First Quarter 2023 Highlights
- Sales of $1.9 billion, down 12% year over year, up 6%
organically, up 6% from prior quarter on a comparable basis
excluding Russian Operations
- Net income of $25 million, or $0.24 per share, compared with
$42 million, or $0.39 per share, in first quarter 2022
- Adjusted EBITDA of $157 million, up 8% from prior quarter on a
comparable basis excluding Russian Operations
Arconic Corporation (NYSE: ARNC) (“Arconic” or the “Company”)
today reported first quarter 2023 results. Sales were $1.9 billion,
down 12% year over year and up 6% organically due to strength in
aerospace, packaging, and ground transportation sales partially
offset by weak industrial sales. The Company reported net income of
$25 million, or $0.24 per share, compared with $42 million, or
$0.39 per share, in first quarter 2022.
First quarter 2023 Adjusted EBITDA was $157 million, up 8%
sequentially on a comparable basis excluding Russian Operations.
Growth was driven by strength in aerospace, ground transportation,
and the Building and Construction Systems segment partially offset
by weakness in industrial sales. Cash used for operations was $39
million and capital expenditures were $82 million.
Tim Myers, Chief Executive Officer, said, “Our first quarter
results were underpinned by improved operational performance.
Aerospace market strength drove much of the growth and ground
transportation sales continued to improve sequentially, and we
optimized product mix and controlled costs in Europe.”
First Quarter Segment
Performance
Sales by Segment (in millions)
Quarter ended
March 31, 2023
March 31, 2022
Rolled Products
$
1,504
$
1,804
Building and Construction Systems
308
291
Extrusions
120
97
Adjusted EBITDA (in millions)
Quarter ended
March 31, 2023
March 31, 2022
Rolled Products
$
117
$
176
Building and Construction Systems
54
44
Extrusions
(4)
(5)
Subtotal
167
215
Corporate
(10)
(10)
Adjusted
EBITDA
$
157
$
205
Cancellation of 1Q 2023 Earnings Conference Call
In a separate press release issued today, Arconic announced that
it entered into a definitive agreement to be acquired by funds
managed by an affiliate of Apollo Global Management, Inc (NYSE:
APO), with a minority investment from Irenic Capital Management LP.
A copy of that press release is accessible by visiting the Investor
Relations section of the Arconic website at
https://arconic.com/investors/. In light of the announced
transaction, Arconic has cancelled the earnings conference call
previously scheduled for today.
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 the Company’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; the Company’s future financial
results, operating performance, working capital, cash flows,
liquidity and financial position; cost savings and restructuring
programs; the Company’s strategies, outlook, business and financial
prospects; share repurchases; costs associated with pension and
other post-retirement benefit plans; projected sources of cash
flow; potential legal liability; the impact of inflationary price
pressures; and the potential impact of public health epidemics or
pandemics, including the COVID-19 pandemic. These statements
reflect beliefs and assumptions that are based on the Company’s
perception of historical trends, current conditions and expected
future developments, as well as other factors the Company 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 the Company’s control. Such
risks and uncertainties include, but are not limited to: (i)
continuing uncertainty regarding the impact of the COVID-19
pandemic on our business and the businesses of our customers and
suppliers; (ii) deterioration in global economic and financial
market conditions generally; (iii) unfavorable changes in the end
markets we serve; (iv) 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; (v) adverse changes in discount
rates or investment returns on pension assets; (vi) competition
from new product offerings, disruptive technologies, industry
consolidation or other developments; (vii) the loss of significant
customers or adverse changes in customers’ business or financial
condition; (viii) manufacturing difficulties or other issues that
impact product performance, quality or safety or timely delivery;
(ix) the impact of pricing volatility in raw materials and
inflationary pressures on our costs of production, including
energy; (x) a significant downturn in the business or financial
condition of a key supplier or other supply chain disruptions; (xi)
challenges to or infringements on our intellectual property rights;
(xii) the inability to successfully implement or to realize the
expected benefits of strategic initiatives or projects; (xiii) the
inability to identify or successfully respond to changing trends in
our end markets; (xiv) the impact of potential cyber attacks and
information technology or data security breaches; (xv)
geopolitical, economic, and regulatory risks relating to our global
operations, including compliance with U.S. and foreign trade and
tax laws and other regulations, potential expropriation of
properties located outside the U.S., sanctions, tariffs, embargoes,
and renegotiation or nullification of existing agreements; (xvi)
the outcome of contingencies, including legal proceedings,
