• News Releases
Novelis Reports Fiscal Year 2014 Results
Solid Operating Performance in Q4 Ends Year on a Strong Note
- Q4 Net Income, Excluding Certain Items, of $75 million
- Q4 Adjusted EBITDA of $250 million
- Liquidity in Excess of $1 Billion
- Achieved 46% Recycled Input Rate

ATLANTA, May 16, 2014 /PRNewswire/ -- Novelis, the world leader in aluminum rolling and recycling, today reported net income attributable to its common shareholder of $54 million for the fourth quarter of fiscal year 2014.  Excluding certain tax-effected items, net income was $75 million.

"Fiscal 2014 was a transitional year for Novelis and we closed it on a strong note," said Phil Martens, President and Chief Executive Officer for Novelis.  "We completed the majority of our business transformation initiatives to secure our leadership position in flat rolled products for the global automotive and beverage can markets, and enhance our unmatched, low-cost recycling capabilities worldwide.  Together these actions are driving both our top and bottom lines."

The company reported shipments of aluminum rolled products of 753 kilotonnes in the fourth quarter of fiscal 2014, up eight percent compared to the prior year.  Every global operating region reported an increase in shipments year-over-year.  Higher global shipments were the primary driver behind the four percent increase in adjusted EBITDA versus the prior year to $250 million in the fourth quarter of fiscal 2014. 

"While 2014 provided market challenges, particularly lower can sheet pricing and volatile market premiums for primary aluminum, we have positioned the company well for the future.  Auto will accelerate this year as our key supplier role to Ford's new aluminum intensive F-150 program will demonstrate," said Martens. 

The Company noted a number of accomplishments over the past year:

  • Generated significant cash flow to fund capital investments;
  • Made significant progress on all strategic expansions including the ramp up of rolling production at Brazil and Korea mill expansions and the start of commercial production at US automotive finishing lines;
  • Announced incremental investment of $205 million to further expand global auto finishing capacity to approximately 900 kilotonnes annually;
  • Expanded recycling facilities and capabilities in all of its operating regions and increased the recycled content in its products by three percentage points to 46 percent for fiscal 2014, continuing toward the Company's goal of 80 percent recycled content in its products by 2020;
  • Launched commercial use of evercan, the world's first certified high-recycled content beverage can sheet;
  • Demonstrated our leading research & technology capabilities through a 60% year over year increase in patent applications and grants;
  • Further optimized the Company's footprint and product portfolio, including the proposed sale of its household foil operations in North America and non-core hydroelectric power generation operations in Brazil.

Adjusted EBITDA for fiscal 2014 was $885 million compared to $961 million reported for the prior year. The decline was primarily due to pricing pressures experienced in the Asian and North American beverage can markets, a higher fixed cost base due to expansions ahead of revenue generation and higher incentive costs, partially offset by higher shipments and benefits from increasing recycled content.

Shipments of aluminum rolled products totaled 2,895 kilotonnes in fiscal 2014, an increase of four percent compared to 2,786 kilotonnes reported in fiscal 2013.  Net sales in fiscal 2014 were $9.8 billion, which is flat compared to the prior year resulting from higher shipments partially offset by a ten percent decrease in average aluminum prices and lower conversion premiums.

(in $M)

     

Fiscal 2014

 

Fiscal 2013

 
       

3/31/2014

 

3/31/2013

 

Free Cash Flow

 

$

(16)

   

$

(565)

   

Capital Expenditures

 

717

   

775

   

Free Cash Flow before CapEx

$

701

   

$

210

   

The company reported negative free cash flow of $16 million for the year.  "Our excellent cash generation essentially funded the $717 million in capital investments we made last year," said Steve Fisher, Chief Financial Officer for Novelis.  "In addition, we drove liquidity levels in excess of $1 billion by fiscal year end, allowing us to return $250 million of capital to our parent company in the first quarter of fiscal 2015."

Fourth Quarter and Fiscal Year 2014 Earnings Conference Call

Novelis will discuss its fourth quarter and fiscal year 2014 results via a live webcast and conference call for investors at 9:30 a.m. ET on Friday, May 16, 2014.  To view slides and listen only, visit the web at https://cc.callinfo.com/r/1rzes6fm8phdz&eom.  To join by telephone, dial toll-free in North America at 800 743 4304, India toll-free at 0008001006992 or the international toll line at +1 212 231 2902.  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 9 countries, has approximately 11,400 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 on Facebook at facebook.com/NovelisInc and Twitter 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 Consolidated Statements of Operations, Consolidated Balance Sheets, 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 new release is our expectation for acceleration in the automotive market.  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, 2013 (and in our upcoming Annual Report on Form 10-K for the fiscal year ended March 31, 2014) are specifically incorporated by reference into this news release.

