Financial Analysis

Contingencies and Commitments Contingencies Environmental Matters. Howmet participates in environmental assessments and/or 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 $16 and $19 as of December 31, 2025 and 2024 , respectively, and was recorded in Other noncurrent liabilities and deferred credits in the Consolidated Balance Sheet (of which $7 and $10, 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 $5 and $2 in 2025 and 2024, respectively, and included expenditures currently mandated, as well as those not required by any …

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Debt Debt. December 31, 2025 2024 USD Term Loan Agreement, due 2026 (1) 140 JPY Term Loan Agreement, due 2026 (2) 191 188 5.900% Notes, due 2027 625 6.750% Bonds, due 2028 300 300 3.000% Notes, due 2029 700 700 4.850% Notes, due 2031 (3) 500 500 4.550% Notes, due 2032 500 5.950% Notes, due 2037 625 625 4.750% Iowa Finance Authority Loan, due 2042 250 250 Other, net (4) (16) (13) 3,050 3,315 Less: amount due within one year 191 6 Total long-term debt $ 2,859 $ 3,309 (1) The Company completed the early prepayment of the remaining amount outstanding under the USD Term Loan Facility in 2025. The Company had entered into an interest rate swap to exchange the floating interest rate of this term loan facility to a fixed interest rate of 5.670% as of December 31, 2024, based on the Companys long-term debt ratings. This swap was settled upon the prepayment of the USD Term Loan Facility with an immaterial impact to the Consolidated Financial Statements. (2) The Company entered into an interest rate swap to exchange the floating interest rate of the JPY Term Loan Facility to a fixed interest rate of 1.794% and 1.919% as of December 31, 2025 and December 31, 2024, respectively, based on the Companys long-term debt ratings. The amounts outstanding under the JPY Term Loan Facility are due in November 2026. (3) The Company entered into a cross-currency swap to synthetically convert the 4.850% Notes due October 2031 (the 2031 Notes) into a Euro liability of approximately 458 million with a f …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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 Year ended December 31, 2025 Aerospace - Commercial $ 2,355 $ 1,202 $ 765 $ $ 4,322 Aerospace - Defense 900 176 333 1,409 Commercial Transportation 209 1,039 1,248 Gas Turbines 944 944 Other 121 158 50 329 Total end-market revenue $ 4,320 $ 1,745 $ 1,148 $ 1,039 $ 8,252 Year ended December 31, 2024 Aerospace - Commercial $ 2,091 $ 1,006 $ 774 $ $ 3,871 Aerospace - Defense 766 162 236 1,164 Commercial Transportation 254 1,054 1,308 Gas Turbines 755 755 Other 123 154 55 332 Total end-market revenue $ 3,735 $ 1,576 $ 1,065 $ 1,054 $ 7,430 Year ended December 31, 2023 Aerospace - Commercial $ 1,798 $ 790 $ 641 $ $ 3,229 Aerospace - Defense 670 173 172 1,015 Commercial Transportation 255 1,147 1,402 Gas Turbines 674 674 Other 124 131 65 320 Total end-market revenue $ 3,266 $ 1,349 $ 878 $ 1,147 $ 6,640 …

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Goodwill and Other Intangible Assets The following table details the changes in the carrying amount of goodwill: Engine Products Fastening Systems Engineered Structures Forged Wheels Total Balances at December 31, 2023 Goodwill $ 2,843 $ 1,604 $ 306 $ 7 $ 4,760 Accumulated impairment losses (719) (4) (2) (725) Goodwill, net 2,124 1,600 304 7 4,035 Translation and other (17) (7) (1) (25) Balances at December 31, 2024 Goodwill 2,826 1,597 305 7 4,735 Accumulated impairment losses (719) (4) (2) (725) Goodwill, net 2,107 1,593 303 7 4,010 Translation and other 31 17 48 Balances at December 31, 2025 Goodwill 2,857 1,614 305 7 4,783 Assets held for sale reclassification ( A ) (36) Accumulated impairment losses (719) (4) (2) (725) Goodwill, net $ 2,138 $ 1,610 $ 303 $ 7 $ 4,022 During the 2025 annual review of goodwill in the fourth quarter, management performed quantitative assessments on the Fastening Systems and Engineered Structures reporting units and qualitative assessments on the Engine Products and Forged Wheels reporting units. The estimated fair values of the reporting units exceeded their respective carrying values in excess of 80%; thus, there were no goodwill impairments. Howmet uses a DCF model to estimate the current fair value of the reporting unit, which is compared to its carrying value, when testing for impairment. Management believes forecasted cash flows are the best indicator of such fair value. A number of significant assumptions and estimates are involved in …