government or regulatory investigations, and environmental
remediation and compliance matters; (xvii) the impact of the
ongoing conflict between Russia and Ukraine on economic conditions
in general and on our business and operations, including sanctions,
tariffs, and increased energy prices; (xviii) the timing, receipt
and terms and conditions of any required governmental and
regulatory approvals of the proposed transaction that could reduce
anticipated benefits or cause the parties to abandon the proposed
transaction; (xix) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement entered into pursuant to the proposed transaction; (xx)
the possibility that the Company’s stockholders may not approve the
proposed transaction; (xxi) the risk that the parties to the merger
agreement may not be able to satisfy the conditions to the proposed
transaction in a timely manner or at all; (xxii) risks related to
disruption of management time from ongoing business operations due
to the proposed transaction; (xxiii) the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of the Company’s common stock;
(xxiv) the risk of any unexpected costs or expenses resulting from
the proposed transaction; (xxv) the risk of any litigation relating
to the proposed transaction; (xxvi) the risk that the proposed
transaction and its announcement could have an adverse effect on
the ability of the Company to retain customers and retain and hire
key personnel and maintain relationships with customers, suppliers,
employees, stockholders and other business relationships and on its
operating results and business generally; and (xxvii) the other
risk factors summarized in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2022 and other documents filed by
the Company with the 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 set forth above, even if
subsequently made available by the Company on its website or
otherwise. The Company disclaims any intention or obligation to
update 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 information included in this release is derived from
Arconic’s consolidated financial information but is not presented
in Arconic’s financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP). Certain of these financial measures are considered
“non-GAAP financial measures” under SEC rules. These non-GAAP
financial measures supplement our GAAP disclosures and should not
be considered an alternative to any measure of performance or
financial condition as determined in accordance with GAAP, and
investors should consider Arconic’s performance and financial
condition as reported under GAAP and all other relevant information
when assessing the performance or financial condition of Arconic.
Non-GAAP financial measures have limitations as analytical tools,
and investors should not consider them in isolation or as a
substitute for analysis of the results or financial condition as
reported under GAAP. Non-GAAP financial measures presented by
Arconic may not be comparable to non-GAAP financial measures
presented by other companies. Reconciliations to the most directly
comparable GAAP financial measures and management’s rationale for
the use of the non-GAAP financial measures can be found in the
schedules to this release. 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 the effects of metal
price lag, foreign currency movements, gains or losses on sales of
assets, taxes, and any 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.
Arconic Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Quarter ended
March 31, 2023
December 31, 2022
March 31, 2022
Sales
$
1,929
$
1,942
$
2,191
Cost of goods sold (exclusive of expenses
below)(1)
1,724
1,744
1,956
Selling, general administrative, and other
expenses
72
46
65
Research and development expenses
9
10
9
Provision for depreciation and
amortization
53
56
60
Restructuring and other charges(2)
—
337
5
Operating income (loss)
71
(251
)
96
Interest expense
25
26
25
Other expenses, net
11
32
17
Income (Loss) before income taxes
35
(309
)
54
Provision (Benefit) for income taxes
10
(36
)
12
Net income (loss)
25
(273
)
42
Less: Net income attributable to
noncontrolling interest(3)
—
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO ARCONIC
CORPORATION
$
25
$
(273
)
$
42
EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC
CORPORATION COMMON STOCKHOLDERS:
Basic:
Net income (loss)
$
0.25
$
(2.70
)
$
0.40
Weighted-average number of shares
99,408,330
100,956,393
105,407,022
Diluted:
Net income (loss)
$
0.24
$
(2.70
)
$
0.39
Weighted-average number of shares(4)
102,084,961
100,956,393
108,504,118
COMMON STOCK OUTSTANDING AT THE END OF THE
PERIOD
99,424,955
99,432,194
105,784,425
__________________
(1)
In the quarter ended March 31, 2023, Arconic recorded both a $74
charge and a $74 benefit in Cost of goods sold to establish a
liability for a settlement in principle and a receivable for
insurance reimbursement, respectively, related to a litigation
matter. In the quarter ended December 31, 2022, Arconic recorded
both a $61 charge and a $53 benefit in Cost of goods sold to
establish a liability for a then-potential settlement and a
receivable for an anticipated insurance reimbursement,
respectively, related to a litigation matter.