Novelis Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)

 
 

(unaudited)

       
 

Quarter Ended

 

Year Ended

 

March 31,

 

March 31,

 

2014

 

2013

 

2014

 

2013

       

Net sales

$

2,549

   

$

2,500

   

$

9,767

   

$

9,812

 

Cost of goods sold (exclusive of depreciation and amortization)

2,203

   

2,162

   

8,468

   

8,477

 

Selling, general and administrative expenses

117

   

93

   

461

   

398

 

Depreciation and amortization

87

   

74

   

334

   

292

 

Research and development expenses

11

   

10

   

45

   

46

 

Interest expense and amortization of debt issuance costs

77

   

75

   

304

   

298

 

Gain on assets held for sale

   

   

(6)

   

(3)

 

Loss on extinguishment of debt

   

7

   

   

7

 

Restructuring and impairment, net

29

   

18

   

75

   

47

 

Equity in net loss of non-consolidated affiliates

   

1

   

12

   

16

 

Other income, net

(14)

   

(13)

   

(41)

   

(52)

 
 

2,510

   

2,427

   

9,652

   

9,526

 

Income before income taxes

39

   

73

   

115

   

286

 

Income tax (benefit) provision

(15)

   

14

   

11

   

83

 

Net income

54

   

59

   

104

   

203

 

Net income attributable to noncontrolling interests

   

   

   

1

 

Net income attributable to our common shareholder

$

54

   

$

59

   

$

104

   

$

202

 

 

Novelis Inc.
CONSOLIDATED BALANCE SHEETS (In millions, except number of shares)

 
 

March 31,

 

March 31,

ASSETS

2014

 

2013

Current assets

     

Cash and cash equivalents

$

509

   

$

301

 

Accounts receivable, net

     

— third parties (net of allowances of $4 and $3 as of March 31, 2014 and March 31,

2013, respectively)

1,382

   

1,447

 

— related parties

54

   

38

 

Inventories

1,173

   

1,168

 

Prepaid expenses and other current assets

101

   

93

 

Fair value of derivative instruments

51

   

109

 

Deferred income tax assets

101

   

112

 

Assets held for sale

102

   

9

 

Total current assets

3,473

   

3,277

 

Property, plant and equipment, net

3,513

   

3,104

 

Goodwill

611

   

611

 

Intangible assets, net

640

   

649

 

Investment in and advances to non–consolidated affiliates

612

   

627

 

Deferred income tax assets

80

   

75

 

Other long–term assets

     

— third parties

173

   

166

 

— related parties

12

   

13

 

Total assets

$

9,114

   

$

8,522

 

LIABILITIES AND SHAREHOLDER'S EQUITY

     

Current liabilities

     

Current portion of long–term debt

$

92

   

$

30

 

Short–term borrowings

723

   

468

 

Accounts payable

     

— third parties

1,418

   

1,207

 

— related parties

53

   

47

 

Fair value of derivative instruments

60

   

74

 

Accrued expenses and other current liabilities

     

— third parties

547

   

497

 

— related party

250

   

 

Deferred income tax liabilities

16

   

28

 

Liabilities held for sale

11

   

1

 

Total current liabilities

3,170

   

2,352

 

Long–term debt, net of current portion

4,359

   

4,434

 

Deferred income tax liabilities

425

   

504

 

Accrued postretirement benefits

621

   

731

 

Other long–term liabilities

271

   

262

 

Total liabilities

8,846

   

8,283

 

Commitments and contingencies

     

Shareholder's equity

     

Common stock, no par value; unlimited number of shares authorized; 1,000 shares issued

and outstanding as of March 31, 2014 and March 31, 2013

   

 

Additional paid–in capital

1,404

   

1,654

 

Accumulated deficit

(1,073)

   

(1,177)

 

Accumulated other comprehensive loss

(91)

   

(268)

 

Total equity of our common shareholder

240

   

209

 

Noncontrolling interests

28

   

30

 

Total equity

268

   

239

 

Total liabilities and equity

$

9,114

   

$

8,522

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)

 
 

Year Ended March 31,

 

2014

 

2013

OPERATING ACTIVITIES

     

Net income

$

104

   

$

203

 

Adjustments to determine net cash provided by operating activities:

     

Depreciation and amortization

334

   

292

 

Gain on unrealized derivatives and other realized derivatives in investing activities, net

(3)

   

(28)

 

Gain on assets held for sale

(6)

   

(3)

 

Loss on extinguishment of debt

   

7

 

Deferred income taxes

(129)

   

(31)

 

Amortization of fair value adjustments, net

12

   

12

 

Equity in net loss of non–consolidated affiliates

12

   

16

 

(Gain) loss on foreign exchange remeasurement of debt

(2)

   

8

 

Loss on sale of assets

9

   

6

 

Impairment charges

24

   

4

 

Amortization of debt issuance costs and carrying value adjustment

26

   

27

 

Other, net

(4)

   

1

 

Changes in assets and liabilities including assets and liabilities held for sale (net of

effects from divestitures):

     

Accounts receivable

106

   

(121)

 

Inventories

17

   

(160)

 

Accounts payable

159

   

6

 

Other current assets

   

(36)

 

Other current liabilities

32

   

28

 

Other noncurrent assets

(9)

   

(10)

 

Other noncurrent liabilities

20

   

(18)

 

Net cash provided by operating activities

702

   

203

 

INVESTING ACTIVITIES

     

