chairman and Chief Executive Officer
Dated:	October 31, 2022	/s/ Ken Giacobbe
		Ken Giacobbe
		Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Oct. 27, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-3610
Entity Registrant Name	HOWMET AEROSPACE INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	25-0317820
Entity Address, Address Line One	201 Isabella Street, Suite 200
Entity Address, City or Town	Pittsburgh
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15212-5872
City Area Code	412
Local Phone Number	553-1940
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		413,712,037
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000004281
Current Fiscal Year End Date	--12-31
Common stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	HWM
Security Exchange Name	NYSE
Preferred stock
Entity Information [Line Items]
Title of 12(b) Security	$3.75 Cumulative Preferred Stock, par value $100.00 per share
Trading Symbol	HWM PR
Security Exchange Name	NYSEAMER

XML

Statement of Consolidated Operations (unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Sales	$ 1,433	$ 1,283	$ 4,150	$ 3,687
Cost of goods sold (exclusive of expenses below)	1,056	928	2,993	2,658
Selling, general administrative, and other expenses	73	70	225	190
Research and development expenses	7	4	23	13
Provision for depreciation and amortization	65	68	198	203
Restructuring and other charges	4	8	12	22
Operating income	228	205	699	601
Loss on debt redemption	0	118	2	141
Interest expense, net	57	63	172	201
Other expense, net	67	1	67	13
Income before income taxes	104	23	458	246
Provision (benefit) for income taxes	24	(4)	100	65
Net income	80	27	358	181
Amounts Attributable to Howmet Aerospace Common Shareholders:
Net income	79	26	356	179
Net income	$ 79	$ 26	$ 356	$ 179
Earnings per share:
Basic (in usd per share)	$ 0.19	$ 0.06	$ 0.86	$ 0.42
Diluted (in usd per share)	$ 0.19	$ 0.06	$ 0.84	$ 0.41
Average Shares Outstanding:
Basic (in shares)	415	429	417	431
Diluted (in shares)	420	434	422	437

XML

Statement of Consolidated Comprehensive Income (unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 80	$ 27	$ 358	$ 181
Other comprehensive income (loss), net of tax:
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits	7	13	39	90
Foreign currency translation adjustments	(128)	(36)	(273)	(62)
Net change in unrecognized gains (losses) on cash flow hedges	2	(4)	(14)	4
Total Other comprehensive (loss) income, net of tax	(119)	(27)	(248)	32
Comprehensive (loss) income	$ (39)	$ 0	$ 110	$ 213

XML

Consolidated Balance Sheet (unaudited) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 453	$ 720
Receivables from customers, less allowances of $— in both 2022 and 2021 (J)	550	367
Other receivables (J)	50	53
Inventories (K)	1,612	1,402
Prepaid expenses and other current assets	181	195
Total current assets	2,846	2,737
Properties, plants, and equipment, net (L)	2,288	2,467
Goodwill	3,965	4,067
Deferred income taxes	106	184
Intangibles, net	523	549
Other noncurrent assets (M)	201	215
Total assets	9,929	10,219
Current liabilities:
Accounts payable, trade	812	732
Accrued compensation and retirement costs	204	198
Taxes, including income taxes	56	61
Accrued interest payable	68	74
Other current liabilities (M)(Q)	240	183
Short-term debt (N)	1	5
Total current liabilities	1,381	1,253
Long-term debt, less amount due within one year (N)(O)	4,170	4,227
Accrued pension benefits (E)	689	771
Accrued other postretirement benefits (E)	147	153
Other noncurrent liabilities and deferred credits (M)	269	307
Total liabilities	6,656	6,711
Contingencies and commitments (Q)
Howmet Aerospace shareholders’ equity:
Preferred stock	55	55
Common stock	414	422
Additional capital	3,998	4,291
Retained earnings	917	603
Accumulated other comprehensive loss (I)	(2,111)	(1,863)
Total equity	3,273	3,508
Total liabilities and equity	$ 9,929	$ 10,219

XML

Consolidated Balance Sheet (unaudited) (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 0	$ 0

XML

Statement of Consolidated Cash Flows (unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Operating activities
Net income	$ 358	$ 181
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization	198	203
Deferred income taxes	58	24
Restructuring and other charges	12	22
Net realized and unrealized losses	12	7
Net periodic pension cost (E)	17	13
Stock-based compensation	43	28
Loss on debt redemption	2	141
Other	26	28
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
Increase in receivables (J)	(246)	(382)
(Increase) decrease in inventories	(271)	49
Decrease in prepaid expenses and other current assets	5	6
Increase in accounts payable, trade	130	63
Increase (decrease) in accrued expenses	18	(121)
Decrease in taxes, including income taxes	(1)	(15)
Pension contributions	(34)	(68)
Increase in noncurrent assets	(5)	(1)
Decrease in noncurrent liabilities	(44)	(32)
Cash provided from operations	278	146
Financing Activities
Net change in short-term borrowings (original maturities of three months or less)	(4)	0
Additions to debt (original maturities greater than three months) (N)	0	700
Payments on debt (original maturities greater than three months) (N)	(60)	(1,491)
Debt issuance costs (N)	0	(11)
Premiums paid on early redemption of debt (N)	(2)	(133)
Repurchase of common stock	(335)	(225)
Proceeds from exercise of employee stock options	14	17
Dividends paid to shareholders	(27)	(11)
Other	(23)	(20)
Cash used for financing activities	(437)	(1,174)
Investing Activities
Capital expenditures (C)	(148)	(138)
Proceeds from the sale of assets and businesses	42	8
Sale of debt securities	0	5
Cash receipts from sold receivables (J)	0	267
Other	0	2
Cash (used for) provided from investing activities	(106)	144
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3)	(1)
Net change in cash, cash equivalents and restricted cash	(268)	(885)
Cash, cash equivalents and restricted cash at beginning of period	722	1,611
Cash, cash equivalents and restricted cash at end of period	$ 454	$ 726

XML

Statement of Changes in Consolidated Equity (unaudited) - USD ($) $ in Millions	Total	Class A	Preferred stock	Common stock	Additional capital	Retained earnings	Retained earnings Class A	Accumulated other comprehensive loss
Beginning balance at Dec. 31, 2020	$ 3,577		$ 55	$ 433	$ 4,668	$ 364		$ (1,943)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	181					181
Other comprehensive (loss) income (I)	32							32
Cash dividends declared:
Preferred dividends declared, value		$ (2)					$ (2)
Common share, value	(9)					(9)
Repurchase and retirement of common stock	(225)			(7)	(218)
Stock-based compensation	28				28
Common stock issued: compensation plans	(3)			2	(5)
Ending balance at Sep. 30, 2021	3,579		55	428	4,473	534		(1,911)
Beginning balance at Jun. 30, 2021	3,598		55	429	4,481	517		(1,884)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	27					27
Other comprehensive (loss) income (I)	(27)							(27)
Cash dividends declared:
Preferred dividends declared, value		(1)					(1)
Common share, value	(9)					(9)
Repurchase and retirement of common stock	(25)			(1)	(24)
Stock-based compensation	14				14
Common stock issued: compensation plans	2				2
Ending balance at Sep. 30, 2021	3,579		55	428	4,473	534		(1,911)
Beginning balance at Dec. 31, 2021	3,508		55	422	4,291	603		(1,863)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	358					358
Other comprehensive (loss) income (I)	(248)							(248)
Cash dividends declared:
Preferred dividends declared, value		(2)					(2)
Common share, value	(42)					(42)
Repurchase and retirement of common stock	(335)			(10)	(325)
Stock-based compensation	43				43
Common stock issued: compensation plans	(9)			2	(11)
Ending balance at Sep. 30, 2022	3,273		55	414	3,998	917		(2,111)
Beginning balance at Jun. 30, 2022	3,421		55	416	4,079	863		(1,992)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	80					80
Other comprehensive (loss) income (I)	(119)							(119)
Cash dividends declared:
Preferred dividends declared, value		$ (1)					$ (1)
Common share, value	(25)					(25)
Repurchase and retirement of common stock	(100)			(3)	(97)
Stock-based compensation	14				14
Common stock issued: compensation plans	3			1	2
Ending balance at Sep. 30, 2022	$ 3,273		$ 55	$ 414	$ 3,998	$ 917		$ (2,111)

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Statement of Changes in Consolidated Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Common stock, dividends per share, declared (in usd per share)	$ 0.06	$ 0.02	$ 0.10	$ 0.02
Class A
Preferred, dividends per share (in usd per share)	$ 0.9375	$ 0.9375	$ 2.8125	$ 2.8125

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Basis of Presentation

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The interim Consolidated Financial Statements of Howmet Aerospace Inc. and subsidiaries (“Howmet” or the “Company” or “we” or “our”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2021 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation.

In the third quarter of 2022, the Company derived approximately 47% of its revenue from products sold to the commercial aerospace market which is substantially less than the pre-pandemic 2019 annual rate of approximately 60%. Due to the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there has been a decrease in domestic and international air travel, which in turn has adversely affected demand for narrow-body and wide-body aircraft. Although domestic air travel is increasing, it is still below pre-pandemic 2019 levels on an average monthly basis. Year-to-date international travel also continues to be lower than pre-pandemic 2019 levels. Narrow-body demand is returning faster than wide-body demand and the commercial wide-body aircraft market is taking longer to recover, which is creating a shift in our product mix compared to pre-pandemic conditions. In addition to the impact from the pandemic, the timing and level of future aircraft builds by original equipment manufacturers are subject to changes and uncertainties, such as declines in Boeing 787 production rates due to delays in its recertification, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19 and changes in the aerospace industry as a result of the pandemic. The impact of these changes is rapidly changing and of unknown duration and macroeconomic impact and, as a result, these considerations remain highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19 and changes in the aerospace industry.

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Recently Adopted and Recently Issued Accounting Guidance

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Recently Adopted and Recently Issued Accounting Guidance

Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, 2021, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other guidance to simplify several other income tax accounting matters. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The FASB is currently working on a project to extend the date to December 31, 2024. Management does not believe that the impact of these changes will have a material impact on the Consolidated Financial Statements.

In September 2022, the FASB issued guidance to enhance the transparency of disclosures regarding supplier finance programs. These changes become effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

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Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Prior to the first quarter of 2022, the Company used Segment operating profit as its primary measure of performance. However, the Company’s Chief Executive Officer believes that Segment Adjusted EBITDA is now a better representation of its business because it provides additional 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 (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are excluded from Net margin and Segment Adjusted EBITDA. 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.