(2)
On November 15, 2022, Arconic completed the sale of 100% of its
operations in Russia to Promishlennie Investitsii LLC, the majority
owner of VSMPO-AVISMA Corporation, for cash proceeds of $230. The
transaction closed after the Company received all required
approvals, resulting in the receipt of the cash consideration in
exchange for all of Arconic’s net assets in Russia. These net
assets included $203 of cash held in Russia that was not available
for distribution to the parent company because of injunctions
imposed as a result of litigation initiated in March 2020 by the
Federal Antimonopoly Service of The Russian Federation (“FAS”). The
Company recorded a loss of $306 ($304 after-tax) in the fourth
quarter of 2022 in connection with this transaction. At a hearing
on December 22, 2022, the Samara Court dismissed the
litigation.
In addition, in the quarter ended December
31, 2022, Restructuring and other charges includes $31 related to
the settlement of a portion of the Company’s U.S. defined benefit
pension plan obligations as a result of elections by certain plan
participants to receive lump-sum benefit payments.
(3)
Prior to the sale of Arconic’s operations in Russia (see
footnote 2), VSMPO-AVISMA Corporation owned a limited portion of
one of the legal entities included in the sale. VSMPO-AVISMA
Corporation’s share of net income (loss) of this legal entity was
reported in this line item. Subsequent to the sale, there is no
longer a noncontrolling interest in Arconic Corporation and its
subsidiaries.
(4)
For periods in which the Company generates net income, the
diluted weighted-average number of shares include common share
equivalents associated with outstanding employee stock awards. For
periods in which the Company generates a net loss, the diluted
weighted-average number of shares does not include any common share
equivalents as their effect is anti-dilutive.
Arconic Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
197
$
261
Receivables from customers, less
allowances of $1 in both 2023 and 2022
926
791
Other receivables
153
183
Inventories
1,662
1,622
Fair value of hedging instruments and
derivatives
7
21
Prepaid expenses and other current
assets(1)
141
124
Total current assets
3,086
3,002
Properties, plants, and equipment
7,014
6,957
Less: accumulated depreciation and
amortization
4,651
4,596
Properties, plants, and equipment, net
2,363
2,361
Goodwill
294
292
Operating lease right-of-use-assets
117
115
Deferred income taxes
187
188
Other noncurrent assets
56
57
Total assets
$
6,103
$
6,015
LIABILITIES
Current liabilities:
Short term debt(2)
$
50
$
—
Accounts payable, trade
1,554
1,578
Accrued compensation and retirement
costs
108
119
Taxes, including income taxes
36
43
Environmental remediation
36
40
Operating lease liabilities
35
34
Fair value of hedging instruments and
derivatives
29
7
Other current liabilities(1)
177
150
Total current liabilities
2,025
1,971
Long-term debt
1,597
1,597
Accrued pension benefits
586
586
Accrued other postretirement benefits
297
302
Environmental remediation
40
45
Operating lease liabilities
84
83
Deferred income taxes
6
3
Other noncurrent liabilities
71
71
Total liabilities
4,706
4,658
STOCKHOLDERS’ EQUITY
Common stock
1
1
Additional capital
3,379
3,373
Accumulated deficit
(709
)
(734
)
Treasury stock
(347
)
(346
)
Accumulated other comprehensive loss
(927
)
(937
)
Total stockholders’ equity(3)
1,397
1,357
Total liabilities and stockholders’
equity
$
6,103
$
6,015
__________________
(1)
In the quarter ended March 31, 2023, Arconic established both a
liability of $74 (reported in Other current liabilities) for a
settlement in principle and a receivable of $74 (reported in
Prepaid expenses and other current assets) for an insurance
reimbursement of the settlement in principle with respect to a
litigation matter. See footnote 1 to the Statement of Consolidated
Operations for the quarter ended March 31, 2023 included in this
release.
