Company to host conference call on March 14,
2017, at 1:00 p.m. ET
Real Industry, Inc. (NASDAQ:RELY) (“Real Industry” or the
“Company”) today reported financial results for its fiscal
fourth quarter and year ended December 31, 2016. As a result of the
Real Alloy acquisition in February 2015, the Company’s results of
operations and any other performance metric for its two reportable
segments for fiscal 2016 compare only to approximately 10 months of
performance (February 27, 2015 through December 31, 2015) in fiscal
2015.
FY 2016 Summary:
- Revenues of $1.2 billion, compared to
$1.1 billion in fiscal 2015 (10-month period)
- Net loss of $102.6 million and net loss
available to common stockholders of $105.9 million, significantly
attributable to a one-time noncash $61.8 million goodwill
impairment charge in Real Alloy North America (“RANA”)
- Segment Adjusted EBITDA of $67.9
million, compared to $70.3 million in fiscal 2015 (10-month
period)
- Liquidity remains solid at $85.9
million at year-end
- Strategic bolt-on acquisition of Beck
Aluminum integrated and right-sized for profitability in 2017
- Invested in our corporate mergers and
acquisitions team, while accounting and finance functions have been
streamlined and integrated with our Real Alloy staff, resulting in
improved efficiency and a reduction in ongoing operating costs
Fourth Quarter 2016 Operating and Financial
Highlights:
- Revenues were $304.5 million, compared
to $300.5 million in the prior-year period and $314.9 million
sequentially from the fiscal 2016 third quarter
- Net loss of $80.6 million and net loss
available to common stockholders of $81.2 million were primarily
driven by the goodwill impairment charge
- Segment Adjusted EBITDA was $11.8
million, down from $17.1 million in the prior-year period and $16.9
million sequentially from the fiscal 2016 third quarter, driven by
weaker results in RANA
2017 Outlook:
- LME and aluminum alloy prices have
risen considerably in the early part of 2017 from fiscal 2016 third
quarter and fourth quarter prices, which directionally serve as a
positive indicator for our Real Alloy business
- Expect invoiced volumes in 2017 to be
stable to slightly positive year over year
Management Commentary
Mr. Kyle Ross, President, Interim Chief Executive Officer and
Chief Investment Officer of Real Industry, stated, “2016 was a year
in which Real Alloy navigated a challenging market environment by
leveraging its leading size, diversified operations, productivity
focus and liquidity position. We have responded proactively to
these difficult market conditions, and we feel well-positioned to
benefit from the expected market recovery in 2017. During the year,
our Real Alloy Europe ("RAEU") segment delivered consistent
performance, including the highest Segment Adjusted EBITDA in five
years. RAEU is already off to a strong start in 2017, and market
conditions are indicating another solid year ahead. Furthermore, we
believe our recent multi-million dollar investment in our Norwegian
operation has positioned that part of the business for a successful
long-term future. In RANA the metal price environment created
challenges that our productivity initiatives and flexible cost
structure were unable to fully offset. As previously reported,
primary aluminum prices caused some customers to substitute away
from secondary alloys, leading to reductions in our tolling
business in 2016, and the scrap spread environment continued to
tighten throughout the second half of the year, ultimately
resulting in the lowest Segment Adjusted EBITDA for RANA over a
six-month period since 2009. This lower performance resulted in the
goodwill impairment charge we incurred in the fourth quarter. LME
and aluminum alloy prices have risen considerably in the early part
of 2017, which directionally is very positive for both RANA and
RAEU. While this improved pricing environment is not expected to
significantly impact RANA’s financial performance in the first
quarter of 2017, due to the structure of our commercial
arrangements, we are optimistic that the higher metal prices and
normal seasonal increases in scrap flow will result in improved
scrap spreads and Segment Adjusted EBITDA in the second quarter and
beyond.”
