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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, 2023
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)
Delaware25-0317820
(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 SymbolName of each exchange on which registered 
Common Stock, par value $1.00 per shareHWMNew York Stock Exchange
$3.75 Cumulative Preferred Stock,
par value $100.00 per share
HWM PRNYSE 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 31, 2023, there were 411,744,354 shares of common stock, par value $1.00 per share, of the registrant outstanding.






TABLE OF CONTENTS 
  Page
Part I
Item 1.
Item 2.
Item 3.
Item 4.
Part II
Item 1.
Item 1A.
Item 2.
Item 6.



PART I – FINANCIAL INFORMATION
Item 1. Financial Statements and Supplementary Data.
Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share amounts)
Third quarter endedNine months ended
 September 30,September 30,
 2023202220232022
Sales (C)
$1,658 $1,433 $4,909 $4,150 
Cost of goods sold (exclusive of expenses below)1,183 1,056 3,543 2,993 
Selling, general administrative, and other expenses87 73 250 225 
Research and development expenses9 7 27 23 
Provision for depreciation and amortization68 65 204 198 
Restructuring and other charges (D)
4 4 8 12 
Operating income307 228 877 699 
Loss on debt redemption (N)
  1 2 
Interest expense, net54 57 166 172 
Other expense, net (F)
11 67 5 67 
Income before income taxes242 104 705 458 
Provision for income taxes (G)
54 24 176 100 
Net income$188 $80 $529 $358 
Amounts Attributable to Howmet Aerospace Common Shareholders (H):
Net income$187 $79 $527 $356 
Earnings per share:
Basic$0.45 $0.19 $1.28 $0.86 
Diluted$0.45 $0.19 $1.27 $0.84 
Average Shares Outstanding (H):
Basic412 415 412 417 
Diluted415 420 417 422 
The accompanying notes are an integral part of the consolidated financial statements.

3

Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Comprehensive Income (unaudited)
(in millions)
Third quarter endedNine months ended
 September 30,September 30,
2023202220232022
Net income$188 $80 $529 $358 
Other comprehensive income (loss), net of tax (I):
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits10 7 19 39 
Foreign currency translation adjustments (56)(128)(18)(273)
Net change in unrecognized gains (losses) on cash flow hedges4 2 (10)(14)
Total Other comprehensive loss, net of tax (42)(119)(9)(248)
Comprehensive income (loss)$146 $(39)$520 $110 
The accompanying notes are an integral part of the consolidated financial statements.
4

Howmet Aerospace Inc. and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$424 $791 
Receivables from customers, less allowances of $1 in both 2023 and 2022 (J)
714 506 
Other receivables13 31 
Inventories (K)
1,748 1,609 
Prepaid expenses and other current assets212 206 
Total current assets3,111 3,143 
Properties, plants, and equipment, net (L)
2,296 2,332 
Goodwill4,007 4,013 
Deferred income taxes45 54 
Intangibles, net507 521 
Other noncurrent assets (M)
200 192 
Total assets$10,166 $10,255 
Liabilities
Current liabilities:
Accounts payable, trade (B)
$894 $962 
Accrued compensation and retirement costs240 195 
Taxes, including income taxes (G)
73 48 
Accrued interest payable58 75 
Other current liabilities (M)(P)
189 202 
Total current liabilities1,454 1,482 
Long-term debt (N)(O)
3,794 4,162 
Accrued pension benefits (E)
618 633 
Accrued other postretirement benefits (E)
98 109 
Other noncurrent liabilities and deferred credits (M)
330 268 
Total liabilities6,294 6,654 
Contingencies and commitments (P)
Equity
Howmet Aerospace shareholders’ equity:
Preferred stock55 55 
Common stock412 412 
Additional capital3,770 3,947 
Retained earnings1,485 1,028 
Accumulated other comprehensive loss (I)
(1,850)(1,841)
Total equity3,872 3,601 
Total liabilities and equity$10,166 $10,255 
The accompanying notes are an integral part of the consolidated financial statements.
5