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Income Taxes The components of income before income taxes were as follows: For the year ended December 31, 2025 2024 2023 United States $ 1,374 $ 901 $ 538 Foreign 466 482 437 Total $ 1,840 $ 1,383 $ 975 The provision for income taxes consisted of the following: For the year ended December 31, 2025 2024 2023 Current: Federal (1) $ 181 $ 70 $ 5 Foreign 116 98 94 State and local 18 4 2 315 172 101 Deferred: Federal 34 43 92 Foreign (15) 17 16 State and local (2) (4) 1 17 56 109 Total $ 332 $ 228 $ 210 (1) Federal includes U.S. taxes related to foreign income. A reconciliation of the U.S. federal statutory rate to Howmets effective tax rate, with prior years recategorized based on guidance issued by the FASB in December 2023, was as follows (the effective tax rate for 2025, 2024, and 2023 was a provision on income): For the year ended December 31, 2025 2024 2023 Amount Percent Amount Percent Amount Percent U.S. federal statutory tax rate $ 387 21.0 % $ 290 21.0 % $ 205 21.0 % U.S. state and local income tax, net of federal income tax effect (1) 12 0.6 1 0.1 3 0.3 Foreign tax effects Hungary Statutory tax rate difference between Hungary and United States (19) (1.0) (18) (1.3) (17) (1.7) Other (1) (0.1) 1 0.1 (3) (0.3) Other foreign jurisdictions 24 1.3 29 2.1 25 2.6 Effect of changes in tax laws or rates enacted in the current period 10 0.6 Effect of cross-border tax laws (2) Foreign-derived intangible income (38) (2.1) (25) (1.8) (13) (1.3) Global intangible low-taxed income 19 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases Operating lease cost includes short-term leases and variable lease payments and approximates cash paid. Operating lease cost was $73, $67, and $63 in 2025, 2024, and 2023, respectively. Operating lease right-of-use assets and lease liabilities in the Consolidated Balance Sheet were as follows: December 31, 2025 2024 Right-of-use assets classified in Other noncurrent assets $ 162 $ 155 Current portion of lease liabilities classified in Other current liabilities $ 42 $ 37 Long-term portion of lease liabilities classified in Other noncurrent liabilities and deferred credits 121 119 Total lease liabilities $ 163 $ 156 Future minimum contractual operating lease obligations were as follows at December 31, 2025: 2026 $ 52 2027 42 2028 29 2029 19 2030 14 Thereafter 40 Total lease payments $ 196 Less: Imputed interest (33) Present value of lease liabilities $ 163 December 31, 2025 2024 2023 Right-of-use assets obtained in exchange for operating lease obligations $ 50 $ 66 $ 68 Weighted-average remaining lease term in years 5.7 5.9 6.4 Weighted-average discount rate 5.4 % 5.7 % 5.9 %

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Recently Adopted Accounting Guidance. In December 2023, the Financial Accounting Standards Board (FASB) issued guidance to enhance the transparency of income tax disclosures including additional details on the rate reconciliation and taxes paid by jurisdiction. These changes became effective for fiscal years beginning after December 15, 2024. The adoption of this new disclosure, including retrospective changes, is reflected in Note H of the Consolidated Financial Statements. Recently Issued Accounting Guidance. In December 2025, the FASB issued guidance to establish the recognition, measurement, and presentation of government grants received by business entities. These changes become effective for fiscal years beginning after December 15, 2028 for interim and annual reporting periods. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements. In September 2025, the FASB issued guidance to simplify the requirements for the capitalization of costs surrounding internally-developed software. These changes become effective for fiscal years beginning after December 15, 2027 for interim and annual reporting periods. Management is currently evaluating the impact of these changes on the Consolidated Financial Statements. In July 2025, the FASB issued guidance to simplify the process of estimating credit losses for current contract assets and accounts receivable. These changes become effective for fiscal years beginning after December 15, 2 …

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Retirement and Other Postretirement Benefits Howmet maintains pension plans covering U.S. employees and certain employees in foreign locations. Defined pension benefits generally depend on length of service and job grade. The majority of benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. Most salaried and non-bargaining hourly U.S. employees hired after March 1, 2006 participate in a defined contribution plan instead of a defined benefit plan. Howmet also maintains health care and life insurance postretirement benefit plans covering eligible U.S. retired employees. The medical plans are unfunded and generally pay a percentage of medical expenses, reduced by deductibles and other coverage. Life benefits are generally provided by insurance contracts. Howmet retains the right, subject to existing agreements, to change or eliminate these benefits. Effective May 1, 2019, salaried and non-bargaining hourly U.S. employees and retirees are not eligible for postretirement life insurance benefits. Effective July 1, 2024, salaried and non-bargaining hourly U.S. employees are not eligible for any postretirement medical benefits. In December 2025, the Company undertook actions to reduce gross pension obligations by $128 by purchasing group annuity contracts with a third-party carrier to pay and administer future annuity payments for its U.K. pension plan, effectively starting the process for termi …