FY 2016 Financial Results
Real Industry reported revenues of $1.2 billion in the year
ended December 31, 2016, driven by the Company’s Real Alloy
business, which invoiced 1.2 million metric tonnes in 2016. This
compares to $1.1 billion in revenues on over 1 million metric
tonnes invoiced in fiscal 2015 (approximately 10 months of
operation). For 2016, Real Industry reported a net loss of $102.6
million and net loss available to common stockholders of $105.9
million, or a loss of $3.68 per basic and diluted share, which
includes a one-time, noncash $61.8 million goodwill impairment
charge at RANA that represents $2.15 of the per share loss. Other
factors contributing to the increased net loss over the prior
period are described below.
In 2016, Real Alloy experienced a decline in financial
performance driven by lower volume and tighter scrap spreads in its
RANA segment, while its RAEU segment delivered consistent
performance from a Segment Adjusted EBITDA perspective as improved
mix and higher margins offset lower volumes on a comparable
12-month basis.
In RANA, the year-over-year volume decline was primarily due to
wrought alloy tolling customers electing to purchase prime aluminum
rather than using as much secondary alloys as in the prior period.
This reduction in tolling volume was partially offset by increased
buy/sell volumes due to commercial sales efforts. RAEU also
experienced a reduction in volume year-over-year due to similar
substitution of primary aluminum by certain customers and
operational downtime from customers taking longer holiday
shutdowns. However, both segments experienced very different scrap
spread environments in 2016, which supports the value of
maintaining diverse operations. RANA was negatively impacted by
pricing pressure on its sales prices from imported material due to
the strong dollar while demand for scrap remained high, compressing
margins, whereas RAEU benefitted from a favorable product mix and a
consistent flow of scrap at stable margins throughout the year.
In this difficult environment, RANA achieved significant
productivity gains in 2016, including reduced SG&A expenses and
a series of plant-level cost reductions. These positive actions
were unable to fully offset the lower volumes and tighter scrap
spreads resulting in RANA’s lowest Segment Adjusted EBITDA over a
six-month period (Q3 and Q4) since 2009. In contrast, RAEU
delivered its highest Segment Adjusted EBITDA in five years.
In the aggregate, Real Alloy generated Segment Adjusted EBITDA
of $67.9 million in 2016, compared to $70.3 million in fiscal 2015
(approximately 10 months of operation). RANA’s Segment Adjusted
EBITDA was $44.0 million in 2016, compared to $49.0 million in
fiscal 2015 (10 months), while Segment Adjusted EBITDA per tonne
decreased from $73 to $56. RAEU’s Segment Adjusted EBITDA was $23.9
million in 2016, compared to $21.3 million in the prior year (10
months) and its Segment Adjusted EBITDA per tonne was flat at
$64.
Largely as a result of RANA’s Segment Adjusted EBITDA in 2016
being more than 20% lower than the period prior to the Real Alloy
Acquisition, the annual goodwill impairment analysis resulted in a
$61.8 million noncash charge in the fourth quarter.
Fourth Quarter 2016 Consolidated Financial Results
Real Industry reported revenues of $304.5 million in the fourth
quarter of 2016, which was driven by Real Alloy’s aggregate 278,900
metric tonnes invoiced. This compares to $300.5 million in revenues
on an aggregate 291,300 metric tonnes invoiced in the fourth
quarter of 2015. Real Industry reported net loss of $80.6 million
and net loss available to common stockholders of $81.2 million in
the quarter ended December 31, 2016, or a loss of $2.84 per basic
and diluted share.
During the period, RANA reported revenues of $207.3 million on
194,300 tonnes invoiced. The mix between buy/sell and tolling
arrangements was 52% and 48%, respectively. Compared to the
prior-year period, total volume was lower by 1%, but revenues were
higher by 9% driven primarily by a 7% shift in mix from tolling to
buy/sell volume, which contributes substantially more revenue per
tonne than tolling arrangements as the metal value is included in
sales. The fourth quarter of 2016 included incremental buy/sell
volume from the Beck Aluminum acquisition. The reduction in tolling
volume described previously drove an overall reduction in volume
from the prior period. Compared to the prior sequential quarter,
revenues were 3% higher, similarly driven by increased buy/sell
volumes due to commercial sales efforts and the Beck Aluminum
acquisition, even though aggregate volume was slightly lower during
the period attributable to typical seasonality of the business,
particularly the holidays.
