Howmet Aerospace Inc.

Good morning, ladies and gentlemen, and welcome to HowMet Aerospace Second Quarter 2022 Results Conference Call. My name is Ian, and I'll be your operator for today. As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Paul Luther, Vice President of Investor Relations.

Please go ahead. Thank you, Ian. Good morning and welcome to the HowMet Aerospace Second Quarter 2022 Results Conference Call. I'm joined by John Plant, Executive Chairman and Chief Executive Officer, and Ken Giacobi, Executive Vice President and Chief Financial Officer. After comments by John and Ken, we will have a question and answer session. I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the company's actual results to differ materially from these projections listed in today's presentation and earnings press release and in our most recent SEC filings. In addition, we've included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release and in the appendix in today's presentation. With that, I'd like to turn the call over to John.

Thanks, BT, and good morning, everyone. Welcome to our Q2 call. Hammett's second quarter was another strong quarter and witnessed the continuing recovery in commercial aerospace, which was up 34% year-on-year and 7% sequentially. Total revenue was $1.393 billion and was up 17% year-on-year and 5% sequentially, which was at the top end of our guidance range. Revenue increased in each business segment both year-over-year and sequentially. Similarly, Hermet's Q2 EBITDA grew year-over-year and sequentially to $316 million, including net headcount additions of approximately 740 employees. Moreover, we are particularly pleased with the continuing healthy EBITDA margin performance of 22.8%, which is also at the high end of guidance. Inflationary costs were either recovered from customers or offset with efficiency improvements. Finally, earnings per share was strong at $0.35, an increase of 59% year over year. Moving to the balance sheet and cash flow, free cash flow was a positive $114 million in the quarter, including an inventory build of approximately $105 million, primarily to accommodate the commercial aerospace recovery. Free cash flow was positive for the first half, and we expect to have positive free cash flow in both Q3 and Q4. The cash balance at the end of Q2 increased to $538 million, including common stock repurchases of $60 million and bond repurchases of $60 million. Share and bond repurchases were with cash on hand and continued to reduce share count and interest expense drag and hence improved free cash flow yield. Legacy pension and OPEB liabilities are trending favorably, with a net liability improvement of $60 million year-to-date. Associated cash contributions are down 65% in the first half compared to last year. Lastly, net leverage improved three times and is expected to accelerate by year-end to move towards 2.5 times EBITDA. Segment details will be covered by Kent. However, I would like to note the small continuing EBITDA margin increase in our engines business and an improvement in structures. This was commendable for structures in the light of both the inventory burndown of F-35 and the continuing low to zero build of the Boeing 787. Now over to Ken.