Third Quarter 2021 Highlights
- Sales of $1.9 billion, up 34% year over year, and up 5% from
prior quarter
- Net income of $16 million, or $0.15 per share, compared with $5
million, or $0.05 per share, in third quarter 2020
- Adjusted EBITDA of $171 million, up 4% year over year, and down
9% from prior quarter
- Repurchased nearly 3 million shares at a cost of approximately
$97 million for year-to-date repurchases of $106 million toward
$300 million authorization
Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”)
today reported third quarter 2021 results. Revenue was $1.9
billion, up 5% from the prior quarter, primarily due to higher
aluminum prices and the start of packaging sales in the U.S.,
partially offset by weaker than expected ground transportation
sales. The Company reported net income of $16 million, or $0.15 per
share, compared with $5 million, or $0.05 per share, in third
quarter 2020.
Third quarter 2021 Adjusted EBITDA was $171 million, an increase
of 4% year over year and a decline of 9% sequentially, driven by
productivity issues related to labor shortages, higher energy
costs, and ongoing weakness in automotive due to semiconductor
supply issues. Cash used for operations was $42 million and capital
expenditures were $51 million. At quarter-end, the cash balance was
$349 million with total available liquidity of approximately $1.1
billion, and debt was $1.6 billion.
Tim Myers, Chief Executive Officer, said, “Demand for our
products remains very strong across all end markets even as the
pandemic continues to affect our operations. Ongoing labor
shortages in the U.S. limited our ability to serve existing orders,
particularly in the industrial market. As we exited the third
quarter, our industrial backlog was more than $60 million above
typical levels or roughly five times greater than normal. We are
aggressively addressing these issues and expect to work down the
backlog by the end of the year and return to sequential Adjusted
EBITDA growth in the fourth quarter.”
Mr. Myers continued, “The Company grew Adjusted EBITDA year over
year and executed on our capital allocation plan, repurchasing
approximately $97 million in shares. Looking forward, we are
focused on achieving sustained Adjusted EBITDA growth as demand
continues to increase across our end markets. Today we announced
two investments that underpin that growth. As profitability
continues to increase and legacy cash obligations decline in 2022,
our ability to allocate capital to additional shareholder returns
and organic investments will create value for all
stakeholders.”
Third Quarter Segment
Performance
Revenue by Segment ($M)
Quarter ended
September 30, 2021
September 30, 2020
Rolled Products
$
1,559
$
1,092
Building and Construction Systems
257
241
Extrusions
74
82
Adjusted EBITDA ($M)
Quarter ended
September 30, 2021
September 30, 2020
Rolled Products
$
155
$
138
Building and Construction Systems
34
40
Extrusions
(7
)
(6
)
Subtotal
182
172
Corporate
(11
)
(7
)
Adjusted EBITDA
$
171
$
165
Outlook
The Company is updating its full-year 2021 outlook to reflect
the impact of increased metal prices on revenue and working
capital. Arconic revenue expectations are now in the range of $7.5
billion to $7.7 billion for full-year 2021 compared with the prior
expected range of $7.3 billion to $7.6 billion. This assumes an
average annual LME aluminum price of $2,510/mt and Midwest Premium
of $610/mt for the full year, increased from prior assumptions for
LME of $2,330/mt and Midwest Premium of $540/mt. Expected Adjusted
EBITDA range has been tightened to $710 million to $730 million
from the prior range of $710 million to $750 million. Adjusted free
cash flow outlook for full-year 2021 is now expected to be
approximately $50 million compared with the prior view of
approximately $250 million. At quarter end, combined LME plus
Midwest Premium price had increased approximately $1,300/mt
compared with year-end 2020 resulting in $250-$300 million of
working capital pressure for full-year 2021. Adjusted free cash
flow outlook excludes a $250 million contribution to U.S. pension
plans in April in connection with the $1 billion partial
annuitization of U.S. pension obligations, and approximately $350
million in other funding of legacy pension, OPEB, and environmental
liabilities.