Howmet’s operations consist of four worldwide reportable segments as follows:

Engine Products

Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and industrial gas turbines. Engine Products produces rotating parts as well as structural parts.

Fastening Systems

Fastening Systems produces aerospace fastening systems, as well as commercial transportation, industrial and other fasteners. The business’s high-tech, multi-material fastening systems are found nose to tail on aircraft and aero engines. Fastening Systems’ products are also critical components of commercial transportation vehicles, automobiles, construction and industrial equipment, and renewable energy sectors.

Engineered Structures

Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, extrusions, forming and machining services for airframe, wing, aero-engine, and landing gear components. Engineered Structures also produces aluminum forgings, nickel forgings, and aluminum machined components and assemblies for aerospace and defense applications.

Forged Wheels

Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.

The operating results of the Company’s reportable segments were as follows:

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Sales:
Third-party sales	$	683	$	291	$	193	$	266	$	1,433
Inter-segment sales	1		—		3		—		4
Total sales	$	684	$	291	$	196	$	266	$	1,437
Profit and loss:
Provision for depreciation and amortization	$	31	$	11	$	12	$	10	$	64
Segment Adjusted EBITDA	186		64		28		64		342
Restructuring and other charges	2		—		1		—		3
Capital expenditures	23		7		3		6		39
Third quarter ended September 30, 2021
Sales:
Third-party sales	$	599	$	254	$	199	$	231	$	1,283
Inter-segment sales	1		—		1		—		2
Total sales	$	600	$	254	$	200	$	231	$	1,285
Profit and loss:
Provision for depreciation and amortization	$	31	$	12	$	12	$	10	$	65
Segment Adjusted EBITDA	151		59		26		72		308
Restructuring and other charges	5		3		—		—		8
Capital expenditures	21		8		3		15		47
	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Nine months ended September 30, 2022
Sales:
Third-party sales	$	1,966	$	832	$	560	$	792	$	4,150
Inter-segment sales	3		—		5		—		8
Total sales	$	1,969	$	832	$	565	$	792	$	4,158
Profit and loss:
Provision for depreciation and amortization	$	93	$	34	$	36	$	30	$	193
Segment Adjusted EBITDA	538		176		77		206		997
Restructuring and other charges (credits)	9		(3)		4		—		10
Capital expenditures	74		30		12		20		136
Nine months ended September 30, 2021
Sales:
Third-party sales	$	1,677	$	788	$	535	$	687	$	3,687
Inter-segment sales	3		—		4		—		7
Total sales	$	1,680	$	788	$	539	$	687	$	3,694
Profit and loss:
Provision for depreciation and amortization	$	92	$	37	$	37	$	29	$	195
Segment Adjusted EBITDA	413		179		72		222		886
Restructuring and other charges	15		8		1		—		24
Capital expenditures	48		22		13		37		120

The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total Segment Adjusted EBITDA	$	342	$	308	$	997	$	886
Segment provision for depreciation and amortization	(64)		(65)		(193)		(195)
Unallocated amounts:
Restructuring and other charges	(4)		(8)		(12)		(22)
Corporate expense	(46)		(30)		(93)		(68)
Operating income	$	228	$	205	$	699	$	601
Loss on debt redemption	—		(118)		(2)		(141)
Interest expense, net	(57)		(63)		(172)		(201)
Other expense, net (Q)	(67)		(1)		(67)		(13)
Income before income taxes	$	104	$	23	$	458	$	246

The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total segment capital expenditures	$	39	$	47	$	136	$	120
Corporate	3		—		12		18
Capital expenditures	$	42	$	47	$	148	$	138

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Aerospace - Commercial	$	388	$	156	$	124	$	—	$	668
Aerospace - Defense	124		43		56		—		223
Commercial Transportation	—		63		—		266		329
Industrial and Other	171		29		13		—		213
Total end-market revenue	$	683	$	291	$	193	$	266	$	1,433
Third quarter ended September 30, 2021
Aerospace - Commercial	$	299	$	126	$	118	$	—	$	543
Aerospace - Defense	130		37		65		—		232
Commercial Transportation	—		59		—		231		290
Industrial and Other	170		32		16		—		218
Total end-market revenue	$	599	$	254	$	199	$	231	$	1,283
Nine months ended September 30, 2022
Aerospace - Commercial	$	1,079	$	459	$	341	$	—	$	1,879
Aerospace - Defense	384		112		176		—		672
Commercial Transportation	—		169		—		792		961
Industrial and Other	503		92		43		—		638
Total end-market revenue	$	1,966	$	832	$	560	$	792	$	4,150
Nine months ended September 30, 2021
Aerospace - Commercial	$	786	$	403	$	277	$	—	$	1,466
Aerospace - Defense	402		120		206		—		728
Commercial Transportation	—		154		—		687		841
Industrial and Other	489		111		52		—		652
Total end-market revenue	$	1,677	$	788	$	535	$	687	$	3,687

The Company derived 61% and 60% of its revenue from the aerospace market for the nine months ended September 30, 2022 and 2021, respectively.

General Electric Company represented approximately 13% of the Company’s third-party sales for both the nine months ended September 30, 2022 and 2021, primarily from Engine Products.

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Restructuring and Other Charges

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Layoff costs	$	—	$	—	$	—	$	2
Reversals of previously recorded layoff reserves	—		—		(1)		(1)
Pension and Other post-retirement benefits - net settlements (E)	3		3		7		9
Non-cash asset impairments	—		4		—		8
Net loss related to divestitures of assets and businesses (P)	—		—		—		4
Other	1		1		6		—
Restructuring and other charges	$	4	$	8	$	12	$	22

In the third quarter of 2022, the Company recorded Restructuring and other charges of $4, which were primarily due to charges

for U.S. and Canadian pension plan settlements of $3 and exit related costs, including accelerated depreciation, of $1.

In the nine months ended September 30, 2022, the Company recorded Restructuring and other charges of $12, which were primarily due to charges for U.S. pension plan settlements of $7 and exit related costs, including accelerated depreciation, of $6, partially offset by a reversal of $1 for a layoff reserve related to a prior period.

In the third quarter and nine months ended September 30, 2021, the Company recorded Restructuring and other charges of $8 and $22, respectively, which were primarily due to charges for pension plan settlements and exit related costs.

	Layoff costs		Other exit costs		Total
Reserve balances at December 31, 2021	$	17	$	2	$	19
Cash payments	(9)		(5)		(14)
Restructuring charges	6		6		12
Other(1)	(7)		(1)		(8)
Reserve balances at September 30, 2022	$	7	$	2	$	9

(1)In the nine months ended September 30, 2022, other for layoff costs included a $7 charge for U.S. pension plan settlements and for other exit costs included a $1 charge for accelerated depreciation.

The majority of the layoff cost and other exit cost reserves is expected to be paid in cash during the remainder of 2022 and 2023, with small amounts to be paid in 2024.

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Pension and Other Postretirement Benefits

9 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The components of net periodic cost (benefit) were as follows:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension benefits
Service cost	$	1	$	1	$	3	$	3
Interest cost	13		12		38		36
Expected return on plan assets	(20)		(23)		(61)		(69)
Recognized net actuarial loss	12		14		37		43
Settlements	3		3		7		9
Net periodic cost(1)	$	9	$	7	$	24	$	22
Other postretirement benefits
Service cost	$	—	$	—	$	1	$	1
Interest cost	1		1		3		4
Recognized net actuarial loss	—		1		1		1
Amortization of prior service benefit	(2)		(3)		(7)		(7)
Net periodic benefit(1)	$	(1)	$	(1)	$	(2)	$	(1)

 

(1)Service cost was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations.

Pension benefits

The Company applied settlement accounting to certain small U.S. and Canadian pension plans due to lump sum payments made to participants, which resulted in settlement charges of $3 and $7 in the third quarter and nine months ended September 30, 2022, respectively, and $3 and $9 in the third quarter and nine months ended September 30, 2021, respectively, that were recorded in Restructuring and other charges in the Statement of Consolidated Operations.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA 2021”) was signed into law in the United States. ARPA 2021, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974. For the third quarter and nine months ended

September 30, 2022, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $18 and $43, respectively. For the third quarter and nine months ended September 30, 2021, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $10 and $79, respectively.

Other postretirement benefits

In the first quarter of 2021, the Company announced a plan administration change of certain of its Medicare-eligible prescription drug benefits to an Employer Group Waiver Plan with a wrap-around secondary plan effective July 1, 2021. The administration change is expected to reduce costs to the Company through the usage of Medicare Part D and drug manufacturer subsidies. Due to this amendment, along with the associated plan remeasurements, the Company recorded a decrease to its Accrued other postretirement benefits liability of $39, which was offset in Accumulated other comprehensive loss in the Consolidated Balance Sheet.

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Other Expense, Net

9 Months Ended

Sep. 30, 2022

Other Income and Expenses [Abstract]

Other Expense, Net

Other Expense, Net

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Non-service related net periodic benefit cost	$	4	$	2	$	11	$	8
Interest income	(2)		(1)		(3)		(2)
Foreign currency (gains) losses, net	(3)		(2)		(7)		1
Net realized and unrealized losses	5		3		12		7
Deferred compensation	(2)		(1)		(11)		5
Other, net	65		—		65		(6)
Other expense, net	$	67	$	1	$	67	$	13

In the third quarter and nine months ended September 30, 2022, Other, net primarily includes the $65 adverse judgment related to Lehman Brothers International (Europe) swaps that were entered into in 2007 and 2008, which were assumed as part of the Firth Rixson acquisition in 2014 (see Note Q).

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

The estimated annual effective tax rate, before discrete items, applied to ordinary income was 24.3% in both the third quarter and nine months ended September 30, 2022 and 29.7% in both the third quarter and nine months ended September 30, 2021. The 2022 and 2021 rates were higher than the U.S. federal statutory rate of 21% primarily due to additional estimated U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, and nondeductible expenses.

For the third quarter of 2022 and 2021, the tax rate including discrete items was 23.1% (provision on income) and 17.4% (benefit on income), respectively. For the third quarter of 2022, the Company recorded a discrete tax benefit of $2 for other small items. For the third quarter of 2021, the Company recorded a discrete tax benefit of $12 related to a net $13 benefit from prior year amended returns and audit settlements and a net $1 charge for other small items.