RAEU reported revenues of $97.1 million on 84,600 tonnes
invoiced in the fourth quarter. The mix between buy/sell and
tolling arrangements was 46% and 54%, respectively. Compared to the
prior-year period, total volume was lower by 11%, and revenues were
lower by 12%. The reduction in volume was largely due to customers
taking more holiday shutdown time in 2016, which also drove the
lower revenues. Compared to the prior sequential quarter, revenues
were lower by 15% driven largely by a 12% reduction in volume due
to normal seasonality of the business.
In the aggregate, Real Alloy generated Segment Adjusted EBITDA
of $11.8 million in the fourth quarter of 2016, compared to $17.1
million in the prior-year period. The majority of the decrease was
driven by RANA as its Segment Adjusted EBITDA was $7.5 million in
the fourth quarter, compared to $12.7 million in the prior-year
period. Segment Adjusted EBITDA per tonne decreased from $65 to
$39. Lower SG&A expenses and increased productivity results
year-over-year did not fully offset the drop in volume and
compressed margins. RAEU’s Segment Adjusted EBITDA was $4.3 million
in the fourth quarter, compared to $4.4 million in the prior-year
period as Segment Adjusted EBITDA per tonne increased from $47 to
$51.
Real Alloy reduced its SG&A expenses by $1.0 million in the
fourth quarter compared to the prior-year period. Capital
expenditures in the fourth quarter were higher in both segments due
to the investment in Norway mentioned above and incremental plant
improvements in North America. For the year, total capital
expenditures were in line with prior guidance.
Outside of the Company’s segments, corporate operating costs,
which primarily represent SG&A expenses, were $3.1 million in
the fourth quarter of 2016 and $3.4 million in the prior-year
period. In addition, Real Industry accrued $0.4 million in
severance and restructuring costs associated with its decision to
exit Cosmedicine and transition a number of corporate functions
from Sherman Oaks to Real Alloy’s headquarters in Ohio.
Management Outlook
Mr. Ross continued, “Although 2016 results at RANA were below
management’s plans, we continue to see strong customer activity due
to continued growth in the utilization of aluminum across our
end-markets and we anticipate business volumes in 2017 will be
stable to slightly positive year-over-year given the impact of
ongoing commercial efforts and the contributions from the Beck
Aluminum acquisition. We remain focused on maintaining lean
operations and striving for continuous improvement as we stay in
close contact with our customers and keep an eye on these market
trends. In 2017, we will continue to devote resources to
opportunities that we anticipate will increase the value of our
investment in Real Alloy through productivity efforts, organic
growth and prudent capital allocation including further potential
bolt-on activity. But Real Alloy is only a piece of Real Industry’s
future. Our strong M&A team at corporate is focused on
executing a more targeted M&A strategy to create a more
diversified business generating sustainable profits. As a business
buyer, our platform is unique, and we expect to use that to our
advantage. Through a disciplined approach to structure and value,
our acquisition strategy should begin to unlock the value of our
$916 million U.S. federal NOL to the benefit of our
stockholders.”
Balance Sheet and Liquidity
As of December 31, 2016, Real Industry’s cash and cash
equivalents were $27.2 million, total debt was $356.5 million, and
stockholders’ equity was $34.5 million. The Company’s total
liquidity was $85.9 million as of December 31, 2016, of which $76.0
million relates to Real Alloy.
Conference Call and Webcast Information
The Company will host a conference call at 1:00 p.m. ET on
Tuesday, March 14, 2017, during which management will discuss the
results of operations for the fourth quarter and year ended
December 31, 2016.