Share Repurchase Program
The Company repurchased nearly 3 million shares in third quarter
2021 at an average price of $34.13 for a total of approximately $97
million. Since the start of the program in May 2021 through
September 30, 2021, the Company has repurchased approximately 3.1
million shares for a total of approximately $106 million toward the
$300 million two-year authorization.
Arconic will hold its quarterly conference call at 10:00 AM
Eastern Time on November 2, 2021, to present third quarter
financial results. The call will be webcast on the Arconic website.
Call information and related details are 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.
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; potential legal liability; the potential impact of
inflationary price pressures; the potential impact of the COVID-19
pandemic; the timing and levels of potential recovery from the
COVID-19 pandemic within our end markets; and the impact of actions
to mitigate the impact of the COVID-19 pandemic. 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) the
inability to identify or successfully respond to changing trends in
our end markets; (n) the impact of potential cyber attacks and
information technology or data security breaches; (o) 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; (p) the outcome of
contingencies, including legal proceedings, government or
regulatory investigations, and environmental remediation and
compliance matters; and (q) the other risk factors summarized in
Arconic’s Form 10-K for the year ended December 31, 2020 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 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, free cash flow, and adjusted 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
September 30,
June 30,
September 30,
2021
2021
2020
Sales
$
1,890
$
1,801
$
1,415
Cost of goods sold (exclusive of expenses
below)
1,676
1,567
1,218
Selling, general administrative, and other
expenses
63
61
59
Research and development expenses
8
9
8
Provision for depreciation and
amortization
61
62
63
Restructuring and other charges(1)
14
597
3
Operating income (loss)
68
(495
)
64
Interest expense
26
25
22
Other expenses, net
15
15
27
Income (Loss) before income taxes
27
(535
)
15
Provision (Benefit) for income taxes
11
(108
)
10
Net income (loss)
16
(427
)
5
Less: Net income attributable to
noncontrolling interest
–
–
–
NET INCOME (LOSS) ATTRIBUTABLE TO
ARCONIC
CORPORATION
$
16
$
(427
)
$
5
EARNINGS PER SHARE ATTRIBUTABLE TO
ARCONIC
CORPORATION COMMON STOCKHOLDERS:
Basic:
Net income (loss)
$
0.15
$
(3.89
)
$
0.05
Weighted-average number of shares
108,677,887
110,035,026
109,073,635
Diluted:
Net income (loss)
$
0.15
$
(3.89
)
$
0.05
Weighted-average number of shares(2)
112,115,436
110,035,026
112,813,853
COMMON STOCK OUTSTANDING AT THE END OF
THE
PERIOD
107,097,586
109,933,436
109,087,034
(1)
In the quarter ended June 30, 2021,
Restructuring and other charges includes $568 related to the
settlement of a portion of the Company’s U.S. defined benefit
pension plan obligations as a result of the purchase of a group
annuity contract and elections by certain plan participants to
receive lump-sum benefit payments (see footnote 4 to the
Consolidated Balance Sheet included in this release).
(2)
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)
(dollars in millions)
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
349
$
787
Receivables from customers, less
allowances of
$1 in both 2021 and 2020
876
631
Other receivables
198
128
Inventories
1,525
1,043
Prepaid expenses and other current
assets
61
53
Total current assets
3,009
2,642
Properties, plants, and equipment
7,452
7,409
Less: accumulated depreciation and
amortization
4,836
4,697
Properties, plants, and equipment, net
2,616
2,712
Goodwill
388
390
Operating lease right-of-use-assets
130
144
Deferred income taxes
258
329
Other noncurrent assets
95
97
Total assets
$
6,496
$
6,314
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,489
$
1,106
Accrued compensation and retirement
costs
129
118
Taxes, including income taxes
42
33
Environmental remediation
56
90
Operating lease liabilities
35
36
Other current liabilities
163
90
Total current liabilities
1,914
1,473
Long-term debt(1)
1,593
1,278
Accrued pension benefits(2)
731
1,343
Accrued other postretirement benefits
424
479
Environmental remediation
47
66
Operating lease liabilities
98
111
Deferred income taxes
14
15
Other noncurrent liabilities and deferred
credits
97
102
Total liabilities
4,918
4,867
EQUITY
Arconic Corporation stockholders’
equity:
Common stock
1
1
Additional capital
3,361
3,348
Accumulated deficit
(514
)
(155
)
Treasury stock(3)
(106
)
–
Accumulated other comprehensive
loss(4)
(1,178
)
(1,761
)
Total Arconic Corporation stockholders’
equity
1,564
1,433
Noncontrolling interest
14
14
Total equity
1,578
1,447
Total liabilities and equity
$
6,496
$
6,314
(1)
In March 2021, Arconic issued $300
aggregate principal amount of 6.125% Senior Secured Second-Lien
Notes due 2028 at 106.25% of par. In April 2021, the Company used a
portion of the net proceeds of this issuance to contribute a total
of $250 to its two funded U.S. defined benefit plans (see footnote
2).