For the nine months ended September 30, 2022 and 2021, the tax rate including discrete items was 21.8% and 26.4%, respectively. For the nine months ended September 30, 2022, the Company recorded a discrete tax benefit of $11 attributable to a $6 benefit to release a valuation allowance related to an interest carryforward tax attribute in the U.K. and a $5 excess benefit for stock compensation. For the nine months ended September 30, 2021, the Company recorded a discrete tax benefit of $9 attributable to a net $13 benefit related to prior year amended returns and audit settlements, a $2 charge for a U.K. tax rate change, and a net $2 charge for other small items.

The tax provision (benefit) was comprised of the following:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pre-tax income at estimated annual effective income tax rate before discrete items	$	24	$	7	$	111	$	73
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	2		1		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	—		—		—		1
Other discrete items	(2)		(12)		(11)		(9)
Provision (benefit) for income taxes	$	24	$	(4)	$	100	$	65

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Earnings Per Share and Common Stock

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share and Common Stock

Earnings Per Share and Common Stock

Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions):

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income attributable to common shareholders	$	80	$	27	$	358	$	181
Less: preferred stock dividends declared	1		1		2		2
Net income available to Howmet Aerospace common shareholders - basic and diluted	$	79	$	26	$	356	$	179
Average shares outstanding - basic	415		429		417		431
Effect of dilutive securities:
Stock and performance awards	5		4		5		5
Stock options	—		1		—		1
Average shares outstanding - diluted	420		434		422		437

Common stock outstanding at September 30, 2022 and 2021 was approximately 414 million and 428 million, respectively.

On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 of the Company's outstanding common stock. In the quarter ended September 30, 2022, the Company repurchased approximately 3 million shares of its common stock at an average price of $36.17 per share (excluding commissions cost) for $100 in cash. For the nine months ended September 30, 2022, the Company repurchased approximately 10 million shares for $335 in cash. All of the shares repurchased have been retired. After giving effect to the share repurchases made through September 30, 2022, approximately $1,012 Board authorization remains available. Under the Company’s share repurchase programs (the “Share Repurchase Programs”), the Company may repurchase shares 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 and/or accelerated share repurchase agreements, or other derivative transactions. There is no stated expiration for the Share Repurchase Programs. Under its Share Repurchase Programs, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations, including limits under its Five-Year Revolving Credit Agreement (the “Credit Agreement”) (see Note N). The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Programs may be suspended, modified or terminated at any time without prior notice.

The approximately 14 million decrease in average shares outstanding (basic) for the third quarter of 2022 compared to the third quarter of 2021 was primarily due to the approximately 16 million shares repurchased between October 1, 2021 and September 30, 2022. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not realized in EPS in the third quarter and nine months ended September 30, 2022 as share repurchases occurred at varying points during the quarter.

There were no stock options shares excluded from the calculation of average shares outstanding – diluted for the third quarter and nine months ended September 30, 2022 and 2021.

Common stock dividends declared were $0.06 per share in the third quarter of 2022 (of which $0.02 per share was paid) and $0.10 per share in the nine months ended September 30, 2022 (of which $0.06 per share was paid). Common stock dividends declared and paid were $0.02 per share for both the third quarter and nine months ended September 30, 2021.

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive LossThe following table details the activity of the three components that comprise Accumulated other comprehensive loss:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension and other postretirement benefits (E)
Balance at beginning of period	$	(767)	$	(903)	$	(799)	$	(980)
Other comprehensive income:
Unrecognized net actuarial gain and prior service cost/benefit	(3)		1		13		68
Tax expense	—		—		(3)		(15)
Total Other comprehensive (loss) income before reclassifications, net of tax	(3)		1		10		53
Amortization of net actuarial loss and prior service cost(1)	13		15		38		46
Tax expense(2)	(3)		(3)		(9)		(9)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	10		12		29		37
Total Other comprehensive income	7		13		39		90
Balance at end of period	$	(760)	$	(890)	$	(760)	$	(890)
Foreign currency translation
Balance at beginning of period	$	(1,207)	$	(992)	$	(1,062)	$	(966)
Other comprehensive loss	(128)		(36)		(273)		(62)
Balance at end of period	$	(1,335)	$	(1,028)	$	(1,335)	$	(1,028)
Cash flow hedges
Balance at beginning of period	$	(18)	$	11	$	(2)	$	3
Other comprehensive (loss) income:
Net change from periodic revaluations	(6)		1		(17)		20
Tax income (expense)	2		—		4		(4)
Total Other comprehensive (loss) income before reclassifications, net of tax	(4)		1		(13)		16
Net amount reclassified to earnings	9		(7)		(1)		(15)
Tax (expense) benefit(2)	(3)		2		—		3
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(3)	6		(5)		(1)		(12)
Total Other comprehensive income (loss)	2		(4)		(14)		4
Balance at end of period	$	(16)	$	7	$	(16)	$	7
Accumulated other comprehensive loss	$	(2,111)	$	(1,911)	$	(2,111)	$	(1,911)

(1)These amounts were recorded in Other expense, net (see Note F) and Restructuring and other charges (see Note D) in the Statement of Consolidated Operations.

(2)These amounts were included in Provision (benefit) for income taxes (see Note G) in the Statement of Consolidated Operations.

(3)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

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Receivables

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

Receivables

Receivables

Sale of Receivables Programs

The Company maintains an accounts receivables securitization arrangement through a wholly-owned special purpose entity (“SPE”). The Company previously had a second arrangement which terminated on August 30, 2021. The net cash funding from the sale of accounts receivable was neither a use of cash nor a source of cash for any quarter of 2022 or 2021.

The terminated arrangement was with financial institutions to sell certain customer receivables without recourse on a revolving basis. The Company had $44 net cash repayments ($41 in draws and $85 in repayments) for the nine months ended September 30, 2021 in connection with this arrangement. The total cash receipts from both customer payments on sold receivables (which were cash receipts on the underlying trade receivables that had been previously sold) and net cash repayments under the program were presented as cash receipts from sold receivables within investing activities in the Statement of Consolidated Cash Flows for the nine months ended September 30, 2021.

The current accounts receivables securitization arrangement is one in which the Company, through an SPE, has a receivables purchase agreement (the “Receivables Purchase Agreement”) such that the SPE may sell certain receivables to financial institutions until the earlier of August 30, 2024 or a termination event. The Receivables Purchase Agreement also contains customary representations and warranties, as well as affirmative and negative covenants. Pursuant to the Receivables Purchase Agreement, the Company does not maintain effective control over the transferred receivables, and therefore accounts for these transfers as sales of receivables. This accounts receivable securitization arrangement totaled $325 at both September 30, 2022 and December 31, 2021 of which $250 was drawn as of both September 30, 2022 and December 31, 2021. As collateral against the sold receivables, the SPE maintains a certain level of unsold receivables, which were $161 and $79 at September 30, 2022 and December 31, 2021, respectively.

The Company sold $453 and $1,354 of its receivables without recourse and received cash funding under this program during the third quarter and nine months ended September 30, 2022, respectively, resulting in derecognition of the receivables from the Company’s Consolidated Balance Sheet. Costs associated with the sales of receivables are reflected in the Company’s Statement of Consolidated Operations for the periods in which the sales occur. Cash receipts from sold receivables under the Receivables Purchase Agreement are presented within operating activities in the Statement of Consolidated Cash Flows.

Other Customer Receivable Sales

In the third quarter and nine months ended September 30, 2022, the Company sold $127 and $350, respectively, of certain customers’ receivables in exchange for cash ($123 was outstanding from customers at September 30, 2022), the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows. In the third quarter and nine months ended September 30, 2021, the Company sold $103 and $267, respectively, of certain customers’ receivables in exchange for cash, the proceeds from which are presented in changes in receivables within operating activities in the Statement of Consolidated Cash Flows.

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Inventories

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories

	September 30, 2022		December 31, 2021
Finished goods	$	493	$	478
Work-in-process	758		631
Purchased raw materials	314		256
Operating supplies	47		37
Total inventories	$	1,612	$	1,402

At September 30, 2022 and December 31, 2021, the portion of inventories valued on a last-in, first-out (“LIFO”) basis was $668 and $523, respectively. These amounts exclude the effects of LIFO valuation reductions, which were $206 and $192 at September 30, 2022 and December 31, 2021, respectively.

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Properties, Plants, and Equipment, net

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Properties, Plants, and Equipment, net

Properties, Plants, and Equipment, net

	September 30, 2022		December 31, 2021
Land and land rights(1)	$	84	$	91
Structures(1)	960		1,034
Machinery and equipment	3,851		3,932
	4,895		5,057
Less: accumulated depreciation and amortization(1)	2,765		2,772
	2,130		2,285
Construction work-in-progress	158		182
Properties, plants, and equipment, net	$	2,288	$	2,467

(1)In the first quarter of 2022, the Company entered into an agreement to sell the corporate headquarters in Pittsburgh, PA. The proceeds from the sale of the corporate headquarters, which closed in June 2022, were $44, excluding $3 of transaction costs, and the carrying value at the time of sale was $41. A loss of less than $1 was recorded in Restructuring and other charges in the Statement of Consolidated Operations upon finalization of the sale in the second quarter of 2022. The Company entered into a 12-year lease with the purchaser for a portion of the property.

The Company incurred capital expenditures which remained unpaid at September 30, 2022 and September 30, 2021 of $30 and $42, respectively, and will result in cash outflows within investing activities in the Statement of Consolidated Cash Flows in subsequent periods.

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Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Leases

Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $16 and $15 in the third quarter of 2022 and 2021, respectively. Operating lease cost, which includes short-term leases and variable lease payments and approximates cash paid, was $46 and $48 in the nine months ended September 30, 2022 and 2021, respectively.

Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:

	September 30, 2022		December 31, 2021
Right-of-use assets classified in Other noncurrent assets	$	106	$	108
Current portion of lease liabilities classified in Other current liabilities	$	31	$	33
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits	80		81
Total lease liabilities	$	111	$	114

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Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

Debt

	September 30, 2022		December 31, 2021
5.125% Notes, due 2024	$	1,090	$	1,150
6.875% Notes, due 2025	600		600
5.900% Notes, due 2027	625		625
6.750% Bonds, due 2028	300		300
3.000% Notes, due 2029	700		700
5.950% Notes, due 2037	625		625
4.750% Iowa Finance Authority Loan, due 2042	250		250
Other(1)	(19)		(18)
	4,171		4,232
Less: amount due within one year	1		5
Total long-term debt	$	4,170	$	4,227

(1)Includes various financing arrangements related to subsidiaries, unamortized debt discounts, and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above.