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Restructuring and Other Charges Restructuring and other charges were comprised of the following: For the year ended December 31, 2025 2024 2023 Layoff costs $ 3 $ 10 $ 3 Net reversals of previously recorded layoff reserves (3) (3) (1) Pension and other post-retirement benefits - net settlements ( G ) 89 5 Non-cash asset impairments and accelerated depreciation 2 14 Net (gains) loss related to divestitures of assets and businesses (6) 12 (1) Other 1 3 Total restructuring and other charges $ 84 $ 21 $ 23 Layoff costs were recorded based on approved, detailed action plans submitted by the operating locations that specified positions to be eliminated, benefits to be paid under existing severance plans, union contracts, or statutory requirements and the expected timetable for completion of the plans. 2025 Actions. In 2025, Howmet recorded Restructuring and other charges of $84, which were primarily due to charges for U.K. and Canadian pension plans settlement accounting of $89, a $3 charge for layoff costs, including the separation of 123 employees (79 in Fastening Systems and 44 in Forged Wheels), and exit related costs, including accelerated depreciation, of $1, partially offset by a gain on the sale of assets at a small U.K. manufacturing facility in Engineered Structures of $3, a reversal of $3 for layoff reserves related to a prior period, a gain on the sale of assets at a previously closed facility in Forged Wheels of $2, and a gain related to post-closing adjustments from t …

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Segment and Geographic Area Information Howmet is a global leader in lightweight metals engineering and manufacturing. Howmets innovative, multi-material products, which may include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, gas turbines, and other markets. Segment performance under Howmets management reporting system is evaluated based on Segment Adjusted EBITDA. The Companys Chief Executive Officer, who has been determined to be our Chief Operating Decision Maker (CODM), believes that Segment Adjusted EBITDA provides information with respect to the Companys operating performance and the Companys ability to meet its financial obligations. Howmets 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 (R&D) expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are excluded from net margin and Segment Adjusted EBITDA. The Companys CODM considers forecast-to-actual variances for Segment Adjusted EBITDA when allocating resources across the Companys reportable segments. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companie …

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Summary of Significant Accounting Policies Basis of Presentation. The Consolidated Financial Statements of Howmet Aerospace Inc. (formerly known as Arconic Inc.) and subsidiaries (Howmet or the Company or we or our) are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and require 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 expectations, including considerations relating to changes in the aerospace industry. The impact of these changes, including the macroeconomic considerations, remains 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. These may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates upon subsequent resolution of identified matte …

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Preferred and Common Stock Preferred Stock. Howmet has two classes of preferred stock: $3.75 Cumulative Preferred Stock (Class A Preferred Stock) and Class B Serial Preferred Stock. Class A Preferred Stock had 660,000 shares authorized at a par value of $100 per share with an annual $3.75 cumulative dividend preference per share. There were no and 546,024 shares of Class A Preferred Stock outstanding as of December 31, 2025 and 2024, respectively. Howmet redeemed all outstanding shares of Class A Preferred Stock on December 17, 2025 (the Redemption Date) at a redemption price of $100 per share plus $0.8125 per share of dividends accrued but not paid or declared as of the Redemption Date. On February 9, 2026, the Company retired 659,909 shares of Class A preferred Stock, including the redeemed shares. The redemption simplified the Companys capital structure. Class B Serial Preferred Stock has 10,000,000 shares authorized at a par value of $1 per share. There were no shares of Class B Serial Preferred Stock outstanding as of both December 31, 2025 and 2024. Common Stock. As of December 31, 2025, there were 600,000,000 shares authorized at a par value of $1 per share, and 401,620,565 shares issued and outstanding. Dividends paid were $0.44 per share in 2025 ($0.10 per share in each of the first and second quarters of 2025 and $0.12 per share in each of the third and fourth quarter of 2025), $0.26 per share in 2024 ($0.05 per share in each of the first and second quarters of 2024 …

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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 I regarding the share repurchases made in January and February 2026 and the retirement of 659,909 shares of Class A Preferred Stock. See Note Q regarding the extension of the 5 -Year Revolving Credit Agreement and new 364 -Day Revolving Credit Facility in February 2026. See Note T regarding a small privately-held fasteners company acquired in February 2026.

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