(2)
The decrease of $612 in Accrued pension
benefits was mostly due to cash contributions and the purchase of a
group annuity contract associated with the Company’s two funded
U.S. defined benefit pension plans. In January 2021, the Company
contributed a total of $200 to these two plans, comprised of the
estimated minimum required funding for 2021 of $183 and an
additional $17. In April 2021, the Company purchased a group
annuity contract to transfer the obligation to pay the remaining
retirement benefits of approximately 8,400 participants to an
insurance company. On a combined basis, this transaction resulted
in the settlement of $995 in plan obligations and the transfer of
$1,007 in plan assets. In connection with this transaction, the
Company contributed a total of $250 to these two plans to maintain
the funding level of the remaining plan obligations not
transferred. This contribution was funded with the net proceeds
from a recent debt offering (see footnote 1). This transaction
represents a significant settlement event, and, as a result, the
Company was required to complete a remeasurement of these two
plans, including an interim actuarial valuation of the plan
obligations. Accordingly, the weighted average discount rate used
in calculating the plan obligations increased to 3.10% as of April
30, 2021 from 2.54% as of December 31, 2020. This increase drove a
decrease in the Company’s liability of $152.
(3)
In May 2021, Arconic announced that its
Board of Directors approved a share repurchase program authorizing
the Company to repurchase shares of its outstanding common stock up
to an aggregate transactional value of $300 over a two-year period
expiring April 28, 2023. Since the program’s inception, the Company
has repurchased 3,108,705 shares of its common stock under this
program.
(4)
The decrease of $583 in Accumulated other
comprehensive loss was mostly due to a reduction in the existing
combined net actuarial loss associated with the Company’s two
funded U.S. defined benefit pension plans. In the quarter ended
June 30, 2021, the Company accelerated the amortization of a
portion of this net actuarial loss due to the settlement of a
portion of the Company’s pension plan obligations as a result of
the purchase of a group annuity contract (see footnote 2) and
elections by certain plan participants to receive lump-sum benefit
payments. The impact of this activity on Accumulated other
comprehensive loss was $437 ($568 before tax impact). The Company
recognized the $568 in Restructuring and other charges on its
Statement of Consolidated Operations (see footnote 1 to the
Statement of Consolidated Operations included in this release).
Additionally, as a result of an increase in the discount rate used
in calculating the Company’s obligations related to these two plans
as of April 30, 2021 (see footnote 2), Accumulated other
comprehensive loss was reduced by $117 ($152 before tax
impact).