Public Debt

On January 15, 2021, the Company completed the early redemption of all the remaining $361 of its 5.400% Notes due 2021 at par and paid $5 in accrued interest.

On May 3, 2021, the Company completed the early redemption of all the remaining $476 aggregate principal amount of its 5.870% Notes due 2022 and paid an aggregate of $503, including $5 of accrued interest. The Company also incurred an early termination premium and other costs of $23, which was recorded in Loss on debt redemption in the Statement of Consolidated Operations.

On September 1, 2021, the Company completed an offering of $700 aggregate principal amount of 3.000% Notes due 2029, the proceeds of which have been used to fund the cash tender offer noted below and to pay related transaction fees, including applicable premiums and expenses.

On September 2, 2021, the Company completed a cash tender offer and repurchased approximately $600 aggregate principal amount of its 6.875% Notes due 2025. The amount of tender premium and accrued interest associated with the notes accepted for settlement were $105 and $14, respectively, which were recorded in Loss on debt redemption and Interest expense, net, respectively, in the Statement of Consolidated Operations.

In the third quarter of 2021, the Company repurchased in the open market approximately $53 aggregate principal amount of its 5.125% Notes due 2024 (the “5.125% Notes”) and paid approximately $59, including an early termination premium and accrued interest of approximately $5 and $1, respectively, which were recorded in Loss on debt redemption and Interest expense, net, respectively.

In the second quarter of 2022, the Company repurchased in the open market approximately $60 aggregate principal amount of its 5.125% Notes and paid approximately $62, including an early termination premium of approximately $2, which was recorded in Loss on debt redemption in the Statement of Consolidated Operations.

Credit Facility

On September 28, 2021, the Company amended and restated its Credit Agreement. The Credit Agreement provides a $1,000 senior unsecured revolving credit facility that matures on September 28, 2026, unless extended or earlier terminated in accordance with the provisions of the Credit Agreement. Capitalized terms used in this “Credit Facility” section but not otherwise defined shall have the meanings given to such terms in the Credit Agreement.

Under the Credit Agreement, the Company’s ratio of Consolidated Net Debt to Consolidated EBITDA as of the end of each fiscal quarter for the period of the four fiscal quarters of the Company most recently ended, is required to be no greater than 3.50 to 1.00; provided, however, that during the Covenant Relief Period through December 31, 2022 (unless the Company elects to terminate the Covenant Relief Period earlier in accordance with the Credit Agreement), the Company’s Consolidated Net Debt to Consolidated EBITDA ratio cannot exceed the levels set forth below:

	No greater than
(i) for the quarter ending September 30, 2022	4.25 to 1.00
(ii) for the quarter ending December 31, 2022	3.75 to 1.00

During the Covenant Relief Period, common stock dividends and share repurchases (see Note H) are permitted only if no loans under the Credit Agreement are outstanding at the time and are limited to an aggregate amount not to exceed $500 during the year ending December 31, 2022. Common stock dividends and share repurchases were $377 for the nine months ended September 30, 2022.

There were no amounts outstanding under the Credit Agreement at September 30, 2022 or December 31, 2021, and no amounts were borrowed during 2022 or 2021 under the Credit Agreement. At September 30, 2022, the Company was in compliance with all covenants under the Credit Agreement. Availability under the Credit Agreement could be reduced in future periods if the Company fails to maintain the required ratios referenced above.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

	September 30, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value
Long-term debt, less amount due within one year	$	4,170	$	3,905	$	4,227	$	4,707

Restricted cash, which is included in Prepaid expenses and other current assets in the Consolidated Balance Sheet, was $1 and $2 at September 30, 2022 and December 31, 2021, respectively.

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Divestiture	9 Months Ended
	Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
Divestiture	Divestiture2021 DivestitureOn March 15, 2021, the Company reached an agreement to sell a small manufacturing plant in France within the Fastening Systems segment, which resulted in a charge of $4 related to the non-cash impairment of the net book value of the business, primarily goodwill, in the first quarter of 2021 which was recorded in Restructuring and other charges in the Statement of Consolidated Operations. On June 1, 2021, the Company completed the sale for $10 (of which $8 of cash was received in the second quarter of 2021). In the third quarter of 2022, $1 was received, and the remaining $1 in escrow is expected to be received in the third quarter of 2023.

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Contingencies and Commitments

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

Contingencies

The following information supplements and, as applicable, updates the discussion of the contingencies and commitments in Note V to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”), and should be read in conjunction with the complete descriptions provided in the Form 10-K.

Environmental Matters. Howmet participates in environmental assessments and cleanups at more than 30 locations. These include owned or operating facilities and adjoining properties, previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)) sites.

A liability is recorded for environmental remediation when a cleanup program becomes probable and the costs can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, and technological changes, among others.

The Company’s remediation reserve balance was $15 at both September 30, 2022 and December 31, 2021, and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $7 and $6, respectively, was classified as a current liability), and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. Payments related to remediation expenses applied against the reserve were less than $1 in the third quarter ended September 30, 2022 and included expenditures currently mandated, as well as those not required by any regulatory authority or third party.

Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental programs. These costs are estimated to be less than 1% of Cost of goods sold.

Indemnified Matters. The Separation and Distribution Agreement, dated October 31, 2016, that the Company entered into with Alcoa Corporation in connection with its separation from Alcoa Corporation, provides for cross-indemnities between the Company and Alcoa Corporation for claims subject to indemnification. The Separation and Distribution Agreement, dated March 31, 2020, that the Company entered into with Arconic Corporation in connection with its separation from Arconic Corporation, provides for cross-indemnities between the Company and Arconic Corporation for claims subject to indemnification. Among other claims that are covered by these indemnities, Arconic Corporation indemnifies the Company (f/k/a Arconic Inc. and f/k/a Alcoa Inc.) for all potential liabilities associated with the fire that occurred at the Grenfell Tower in London, U.K. on June 14, 2017, including the following legal proceedings, as updated from the Form 10-K:

United Kingdom Litigation (various claims on behalf of survivors and estates of decedents). The suits are stayed. A case management conference was held during the week of April 26, 2022. On July 28, 2022, the stay was extended.

Behrens et al. v. Arconic Inc. et al. (various claims on behalf of survivors and estates of decedents). On September 16, 2020, the court dismissed the U.S. case, determining that the U.K. is the appropriate jurisdiction for the case. On July 8, 2022, the Third Circuit Court of Appeals affirmed the dismissal. A petition for a rehearing was filed before the Third Circuit Court, which the Third Circuit Court denied on October 7, 2022.

Howard v. Arconic Inc. et al. (securities law related claims). The court held a status conference on September 14, 2022, and the parties are currently awaiting an order from the court setting the schedule for class certification briefing and discovery.

With respect to the Raul v. Albaugh, et al. (derivative related claim) proceeding, the regulatory investigations and the stockholder demands specified in the Form 10-K, there are no updates.

Lehman Brothers International (Europe) (“LBIE”) Legal Proceeding. On June 26, 2020, Lehman Brothers International (Europe) (“LBIE”) filed proceedings in the High Court of Justice, Business and Property Courts of England and Wales (the “Court”) against two subsidiaries of the Company, FR Acquisitions Corporation (Europe) Ltd and JFB Firth Rixson Inc. (collectively, the “Firth Rixson Entities”). The proceedings concern two interest rate swap transactions with LBIE (collectively, the “ISDAs”). In 2007 and 2008, the Firth Rixson Entities, then owned by Oak Hill, entered into the ISDAs in order to meet their obligation to hedge interest rate exposure under a lending agreement with LBIE. When LBIE went into bankruptcy in 2008, the Firth Rixson Entities entered into alternative swap agreements with another counterparty in order to meet this hedging obligation. The Firth Rixson Entities were acquired by the Company as part of its acquisition of the Firth Rixson business from Oak Hill in 2014. In the LBIE legal proceeding, LBIE claims the amounts owing by the Firth Rixson Entities under the ISDAs to be approximately $64, plus applicable interest. The Court issued its ruling in these proceedings on October 11, 2022 (the “Judgment”). In its ruling, the Court determined that the event of default under the ISDAs caused by LBIE as a result of its insolvency in 2008 and other defaults will conclude upon LBIE’s expected emergence from administration under the Insolvency Act of 1986. The Court ruled that upon such future event and other relevant steps being completed, the timing of which is unknown, the Firth Rixson Entities will be obligated to pay amounts due under the ISDAs. The Company recorded $65 in Other current liabilities in the Consolidated Balance Sheet, and took a pre-tax charge of this amount in Other expense, net in the Statement of Consolidated Operations in the third quarter and nine months ended September 30, 2022. The matter of interest was not specifically addressed in the proceeding and no related amounts have been reserved. The Company vigorously disagrees with the ruling including as to any payment obligation in respect of the principal as well as any interest. The Company intends to apply to appeal the Judgment to the Court of Appeal and will request that payment of all amounts be stayed until the appeal is concluded. This application is expected to be addressed at a hearing before the Court by the end of this year, and any appeal proceedings would continue into 2023.

Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability, safety and health, employment, tax and antitrust matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity or results of operations in a period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the results of operations, financial position or cash flows of the Company.

Commitments

Guarantees

At September 30, 2022, Howmet had outstanding bank guarantees related to tax matters, outstanding debt, workers’ compensation, environmental obligations, energy contracts, and customs duties, among others. The total amount committed under these guarantees, which expire at various dates between 2022 and 2040, was $11 at September 30, 2022.

Pursuant to the Separation and Distribution Agreement, dated as of October 31, 2016, between Howmet and Alcoa Corporation, Howmet was required to provide certain guarantees for Alcoa Corporation, which had a fair value of $6 at both September 30, 2022 and December 31, 2021, and were included in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet. The remaining guarantee, for which the Company and Arconic Corporation are secondarily liable in the event of a payment default by Alcoa Corporation, relates to a long-term energy supply agreement that expires in 2047 at an Alcoa Corporation facility. The Company currently views the risk of an Alcoa Corporation payment default on its obligations under the contract to be remote. The Company and Arconic Corporation are required to provide a guarantee up to an estimated present value amount of approximately $1,406 at both September 30, 2022 and December 31, 2021 in the event of an Alcoa Corporation default. In December 2021, a surety bond with a limit of $80 relating to this guarantee was obtained by Alcoa Corporation to protect Howmet’s obligation. This surety bond will be renewed on an annual basis by Alcoa Corporation.