(2)
Arconic maintains a five-year credit agreement, dated May 13,
2020, with a syndicate of lenders named therein and Deutsche Bank
AG New York Branch as administrative agent (the “ABL Credit
Agreement”). The ABL Credit Agreement provides for a $1,200 senior
secured asset-based revolving credit facility (the “ABL Credit
Facility”) to be used, generally for working capital or other
general corporate purposes. In the quarter ended March 31, 2023,
the Company borrowed $150 and repaid $100 under this facility.
(3)
See footnote 3 to the Statement of Consolidated Operations
included in this release.
Arconic Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(dollars in millions)
Quarter ended
March 31, 2023
December 31, 2022
March 31, 2022
OPERATING ACTIVITIES
Net income (loss)
$
25
$
(273
)
$
42
Adjustments to reconcile net income (loss)
to cash (used for) provided from operations:
Depreciation and amortization
53
56
60
Deferred income taxes
20
(29
)
(4
)
Restructuring and other charges(1)
—
337
5
Net periodic pension benefit cost
17
28
16
Stock-based compensation
6
(4
)
5
Other
22
14
12
Changes in assets and liabilities,
excluding effects of acquisitions, divestitures, and foreign
currency translation adjustments:
(Increase) in receivables(2)
(107
)
(32
)
(110
)
(Increase) Decrease in inventories
(34
)
21
(206
)
(Increase) in prepaid expenses and other
current assets
(24
)
(49
)
(10
)
Increase in accounts payable, trade
5
76
116
(Decrease) Increase in accrued
expenses
(9
)
63
(28
)
(Decrease) Increase in taxes, including
income taxes
(22
)
(17
)
1
Pension contributions
(10
)
(9
)
(4
)
Decrease (Increase) in noncurrent
assets
8
(9
)
1
Increase in noncurrent liabilities
11
15
1
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(39
)
188
(103
)
FINANCING ACTIVITIES
Net change in short term borrowings
(original maturities of three months or less)(3)
50
(150
)
100
Repurchases of common stock(4)
(1
)
(46
)
(16
)
Other
—
(1
)
(12
)
CASH PROVIDED FROM (USED FOR) FINANCING
ACTIVITIES
49
(197
)
72
INVESTING ACTIVITIES
Capital expenditures
(82
)
(70
)
(95
)
Proceeds from the sale of assets and
businesses(5)
7
27
—
Other
—
—
1
CASH USED FOR INVESTING ACTIVITIES
(75
)
(43
)
(94
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
1
1
—
Net change in cash and cash equivalents
and restricted cash
(64
)
(51
)
(125
)
Cash and cash equivalents and restricted
cash at beginning of period(6)
261
312
335
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD(6)
197
261
210
__________________
(1)
See footnote 2 to the Statement of Consolidated Operations for
the quarter ended December 31, 2022 included in this release.
(2)
Arconic has two separate arrangements, each with a single
financial institution, to sell certain customer receivables
outright without recourse on a continuous basis. All such sales are
at the Company’s discretion. The first arrangement, which was
executed in January 2022, relates to certain of Arconic’s U.S.
operations and automatically renews each year unless terminated in
accordance with the provisions of the underlying purchase
agreement. The second arrangement, which was executed in July 2022,
relates to certain of the Company’s European operations. Under both
arrangements, Arconic serves in an administrative capacity,
including collection of the receivables from the respective
customers and remittance of these cash collections to the
respective financial institution. Accordingly, upon the sale of
customer receivables to the financial institutions, the Company
removes the underlying trade receivables from its Consolidated
Balance Sheet and includes the reduction as a positive amount in
the (Increase) in receivables line item within Operating Activities
on its Statement of Consolidated Cash Flows. In the quarters ended
March 31, 2023, December 31, 2022, and March 31, 2022, the Company
sold customer receivables of $151, $156, and $221, respectively,
collected cash from customers of $129, $314, and $158,
respectively, and remitted cash to the financial institutions of
$116, $314, and $158, respectively.
