Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”)
today provided preliminary operating results for the third quarter
2022 and updates to its outlook for the full-year 2022.
Preliminary Third Quarter Results and Revised Outlook
Third quarter 2022 Adjusted EBITDA is expected to be in the
range of $135 million to $150 million. The third quarter results
will be impacted by production outages and other operational
challenges in Tennessee and Davenport that have reduced production
from planned operating rates. Additionally, hyperinflationary
energy costs are driving increased cost pressures and declining
demand in Europe, which are expected to have an increasingly
negative impact on third and fourth quarter results.
The Company is updating its full-year 2022 outlook to reflect
the impact of operational issues and the combination of demand
declines and higher unhedged energy costs in Europe. Revenue
expectations are now in the range of $9.2 billion to $9.5 billion
for full-year 2022 compared with the prior expected range of $9.6
billion to $10.0 billion. This assumes LME aluminum price of
$2,300/mt and Midwest Premium of $550/mt, compared with prior
assumptions for LME of $2,500/mt and Midwest Premium of $700/mt.
Adjusted EBITDA is expected to be in the range of $715 million to
$765 million compared with the previous expectation of the low end
of the range of $820 million to $870 million. Free cash flow for
full-year 2022 is now anticipated to be approximately $200 million
compared with the prior outlook of approximately $300 million due
to the impact of lower profitability and working capital pressure
related to operational disruptions.
Tim Myers, Chief Executive Officer, said, “The third quarter has
been substantially impacted by production disruptions. In addition
to the previously discussed seasonality effect on our European
facilities and the full quarter disruption related to the
de-lacquering equipment at our Tennessee facility, we have had
further operational issues. Our Tennessee hot mill had electrical
and mechanical issues following planned maintenance in early
August. Also, our Davenport and Tennessee casting operations
experienced disruptions in recent weeks that further reduced
volumes at both facilities. Major equipment repairs are being
executed throughout September that will lead to higher production
rates at Tennessee and Davenport in the fourth quarter.”
Management expects to complete a business review of the
Extrusions segment in the third quarter aimed at identifying
alternatives to improve the financial performance of this segment
in future periods. Such alternatives could include changes to the
operations that may result in asset impairment charges. As of June
30, 2022, the aggregate carrying value of the Extrusions segment’s
properties, plants, and equipment, intangible assets, and operating
lease right-of-use assets was approximately $230 million.
Arconic will hold its quarterly conference call at 10:00 AM
Eastern Time on November 1, 2022, to present third quarter 2022
financial results. The call will be webcast on the Arconic website.
Call information and related details will be available at
www.arconic.com under “Investors.”
About Arconic
Arconic Corporation (NYSE: ARNC), headquartered in Pittsburgh,
Pennsylvania, is a leading provider of aluminum sheet, plate, and
extrusions, as well as innovative architectural products, that
advance the ground transportation, aerospace, building and
construction, industrial and packaging end markets. For more
information: www.arconic.com.
Dissemination of Company Information
Arconic intends to make future announcements regarding Company
developments and financial performance through its website at
www.arconic.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,"
"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 Arconic’s expectations, assumptions,
projections, beliefs or opinions about the future, other than
statements of historical fact, are forward-looking statements,
including, without limitation, statements, relating to the
condition of, or trends or developments in, the ground
transportation, aerospace, building and construction, industrial,
packaging and other end markets; Arconic’s future financial
results, operating performance, working capital, cash flows,
liquidity and financial position; cost savings and restructuring
programs; Arconic's strategies, outlook, business and financial
prospects; share repurchases; costs associated with pension and
other post-retirement benefit plans; projected sources of cash
flow; and potential legal liability. These statements reflect
beliefs and assumptions that are based on Arconic’s perception of
historical trends, current conditions and expected future
developments, as well as other factors Arconic believes are
appropriate in the circumstances. Forward-looking statements are
not guarantees of future performance, and actual results may differ
materially from those indicated by these forward-looking statements
due to a variety of risks, uncertainties and changes in
circumstances, many of which are beyond Arconic’s control. Such
risks and uncertainties include, but are not limited to: (a)
continuing uncertainty regarding the duration and impact of the
COVID-19 pandemic on our business and the businesses of our
customers and suppliers including labor shortages and increased
quarantine rates; (b) deterioration in global economic and
financial market conditions generally; (c) unfavorable changes in
the end markets we serve; (d) the inability to achieve the level of
revenue growth, cash generation, cost savings, benefits of our
management of legacy liabilities, improvement in profitability and
margins, fiscal discipline, or strengthening of competitiveness and
operations anticipated or targeted; (e) adverse changes in discount
rates or investment returns on pension assets; (f) competition from
new product offerings, disruptive technologies, industry
consolidation or other developments; (g) the loss of significant
customers or adverse changes in customers’ business or financial
condition; (h) manufacturing difficulties or other issues that
impact product performance, quality or safety; (i) the impact of
pricing volatility in raw materials and inflationary pressures on
our costs of production; (j) a significant downturn in the business
or financial condition of a key supplier or other supply chain
disruptions; (k) challenges to or infringements on our intellectual
property rights; (l) the inability to successfully implement our
re-entry into the U.S. packaging market or to realize the expected
benefits of other strategic initiatives or projects; (m) our
ability to complete the previously announced sale with respect to
our Kawneer® business; (n) the inability to identify or
successfully respond to changing trends in our end markets; (o) the
impact of potential cyber attacks and information technology or
data security breaches; (p) geopolitical, economic, and regulatory
risks relating to our global operations, including compliance with
U.S. and foreign trade and tax laws, sanctions, embargoes and other
regulations; (q) the outcome of contingencies, including legal
proceedings, government or regulatory investigations, and
environmental remediation and compliance matters; (r) restrictions
imposed by authorities on our Russian operations; (s) our ability
to complete the announced divestiture of our Russian operations and
the impact of such divestiture on our business and operations; (t)
reactions to or consequences of our announcement regarding the sale
of our Russian operations, including the potential for our Russian
operations to be nationalized or otherwise expropriated by the
Russian government; (u) the impact of the conflict between Russia
and Ukraine on economic conditions in general and on our business
and operations; and (v) the other risk factors summarized in
Arconic’s Form 10-K for the year ended December 31, 2021 and other
reports filed with the U.S. Securities and Exchange Commission
(SEC). The above list of factors is not exhaustive or necessarily
in order of importance. Market projections are subject to the risks
discussed above and in this release, and other risks in the market.
The statements in this release are made as of the date of this
release, even if subsequently made available by Arconic on its
website or otherwise. Arconic 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.
Non-GAAP Financial Measures
Some of the forward-looking information included in this release
is considered “non-GAAP financial measures” under SEC rules.
Arconic has not provided reconciliations of any forward-looking
non-GAAP financial measures, such as adjusted EBITDA, and free cash
flow, to the most directly comparable GAAP financial measures
because such reconciliations are not available without unreasonable
efforts due to the variability and complexity with respect to the
charges and other components excluded from the non-GAAP measures,
such as any impairment or related charges associated with the
business review of our Extrusions segment, the effects of metal
price lag, foreign currency movements, unrealized gains or losses
on mark-to-market hedging, gains or losses on sales of assets,
taxes, and any other future restructuring or impairment charges.
These reconciling items are in addition to the inherent variability
already included in the GAAP measures, which includes, but is not
limited to, price/mix and volume. Arconic believes such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220914005941/en/
Investor Contact Shane Rourke (412) 315-2984
Investor.Relations@arconic.com
Media Contact Tracie Gliozzi (412) 992-2525
Tracie.Gliozzi@arconic.com
Arconic (NYSE:ARNC)
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