Howmet Aerospace Inc. and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
Nine months ended
 September 30,
 20232022
Operating activities
Net income$529 $358 
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization204 198 
Deferred income taxes92 58 
Restructuring and other charges8 12 
Net realized and unrealized losses17 12 
Net periodic pension cost (E)
28 17 
Stock-based compensation39 43 
Loss on debt redemption (N)
1 2 
Other2 26 
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
Increase in receivables (J)
(211)(246)
Increase in inventories(148)(271)
(Increase) decrease in prepaid expenses and other current assets(12)5 
(Decrease) increase in accounts payable, trade(57)130 
(Decrease) increase in accrued expenses (18)18 
Increase (decrease) in taxes, including income taxes17 (1)
Pension contributions (19)(34)
Increase in noncurrent assets(2)(5)
Decrease in noncurrent liabilities(27)(44)
Cash provided from operations443 278 
Financing Activities
Net change in short-term borrowings (4)
Repurchases and payments on debt (N)
(376)(60)
Premiums paid on early redemption of debt (N)
(1)(2)
Repurchases of common stock(150)(335)
Proceeds from exercise of employee stock options10 14 
Dividends paid to shareholders(52)(27)
Taxes paid for net share settlement of equity awards(77)(23)
Cash used for financing activities(646)(437)
Investing Activities
Capital expenditures (C)
(164)(148)
Proceeds from the sale of assets and businesses (L)
1 42 
Cash used for investing activities(163)(106)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1)(3)
Net change in cash, cash equivalents and restricted cash (367)(268)
Cash, cash equivalents and restricted cash at beginning of period 792 722 
Cash, cash equivalents and restricted cash at end of period$425 $454 
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)
(in millions, except per-share amounts)
 Preferred
stock
Common
stock
Additional
capital
Retained earningsAccumulated
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 (H)
— (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 

 Preferred
stock
Common
stock
Additional
capital
Retained earningsAccumulated
other
comprehensive
loss
Total
Equity
Balance at June 30, 2023$55 $412 $3,782 $1,334 $(1,808)$3,775 
Net income— — — 188 — 188 
Other comprehensive loss (I)
— — — — (42)(42)
Cash dividends declared:
Preferred-Class A @ $0.9375 per share
— — — (1)— (1)
Common @ $0.09 per share
— — — (36)— (36)
Repurchase and retirement of common stock (H)
— — (25)— — (25)
Stock-based compensation — — 13 — — 13 
Balance at September 30, 2023$55 $412 $3,770 $1,485 $(1,850)$3,872 

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 earningsAccumulated
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 (H)
— (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 

 
 Preferred
stock
Common
stock
Additional
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Total
Equity
Balance at December 31, 2022
$55 $412 $3,947 $1,028 $(1,841)$3,601 
Net income— — — 529 — 529 
Other comprehensive loss (I)
— — — — (9)(9)
Cash dividends declared:
Preferred-Class A @ $2.8125 per share
— — — (2)— (2)
Common @ $0.17 per share
— — — (70)— (70)
Repurchase and retirement of common stock (H)
— (3)(147)— — (150)
Stock-based compensation — — 39 — — 39 
Common stock issued: compensation plans — 3 (69)— — (66)
Balance at September 30, 2023$55 $412 $3,770 $1,485 $(1,850)$3,872 

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 share and per-share amounts)
A. Basis of Presentation
The interim Consolidated Financial Statements of Howmet Aerospace Inc. and its 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 2022 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, 2022 (the “Form 10-K”), 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 2023, the Company derived approximately 49% of its revenue from products sold to the commercial aerospace market which is substantially less than the 2019 annual rate of approximately 60%. During the global COVID-19 pandemic and its impact on the commercial aerospace industry to date, there was a decrease in domestic and international air travel, which in turn adversely affected demand for narrow body and wide body aircraft. Domestic air travel has rebounded and exceeds 2019 levels. International air travel continues to recover and is approximately 90% of 2019 levels. We expect commercial aerospace growth to continue. The commercial wide body aircraft market is emerging but the mix of wide body to narrow body aircraft remains below 2019 levels, which is creating a shift in our product mix compared to 2019 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, 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 related to COVID-19 and 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.
B. Recently Adopted and Recently Issued Accounting Guidance
Adopted
In September 2022, the Financial Accounting Standards Board (“FASB”) issued guidance to enhance the transparency of disclosures regarding supplier finance programs. These changes became 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.
On January 1, 2023, the Company adopted the changes issued by the FASB related to disclosure requirements of supplier finance program obligations. We offer voluntary supplier finance programs to suppliers who may elect to sell their receivables to third parties at the sole discretion of both the suppliers and the third parties. The program is at no cost to the Company and provides additional liquidity to our suppliers, if they desire, at their cost. Under these programs, the Company pays the third party bank rather than the supplier, the stated amount of the confirmed invoices on the original maturity date of the invoices. The Company or the third party bank may terminate a program upon at least 30 days’ notice. Supplier invoices under the program require payment in full no more than 120 days of the invoice date. As of September 30, 2023 and December 31, 2022, supplier invoices that are subject to future payment under these programs were $254 and $240, respectively, and are included in Accounts payable, trade in the Consolidated Balance Sheet.

