• News Releases
Novelis Reports Strong Results For Third Quarter Of Fiscal Year 2015
New Business Model Drives Significant Improvement in Year-Over-Year Results
- Net Income Grows to $46 Million
- Sales Increase 18% to $2.8 Billion
- Adjusted EBITDA Increases 16% to $236 Million
- Shipments Increase 5% to 757 Kilotonnes, a Record Third Quarter
- North American Auto Facilities Accelerating Production to Meet Customer Demand

ATLANTA, Feb. 9, 2015 /PRNewswire/ -- Novelis, the world leader in aluminum rolling and recycling, today reported net income grew to $46 million for the third quarter of fiscal year 2015, up significantly from the $13 million reported in the third quarter of fiscal year 2014. Excluding certain tax-effected items in both periods, net income is $60 million for the third quarter of fiscal 2015, more than double the $23 million reported in the prior year period.

Adjusted EBITDA for the third quarter of fiscal 2015 was $236 million, a 16% increase compared to the $203 million reported for the prior year. The increase was primarily driven by higher shipments as a result of strategic capacity expansions in Asia and South America, favorable product mix, and cost benefits from using recycled metal inputs.

"Our strong third quarter results are a clear demonstration that our new business model is delivering benefits," said Phil Martens, President and Chief Executive Officer for Novelis.  "By shifting our portfolio to more premium products in high-growth markets and advancing our recycling operations, we set record can and automotive shipments, generated significantly higher earnings, and achieved our mid-decade goal of having 50% recycled content in our products."

Third quarter fiscal 2015 revenues climbed 18% to $2.8 billion compared to $2.4 billion for the third quarter of fiscal 2014.  Revenue growth was driven by a 5% increase in shipments of rolled aluminum products to 757 kilotonnes for the third quarter of fiscal 2015 compared to 721 kilotonnes in the prior year period.  All four operating regions reported an increase in shipments year-over-year.  Higher metal prices also contributed to the increase in revenue.

"Our earnings will further improve in the fourth quarter as we near the full production run-rate of automotive sheet for Ford, ship at record levels, and further ramp up new recycling facilities in Germany and Brazil," said Martens.  "However, this growth will be tempered by negative currency headwinds in Europe, challenging pricing dynamics in Asia, and reduced production related to the Logan hot mill outage in North America last month.  In spite of these market challenges, we still expect EBITDA for the second half of fiscal 2015 will be higher than in the first half of the year."

(in $M)

     

Q3FY15

 

Q3FY14

 
       

12/31/2014

 

12/31/2013

 

Free Cash Flow

 

$

(12)

   

$

(61)

   

Capital Expenditures

 

$

104

   

$

157

   

Free Cash Flow before CapEx

$

92

   

$

96

   

 

The company reported negative free cash flow of $(12) million in the third quarter, a $49 million increase over the prior year. "Free cash flow increased in the third quarter despite rising aluminum prices due to stronger EBITDA, lower capital spending, and working capital initiatives," said Steve Fisher, Chief Financial Officer for Novelis.  "Higher EBITDA and the benefits from structurally reducing working capital will allow us to generate positive free cash flow by fiscal year end."

At the end of the third quarter, the company reported liquidity of $839 million.

Third Quarter of Fiscal Year 2015 Earnings Conference Call
Novelis will discuss its third quarter of fiscal year 2015 results via a live webcast and conference call for investors at 8:00 a.m. ET on Monday, February 9, 2015.  To view slides and listen only, visit the web at https://cc.callinfo.com/r/zg71zunzwkyf&eom. To join by telephone, dial toll-free in North America at 800 732 6870, India toll-free at 0008008521504 or the international toll line at +1 212 231 2905.  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 11 countries, has approximately 10,900 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 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 reduce working capital and generate positive free cash flow by the end of the fiscal year.  Novelis cautions that, by their nature, forward-looking statements involve risk and uncertainty and 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; 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 credit facilities 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.

 

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in millions)

 
 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

2014

   

2013

   

2014

   

2013

 
       

Net sales

$

2,847

   

$

2,403

   

$

8,358

   

$

7,218

 

Cost of goods sold (exclusive of depreciation and amortization)

2,498

   

2,093

   

7,310

   

6,265

 

Selling, general and administrative expenses

108

   

115

   

319

   

344

 

Depreciation and amortization

87

   

91

   

266

   

247

 

Research and development expenses

14

   

12

   

38

   

34

 

Interest expense and amortization of debt issuance costs

85

   

76

   

248

   

227

 

Gain on assets held for sale

(12)

   

(6)

   

(23)

   

(6)

 

Restructuring and impairment, net

25

   

19

   

38

   

46

 

Equity in net loss of non-consolidated affiliates

2

   

5

   

4

   

12

 

Other (income) expense, net

(9)

   

(12)

   

14

   

(27)

 
 

2,798

   

2,393

   

8,214

   

7,142

 

Income before income taxes

49

   

10

   

144

   

76

 

Income tax provision (benefit)

3

   

(3)

   

25

   

26

 

Net income

46

   

13

   

119

   

50

 