Letters of Credit

The Company has outstanding letters of credit primarily related to workers’ compensation, environmental obligations, and leasing obligations. The total amount committed under these letters of credit, which automatically renew or expire at various dates, mostly in 2022 and 2023, was $123 at September 30, 2022.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to retain letters of credit of $53 (which are included in the $123 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation and letters of credit fees paid by the Company are proportionally billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively. Also, the Company was required to provide letters of credit for certain Arconic Corporation environmental obligations and, as a result, the Company has $17 of outstanding letters of credit relating to such liabilities (which are also included in the $123 in the above paragraph).

Surety Bonds

The Company has outstanding surety bonds primarily related to tax matters, contract performance, workers’ compensation, environmental-related matters, and customs duties. The total amount committed under these annual surety bonds, which expire and automatically renew at various dates, primarily in 2022 and 2023, was $43 at September 30, 2022.

Pursuant to the Separation and Distribution Agreements between the Company and Arconic Corporation and between the Company and Alcoa Corporation, the Company is required to provide surety bonds of $22 (which are included in the $43 in the above paragraph) that had previously been provided related to the Company, Arconic Corporation, and Alcoa Corporation workers’ compensation claims that occurred prior to the respective separation transactions of April 1, 2020 and November 1, 2016. Arconic Corporation and Alcoa Corporation workers’ compensation claims and surety bond fees paid by the Company are proportionately billed to, and are reimbursed by, Arconic Corporation and Alcoa Corporation, respectively.

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Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Management evaluated all activity of Howmet and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below:

See Note Q for the unfavorable judgment related to the LBIE legal proceeding.

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The interim Consolidated Financial Statements of Howmet Aerospace Inc. and subsidiaries (“Howmet” or the “Company” or “we” or “our”) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2021 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Form 10-Q report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021, which includes all disclosures required by GAAP. Certain amounts in previously issued financial statements were reclassified to conform to the current period presentation.

In the third quarter of 2022, the Company derived approximately 47% of its revenue from products sold to the commercial aerospace market which is substantially less than the pre-pandemic 2019 annual rate of approximately 60%. Due to the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there has been a decrease in domestic and international air travel, which in turn has adversely affected demand for narrow-body and wide-body aircraft. Although domestic air travel is increasing, it is still below pre-pandemic 2019 levels on an average monthly basis. Year-to-date international travel also continues to be lower than pre-pandemic 2019 levels. Narrow-body demand is returning faster than wide-body demand and the commercial wide-body aircraft market is taking longer to recover, which is creating a shift in our product mix compared to pre-pandemic conditions. In addition to the impact from the pandemic, the timing and level of future aircraft builds by original equipment manufacturers are subject to changes and uncertainties, such as declines in Boeing 787 production rates due to delays in its recertification, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

The preparation of the Consolidated Financial Statements of the Company in conformity with GAAP requires management to make certain judgments, estimates, and assumptions. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations relating to the impact of COVID-19 and changes in the aerospace industry as a result of the pandemic. The impact of these changes is rapidly changing and of unknown duration and macroeconomic impact and, as a result, these considerations remain highly uncertain. Management has made its best estimates using all relevant information available at the time, but it is possible that our estimates will differ from our actual results and affect the Consolidated Financial Statements in future periods and potentially require adverse adjustments to the recoverability of goodwill, intangible and long-lived assets, the realizability of deferred tax assets and other judgments and estimations and assumptions that may be impacted by COVID-19 and changes in the aerospace industry.

Recently Adopted and Recently Issued Accounting Guidance

Recently Adopted and Recently Issued Accounting Guidance

Adopted

On January 1, 2021, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify various aspects of accounting for income taxes by eliminating certain exceptions contained in existing guidance and amending other guidance to simplify several other income tax accounting matters. The adoption of this new guidance did not have a material impact on the Consolidated Financial Statements.

Issued

In March 2020, the FASB issued amendments that provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The FASB is currently working on a project to extend the date to December 31, 2024. Management does not believe that the impact of these changes will have a material impact on the Consolidated Financial Statements.

In September 2022, the FASB issued guidance to enhance the transparency of disclosures regarding supplier finance programs. These changes become effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements.

Earnings Per Share

Basic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Operating Results of Arconic's Reportable Segments

The operating results of the Company’s reportable segments were as follows:

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Sales:
Third-party sales	$	683	$	291	$	193	$	266	$	1,433
Inter-segment sales	1		—		3		—		4
Total sales	$	684	$	291	$	196	$	266	$	1,437
Profit and loss:
Provision for depreciation and amortization	$	31	$	11	$	12	$	10	$	64
Segment Adjusted EBITDA	186		64		28		64		342
Restructuring and other charges	2		—		1		—		3
Capital expenditures	23		7		3		6		39
Third quarter ended September 30, 2021
Sales:
Third-party sales	$	599	$	254	$	199	$	231	$	1,283
Inter-segment sales	1		—		1		—		2
Total sales	$	600	$	254	$	200	$	231	$	1,285
Profit and loss:
Provision for depreciation and amortization	$	31	$	12	$	12	$	10	$	65
Segment Adjusted EBITDA	151		59		26		72		308
Restructuring and other charges	5		3		—		—		8
Capital expenditures	21		8		3		15		47
	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Nine months ended September 30, 2022
Sales:
Third-party sales	$	1,966	$	832	$	560	$	792	$	4,150
Inter-segment sales	3		—		5		—		8
Total sales	$	1,969	$	832	$	565	$	792	$	4,158
Profit and loss:
Provision for depreciation and amortization	$	93	$	34	$	36	$	30	$	193
Segment Adjusted EBITDA	538		176		77		206		997
Restructuring and other charges (credits)	9		(3)		4		—		10
Capital expenditures	74		30		12		20		136
Nine months ended September 30, 2021
Sales:
Third-party sales	$	1,677	$	788	$	535	$	687	$	3,687
Inter-segment sales	3		—		4		—		7
Total sales	$	1,680	$	788	$	539	$	687	$	3,694
Profit and loss:
Provision for depreciation and amortization	$	92	$	37	$	37	$	29	$	195
Segment Adjusted EBITDA	413		179		72		222		886
Restructuring and other charges	15		8		1		—		24
Capital expenditures	48		22		13		37		120

Schedule of Segment Reporting Information to Consolidated Income Before income Taxes

The following table reconciles Total Segment Adjusted EBITDA to Income before income taxes. Differences between the total segment and consolidated totals are in Corporate.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total Segment Adjusted EBITDA	$	342	$	308	$	997	$	886
Segment provision for depreciation and amortization	(64)		(65)		(193)		(195)
Unallocated amounts:
Restructuring and other charges	(4)		(8)		(12)		(22)
Corporate expense	(46)		(30)		(93)		(68)
Operating income	$	228	$	205	$	699	$	601
Loss on debt redemption	—		(118)		(2)		(141)
Interest expense, net	(57)		(63)		(172)		(201)
Other expense, net (Q)	(67)		(1)		(67)		(13)
Income before income taxes	$	104	$	23	$	458	$	246

Schedule of Reconciliation of Capital Expenditures from Segments to Consolidated

The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Total segment capital expenditures	$	39	$	47	$	136	$	120
Corporate	3		—		12		18
Capital expenditures	$	42	$	47	$	148	$	138

Schedule of Disaggregation of Revenue by Major End Market Served

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.

	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total Segment
Third quarter ended September 30, 2022
Aerospace - Commercial	$	388	$	156	$	124	$	—	$	668
Aerospace - Defense	124		43		56		—		223
Commercial Transportation	—		63		—		266		329
Industrial and Other	171		29		13		—		213
Total end-market revenue	$	683	$	291	$	193	$	266	$	1,433
Third quarter ended September 30, 2021
Aerospace - Commercial	$	299	$	126	$	118	$	—	$	543
Aerospace - Defense	130		37		65		—		232
Commercial Transportation	—		59		—		231		290
Industrial and Other	170		32		16		—		218
Total end-market revenue	$	599	$	254	$	199	$	231	$	1,283
Nine months ended September 30, 2022
Aerospace - Commercial	$	1,079	$	459	$	341	$	—	$	1,879
Aerospace - Defense	384		112		176		—		672
Commercial Transportation	—		169		—		792		961
Industrial and Other	503		92		43		—		638
Total end-market revenue	$	1,966	$	832	$	560	$	792	$	4,150
Nine months ended September 30, 2021
Aerospace - Commercial	$	786	$	403	$	277	$	—	$	1,466
Aerospace - Defense	402		120		206		—		728
Commercial Transportation	—		154		—		687		841
Industrial and Other	489		111		52		—		652
Total end-market revenue	$	1,677	$	788	$	535	$	687	$	3,687

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Restructuring and Other Charges (Tables)

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Other Charges

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Layoff costs	$	—	$	—	$	—	$	2
Reversals of previously recorded layoff reserves	—		—		(1)		(1)
Pension and Other post-retirement benefits - net settlements (E)	3		3		7		9
Non-cash asset impairments	—		4		—		8
Net loss related to divestitures of assets and businesses (P)	—		—		—		4
Other	1		1		6		—
Restructuring and other charges	$	4	$	8	$	12	$	22

Schedule of Activity and Reserve Balances for Restructuring Charges

	Layoff costs		Other exit costs		Total
Reserve balances at December 31, 2021	$	17	$	2	$	19
Cash payments	(9)		(5)		(14)
Restructuring charges	6		6		12
Other(1)	(7)		(1)		(8)
Reserve balances at September 30, 2022	$	7	$	2	$	9

(1)In the nine months ended September 30, 2022, other for layoff costs included a $7 charge for U.S. pension plan settlements and for other exit costs included a $1 charge for accelerated depreciation.

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Pension and Other Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Cost

The components of net periodic cost (benefit) were as follows:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension benefits
Service cost	$	1	$	1	$	3	$	3
Interest cost	13		12		38		36
Expected return on plan assets	(20)		(23)		(61)		(69)
Recognized net actuarial loss	12		14		37		43
Settlements	3		3		7		9
Net periodic cost(1)	$	9	$	7	$	24	$	22
Other postretirement benefits
Service cost	$	—	$	—	$	1	$	1
Interest cost	1		1		3		4
Recognized net actuarial loss	—		1		1		1
Amortization of prior service benefit	(2)		(3)		(7)		(7)
Net periodic benefit(1)	$	(1)	$	(1)	$	(2)	$	(1)

 (1)Service cost was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements were included in Restructuring and other charges; and all other cost components were recorded in Other expense, net in the Statement of Consolidated Operations.