The dial-in numbers are:
(877) 407-9163 (Toll-free U.S. & Canada)
(412) 902-0043 (International)
Participants may also access the live call via webcast at
http://realindustryinc.equisolvewebcast.com/q4-2016. The webcast
will be archived and accessible for approximately 30 days. A replay
will be available shortly after the call in the investor relations
section of the Company’s website, www.realindustryinc.com, and will
remain available for 90 days.
About Real Industry, Inc.
Real Industry is a North America-based holding company seeking
to take significant ownership stakes in well-managed and
consistently profitable businesses concentrated primarily in the
U.S. industrial and commercial marketplace. Real Industry has
significant capital resources, and U.S. federal net operating loss
tax carryforwards of $916 million. For more information about Real
Industry, visit its corporate website at
www.realindustryinc.com.
Cautionary Statement Regarding Forward-Looking
Statements
This release contains forward-looking statements, which are
based on our current expectations, estimates, and projections about
the Company’s and its subsidiaries’ businesses and prospects, as
well as management’s beliefs, and certain assumptions made by
management. Words such as “anticipates,” “expects,” “intends,”
“plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will”
and variations of these words are intended to identify
forward-looking statements. Such statements speak only as of the
date hereof and are subject to change. The Company undertakes no
obligation to revise or update publicly any forward-looking
statements for any reason. These statements include, but are not
limited to, statements about: our financial results, including for
the fiscal year and fourth quarter of 2016, as well as our
expectations for future financial trends and performance of our
business and our strategy in future periods including during fiscal
2017; our ability to take advantage of opportunities to acquire
assets with tremendous upside; the expected benefits to the Company
of the integration of Beck Aluminum Alloys into Real Alloy; future
opportunistic investments; our evaluation of other potential
M&A opportunities; our long-term outlook; our preparation for
future market conditions; and any statements or assumptions
underlying any of the foregoing. Such statements are not guarantees
of future performance and are subject to certain risks,
uncertainties, and assumptions that are difficult to predict.
Accordingly, actual results could differ materially and adversely
from those expressed in any forward-looking statements as a result
of various factors. Important factors that may cause such a
difference include, but are not limited to, changes in domestic and
international demand for recycled aluminum; the cyclical nature and
general health of the aluminum industry and related industries;
commodity and scrap price fluctuations and our ability to enter
into effective commodity derivatives or arrangements to effectively
manage our exposure to such commodity price fluctuations; inventory
risks, commodity price risks, and energy risks associated with Real
Alloy’s buy/sell business model; our ability to service, and the
high leverage associated with, our indebtedness, and compliance
with the terms of the indebtedness, including the restrictive
covenants that constrain the operation of our business and the
businesses of our subsidiaries; our ability to successfully
identify, acquire and integrate additional companies and businesses
that perform and meet expectations after completion of such
acquisitions; our ability to achieve future profitability; our
ability to control operating costs and other expenses; that general
economic conditions may be worse than expected; that competition
may increase significantly; changes in laws or government
regulations or policies affecting our current business operations
and/or our legacy businesses, as well as those risks and
uncertainties disclosed under the sections entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Real Industry, Inc.’s Form 10-K filed
with the Securities and Exchange Commission (“SEC”) on March 13,
2017, and similar disclosures in subsequent reports filed with the
SEC, which are available on our website at www.realindustryinc.com
and on the SEC website at https://www.sec.gov.