(3)
Arconic maintains a five-year credit agreement, dated May 13,
2020, with a syndicate of lenders named therein and Deutsche Bank
AG New York Branch as administrative agent (the “ABL Credit
Agreement”). The ABL Credit Agreement provides for a $1,200 senior
secured asset-based revolving credit facility (the “ABL Credit
Facility”) to be used, generally, for working capital or other
general corporate purposes. In the quarters ended March 31, 2023,
December 31, 2022, and March 31, 2022, the Company borrowed $150,
$25, and $100, respectively, and in the quarters ended March 31,
2023 and December 31, 2022, repaid $100 and $175, respectively,
under the ABL Credit Facility.
(4)
On November 16, 2022, Arconic announced that its Board of
Directors approved a new share repurchase program authorizing the
Company to repurchase shares of its outstanding common stock up to
an aggregate transactional value of $200 over a two-year period
expiring November 17, 2024. In the quarters ended March 31, 2023
and December 31, 2022, the Company repurchased 35,615 and
2,071,835, respectively, shares of its common stock under this
program.
In the quarter ended March 31, 2022, the
Company repurchased 505,982 shares of its common stock under its
previous share repurchase program, which was authorized in May 2021
and completed in August 2022. Cumulatively, the Company repurchased
9,776,177 shares of its common stock for $300 under this program.
In connection with the authorization of the new program, Arconic’s
previous repurchase program was terminated.
(5)
In the quarter ended December 31, 2022, the Company received
$230 in cash proceeds related to the sale of its operations in
Russia less $203 in cash held by its operations in Russia that was
not available for distribution to the parent company because of
injunctions imposed as a result of litigation initiated in March
2020. See footnote 2 to the Statement of Consolidated Operations
for the quarter ended December 31, 2022 included in this
release.
(6)
Cash and cash equivalents and restricted cash at beginning of
period for all periods presented and Cash and cash equivalents and
restricted cash at end of period for all periods presented includes
Restricted cash of less than $0.03.
Arconic Corporation and
subsidiaries
Segment Adjusted EBITDA Reconciliation
(unaudited)
(in millions)
Quarter ended
March 31, 2023
December 31, 2022
March 31, 2022
Total Segment Adjusted EBITDA(1)
$
167
$
152
$
215
Unallocated amounts:
Corporate expenses(2)
(9
)
(6
)
(9
)
Stock-based compensation expense
(6
)
4
(5
)
Metal price lag(3)
—
8
(36
)
Unrealized (losses) gains on
mark-to-market hedging instruments and derivatives
(20
)
(10
)
2
Provision for depreciation and
amortization
(53
)
(56
)
(60
)
Restructuring and other charges(4)
—
(337
)
(5
)
Other(5)
(8
)
(6
)
(6
)
Operating income (loss)
71
(251
)
96
Interest expense
(25
)
(26
)
(25
)
Other expenses, net
(11
)
(32
)
(17
)
(Provision) Benefit for income taxes
(10
)
36
(12
)
Net income attributable to noncontrolling
interest(6)
—
—
—
Consolidated net income (loss)
attributable to Arconic Corporation
$
25
$
(273
)
$
42
__________________
(1)
Arconic’s profit or loss measure for its reportable segments is
Segment Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization). The Company calculates Segment
Adjusted EBITDA as Total sales (third-party and intersegment) minus
each of (i) Cost of goods sold, (ii) Selling, general
administrative, and other expenses, and (iii) Research and
development expenses, plus each of (i) Stock-based compensation
expense, (ii) Metal price lag (see footnote 3), and (iii)
Unrealized (gains) losses on mark-to-market hedging instruments and
derivatives. Arconic’s Segment Adjusted EBITDA may not be
comparable to similarly titled measures of other companies’
reportable segments.