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Other Expense, Net (Tables)

9 Months Ended

Sep. 30, 2022

Other Income and Expenses [Abstract]

Schedule of Other Expense, Net

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Non-service related net periodic benefit cost	$	4	$	2	$	11	$	8
Interest income	(2)		(1)		(3)		(2)
Foreign currency (gains) losses, net	(3)		(2)		(7)		1
Net realized and unrealized losses	5		3		12		7
Deferred compensation	(2)		(1)		(11)		5
Other, net	65		—		65		(6)
Other expense, net	$	67	$	1	$	67	$	13

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of Income Tax Provisions

The tax provision (benefit) was comprised of the following:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pre-tax income at estimated annual effective income tax rate before discrete items	$	24	$	7	$	111	$	73
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	2		1		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	—		—		—		1
Other discrete items	(2)		(12)		(11)		(9)
Provision (benefit) for income taxes	$	24	$	(4)	$	100	$	65

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Earnings Per Share and Common Stock (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Reconciliation of Information Used to Compute Basic and Diluted EPS

The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions):

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income attributable to common shareholders	$	80	$	27	$	358	$	181
Less: preferred stock dividends declared	1		1		2		2
Net income available to Howmet Aerospace common shareholders - basic and diluted	$	79	$	26	$	356	$	179
Average shares outstanding - basic	415		429		417		431
Effect of dilutive securities:
Stock and performance awards	5		4		5		5
Stock options	—		1		—		1
Average shares outstanding - diluted	420		434		422		437

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive (Loss) by Component

The following table details the activity of the three components that comprise Accumulated other comprehensive loss:

	Third quarter ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Pension and other postretirement benefits (E)
Balance at beginning of period	$	(767)	$	(903)	$	(799)	$	(980)
Other comprehensive income:
Unrecognized net actuarial gain and prior service cost/benefit	(3)		1		13		68
Tax expense	—		—		(3)		(15)
Total Other comprehensive (loss) income before reclassifications, net of tax	(3)		1		10		53
Amortization of net actuarial loss and prior service cost(1)	13		15		38		46
Tax expense(2)	(3)		(3)		(9)		(9)
Total amount reclassified from Accumulated other comprehensive loss, net of tax(3)	10		12		29		37
Total Other comprehensive income	7		13		39		90
Balance at end of period	$	(760)	$	(890)	$	(760)	$	(890)
Foreign currency translation
Balance at beginning of period	$	(1,207)	$	(992)	$	(1,062)	$	(966)
Other comprehensive loss	(128)		(36)		(273)		(62)
Balance at end of period	$	(1,335)	$	(1,028)	$	(1,335)	$	(1,028)
Cash flow hedges
Balance at beginning of period	$	(18)	$	11	$	(2)	$	3
Other comprehensive (loss) income:
Net change from periodic revaluations	(6)		1		(17)		20
Tax income (expense)	2		—		4		(4)
Total Other comprehensive (loss) income before reclassifications, net of tax	(4)		1		(13)		16
Net amount reclassified to earnings	9		(7)		(1)		(15)
Tax (expense) benefit(2)	(3)		2		—		3
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax(3)	6		(5)		(1)		(12)
Total Other comprehensive income (loss)	2		(4)		(14)		4
Balance at end of period	$	(16)	$	7	$	(16)	$	7
Accumulated other comprehensive loss	$	(2,111)	$	(1,911)	$	(2,111)	$	(1,911)

(1)These amounts were recorded in Other expense, net (see Note F) and Restructuring and other charges (see Note D) in the Statement of Consolidated Operations.

(2)These amounts were included in Provision (benefit) for income taxes (see Note G) in the Statement of Consolidated Operations.

(3)A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory Components

	September 30, 2022		December 31, 2021
Finished goods	$	493	$	478
Work-in-process	758		631
Purchased raw materials	314		256
Operating supplies	47		37
Total inventories	$	1,612	$	1,402

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Properties, Plants, and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Properties, Plants, and Equipment, Net

	September 30, 2022		December 31, 2021
Land and land rights(1)	$	84	$	91
Structures(1)	960		1,034
Machinery and equipment	3,851		3,932
	4,895		5,057
Less: accumulated depreciation and amortization(1)	2,765		2,772
	2,130		2,285
Construction work-in-progress	158		182
Properties, plants, and equipment, net	$	2,288	$	2,467

(1)In the first quarter of 2022, the Company entered into an agreement to sell the corporate headquarters in Pittsburgh, PA. The proceeds from the sale of the corporate headquarters, which closed in June 2022, were $44, excluding $3 of transaction costs, and the carrying value at the time of sale was $41. A loss of less than $1 was recorded in Restructuring and other charges in the Statement of Consolidated Operations upon finalization of the sale in the second quarter of 2022. The Company entered into a 12-year lease with the purchaser for a portion of the property.

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Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Supplemental Balance Sheet Information Related to Leases

Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows:

	September 30, 2022		December 31, 2021
Right-of-use assets classified in Other noncurrent assets	$	106	$	108
Current portion of lease liabilities classified in Other current liabilities	$	31	$	33
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits	80		81
Total lease liabilities	$	111	$	114

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Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

	September 30, 2022		December 31, 2021
5.125% Notes, due 2024	$	1,090	$	1,150
6.875% Notes, due 2025	600		600
5.900% Notes, due 2027	625		625
6.750% Bonds, due 2028	300		300
3.000% Notes, due 2029	700		700
5.950% Notes, due 2037	625		625
4.750% Iowa Finance Authority Loan, due 2042	250		250
Other(1)	(19)		(18)
	4,171		4,232
Less: amount due within one year	1		5
Total long-term debt	$	4,170	$	4,227

(1)Includes various financing arrangements related to subsidiaries, unamortized debt discounts, and unamortized debt issuance costs related to outstanding notes and bonds listed in the table above.

Schedule Of Debt Covenant Information

the Company’s Consolidated Net Debt to Consolidated EBITDA ratio cannot exceed the levels set forth below:

	No greater than
(i) for the quarter ending September 30, 2022	4.25 to 1.00
(ii) for the quarter ending December 31, 2022	3.75 to 1.00

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Fair Values of Financial Instruments

The carrying values of Cash and cash equivalents, restricted cash, derivatives, noncurrent receivables, and Short-term debt included in the Consolidated Balance Sheet approximate their fair value. The Company holds exchange-traded fixed income securities which are considered available-for-sale securities that are carried at fair value which is based on quoted market prices which are classified in Level 1 of the fair value hierarchy and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet. The fair value of Long-term debt, less amount due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Howmet for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Long-term debt were classified in Level 2 of the fair value hierarchy.

	September 30, 2022				December 31, 2021
	Carrying value		Fair value		Carrying value		Fair value
Long-term debt, less amount due within one year	$	4,170	$	3,905	$	4,227	$	4,707

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Basis of Presentation (Details)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2019
Aerospace | Revenue Benchmark | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	47.00%	61.00%	60.00%	60.00%

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Segment Information - Narrative (Details) - segment	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2019
Segment Reporting Information [Line Items]
Number of reportable segments		4
Revenue Benchmark | Customer Concentration Risk | Aerospace
Segment Reporting Information [Line Items]
Concentration risk, percentage	47.00%	61.00%	60.00%	60.00%
Revenue Benchmark | Customer Concentration Risk | Aerospace | General Electric Company | Engine Products
Segment Reporting Information [Line Items]
Concentration risk, percentage		13.00%	13.00%

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Segment Information - Schedule of Operating Results of Reportable Segments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Sales	$ 1,433	$ 1,283	$ 4,150	$ 3,687
Provision for depreciation and amortization	65	68	198	203
Restructuring and other charges	4	8	12	22
Capital expenditures	42	47	148	138
Third-party sales
Segment Reporting Information [Line Items]
Sales	1,433	1,283	4,150	3,687
Intersegment sales
Segment Reporting Information [Line Items]
Sales	4	2	8	7
Total segment capital expenditures
Segment Reporting Information [Line Items]
Sales	1,437	1,285	4,158	3,694
Provision for depreciation and amortization	64	65	193	195
Segment Adjusted EBITDA	342	308	997	886
Restructuring and other charges	3	8	10	24
Capital expenditures	39	47	136	120
Engine Products | Third-party sales
Segment Reporting Information [Line Items]
Sales	683	599	1,966	1,677
Engine Products | Intersegment sales
Segment Reporting Information [Line Items]
Sales	1	1	3	3
Engine Products | Total segment capital expenditures
Segment Reporting Information [Line Items]
Sales	684	600	1,969	1,680
Provision for depreciation and amortization	31	31	93	92
Segment Adjusted EBITDA	186	151	538	413
Restructuring and other charges	2	5	9	15
Capital expenditures	23	21	74	48
Fastening Systems | Third-party sales
Segment Reporting Information [Line Items]
Sales	291	254	832	788
Fastening Systems | Intersegment sales
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Fastening Systems | Total segment capital expenditures
Segment Reporting Information [Line Items]
Sales	291	254	832	788
Provision for depreciation and amortization	11	12	34	37
Segment Adjusted EBITDA	64	59	176	179
Restructuring and other charges	0	3	(3)	8
Capital expenditures	7	8	30	22
Engineered Structures | Third-party sales
Segment Reporting Information [Line Items]
Sales	193	199	560	535
Engineered Structures | Intersegment sales
Segment Reporting Information [Line Items]
Sales	3	1	5	4
Engineered Structures | Total segment capital expenditures
Segment Reporting Information [Line Items]
Sales	196	200	565	539
Provision for depreciation and amortization	12	12	36	37
Segment Adjusted EBITDA	28	26	77	72
Restructuring and other charges	1	0	4	1
Capital expenditures	3	3	12	13
Forged Wheels | Third-party sales
Segment Reporting Information [Line Items]
Sales	266	231	792	687
Forged Wheels | Intersegment sales
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Forged Wheels | Total segment capital expenditures
Segment Reporting Information [Line Items]
Sales	266	231	792	687
Provision for depreciation and amortization	10	10	30	29
Segment Adjusted EBITDA	64	72	206	222
Restructuring and other charges	0	0	0	0
Capital expenditures	$ 6	$ 15	$ 20	$ 37