Arconic Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Quarter ended
September 30,
June 30,
September 30,
2021
2021
2020
OPERATING ACTIVITIES
Net income (loss)
$
16
$
(427
)
$
5
Adjustments to reconcile net income (loss)
to cash (used for) provided from operations:
Depreciation and amortization
61
62
63
Deferred income taxes
2
(117
)
(22
)
Restructuring and other charges(1)
14
597
3
Net periodic pension benefit cost
15
18
22
Stock-based compensation
8
5
6
Amortization of debt issuance costs
1
1
2
Other
4
1
(4
)
Changes in assets and liabilities,
excluding effects of acquisitions, divestitures, and foreign
currency translation adjustments:
(Increase) in receivables
(60
)
(61
)
(66
)
(Increase) Decrease in inventories
(131
)
(196
)
82
Decrease (Increase) in prepaid expenses
and other current assets
3
(13
)
1
Increase in accounts payable, trade
65
206
169
(Decrease) in accrued expenses
(21
)
(1
)
(61
)
Increase in taxes, including income
taxes
1
5
21
Pension contributions(2)
(3
)
(252
)
–
(Increase) Decrease in noncurrent
assets
(1
)
(4
)
7
(Decrease) Increase in noncurrent
liabilities
(16
)
9
12
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(42
)
(167
)
240
FINANCING ACTIVITIES
Debt issuance costs
–
(1
)
–
Repurchases of common stock(3)
(97
)
(9
)
–
Other
(1
)
1
4
CASH (USED FOR) PROVIDED FROM FINANCING
ACTIVITIES
(98
)
(9
)
4
INVESTING ACTIVITIES
Capital expenditures
(51
)
(44
)
(39
)
Proceeds from the sale of assets and
businesses
–
(3
)
–
CASH USED FOR INVESTING ACTIVITIES
(51
)
(47
)
(39
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
-
-
2
Net change in cash and cash equivalents
and restricted cash
(191
)
(223
)
207
Cash and cash equivalents and restricted
cash at beginning of period(4)
540
763
595
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD(4)
$
349
$
540
$
802
(1)
See footnote 1 to the Statement of
Consolidated Operations included in this release.
(2)
In April 2021, the Company contributed a
total of $250 to its two funded U.S. defined benefit pension plans
to maintain the funding level of the remaining plan obligations not
transferred under a group annuity contract (see footnote 2 to the
Consolidated Balance Sheet included in this release).
(3)
In May 2021, Arconic announced that its
Board of Directors approved a share repurchase program authorizing
the Company to repurchase shares of its outstanding common stock up
to an aggregate transactional value of $300 over a two-year period
expiring April 28, 2023. In the quarters ended September 30, 2021
and June 30, 2021, the Company repurchased 2,862,694 and 246,011,
respectively, shares of its common stock under this program.
(4)
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
September 30,
June 30,
September 30,
2021
2021
2020
Total Segment Adjusted EBITDA(1)
$
182
$
200
$
172
Unallocated amounts:
Corporate expenses(2)
(7
)
(10
)
(6
)
Stock-based compensation expense
(8
)
(5
)
(6
)
Metal price lag(3)
(21
)
(11
)
(16
)
Provision for depreciation and
amortization
(61
)
(62
)
(63
)
Restructuring and other charges(4)
(14
)
(597
)
(3
)
Other(5)
(3
)
(10
)
(14
)
Operating income (loss)
68
(495
)
64
Interest expense
(26
)
(25
)
(22
)
Other expenses, net
(15
)
(15
)
(27
)
(Provision) Benefit for income taxes
(11
)
108
(10
)
Net income attributable to noncontrolling
interest
–
–
–
Consolidated net income (loss)
attributable to Arconic Corporation
$
16
$
(427
)
$
5
(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 Stock-based compensation expense and
Metal price lag (see footnote 3). 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 1 to the Statement of
Consolidated Operations 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 3 to the
reconciliation of Adjusted EBITDA within Calculation of Non-GAAP
Financial Measures included in this release).
Arconic Corporation and
subsidiaries
Calculation of Non-GAAP Financial
Measures (unaudited)
(in millions)
Adjusted EBITDA
Quarter ended
September 30,
June 30,
September 30,
2021
2021
2020
Net income (loss) attributable to Arconic
Corporation
$
16
$
(427
)
$
5
Add:
Net income attributable to noncontrolling
interest
–
–
–
Provision (Benefit) for income taxes
11
(108
)
10
Other expenses, net
15
15
27
Interest expense
26
25
22
Restructuring and other charges(1)
14
597
3
Provision for depreciation and
amortization
61
62
63
Stock-based compensation
8
5
6
Metal price lag(2)
21
11
16
Other special items(3)
(1
)
7
13
Adjusted EBITDA
$
171
$
187
$
165
Sales
$
1,890
$
1,801
$
1,415
Adjusted EBITDA Margin
9.0
%
10.4
%
11.7
%
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 2); 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 is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because 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 1 to the Statement of
Consolidated Operations included in this release.