9

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. In December 2022, the FASB deferred the sunset date to December 31, 2024. The Company has amended its agreements in accordance with the new guidance (See Note J and Note N). Management has concluded that the impact of these changes is not expected to have a material impact on the Consolidated Financial Statements.
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. 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 ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Third quarter ended September 30, 2023
Sales:
Third-party sales$798 $348 $227 $285 $1,658 
Inter-segment sales5    5 
Total sales$803 $348 $227 $285 $1,663 
Profit and loss:
Provision for depreciation and amortization$33 $12 $12 $10 $67 
Segment Adjusted EBITDA219 76 30 77 402 
Restructuring and other charges 1 1  2 
Capital expenditures30 9 6 9 54 
Third quarter ended September 30, 2022
Sales:
Third-party sales$683 $291 $193 $266 $1,433 
Inter-segment sales1  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 EBITDA186 64 28 64 342 
Restructuring and other charges2  1  3 
Capital expenditures23 7 3 6 39 
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Nine months ended September 30, 2023
Sales:
Third-party sales$2,414 $989 $634 $872 $4,909 
Inter-segment sales12  1  13 
Total sales$2,426 $989 $635 $872 $4,922 
Profit and loss:
Provision for depreciation and amortization$97 $35 $36 $29 $197 
Segment Adjusted EBITDA654 198 80 237 1,169 
Restructuring and other (credits) charges(1)1 7  7 
Capital expenditures84 23 21 25 153 
Nine months ended September 30, 2022
Sales:
Third-party sales$1,966 $832 $560 $792 $4,150 
Inter-segment sales3  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 EBITDA538 176 77 206 997 
Restructuring and other charges (credits)9 (3)4  10 
Capital expenditures74 30 12 20 136 
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 endedNine months ended
September 30,September 30,
2023202220232022
Total Segment Adjusted EBITDA$402 $342 $1,169 $997 
Segment provision for depreciation and amortization(67)(64)(197)(193)
Unallocated amounts:
Restructuring and other charges(4)(4)(8)(12)
Corporate expense(24)(46)(87)(93)
Operating income$307 $228 $877 $699 
Loss on debt redemption  (1)(2)
Interest expense, net(54)(57)(166)(172)
Other expense, net(11)(67)(5)(67)
Income before income taxes$242 $104 $705 $458 
The following table reconciles total segment capital expenditures with Capital expenditures as presented in the Statement of Consolidated Cash Flows.
Third quarter endedNine months ended
September 30,September 30,
2023202220232022
Total segment capital expenditures$54 $39 $153 $136 
Corporate5 3 11 12 
Capital expenditures$59 $42 $164 $148 
12

The following table disaggregates segment revenue by major market served. Differences between the total segment and consolidated totals are in Corporate.
Engine ProductsFastening SystemsEngineered StructuresForged WheelsTotal
Segment
Third quarter ended September 30, 2023
Aerospace - Commercial$446 $209 $165 $ $820 
Aerospace - Defense 165 41 45  251 
Commercial Transportation 67  285 352 
Industrial and Other187 31 17  235 
Total end-market revenue$798 $348 $227 $285 $1,658 
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 Other171 29 13  213 
Total end-market revenue$683 $291 $193 $266 $1,433 
Nine months ended September 30, 2023
Aerospace - Commercial$1,324 $563 $458 $ $2,345 
Aerospace - Defense 502 131 131  764 
Commercial Transportation 192  872 1,064 
Industrial and Other588 103 45  736 
Total end-market revenue$2,414 $989 $634 $872 $4,909 
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 Other503 92 43  638 
Total end-market revenue$1,966 $832 $560 $792 $4,150 
The Company derived 63% and 61% of its revenue from the aerospace (commercial and defense) markets for the nine months ended September 30, 2023 and 2022, respectively.
General Electric Company and RTX Corporation represented approximately 13% and 10%, respectively, of the Company’s third-party sales for the nine months ended September 30, 2023. General Electric Company and RTX Corporation represented approximately 13% and 9%, respectively, of the Company’s third-party sales for the nine months ended September 30, 2022. These sales were primarily from the Engine Products segment.
D. Restructuring and Other Charges
Third quarter endedNine months ended
September 30,September 30,
2023202220232022
Layoff costs$1 $ $1 $ 
Reversals of previously recorded layoff reserves  (1)(1)
Pension and Other post-retirement benefits - net settlements (E)
2 3 5 7 
Other1 1 3 6 
Total restructuring and other charges$4 $4 $8 $12 