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Segment Information - Schedule of Segment Operating Profit to Consolidated Income before Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Segment operating profit	$ 228	$ 205	$ 699	$ 601
Loss on debt redemption	0	(118)	(2)	(141)
Interest expense, net	(57)	(63)	(172)	(201)
Other expense, net	(67)	(1)	(67)	(13)
Income before income taxes	104	23	458	246
Total segment capital expenditures
Segment Reporting Information [Line Items]
Segment operating profit	342	308	997	886
Segment provision for depreciation and amortization	(64)	(65)	(193)	(195)
Restructuring and other charges
Segment Reporting Information [Line Items]
Segment operating profit	(4)	(8)	(12)	(22)
Corporate expense
Segment Reporting Information [Line Items]
Segment operating profit	$ (46)	$ (30)	$ (93)	$ (68)

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Segment Information - Reconciliation of Capital Expenditures (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Capital expenditures	$ 42	$ 47	$ 148	$ 138
Total segment capital expenditures
Segment Reporting Information [Line Items]
Capital expenditures	39	47	136	120
Corporate
Segment Reporting Information [Line Items]
Capital expenditures	$ 3	$ 0	$ 12	$ 18

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Segment Information - Disaggregation of Revenue by Major End Market Served (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue, Major Customer [Line Items]
Sales	$ 1,433	$ 1,283	$ 4,150	$ 3,687
Third-party sales
Revenue, Major Customer [Line Items]
Sales	1,433	1,283	4,150	3,687
Third-party sales | Engine Products
Revenue, Major Customer [Line Items]
Sales	683	599	1,966	1,677
Third-party sales | Fastening Systems
Revenue, Major Customer [Line Items]
Sales	291	254	832	788
Third-party sales | Engineered Structures
Revenue, Major Customer [Line Items]
Sales	193	199	560	535
Third-party sales | Forged Wheels
Revenue, Major Customer [Line Items]
Sales	266	231	792	687
Third-party sales | Aerospace - Commercial
Revenue, Major Customer [Line Items]
Sales	668	543	1,879	1,466
Third-party sales | Aerospace - Commercial | Engine Products
Revenue, Major Customer [Line Items]
Sales	388	299	1,079	786
Third-party sales | Aerospace - Commercial | Fastening Systems
Revenue, Major Customer [Line Items]
Sales	156	126	459	403
Third-party sales | Aerospace - Commercial | Engineered Structures
Revenue, Major Customer [Line Items]
Sales	124	118	341	277
Third-party sales | Aerospace - Commercial | Forged Wheels
Revenue, Major Customer [Line Items]
Sales	0	0	0	0
Third-party sales | Aerospace - Defense
Revenue, Major Customer [Line Items]
Sales	223	232	672	728
Third-party sales | Aerospace - Defense | Engine Products
Revenue, Major Customer [Line Items]
Sales	124	130	384	402
Third-party sales | Aerospace - Defense | Fastening Systems
Revenue, Major Customer [Line Items]
Sales	43	37	112	120
Third-party sales | Aerospace - Defense | Engineered Structures
Revenue, Major Customer [Line Items]
Sales	56	65	176	206
Third-party sales | Aerospace - Defense | Forged Wheels
Revenue, Major Customer [Line Items]
Sales	0	0	0	0
Third-party sales | Commercial Transportation
Revenue, Major Customer [Line Items]
Sales	329	290	961	841
Third-party sales | Commercial Transportation | Engine Products
Revenue, Major Customer [Line Items]
Sales	0	0	0	0
Third-party sales | Commercial Transportation | Fastening Systems
Revenue, Major Customer [Line Items]
Sales	63	59	169	154
Third-party sales | Commercial Transportation | Engineered Structures
Revenue, Major Customer [Line Items]
Sales	0	0	0	0
Third-party sales | Commercial Transportation | Forged Wheels
Revenue, Major Customer [Line Items]
Sales	266	231	792	687
Third-party sales | Industrial and Other
Revenue, Major Customer [Line Items]
Sales	213	218	638	652
Third-party sales | Industrial and Other | Engine Products
Revenue, Major Customer [Line Items]
Sales	171	170	503	489
Third-party sales | Industrial and Other | Fastening Systems
Revenue, Major Customer [Line Items]
Sales	29	32	92	111
Third-party sales | Industrial and Other | Engineered Structures
Revenue, Major Customer [Line Items]
Sales	13	16	43	52
Third-party sales | Industrial and Other | Forged Wheels
Revenue, Major Customer [Line Items]
Sales	$ 0	$ 0	$ 0	$ 0

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Restructuring and Other Charges - Summary (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Restructuring and Related Activities [Abstract]
Layoff costs	$ 0	$ 0	$ 0	$ 2
Reversals of previously recorded layoff reserves	0	0	(1)	(1)
Pension and Other post-retirement benefits - net settlements (E)	3	3	7	9
Non-cash asset impairments	0	4	0	8
Net loss related to divestitures of assets and businesses (P)	0	0	0	4
Other	1	1	6	0
Restructuring and other charges	$ 4	$ 8	$ 12	$ 22

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Restructuring and Other Charges - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ 4	$ 8	$ 12	$ 22
Accelerated depreciation	1
Reversal of Prior Period Programs
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges			1
Asset Impairment Associated Facility Closure
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges				22
Pension benefits
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	3	$ 3	7	$ 9
Pension plan settlements	$ 3		7
Accelerated depreciation			$ 6

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Restructuring and Other Charges - Activity and Reserve Balances for Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			$ 19
Cash payments			(14)
Restructuring charges	$ 4	$ 8	12	$ 22
Other			(8)
Restructuring reserve ending balance	9		9
Settlement charges	(3)	(3)	(7)	(9)
Accelerated depreciation	1
Pension benefits
Restructuring Reserve [Roll Forward]
Restructuring charges	3	3	7	9
Settlement charges	(3)	$ (3)	(7)	$ (9)
Accelerated depreciation			6
Layoff costs
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			17
Cash payments			(9)
Restructuring charges			6
Other			(7)
Restructuring reserve ending balance	7		7
Layoff costs | Pension benefits
Restructuring Reserve [Roll Forward]
Settlement charges			7
Other exit costs
Restructuring Reserve [Roll Forward]
Restructuring reserve beginning balance			2
Cash payments			(5)
Restructuring charges			6
Other			(1)
Restructuring reserve ending balance	$ 2		2
Accelerated depreciation			$ 1

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Pension and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Defined Benefit Plan Disclosure [Line Items]
Settlements	$ 3	$ 3	$ 7	$ 9
Pension benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	1	3	3
Interest cost	13	12	38	36
Expected return on plan assets	(20)	(23)	(61)	(69)
Recognized net actuarial loss	12	14	37	43
Settlements	3	3	7	9
Net periodic cost (benefit)	9	7	24	22
Other postretirement benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0	1	1
Interest cost	1	1	3	4
Recognized net actuarial loss	0	1	1	1
Amortization of prior service benefit	(2)	(3)	(7)	(7)
Net periodic cost (benefit)	$ (1)	$ (1)	$ (2)	$ (1)

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Pension and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restructuring and other charges	$ 4	$ 8		$ 12	$ 22
Pension benefits
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restructuring and other charges	3	3		7	9
Contributions and payments	$ 18	$ 10		$ 43	$ 79
Other postretirement benefits
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Decrease in obligation, pension benefits			$ 39

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Other Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Other Income and Expenses [Abstract]
Non-service related net periodic benefit cost	$ 4	$ 2	$ 11	$ 8
Interest income	(2)	(1)	(3)	(2)
Foreign currency (gains) losses, net	(3)	(2)	(7)	1
Net realized and unrealized losses	5	3	12	7
Deferred compensation	(2)	(1)	(11)	5
Other, net	65	0	65	(6)
Other expense, net	67	$ 1	67	$ 13
Judgement from legal proceedings	$ 65		$ 65

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation (percent)	24.30%	29.70%	24.30%	29.70%
Effective income tax rate reconciliation, including discrete items (percent)	23.10%	17.40%	21.80%	26.40%
Discrete income tax benefit	$ 2	$ 12	$ 11	$ 9
Benefit from release of valuation allowance			6
Excess benefit for stock compensation			$ 5
Income tax benefit related to prior year items		13		13
Charge for other small items		$ 1		2
Charge from tax rate change				$ 2

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Income Taxes - Schedule of Income Tax Provisions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Pre-tax income at estimated annual effective income tax rate before discrete items	$ 24	$ 7	$ 111	$ 73
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income	2	1	0	0
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized	0	0	0	1
Other discrete items	(2)	(12)	(11)	(9)
Provision (benefit) for income taxes	$ 24	$ (4)	$ 100	$ 65

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Earnings Per Share and Common Stock - Reconciliation of Information Used to Compute Basic and Diluted EPS (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Net income attributable to common shareholders	$ 80	$ 27	$ 358	$ 181
Less: preferred stock dividends declared	1	1	2	2
Net income available to Howmet Aerospace common shareholders - basic	79	26	356	179
Net income available to Howmet Aerospace common shareholders - diluted	$ 79	$ 26	$ 356	$ 179
Average shares outstanding - basic (in shares)	415	429	417	431
Effect of dilutive securities:
Stock and performance awards (in shares)	5	4	5	5
Stock options (in shares)	0	1	0	1
Average shares outstanding - diluted (in shares)	420	434	422	437

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Earnings Per Share and Common Stock - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Aug. 18, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock outstanding (in shares)	414,000,000	428,000,000	414,000,000	428,000,000
Authorized repurchase amount					$ 1,500
Share repurchases (in shares)	3,000,000		10,000,000
Treasury stock acquired, average price per share (in usd per share)	$ 36.17
Repurchase of common stock	$ 100		$ 335	$ 225
Remaining authorized repurchase amount	$ 1,012		$ 1,012
Decrease in average shares outstanding (in shares)	14,000,000
Incremental common shares attributable to dilutive effect of accelerated share repurchase agreements (in shares)		16,000,000
Common stock, dividends per share, declared (in usd per share)	$ 0.06	$ 0.02	$ 0.10	$ 0.02
Common stock, dividends per share, paid (in usd per share)	$ 0.02	$ 0.02	$ 0.06	$ 0.02
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive securities (in shares)	0	0	0	0
Revolving Credit Agreement
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Credit agreement term			5 years

