Executive Vice President & Chief Financial Officer at Howmet Aerospace
Thank you, John. Please move to Slide 5 for an overview of the markets. Third quarter revenue was up 12% year-over-year. The commercial aerospace recovery continued in the third quarter with commercial aerospace revenue up 23% year-over-year and 7% sequentially driven by the engine product segment in the narrow-body recovery. Commercial aerospace has grown for six consecutive quarter and stands at 47% of total revenue, but continues to be far short of the pre-COVID level, which was 60% of total revenue.
Defense aerospace was down 4% year-over-year, driven by continued customer inventory corrections for the F-35 which was in line with our expectations. Commercial transportation which impacts both the Forged Wheels and Fastening Systems segment was up 13% year-over-year, driven by higher aluminum prices and higher volumes partially offset by foreign currency. Finally, the industrial and other markets, which is composed of IGT, oil and gas and general industrial was down 2% year-over-year. Within the industrial and other markets, oil and gas was up 11%, IGT was down 2% and general industrial was down 9% on a year-over-year basis.
Now let's move to Slide 6. As usual, we'll start with P&L and the focus on enhanced profitability. In the third quarter revenue, EBITDA, EBITDA margin and earnings per share were all in line with guidance. Revenue was up 12% year-over-year, including material pass through of approximately $70 million. EBITDA was $323 million and EBITDA margin was a healthy 22.5%. If we exclude the $70 million impact of higher material pass-through, EBITDA margin was 120 basis points higher at 23.7%. Adjusting for material pass-through the flow-through of incremental revenue in the quarter to EBITDA was strong at 39%.
During Q3, we continued the recruitment of headcount by approximately 350 employees, primarily in engines. Year-to-date, we've increased headcount by approximately 1,575 employees focused in engines and fasteners. In Q4, we do not expect significant headcount additions. Adjusted earnings per share was $0.36, up 33% year-over-year. For the quarter, the impact of foreign currency was minimal.
Moving to the balance sheet, free cash flow year-to-date was $130 million, including inventory build of approximately $270 million primarily for the commercial aerospace recovery. Cash-on-hand was healthy at $454 million after buying back $100 million of common stock and funding the quarterly dividend. The average diluted share count improved to a Q3 exit rate of 419 million shares. Year-to-date, net pension and OPEB liabilities were reduced by approximately $85 million and cash contributions were reduced by approximately 45% or $35 million.
Discount rates continued to be favorable and will be re-measured at the end of the year which should further reduce net pension liabilities. We continue to expect annual cash contributions to be approximately $60 million versus expense of $20 million. Finally, net debt to EBITDA remains at three times. All bond debt is unsecured and at fixed rates which will provide stability of our interest-rate expense. Our next bond maturity is in November of 2024.
Moving to capital allocation, we continue to be balanced in our approach. Capital expenditures continue to be less than depreciation at approximately 65% in the third quarter. Productivity capex continues to focus on automation products, projects in the engines and fasteners business, to improve yields, enhance quality, reduced outsourcing and mitigate labor risk.
We purchased approximately 2.8 million shares of common stock in the quarter for $100 million. Year-to-date, we have repurchased approximately 9.7 million shares of common stock for $335 million with an average acquisition price of $34.60 per share. Share buyback authority from the Board of Directors stands at $1 billion. Lastly, we continue to be confident in free cash flow. The quarterly dividend was doubled to $0.04 per share per quarter with the first higher payment to be made in November of 2022.
Now let's move to Slide 7 to cover segment results. Q3 was another solid quarter for engines. Year-over-year revenue was 14% higher in the third quarter with commercial aerospace up 30% driven by the narrow-body recovery. Defense aerospace was down 5%, IGT was down 2% and oil and gas was up 11%. EBITDA increased 23% year-over-year and margin improved 200 basis points to 22.7 -- 27.2% despite adding approximately 260 employees in the third quarter. Year-to-date net headcount additions for the engine business was approximately 1,040 employees. While the headcount additions are preparing us for the future commercial aerospace growth, it does unfavorably impact near-term results due to the time and cost required to train new employees which would take several months depending on the position.
Now let's move to Slide 8. Fastening Systems, year-over-year revenue was 15% higher in the third quarter. Commercial aerospace was 24% higher, driven by the narrow-body recovery somewhat offset by continued production declines for the Boeing 787. Defense aerospace was up 16%. Year-over-year, segment EBITDA increased 8%, despite the addition of employees to support future growth. Year-to-date headcount additions for fasteners was approximately 410 employees. Sequentially, EBITDA margin improved 180 basis points to 22%.
Now let's move to Slide 9. Engineered Structures, year-over-year revenue was down 3% in the quarter. Defense aerospace was down 14% year-over-year, driven by customer inventory corrections for the F-35 as expected. Commercial aerospace was 5% higher as the narrow-body recovery offset the impact of production declines for the Boeing 787. Segment EBITDA increased 8% year-over-year. EBITDA margin improved 140 basis points to 14.5% despite the inventory burndown of the F-35 continued zero to low build-on the 787 and inflationary cost pressures. Structures Q3 2022 EBITDA margin of 14.5% was greater than the 2019 annual rate of 14.2% when 2019 revenues were over $1.25 billion.
Finally, let's move to Slide 10. As expected in Forged Wheels, year-over-year revenue was 15% higher in the third quarter. The $35 million increase in revenue year-over-year was almost entirely driven by higher aluminum prices. Commercial transportation demand remained strong, but volumes continued to be impacted by customer supply chain issues, limiting commercial truck production. Segment EBITDA decreased 11% due to the impact of unfavorable foreign currency, primarily driven by the euro. While the pass-through of the higher aluminum prices did not impact EBITDA dollars, it did unfavorably impact margin by approximately 340 basis points. The impact on EBITDA margin increases to more than 550 basis points if you also include the unfavorable margin impact of passing through higher inflationary cost like the European energy cost and the unfavorable impact of foreign currency.
Before turning it back over to John, I will remind you that the impact of foreign currency to Howmet in total is minimal as the Aerospace segments provide a natural foreign currency hedge against the Forged Wheel segment. Lastly, in the appendix, we've updated assumptions including an improvement in the annual operational tax rate to approximately 23.5%, which translates into a Q4 operational tax rate of approximately 22%. Also we have updated annual assumptions to reflect improvements in our cash tax rate, net pension liabilities, depreciation and amortization, capex and diluted share count.
Now let me turn that back over to John.