Real Industry, Inc. Audited
Consolidated Balance Sheets
December 31, (In
millions) 2016 2015
ASSETS
Current assets: Cash and cash equivalents $ 27.2 $ 35.7 Trade
accounts receivable, net 88.4 77.2 Financing receivable 28.4 32.7
Inventories 118.2 101.2 Prepaid expenses, supplies and other
current assets 24.6 24.7 Current assets of discontinued operations
— 0.3
Total current assets
286.8 271.8 Property, plant and equipment, net 289.2 301.5 Equity
method investment 5.0 — Identifiable intangible assets, net 12.5
15.1 Goodwill 42.2 104.3 Other noncurrent assets 9.8
8.2 TOTAL ASSETS $ 645.5 $ 700.9
LIABILITIES,
REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities: Trade payables 115.8 100.9 Accrued liabilities
46.4 51.8 Long-term debt due within one year 2.3 2.3 Current
liabilities of discontinued operations — 0.1
Total current liabilities 164.5 155.1 Accrued pension
benefits 42.0 38.0 Environmental liabilities 11.6 11.7 Long-term
debt, net 354.2 312.1 Common stock warrant liability 4.4 6.9
Deferred income taxes 2.5 6.7 Other noncurrent liabilities 6.9 5.4
Noncurrent liabilities of discontinued operations —
0.7 TOTAL LIABILITIES 586.1
536.6 Redeemable Preferred Stock 24.9
21.9 Stockholders’ equity: Preferred stock — — Additional
paid-in capital 546.7 546.0 Accumulated deficit
(506.2
)
(403.3 ) Treasury stock — (0.1 ) Accumulated other comprehensive
loss (7.1 ) (1.0 ) Total stockholders’ equity—Real
Industry, Inc. 33.4 141.6 Noncontrolling interest 1.1
0.8 TOTAL STOCKHOLDERS’ EQUITY 34.5
142.4 TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY
$ 645.5 $ 700.9
Real Industry, Inc. Consolidated Statements of
Operations
Three Months EndedDecember
31,
Year EndedDecember 31,
(In millions, except per share amounts)
2016(Unaudited)
2015(Unaudited)
2016(Audited)
2015(Audited)
Revenues $ 304.5 $ 300.5 $ 1,249.7 $ 1,145.6 Cost of sales
293.3 277.1 1,183.0
1,070.7 Gross profit 11.2 23.4 66.7 74.9 Selling, general
and administrative expenses 14.9 16.2 61.0 56.0 Losses (gains) on
derivative financial instruments, net (0.3 ) 1.2 0.2 4.2
Amortization of identifiable intangible assets 0.6 1.4 2.4 2.0
Goodwill impairment 61.8 — 61.8 — Other operating expense, net
1.4 1.8 6.0 2.5
Operating profit (loss) (67.2 ) 2.8
(64.7 ) 10.2 Nonoperating expense (income):
Interest expense (income), net 9.8 8.3 37.3 34.9 Change in fair
value of common stock warrant liability 0.2 (0.7 ) (2.4 ) 1.5
Acquisition-related costs and expenses 1.0 — 1.0 14.8 Loss from
equity method investment 1.1 — 1.1 — Foreign exchange losses on
intercompany loans 3.4 1.3 2.4 1.3 Other, net (0.6 )
(1.2 ) (0.3 ) (1.5 ) Total nonoperating expense, net
14.9 7.7 39.1 51.0
Loss from continuing operations before income taxes (82.1 )
(4.9 ) (103.8 ) (40.8 ) Income tax benefit (1.0 )
(2.4 ) (0.6 ) (9.1 ) Loss from continuing operations
(81.1 ) (2.5 ) (103.2 ) (31.7 ) Earnings (loss) from discontinued
operations,
net of income taxes
0.5 (1.6 ) 0.6 24.9
Net loss (80.6 ) (4.1 ) (102.6 ) (6.8 ) Earnings (loss) from
continuing operations
attributable to noncontrolling
interest
(0.2 ) (0.2 ) 0.3 0.1 Net
loss attributable to Real Industry, Inc. $ (80.4 ) $ (3.9 ) $
(102.9 ) $ (6.9 ) LOSS PER SHARE Net loss attributable to Real
Industry, Inc. $ (80.4 ) $ (3.9 ) $ (102.9 ) $ (6.9 ) Dividends on
Redeemable Preferred Stock, in-kind (0.6 ) (0.5 ) (2.0 ) (1.5 )
Accretion of fair value adjustment to
Redeemable Preferred Stock
(0.2 ) (0.2 ) (1.0 ) (0.8 ) Net loss
available to common stockholders $ (81.2 ) $ (4.6 ) $ (105.9 ) $
(9.2 ) Basic and diluted loss per share: Continuing operations $
(2.84 ) $ (0.16 ) $ (3.68 ) $ (0.35 ) Discontinued operations
— — — —
Basic and diluted loss per share $ (2.84 ) $ (0.16 ) $ (3.68 ) $
(0.35 )
Real Industry, Inc. Unaudited Segment Information
Any differences between combined segment
information and consolidated information are attributable to
Corporate and Other.