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance			$ 3,508
Other comprehensive (loss) income:
Total Other comprehensive (loss) income, net of tax	$ (119)	$ (27)	(248)	$ 32
Ending balance	3,273		3,273
Accumulated other comprehensive loss
Other comprehensive (loss) income:
Total Other comprehensive (loss) income, net of tax	(119)	(27)	(248)	32
Ending balance	(2,111)	(1,911)	(2,111)	(1,911)
Pension and other postretirement benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(767)	(903)	(799)	(980)
Other comprehensive (loss) income:
Unrecognized net actuarial gain and prior service cost/benefit	(3)	1	13	68
Tax (expense) benefit	0	0	(3)	(15)
Total Other comprehensive (loss) income before reclassifications, net of tax	(3)	1	10	53
Amortization of net actuarial loss and prior service cost	13	15	38	46
Tax benefit (expense)	(3)	(3)	(9)	(9)
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax	10	12	29	37
Total Other comprehensive (loss) income, net of tax	7	13	39	90
Ending balance	(760)	(890)	(760)	(890)
Foreign currency translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(1,207)	(992)	(1,062)	(966)
Other comprehensive (loss) income:
Total Other comprehensive (loss) income, net of tax	(128)	(36)	(273)	(62)
Ending balance	(1,335)	(1,028)	(1,335)	(1,028)
Cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(18)	11	(2)	3
Other comprehensive (loss) income:
Unrecognized net actuarial gain and prior service cost/benefit	(6)	1	(17)	20
Tax (expense) benefit	2	0	4	(4)
Total Other comprehensive (loss) income before reclassifications, net of tax	(4)	1	(13)	16
Amortization of net actuarial loss and prior service cost	9	(7)	(1)	(15)
Tax benefit (expense)	(3)	2	0	3
Total amount reclassified from Accumulated other comprehensive income (loss), net of tax	6	(5)	(1)	(12)
Total Other comprehensive (loss) income, net of tax	2	(4)	(14)	4
Ending balance	$ (16)	$ 7	$ (16)	$ 7

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Receivables (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Certain Customers
Schedule Of Financial Receivables [Line Items]
Accounts receivables sold	$ 127	$ 103	$ 350	$ 267
Accounts receivable remaining outstanding	123		123
Receivables Sale Program
Schedule Of Financial Receivables [Line Items]
Net cash funding received during the period				44
Amount of cash draws under arrangement during the period				41
Amount of cash repayments under arrangement during the period				$ 85
Receivables Purchase Agreement
Schedule Of Financial Receivables [Line Items]
Accounts receivable securitization	325		325		$ 325
Accounts receivable securitization amount drawn	250		250		250
Financing receivables, held as collateral	161		161		$ 79
Accounts receivables sold	$ 453		$ 1,354

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Inventories - Schedule of Inventory Components (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Finished goods	$ 493	$ 478
Work-in-process	758	631
Purchased raw materials	314	256
Operating supplies	47	37
Total inventories	$ 1,612	$ 1,402

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Inventories - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Inventories valued on a LIFO basis	$ 668	$ 523
Total inventories valued on an average-cost basis	$ 206	$ 192

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Properties, Plants, and Equipment, net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross			$ 4,895		$ 5,057
Less: accumulated depreciation and amortization			2,765		2,772
Properties, plants and equipment excluding construction work in progress			2,130		2,285
Construction work-in-progress			158		182
Properties, plants, and equipment, net			2,288		2,467
Capital expenditures incurred but not yet paid			30	$ 42
Corporate Center | Disposed of by Sale
Property, Plant and Equipment [Line Items]
Proceeds from the sales of businesses		$ 44
Transaction costs		3
Loss on sale	$ 1
Purchaser lease term	12 years
Land and land rights
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross			84		91
Structures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross			960		1,034
Structures | Corporate Center | Disposed of by Sale
Property, Plant and Equipment [Line Items]
Properties, plants, and equipment, net		$ 41
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross			$ 3,851		$ 3,932

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Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating lease cost	$ 16	$ 15	$ 46	$ 48

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Leases - Operating Lease Assets and Liabilities in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent	Other Assets, Noncurrent
Right-of-use assets classified in Other noncurrent assets	$ 106	$ 108
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities (M)(Q)	Other current liabilities (M)(Q)
Current portion of lease liabilities classified in Other current liabilities	$ 31	$ 33
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other noncurrent liabilities and deferred credits (M)	Other noncurrent liabilities and deferred credits (M)
Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits	$ 80	$ 81
Total lease liabilities	$ 111	$ 114

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Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
Debt Instrument [Line Items]
Other	$ (19)		$ (18)
Long-term debt	4,171		4,232
Less: amount due within one year	1		5
Total long-term debt	$ 4,170		4,227
5.125% Notes, due 2024
Debt Instrument [Line Items]
Long-term debt, interest rate	5.125%	5.125%		5.125%
Amount outstanding	$ 1,090		1,150
6.875% Notes, due 2025
Debt Instrument [Line Items]
Long-term debt, interest rate	6.875%
Amount outstanding	$ 600		600
5.900% Notes, due 2027
Debt Instrument [Line Items]
Long-term debt, interest rate	5.90%
Amount outstanding	$ 625		625
6.750% Bonds, due 2028
Debt Instrument [Line Items]
Long-term debt, interest rate	6.75%
Amount outstanding	$ 300		300
3.000% Notes, due 2029
Debt Instrument [Line Items]
Long-term debt, interest rate	3.00%
Amount outstanding	$ 700		700
5.950% Notes, due 2037
Debt Instrument [Line Items]
Long-term debt, interest rate	5.95%
Amount outstanding	$ 625		625
4.750% Iowa Finance Authority Loan, due 2042
Debt Instrument [Line Items]
Long-term debt, interest rate	4.75%
Amount outstanding	$ 250		$ 250

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Debt - Public Debt (Details) - USD ($) $ in Millions					3 Months Ended		9 Months Ended
	Sep. 02, 2021	Sep. 01, 2021	May 03, 2021	Jan. 15, 2021	Jun. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Payment for early redemption of debt							$ 2	$ 133
5.400% Notes, due 2021
Debt Instrument [Line Items]
Early redemption of debt				$ 361
Long-term debt, interest rate				5.40%
Accrued interest paid				$ 5
5.870% Notes, due 2022
Debt Instrument [Line Items]
Early redemption of debt			$ 476
Long-term debt, interest rate			5.87%
Accrued interest paid			$ 5
Payment for early redemption of debt			503
Early termination premium			$ 23
3.000% Notes, due 2029
Debt Instrument [Line Items]
Early redemption of debt		$ 700
Long-term debt, interest rate							3.00%
6.875% Notes, due 2025
Debt Instrument [Line Items]
Early redemption of debt	$ 600
Long-term debt, interest rate							6.875%
Early termination premium	105
Interest expense	$ 14
5.125% Notes, due 2024
Debt Instrument [Line Items]
Early redemption of debt					$ 60	$ 53
Long-term debt, interest rate					5.125%	5.125%	5.125%	5.125%
Payment for early redemption of debt					$ 62	$ 59
Early termination premium					$ 2	5
Interest expense						$ 1

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Debt - Credit Facility (Details) - Revolving Credit Agreement $ in Millions		9 Months Ended	12 Months Ended
	Sep. 28, 2021 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Long-term line of credit	$ 1,000
Debt covenants, net debt to consolidated EBITDA ratio	3.50
Amount outstanding		$ 0	$ 0
Amount borrowed		0	$ 0
Year Ending December 2022
Debt Instrument [Line Items]
Debt covenants, net debt to consolidated EBITDA ratio	3.75
Maximum common stock dividends and share repurchases		500
Common stock dividends and share repurchases		$ 377

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Debt - Schedule of Net Debt To Consolidated EBITDA Ratio (Details) - Revolving Credit Agreement	Sep. 28, 2021
Debt Conversion [Line Items]
Debt covenants, net debt to consolidated EBITDA ratio	3.50
Quarter ending September 30, 2022
Debt Conversion [Line Items]
Debt covenants, net debt to consolidated EBITDA ratio	4.25
Quarter ending December 31, 2022
Debt Conversion [Line Items]
Debt covenants, net debt to consolidated EBITDA ratio	3.75

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Fair Value of Financial Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Derivative [Line Items]
Restricted cash	$ 1	$ 2
Carrying value
Derivative [Line Items]
Long-term debt, less amount due within one year	4,170	4,227
Fair value
Derivative [Line Items]
Long-term debt, less amount due within one year	$ 3,905	$ 4,707

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Divestiture (Details) - USD ($) $ in Millions	3 Months Ended					9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 01, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Asset impairment charges		$ 0	$ 4			$ 0	$ 8
Fastening Systems | Small Manufacturing Facility in France | Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Asset impairment charges					$ 4
Consideration								$ 10
Proceeds from the sales of businesses		$ 1		$ 8
Fastening Systems | Small Manufacturing Facility in France | Disposed of by Sale | Forecast
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Escrow deposits	$ 1

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Contingencies and Commitments (Details) $ in Millions	1 Months Ended	3 Months Ended	9 Months Ended
	Dec. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($) location	Jun. 26, 2020 USD ($) derivative entity
Loss Contingencies [Line Items]
Number of cleanup locations | location			30
Remediation reserve balance	$ 15	$ 15	$ 15
Remediation reserve balance, classified as a current liability	6	7	7
Payments related to remediation expenses applied against the reserve (less than)		1
Guarantees of third party related to project financing		11	11
Combined fair value of guarantees	6	6	6
Coverage limit	80
Total amount committed under outstanding surety bonds		43	43
Surety bonds, amount outstanding		22	22
Bank Loan Obligations
Loss Contingencies [Line Items]
Letters of credit, total amount		123	123
Other Noncurrent Liabilities and Deferred Credits | Separation Agreement
Loss Contingencies [Line Items]
Guarantees of third party related to project financing	$ 1,406	1,406	1,406
Lehman Brothers International (Europe) (“LBIE”) Claims
Loss Contingencies [Line Items]
Number of entities | entity				2
Number of derivative transactions | derivative				2
Estimate of claim				$ 64
Amount reserved		65	65
Alcoa Corporation Workers Compensation Claims
Loss Contingencies [Line Items]
Letters of credit, total amount outstanding		53	53
Arconic Corporation Environmental Obligations
Loss Contingencies [Line Items]
Letters of credit, total amount outstanding		$ 17	$ 17
Maximum | Recurring Costs of Managing Hazardous Substances and Environmental Programs
Loss Contingencies [Line Items]
Percentage of cost of goods sold (percent)			1.00%