Capital expenditures

(717)

   

(775)

 

Proceeds from sales of assets, third party, net of transaction fees

8

   

19

 

Proceeds from the sale of assets, related party, net of transaction fees

8

   

2

 

(Outflows) proceeds from investment in and advances to non–consolidated affiliates, net

(16)

   

3

 

Proceeds from settlement of other undesignated derivative instruments, net

15

   

4

 

Net cash used in investing activities

(702)

   

(747)

 

FINANCING ACTIVITIES

     

Proceeds from issuance of debt

169

   

319

 

Principal payments

(164)

   

(97)

 

Short–term borrowings, net

208

   

332

 

Dividends, noncontrolling interest

   

(2)

 

Acquisition of noncontrolling interest in Novelis Korea Ltd.

   

(9)

 

Debt issuance costs

(8)

   

(8)

 

Net cash provided by (used in) financing activities

205

   

535

 

Net increase (decrease) in cash and cash equivalents

205

   

(9)

 

Effect of exchange rate changes on cash

3

   

(7)

 

Cash and cash equivalents — beginning of period

301

   

317

 

Cash and cash equivalents — end of period

$

509

   

$

301

 

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.

 

Quarter Ended

 

Year Ended

(in millions)

March 31,

 

March 31,

 

2014

 

2013

 

2014

 

2013

Net income attributable to our common shareholder

$

54

   

$

59

   

$

104

   

$

202

 

Noncontrolling interests

   

   

   

(1)

 

Income tax (provision) benefit

15

   

(14)

   

(11)

   

(83)

 

Interest, net

(74)

   

(73)

   

(297)

   

(293)

 

Depreciation and amortization

(87)

   

(74)

   

(334)

   

(292)

 

EBITDA

200

   

220

   

746

   

871

 
               

Unrealized gain (loss) on derivatives

(5)

   

21

   

(10)

   

14

 

Realized (loss) gain on derivative instruments not  included in segment

income

(1)

   

3

   

5

   

5

 

Proportional consolidation

(10)

   

(10)

   

(40)

   

(41)

 

Gain on assets held for sale

   

   

6

   

3

 

Loss on early extinguishment of debt

   

(7)

   

   

(7)

 

Restructuring and impairment, net

(29)

   

(18)

   

(75)

   

(47)

 

Other income, net

(5)

   

(9)

   

(25)

   

(17)

 

Adjusted EBITDA  

$

250

   

$

240

   

$

885

   

$

961

 

The following table shows the "Free cash flow" for the year ended March 31, 2014 and 2013 and the ending balances of cash and cash equivalents (in millions).

 

Year Ended March 31,

 

2014

 

2013

Net cash provided by operating activities

$

702

   

$

203

 

Net cash used in investing activities

(702)

   

(747)

 

Less: Proceeds from sales of assets

(16)

   

(21)

 

Free cash flow

$

(16)

   

$

(565)

 

Ending cash and cash equivalents

$

509

   

301

 

The following table shows available liquidity as of March 31, 2014 and 2013 (in millions).

 

March 31,

 

2014

 

2013

Cash and cash equivalents

$

509

   

$

301

 

Availability under committed credit facilities

511

   

459

 

Total liquidity

$

1,020

   

$

760

 

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.

 

Quarter Ended

 

Year Ended

 

March 31,

 

March 31,

 

2014

 

2013

 

2014

 

2013

               

Net income attributable to our common shareholder

$

54

   

$

59

   

$

104

   

$

202

 

Certain Items:

             

Gain on assets held for sale

   

   

(6)

   

(3)

 

Loss on extinguishment of debt

   

7

   

   

7

 

Restructuring and impairment, net

29

   

18

   

75

   

47

 

Tax effect on Certain Items

(8)

   

(5)

   

(18)

   

(11)

 

Net income attributable to our common shareholder, excluding Certain

  Items

$

75

   

$

79

   

$

155

   

$

242

 

Segment Information

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

 

Quarter Ended

 

Year Ended

 

March 31,

 

March 31,

 

2014

 

2013

 

2014

 

2013

Adjusted EBITDA

             

North America

68

   

61

   

229

   

324

 

Europe

73

   

71

   

265

   

261

 

Asia

33

   

47

   

160

   

174

 

South America

75

   

61

   

231

   

202

 

Eliminations

1

   

   

   

 

Total Adjusted EBITDA

$

250

   

$

240

   

$

885

   

$

961

 
               

Total Rolled Products Shipments

             

North America

247

   

239

   

958

   

990

 

Europe

242

   

218

   

911

   

861

 

Asia

157

   

143

   

640

   

562

 

South America

124

   

107

   

447

   

395

 

Eliminations

(17)

   

(9)

   

(61)

   

(22)

 

Total Rolled Product Shipments

753

   

698

   

2,895

   

2,786

 
                               

 

SOURCE Novelis Inc.

For further information: Media Contact: Charles Belbin, +1 404 760 4120, charles.belbin@novelis.com; or Investor Contact: Megan Cochard, +1 404 760 4170, megan.cochard@novelis.com