(2)
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.
(3)
Other special items include the
following:
• for the quarter ended September 30,
2021, a partial reversal of a previously established reserve
related to the Grasse River environmental remediation matter ($11),
costs related to several legal matters ($7), and other items
($3);
• for the quarter ended June 30, 2021, a
write-down of inventory related to the idling of both the remaining
operations at the Chandler (Arizona) extrusions facility and the
casthouse operations at the Lafayette (Indiana) extrusions facility
($4) and costs related to several legal matters ($3); and
• for the quarter ended September 30,
2020, costs related to several legal matters, including Grenfell
Tower ($4) and other ($2), a write-down of inventory related to the
idling of the casthouse operations at the Chandler (Arizona)
extrusions facility ($5), and other items ($2).
Net Debt
September 30,
2021
Long-term debt
$
1,593
Short-term borrowings
–
Total debt
$
1,593
Less: Cash and cash equivalents
349
Net debt
$
1,244
Net debt is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because management assesses Arconic’s leverage position after
considering available cash that could be used to repay outstanding
debt. Long-term debt equals $1,600 principal of outstanding
indebtedness plus $17 of unamortized debt premium less $24 of
unamortized debt issuance costs.
Adjusted EBITDA to Free Cash Flow
Bridge
Quarter ended
September 30,
June 30,
March 31,
December 31,
2021
2021
2021
2020
Adjusted EBITDA(1)
$
171
$
187
$
179
$
151
Change in working capital(2)
(126
)
(51
)
(230
)
130
Cash payments for:
Environmental remediation
(23
)
(4
)
(17
)
(28
)
Pension contributions(3)
(3
)
(252
)
(201
)
(227
)
Other postretirement benefits
(9
)
(10
)
(10
)
(14
)
Restructuring actions
(2
)
(4
)
(5
)
(9
)
Interest
(28
)
(22
)
(18
)
(21
)
Income taxes
(4
)
(6
)
(6
)
(11
)
Capital expenditures
(51
)
(44
)
(28
)
(37
)
Other
(18
)
(5
)
14
17
Free Cash Flow(4)
$
(93
)
$
(211
)
$
(322
)
$
(49
)
Add-back cash payments for:
Environmental remediation
23
4
17
28
Pension benefits(5)
5
254
203
229
Other postretirement benefits
9
10
10
14
Adjusted Free Cash Flow(6)
$
(56
)
$
57
$
(92
)
$
222
(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)
In January 2021, the Company contributed a
total of $200 to its two funded U.S. defined benefit pension plans,
comprised of the estimated minimum required funding for 2021 of
$183 and an additional $17. In April 2021, the Company contributed
a total of $250 to its two funded U.S. defined benefit pension
plans to maintain the funding level of the remaining plan
obligations not transferred under a group annuity contract.
(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.
• 3Q 2021: Cash used for operations of
$(42) less capital expenditures of $51 = free cash flow of
$(93)
• 2Q 2021: Cash used for operations of
$(167) less capital expenditures of $44 = free cash flow of
$(211)
• 1Q 2021: Cash used for operations of
$(294) less capital expenditures of $28 = free cash flow of
$(322)
• 4Q 2020: Cash used for operations of
$(12) less capital expenditures of $37 = free cash flow of
$(49)
(5)
Pension benefits are comprised of
contributions to funded defined benefit plans and benefit payments
to participants in unfunded defined benefit plans.
(6)
Adjusted Free Cash Flow is a non-GAAP
financial measure. Management believes that this measure is
meaningful to investors because Adjusted Free Cash Flow provides an
incremental view of the Company’s cash performance by excluding
payments related to legacy liabilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211102005198/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)
Gráfico Histórico do Ativo
De Fev 2024 até Mar 2024
Arconic (NYSE:ARNC)
Gráfico Histórico do Ativo
De Mar 2023 até Mar 2024