Novelis Reports First Quarter of Fiscal Year 2015 Results

ATLANTA, Aug. 7, 2014 /PRNewswire/ -- Novelis, the world leader in aluminum rolling and recycling, today reported net income attributable to its common shareholder of $35 million for the first quarter of fiscal year 2015 compared to $14 million in the first quarter of fiscal year 2014.  Excluding certain tax-effected items, net income was $30 million, up 43% compared to the first quarter of fiscal year 2014.

"Excellent plant productivity, strong winter results in South America boosted by World Cup beverage  consumption, and good year-over-year demand trends drove a strong start to the new fiscal year," said Phil Martens, President and Chief Executive Officer for Novelis.

Adjusted EBITDA for the first quarter of fiscal 2015 was $235 million, a 15% increase compared to $204 million reported for the prior year. The increase was primarily driven by significantly higher volume, partially offset by pricing pressures in the Asian markets and a higher fixed cost base due to expansions ahead of revenue generation.

Novelis' new recycling centers in Germany and Brazil are ramping up production and will help the company achieve its mid-decade target of 50% recycled aluminum in its products on the way to its ultimate goal of 80% recycled content by 2020.  In addition, rolling expansions in Korea and Brazil are adding capacity to grow shipments and capitalize on strong global demand for aluminum flat rolled products, particularly in the beverage can market.  In June, the company completed the sale of its Canadian consumer foil business in line with the company's strategic focus on core premium markets.

"Demand trends continue to be favorable and our investments in rolling, recycling and automotive sheet finishing lines have positioned the company well to capture growth in our core can sheet and specialty markets as well as the emerging automotive business," said Martens.  "The first of our new global auto finishing lines are on track to begin shipping product in the second half of this fiscal year and will allow us to maintain our leadership position in the technically demanding, high-growth automotive aluminum sheet market, while growing our premium product portfolio."

Shipments of aluminum rolled products increased 9% in the first quarter of fiscal 2015 to 770 kilotonnes compared to 708 kilotonnes in the prior year. 

For the third consecutive quarter, all four operating regions reported an increase in shipments year-over-year.  Higher shipments were the primary driver of the 12% increase in net sales for the first quarter of fiscal 2015 to $2.7 billion as compared to $2.4 billion for the first quarter of fiscal 2014.

 

 

The company reported negative free cash flow of $177 million for the year. "Free cash flow improved by $112 million versus the prior year, but as expected remained negative due to capital investments and semi-annual bond interest payments," said Steve Fisher, Chief Financial Officer for Novelis.  "Despite these factors and a $250 million return of capital to our parent company in the quarter, we reported solid liquidity of $791 million and expect to achieve positive free cash flow by fiscal year-end."

First Quarter of Fiscal Year 2015 Earnings Conference Call

Novelis will discuss its first quarter of fiscal year 2015 results via a live webcast and conference call for investors at 9:00 a.m. ET on Thursday, August 7, 2014.  To view slides and listen only, visit the web at https://cc.callinfo.com/r/1fqxlix18q32k&eom.  To join by telephone, dial toll-free in North America at 800 732 5617, India toll-free at 0008001007928 or the international toll line at +1 212 231 2900.  Presentation materials and access information may also be found at novelis.com/investors.

About Novelis

Novelis Inc. is the global leader in aluminum rolled products and the world's largest recycler of aluminum. The company operates in nine countries, has approximately 11,200 employees and reported revenue of approximately $10 billion for its 2014 fiscal year. Novelis supplies premium aluminum sheet and foil products to transportation, packaging, construction, industrial and consumer electronics markets throughout North America, Europe, Asia and South America. The company is part of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India. For more information, visit novelis.com and follow us at facebook.com/NovelisInc and at twitter.com/Novelis.

Non-GAAP Financial Measures

This press release and the presentation slides for the earnings call contain non-GAAP financial measures as defined by SEC rules.  We think that these measures are helpful to investors in measuring our financial performance and liquidity and comparing our performance to our peers.  However, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies.  These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP financial measures.  To the extent we discuss any non-GAAP financial measures on the earnings call, a reconciliation of each measure to the most directly comparable GAAP measure will be available in the presentation slides filed as Exhibit 99.2 to our Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release. In addition, the Form 8-K includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.

Attached to this news release are tables showing the Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Reconciliation to Adjusted EBITDA and Free Cash Flow, Reconciliation to Liquidity and Net Income excluding Certain Items, and Segment Information.

Forward-Looking Statements

Statements made in this news release which describe Novelis' intentions, expectations, beliefs or predictions may be forward-looking statements within the meaning of securities laws.  Forward-looking statements include statements preceded by, followed by, or including the words "believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," or similar expressions.  An example of forward looking statements in this news release is our expectation that we will capture growth in our core can sheet and specialty markets as well as the emerging automotive business.  Novelis cautions that, by their nature, forward-looking statements involve risk and uncertainty and that Novelis' actual results could differ materially from those expressed or implied in such statements.  We do not intend, and we disclaim any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.  Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things: changes in the prices and availability of aluminum (or premiums associated with such prices) or other materials and raw materials we use; the capacity and effectiveness of our metal hedging activities, including our internal used beverage cans (UBCs) and smelter hedges; relationships with, and financial and operating conditions of, our customers, suppliers and other stakeholders; fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities; our ability to access financing for future capital requirements; changes in the relative values of various currencies and the effectiveness of our currency hedging activities; factors affecting our operations, such as litigation, environmental remediation and clean-up costs, labor relations and negotiations, breakdown of equipment and other events; the impact of restructuring efforts in the future; economic, regulatory and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic and composite materials; changes in general economic conditions including deterioration in the global economy, particularly sectors in which our customers operate; changes in the fair value of derivative instruments; cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers' industries; changes in government regulations, particularly those affecting taxes, derivative instruments, environmental, health or safety compliance; changes in interest rates that have the effect of increasing the amounts we pay under our principal credit agreement and other financing agreements; the effect of taxes and changes in tax rates; our indebtedness and our ability to generate cash. The above list of factors is not exhaustive.  Other important risk factors included under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2014 are specifically incorporated by reference into this news release.

 

 

 

 

Reconciliation from Net Income Attributable to our Common Shareholder to Adjusted EBITDA 
Novelis is providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

 

 

Free Cash Flow and Cash and Cash Equivalents
The following table shows the "Free cash flow" for the three months ended June 30, 2014 and 2013 and the ending balances of cash and cash equivalents (in millions).

 

 

Total Liquidity
The following table shows available liquidity as of June 30, 2014 and March 31, 2014 (in millions).

 

 

Reconciliation of Net Income to Net Income, excluding Certain Items
The following table shows Net Income attributable to our common shareholder excluding Certain Items (in millions). We adjust for items which may recur in varying magnitude which affect the comparability of the operational results of our underlying business.

 

 

Segment Information
The following table shows selected segment financial information (in millions, except shipments which are in kilotonnes).

 

 

 

SOURCE Novelis Inc.