Net income attributable to noncontrolling interests

   

   

   

 

Net income attributable to our common shareholder

$

46

   

$

13

   

$

119

   

$

50

 

 

 

 

Novelis Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in millions, except number of shares)

 
 

December 31, 2014

 

March 31, 2014

ASSETS

 

Current assets

         

Cash and cash equivalents

$

387

   

$

509

 

Accounts receivable, net

         

— third parties (net of uncollectible accounts of $4 as of December 31, 2014 and March 31, 2014)

1,473

   

1,382

 

— related parties

63

   

54

 

Inventories

1,534

   

1,173

 

Prepaid expenses and other current assets

153

   

101

 

Fair value of derivative instruments

117

   

51

 

Deferred income tax assets

64

   

101

 

Assets held for sale

22

   

102

 

Total current assets

3,813

   

3,473

 

Property, plant and equipment, net

3,503

   

3,513

 

Goodwill

607

   

611

 

Intangible assets, net

599

   

640

 

Investment in and advances to non–consolidated affiliates

534

   

612

 

Deferred income tax assets

67

   

80

 

Other long–term assets

         

— third parties

150

   

173

 

— related parties

11

   

12

 

Total assets

$

9,284

   

$

9,114

 

LIABILITIES AND SHAREHOLDER'S EQUITY

         

Current liabilities

         

Current portion of long–term debt

$

108

   

$

92

 

Short–term borrowings

1,031

   

723

 

Accounts payable

         

— third parties

1,746

   

1,418

 

— related parties

55

   

53

 

Fair value of derivative instruments

99

   

60

 

Accrued expenses and other current liabilities

         

— third parties

512

   

547

 

— related party

   

250

 

Deferred income tax liabilities

42

   

16

 

Liabilities held for sale

   

11

 

Total current liabilities

3,593

   

3,170

 

Long–term debt, net of current portion

4,328

   

4,359

 

Deferred income tax liabilities

305

   

425

 

Accrued postretirement benefits

595

   

621

 

Other long–term liabilities

250

   

271

 

Total liabilities

9,071

   

8,846

 

Commitments and contingencies

         

Shareholder's equity

         

Common stock, no par value; unlimited number of shares authorized; 1,000 shares issued and outstanding as of December 31, 2014 and March 31, 2014

   

 

Additional paid–in capital

1,404

   

1,404

 

Accumulated deficit

(954)

   

(1,073)

 

Accumulated other comprehensive loss

(263)

   

(91)

 

Total equity of our common shareholder

187

   

240

 

Noncontrolling interests

26

   

28

 

Total equity

213

   

268

 

Total liabilities and equity

$

9,284

   

$

9,114

 

 

 

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in millions)

 
 

Nine Months Ended December 31,

 

2014

   

2013

 

OPERATING ACTIVITIES

         

Net income

$

119

   

$

50

 

Adjustments to determine net cash provided by operating activities:

         

Depreciation and amortization

266

   

247

 

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

6

   

9

 

Gain on assets held for sale, net

(23)

   

(6)

 

Loss on sale of assets

4

   

4

 

Impairment charges

7

   

19

 

Deferred income taxes

(46)

   

(45)

 

Amortization of fair value adjustments

9

   

9

 

Equity in net loss of non–consolidated affiliates

4

   

12

 

Gain on foreign exchange remeasurement of debt

(4)

   

(3)

 

Amortization of debt issuance costs and carrying value adjustment

19

   

19

 

Other, net

   

(6)

 

Changes in assets and liabilities including assets and liabilities held for sale (net of effects from divestitures):

         

Accounts receivable

(176)

   

151

 

Inventories

(437)

   

(30)

 

Accounts payable

427

   

(22)

 

Other current assets

(62)

   

35

 

Other current liabilities

(6)

   

(89)

 

Other noncurrent assets

3

   

(1)

 

Other noncurrent liabilities

(23)

   

3

 

Net cash provided by operating activities

87

   

356

 

INVESTING ACTIVITIES

         

Capital expenditures

(368)

   

(522)

 

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

100

   

7

 

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

   

8

 

Outflows from investments in and advances to non–consolidated affiliates, net

(17)

   

(12)

 

Proceeds from settlement of other undesignated derivative instruments, net

1

   

6

 

Net cash used in investing activities

(284)

   

(513)

 

FINANCING ACTIVITIES

         

Proceeds from issuance of long-term and short-term borrowings

303

   

138

 

Principal payments of long-term and short-term borrowings

(209)

   

(113)

 

Revolving credit facilities and other, net

238

   

359

 

Return of capital to our common shareholder

(250)

   

 

Dividends, noncontrolling interest

(1)

   

 

Debt issuance costs

(3)

   

(8)

 

Net cash provided by financing activities

78

   

376

 

Net (decrease) increase in cash and cash equivalents

(119)

   

219

 

Effect of exchange rate changes on cash

(3)

   

7

 

Cash and cash equivalents — beginning of period

509

   

301

 

Cash and cash equivalents — end of period

$

387

   

$

527

 

 

 

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.