Total Segment Adjusted EBITDA is the sum
of the respective Segment Adjusted EBITDA for each of the Company’s
three reportable segments: Rolled Products, Building and
Construction Systems, and Extrusions. This amount is being
presented for the sole purpose of reconciling Segment Adjusted
EBITDA to the Company’s Consolidated net income (loss).
(2)
Corporate expenses are composed of general administrative and
other expenses of operating the corporate headquarters and other
global administrative facilities.
(3)
Metal price lag represents the financial impact of the timing
difference between when aluminum prices included in Sales are
recognized and when aluminum purchase prices included in Cost of
goods sold are realized. This adjustment aims to remove the effect
of the volatility in metal prices and the calculation of this
impact considers applicable metal hedging transactions.
(4)
See footnote 2 to the Statement of Consolidated Operations for
the quarter ended December 31, 2022 included in this release.
(5)
Other includes certain items that impact Cost of goods sold and
Selling, general administrative, and other expenses on the
Company’s Statement of Consolidated Operations that are not
included in Segment Adjusted EBITDA, including those described as
“Other special items” (see footnote 4 to the reconciliation of
Adjusted EBITDA within Calculation of Non-GAAP Financial Measures
included in this release).
(6)
See footnote 3 to the Statement of Consolidated Operations
included in this release.
Arconic Corporation and
subsidiaries
Calculation of Non-GAAP Financial
Measures (unaudited)
(in millions)
Adjusted EBITDA
Quarter ended
March 31, 2023
December 31, 2022
March 31, 2022
Net income (loss) attributable to Arconic
Corporation
$
25
$
(273
)
$
42
Add:
Net income attributable to noncontrolling
interest(1)
—
—
—
Provision (Benefit) for income taxes
10
(36
)
12
Other expenses, net
11
32
17
Interest expense
25
26
25
Restructuring and other charges(2)
—
337
5
Provision for depreciation and
amortization
53
56
60
Stock-based compensation
6
(4
)
5
Metal price lag(3)
—
(8
)
36
Unrealized losses (gains) on
mark-to-market hedging instruments and derivatives
20
10
(2
)
Other special items(4)
7
14
5
Adjusted EBITDA
$
157
$
154
$
205
Sales
$
1,929
$
1,942
$
2,191
Adjusted EBITDA Margin
8.1
%
7.9
%
9.4
%
__________________
Arconic’s definition of Adjusted EBITDA
(Earnings before interest, taxes, depreciation, and amortization)
is net margin plus an add-back for the following items: Provision
for depreciation and amortization; Stock-based compensation; Metal
price lag (see footnote 3); Unrealized (gains) losses on
mark-to-market hedging instruments and derivatives; and Other
special items. 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 are composed of restructuring and other charges, discrete
income tax items, and other items as deemed appropriate by
management. There can be no assurances that additional special
items will not occur in future periods. Adjusted EBITDA provides
additional information with respect to Arconic’s operating
performance and the Company’s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
(1)
See footnote 3 to the Statement of
Consolidated Operations included in this release.
(2)
See footnote 2 to the Statement of
Consolidated Operations for the quarter ended December 31, 2022
included in this release.
(3)
Metal price lag represents the financial
impact of the timing difference between when aluminum prices
included in Sales are recognized and when aluminum purchase prices
included in Cost of goods sold are realized. This adjustment aims
to remove the effect of the volatility in metal prices and the
calculation of this impact considers applicable metal hedging
transactions.
(4)
Other special items include the
following:
- for the quarter ended March 31, 2023, costs related to several
legal matters, including Grenfell Tower ($3) and other ($1), and
other items ($3);
- for the quarter ended December 31, 2022, a charge related to
environmental remediation matters ($9), costs related to several
legal matters ($1), and other items ($4);
- for the quarter ended March 31, 2022, costs related to several
legal matters ($2), costs related to the packaging restart at the
Tennessee rolling mill ($2), and other items ($1).
