Howmet Aerospace Completes Debt Actions

Key Announcements

• In December 2023, Howmet Aerospace drew approximately $400 million from its two term loan facilities. $200 million was drawn from a U.S. dollar-denominated term loan facility (the “USD Term Loan Facility”) and approximately $200 million was drawn from a Japanese yen-denominated term loan facility (the “JPY Term Loan Facility”).
• The Company entered into interest rate swaps to exchange the floating interest rates of the term loan facilities into fixed interest rates. The weighted average fixed interest rate is approximately 3.9%.
• On December 28, 2023, the Company completed an early partial redemption of its 5.125% Notes due October 2024 (the “2024 Notes”) in the aggregate principal amount of $500 million for approximately $506 million, including approximately $6 million of accrued interest. Following this redemption, the aggregate outstanding principal amount of the 2024 Notes is approximately $205 million.
• The combined impact of the term loans and the early partial redemption of the 2024 Notes is expected to reduce annualized interest expense by approximately $10 million.
• On December 15, 2023, S&P Global Ratings (“S&P”) upgraded Howmet Aerospace’s Long-Term Issue Credit Rating to “BBB-” from “BB+” and updated the rating outlook to stable. With this upgrade, Howmet Aerospace is now rated as investment grade by two of the three credit rating agencies.

Howmet Aerospace (NYSE: HWM) today reported the completion of debt actions in the fourth quarter 2023.

As previously disclosed, on November 22, 2023, the Company entered into two senior unsecured term loan agreements. One term loan facility is U.S. dollar denominated. The second term loan facility is Japanese yen denominated, and Howmet Aerospace’s operations in Japan provide a natural foreign currency hedge against the term loan facility. In December 2023, the Company drew $200 million from the USD Term Loan Facility and approximately $200 million from the JPY Term Loan Facility. The term loans are prepayable without penalties or premiums and mature in November 2026.

In December 2023, the Company also entered into interest rate swaps to exchange the floating interest rates of the approximately $400 million in term loans into fixed interest rates. With the benefit of the Company’s credit rating upgrade by S&P, the Company obtained a weighted average fixed interest rate of approximately 3.9%. All of Howmet Aerospace’s outstanding long-term debt continues to be unsecured and at fixed interest rates, which will provide stability of interest expense into the future.

On December 28, 2023, the Company completed an early partial redemption of its 2024 Notes in the aggregate principal amount of $500 million. The 2024 Notes were redeemed with approximately $106 million of cash on hand and approximately $400 million from the term loans at an aggregate redemption price of approximately $506 million, including accrued interest of approximately $6 million. Following this redemption, the aggregate outstanding principal amount of the 2024 Notes, which were inherited from Alcoa Inc. at an original outstanding principal balance of $1.25 billion, is approximately $205 million.

The combined impact of the term loans and the early partial redemption of the 2024 Notes is expected to reduce annualized interest expense by approximately $10 million.

S&P Rating Upgrade and Update Outlook to Stable

On December 15, 2023, S&P upgraded the Company’s Long-Term Issue Credit Rating to “BBB-” from “BB+” and updated the rating outlook to stable. With this upgrade, Howmet Aerospace is now rated as investment grade by two of the three credit rating agencies, reflecting the Company’s improved financial leverage and strong cash generation.

About Howmet Aerospace

Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation. With nearly 1,150 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft and commercial trucks to operate with a lower carbon footprint. For more information, visit www.howmet.com.

Dissemination of Company Information

Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.

Forward-Looking Statements

This release contains 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," “envisions,” "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 relating to any future debt actions. 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) deterioration in global economic and financial market conditions generally; (b) unfavorable changes in the markets served by Howmet Aerospace; (c) the impact of potential cyber attacks and information technology or data security breaches; (d) the loss of significant customers or adverse changes in customers’ business or financial conditions; (e) manufacturing difficulties or other issues that impact product performance, quality or safety; (f) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (g) failure to attract and retain a qualified workforce and key personnel; (h) the inability to achieve revenue growth, cash generation, 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, conflicts and wars, 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; (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, 2022 and other reports filed with the U.S. Securities and Exchange Commission. The statements in this release are made as of the date of this release, even if subsequently made available by Howmet Aerospace on its website or otherwise. 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.

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