13

In the third quarter of 2023, the Company recorded Restructuring and other charges of $4, which were primarily due to charges for a Canadian pension plan settlement of $2, layoff charges of $1, and exit related costs, including accelerated depreciation, of $1.
In the nine months ended September 30, 2023, the Company recorded Restructuring and other charges of $8, which were primarily due to charges for U.S. and Canadian pension plan settlements of $5, exit related costs, including accelerated depreciation, of $3, and layoff charges of $1, partially offset by a reversal of $1 for a layoff reserve related to a prior period.
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.
Layoff costsOther exit costsTotal
Reserve balances at December 31, 2022$6 $2 $8 
Cash payments(2)(2)(4)
Restructuring charges5 3 8 
Other(1)
(5)(1)(6)
Reserve balances at September 30, 2023$4 $2 $6 
(1)In the nine months ended September 30, 2023, other for layoff costs included $5 of charges for U.S. and Canadian pension plan settlements and for other exit costs included a $1 charge for accelerated depreciation.
The remaining reserves as of September 30, 2023 are expected to be paid in cash during the remainder of 2023 and 2024.
E. Pension and Other Postretirement Benefits
The components of net periodic cost (benefit) were as follows:
Third quarter endedNine months ended
 September 30,September 30,
2023202220232022
Pension benefits
Service cost$ $1 $2 $3 
Interest cost20 13 60 38 
Expected return on plan assets(18)(20)(55)(61)
Recognized net actuarial loss7 12 21 37 
Settlements2 3 5 7 
Net periodic cost(1)
$11 $9 $33 $24 
Other postretirement benefits    
Service cost$1 $ $1 $1 
Interest cost2 1 5 3 
Recognized net actuarial (gain) loss (1) (2)1 
Amortization of prior service benefit(3)(2)(7)(7)
Net periodic benefit(1)
$(1)$(1)$(3)$(2)
 
(1)Service cost was included within Cost of goods sold and Selling, general administrative, and other 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
In the third quarter and nine months ended September 30, 2023, the Company applied settlement accounting to its Canadian pension plan due to lump sum payments made to participants, reducing gross pension obligations by $12. In June 2023, the Company also undertook additional actions to reduce gross pension obligations by $19 by purchasing group annuity contracts from a third-party carrier to pay and administer future annuity payments of a U.S. pension plan. Settlement charges of $2 and
14

$5 were recognized in the third quarter and nine months ended September 30, 2023, respectively. In the third quarter and nine months ended September 30, 2022, 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, respectively. All settlement charges were recorded in Restructuring and other charges in the Statement of Consolidated Operations.
For the third quarter and nine months ended September 30, 2023, Howmet’s combined pension contributions and other postretirement benefit payments were approximately $9 and $28, respectively. 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.
F. Other Expense, Net
Third quarter endedNine months ended
 September 30,September 30,
2023202220232022
Non-service costs - pension and other postretirement benefits (E)
$7 $4 $22 $11 
Interest income(5)(2)(15)(3)
Foreign currency losses (gains), net5 (3)3 (7)
Net realized and unrealized losses6 5 17 12 
Deferred compensation(1)(2)5 (11)
Other, net(1)65 (27)65 
Total other expense, net$11 $67 $5 $67 
In the nine months ended September 30, 2023, Other, net primarily includes the reversal of $25, net of legal fees of $1, of the $65 pre-tax charge taken in the third quarter of 2022 related to the Lehman Brothers International (Europe) legal proceeding (See Note P) due to the final settlement of such proceeding in June 2023.
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 23.0% in both the third quarter and nine months ended September 30, 2023 and 24.3% in both the third quarter and nine months ended September 30, 2022. The 2023 and 2022 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. Foreign earnings subject to tax in higher rate jurisdictions also contributed to the 2023 rate being higher than the U.S. federal statutory rate of 21%.
For the third quarter of 2023 and 2022, the tax rate including discrete items was 22.3% and 23.1%, respectively. In the third quarter of 2023, the Company recorded a discrete net tax benefit of $1 for other small items. In the third quarter of 2022, the Company recorded a discrete tax benefit of $2 for other small items.
For the nine months ended September 30, 2023 and 2022, the tax rate including discrete items was 25.0% and 21.8%, respectively. In the nine months ended September 30, 2023, the Company recorded a discrete net tax charge of $13 attributable to a $20 charge for a tax reserve established in France (See Note P) and a net tax charge of $1 for other small items, reduced by an $8 excess tax benefit for stock compensation. In 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.
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The tax provision was comprised of the following:
Third quarter endedNine months ended
 September 30,September 30,
 2023202220232022
Pre-tax income at estimated annual effective income tax rate before discrete items$55 $24 $162 $111 
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income 2   
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized  1  
Tax reserve (P)
  20  
Other discrete items(1)(2)(7)(11)
Provision for income taxes$54