Adjusted EBITDA excluding Russian
operations(1)
Quarter ended
Quarter ended
December 31, 2022
March 31, 2022
As reported
Russia(1)
As recast(1)
As reported
Russia(1)
As recast(1)
Net (loss) income attributable to Arconic
Corporation
$
(273
)
$
7
$
(280
)
$
42
$
6
$
36
Add:
Net income attributable to noncontrolling
interest(2)
—
—
—
—
—
—
(Benefit) Provision for income taxes
(36
)
—
(36
)
12
2
10
Other expenses (income), net
32
(1
)
33
17
4
13
Interest expense
26
—
26
25
—
25
Restructuring and other charges(3)
337
—
337
5
—
5
Provision for depreciation and
amortization
56
3
53
60
6
54
Stock-based compensation
(4
)
—
(4
)
5
—
5
Metal price lag(4)
(8
)
—
(8
)
36
—
36
Unrealized losses (gains) on
mark-to-market hedging instruments and derivatives
10
—
10
(2
)
—
(2
)
Other special items(5)
14
—
14
5
—
5
Adjusted EBITDA
$
154
$
9
$
145
$
205
$
18
$
187
Sales
$
1,942
$
116
$
1,826
$
2,191
$
233
$
1,958
Adjusted EBITDA Margin
7.9
%
7.8
%
7.9
%
9.4
%
7.7
%
9.6
%
__________________
(1)
Adjusted EBITDA is a non-GAAP financial
measure. See the reconciliation of Adjusted EBITDA included in this
release for (i) the Company’s definition of Adjusted EBITDA and
(ii) management’s rationale for the presentation of this non-GAAP
measure. The “As reported” column presents a reconciliation of this
non-GAAP measure to the most directly comparable GAAP measure.
Adjusted EBITDA excluding Russian
operations is also a non-GAAP financial measure. On November 15,
2022, Arconic completed the sale of 100% of its operations in
Russia (see footnote 2 to the Statement of Consolidated Operations
for the quarter ended December 31, 2022 included in this release).
Accordingly, management believes the presentation of Adjusted
EBITDA excluding Russian operations is meaningful to investors
because such measure provides context as to the contribution made
by the Company’s former operations in Russia relative to Arconic’s
total financial performance. Additionally, this measure provides a
historical basis with which to compare the Company’s financial
performance in future periods.
The “Russia” column presents the unaudited
combined financial information of Arconic’s subsidiaries that held
the Company’s former operations in Russia prepared from the
historical accounting records of these legal entities. This
information is not equivalent to that which would be presented as
consolidated financial information prepared in accordance with
accounting principles generally accepted in the United States of
America if these subsidiaries were to be presented as a standalone
consolidated reporting entity. Other amounts related to Arconic’s
former operations in Russia recorded in the historical accounting
records of other legal entities included in the Company’s
consolidated group, such as the loss on the sale of the previously
mentioned former subsidiaries recorded by the direct parent company
of these legal entities, were presented in the “As recast” column.
However, the amount presented as Adjusted EBITDA excluding Russian
operations is the same whether these amounts related to Arconic’s
former operations in Russia are presented in the “Russia” column or
the “As recast” column.
The amounts in the “As recast” column are
equal to the amounts in the “As reported” column less the amounts
in the “Russia” column. Consequently, there are limitations in the
usefulness of the amounts presented in the “As recast” column for
Net (loss) income attributable to Arconic Corporation and (Benefit)
Provision for income taxes. For example, the (Benefit) Provision
for income taxes would need to be recalculated on a “without”
approach to consider the consolidated company excluding the former
operations in Russia, the impact of which may extend beyond
subtracting the amount for (Benefit) Provision for income taxes
presented in the “Russia” column from the consolidated amount in
the “As reported” column. Conversely, the amount presented for
Adjusted EBITDA excluding Russia does not contain any such
limitations.