 

(in millions)

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

2014

   

2013

   

2014

   

2013

 

Net income attributable to our common shareholder

$

46

   

$

13

   

$

119

   

$

50

 

Income tax (provision) benefit

(3)

   

3

   

(25)

   

(26)

 

Interest, net

(84)

   

(74)

   

(244)

   

(223)

 

Depreciation and amortization

(87)

   

(91)

   

(266)

   

(247)

 

EBITDA

220

   

175

   

654

   

546

 
                       

Unrealized gains (losses) on change in fair value of derivative instruments, net

12

   

3

   

12

   

(5)

 

Realized (losses) gains on derivative instruments not included in segment income

(3)

   

2

   

(4)

   

6

 

Adjustment to eliminate proportional consolidation

(10)

   

(11)

   

(27)

   

(30)

 

Loss on sale of fixed assets

(1)

   

(2)

   

(4)

   

(4)

 

Gain on assets held for sale, net

12

   

6

   

23

   

6

 

Restructuring and impairment, net

(25)

   

(19)

   

(38)

   

(46)

 

Other expense, net

(1)

   

(7)

   

(9)

   

(16)

 

Adjusted EBITDA

$

236

   

$

203

   

$

701

   

$

635

 

 

Free Cash Flow and Cash and Cash Equivalents

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

 

 

Nine Months Ended

 December 31,

 

2014

   

2013

 

Net cash provided by operating activities

$

87

   

$

356

 

Net cash used in investing activities

(284)

   

(513)

 

Less: Proceeds from sales of assets

(100)

   

(15)

 

Free cash flow

$

(297)

   

$

(172)

 

Ending cash and cash equivalents

$

387

   

527

 

 

Total Liquidity

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

 

 

December 31,

 

March 31,

 

2014

   

2014

 

Cash and cash equivalents

$

387

   

$

509

 

Availability under committed credit facilities

452

   

511

 

Total liquidity

$

839

   

$

1,020

 

 

 

 

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.

 

 

Three Months Ended December 31,

 

Nine Months Ended

December 31,

 

2014

   

2013

   

2014

   

2013

 

Net income attributable to our common shareholder

$

46

   

$

13

   

$

119

   

$

50

 

Certain Items:

                     

Gain on assets held for sale, net

(12)

   

(6)

   

(23)

   

(6)

 

Restructuring and impairment, net

25

   

19

   

38

   

46

 

Tax effect on Certain Items

1

   

(3)

   

(2)

   

(9)

 

Net income attributable to our common shareholder, excluding Certain Items

$

60

   

$

23

   

$

132

   

$

81

 

 

Segment Information

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

 

Selected Operating Results Three Months

Ended December 31, 2014

North

America

 

Europe

 

Asia

 

South

America

 

Other and

Eliminations

 

Total

Adjusted EBITDA

$

71

   

$

57

   

$

33

   

$

75

   

$

   

$

236

 

Shipments

                                 

Rolled products - third party

255

   

205

   

177

   

120

   

   

757

 

Rolled products - intersegment

   

13

   

21

   

9

   

(43)

   

 

Total rolled products

255

   

218

   

198

   

129

   

(43)

   

757

 

 

Selected Operating Results Three Months

Ended December 31, 2013

North

America

 

Europe

 

Asia

 

South

America

 

Other and

Eliminations

 

Total

Adjusted EBITDA

$

45

   

$

61

   

$

40

   

$

58

   

$

(1)

   

$

203

 

Shipments

                                 

Rolled products - third party

235

   

204

   

164

   

118

   

   

721

 

Rolled products - intersegment

   

8

   

1

   

5

   

(14)

   

 

Total rolled products

235

   

212

   

165

   

123

   

(14)

   

721

 

 

Selected Operating Results Nine Months

Ended December 31, 2014

North

America

 

Europe

 

Asia

 

South

America

 

Other and

Eliminations

 

Total

Adjusted EBITDA

$

211

   

$

211

   

$

106

   

$

171

   

$

2

   

$

701

 

Shipments

                                 

Rolled products - third party

762

   

665

   

528

   

337

   

   

2,292

 

Rolled products - intersegment

2

   

33

   

44

   

22

   

(101)

   

 

Total rolled products

764

   

698

   

572

   

359

   

(101)

   

2,292

 

 

Selected Operating Results Nine Months

Ended December 31, 2013

North

America

 

Europe

 

Asia

 

South

America

 

Other and

Eliminations

 

Total

Adjusted EBITDA

$

161

   

$

192

   

$

127

   

$

156

   

$

(1)

   

$

635

 

Shipments

                                 

Rolled products - third party

709

   

645

   

476

   

312

   

   

2,142

 

Rolled products - intersegment

2

   

24

   

7

   

11

   

(44)

   

 

Total rolled products

711

   

669

   

483

   

323

   

(44)

   

2,142

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/novelis-reports-strong-results-for-third-quarter-of-fiscal-year-2015-300032714.html

SOURCE Novelis Inc.

For further information: Media Contact: Neil Hirsch, +1 404 760 4465, neil.hirsch@novelis.com; Investor Contact: Megan Cochard,+1 404 760 4170, megan.cochard@novelis.com