(2)
See footnote 3 to the Statement of
Consolidated Operations included in this release.
(3)
See footnote 2 to the Statement of
Consolidated Operations for the quarter ended December 31, 2022
included in this release.
(4)
See footnote 3 to the reconciliation of
Adjusted EBITDA for the quarterly periods presented included in
this release.
(5)
See footnote 4 to the reconciliation of
Adjusted EBITDA for the quarterly periods presented included in
this release.
Adjusted EBITDA to Free Cash
Flow Bridge
Quarter ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Adjusted EBITDA(1)
$
157
$
154
$
143
$
204
$
205
Change in working capital(2)
(136
)
65
2
(49
)
(200
)
Cash payments for:
Environmental remediation
(10
)
(4
)
(1
)
(2
)
(4
)
Pension contributions
(10
)
(9
)
(9
)
(9
)
(4
)
Other postretirement benefits
(7
)
(7
)
(7
)
(8
)
(8
)
Restructuring actions
—
—
(2
)
(1
)
(2
)
Interest
(29
)
(24
)
(30
)
(23
)
(29
)
Income taxes
(4
)
1
(3
)
(23
)
(4
)
Capital expenditures
(82
)
(70
)
(47
)
(33
)
(95
)
Other(3)
—
12
(2
)
73
(57
)
Free Cash Flow(4)
$
(121
)
$
118
$
44
$
129
$
(198
)
__________________
(1)
Adjusted EBITDA is a non-GAAP financial
measure. See the reconciliation of Adjusted EBITDA included in this
release for (i) Arconic’s definition of Adjusted EBITDA, (ii)
management’s rationale for the presentation of this non-GAAP
measure, and (iii) a reconciliation of this non-GAAP measure to the
most directly comparable GAAP measure.
(2)
Arconic’s definition of working capital is
Receivables plus Inventories less Accounts payable, trade.
(3)
Other includes the impact of metal price
lag as follows: 1Q23-$—; 4Q22-$8; 3Q22-$15; 2Q22-$30; and
1Q22-$(36). See footnote 3 to the reconciliation of Adjusted EBITDA
included in this release for additional information on metal price
lag.
(4)
Arconic’s definition of Free Cash Flow is
Cash from operations less capital expenditures. Free Cash Flow is a
non-GAAP financial measure. Management believes that this measure
is meaningful to investors because management reviews cash flows
generated from operations after taking into consideration capital
expenditures, which are both necessary to maintain and expand the
Company’s asset base and expected to generate future cash flows
from operations. It is important to note that Free Cash Flow does
not represent the residual cash flow available for discretionary
expenditures since other non-discretionary expenditures, such as
mandatory debt service requirements, are not deducted from the
measure.
- 1Q23: Cash used for operations of $(39) less capital
expenditures of $82 = free cash flow of $(121)
- 4Q22: Cash provided from operations of $188 less capital
expenditures of $70 = free cash flow of $118
- 3Q22: Cash provided from operations of $91 less capital
expenditures of $47 = free cash flow of $44
- 2Q22: Cash provided from operations of $162 less capital
expenditures of $33 = free cash flow of $129
- 1Q22: Cash used for operations of $(103) less capital
expenditures of $95 = free cash flow of $(198)
Reconciliation of Organic
Revenue
(in millions)
Quarter Ended
March 31, 2022
Total
Revenue
$
2,192
Less:
Sales – Russian Operations
233
Organic Revenue
$
1,959
Quarter Ended
March 31, 2023
Revenue
$
1,932
Less:
Sales – Russian Operations
n/a
Aluminum price impact
(128
)
Foreign currency impact
(19
)
Organic Revenue
$
2,079
Organic revenue is a non-GAAP financial measure. Management
believes this measure is meaningful to investors as it presents
revenue on a comparable basis for all periods presented due to the
impact of divestitures, changes in aluminum prices and foreign
currency fluctuations relative to the prior year period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503006033/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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부터 11월(11) 2024 으로 12월(12) 2024
Arconic (NYSE:ARNC)
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