Three Months Ended December 31, (Dollars in
millions, except per tonne information, 2016 2015
tonnes in thousands) RANA RAEU RANA
RAEU Metric tonnes invoiced:
Tolling arrangements
94.0 45.5 109.5 52.1 Buy/sell arrangements 100.3 39.1
87.2 42.5 Total metric tonnes invoiced 194.3
84.6 196.7 94.6 Segment revenues $ 207.3 $
97.1 $ 189.7 $ 110.9 Segment cost of sales 201.4 91.8
176.0 99.0 Segment gross profit $ 5.9 $ 5.3 $ 13.7 $
11.9 Segment selling, general and administrative expenses $
7.0 $ 4.8 $ 8.4 $ 4.4 Segment depreciation and amortization $ 8.6 $
3.4 $ 9.1 $ (0.8 ) Segment capital expenditures $ 6.3 $ 5.9 $ 3.5 $
3.9 Segment Adjusted EBITDA $ 7.5 $ 4.3 $ 12.7 $ 4.4
Segment Adjusted EBITDA per metric tonne
invoiced
$ 39 $ 51 $ 65 $ 47
Year Ended December
31, (Dollars in millions, except per tonne information,
2016 2015 tonnes in thousands) RANA
RAEU RANA RAEU Metric tonnes invoiced: Tolling
arrangements 392.7 199.0 375.4 176.1 Buy/sell arrangements
392.8 171.9 299.9 155.6 Total metric tonnes
invoiced 785.5 370.9 675.3 331.7
Segment revenues $ 821.0 $ 428.6 $ 711.4 $ 434.2 Segment cost of
sales 777.0 405.8 663.6 407.1 Segment
gross profit $ 44.0 $ 22.8 $ 47.8 $ 27.1 Segment selling,
general and administrative expenses $ 28.8 $ 16.7 $ 27.3 $ 14.8
Segment depreciation and amortization $ 32.2 $ 16.3 $ 26.1 $ 6.4
Segment capital expenditures $ 17.8 $ 13.0 $ 19.4 $ 6.6 Segment
Adjusted EBITDA $ 44.0 $ 23.9 $ 49.0 $ 21.3
Segment Adjusted EBITDA per metric tonne
invoiced
$ 56 $ 64 $ 73 $ 64
NON-GAAP FINANCIAL MEASURES
A non-GAAP financial measure is a numerical measure of
historical or future financial performance, financial position or
cash flows that excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the most
directly comparable measure calculated and presented in accordance
with generally accepted accounting principles (“GAAP”) in the
balance sheets, statements of operations, or statements of cash
flows; or includes amounts, or is subject to adjustments that have
the effect of including amounts, that are excluded from the most
directly comparable measures so calculated and presented. We report
our financial results in accordance with GAAP; however, our
management believes that certain non-GAAP performance measures,
which we use in managing our businesses, may provide investors with
additional meaningful comparisons between current results and
results in prior periods. Segment Adjusted EBITDA (defined below)
is an example of a non-GAAP financial measure that we believe
provides investors and other users of our financial information
with useful information.
Our chief operating decision maker and management use several
measures of performance for our reportable segments, including
earnings before interest, taxes, depreciation and amortization and
excludes certain other items (“Segment Adjusted EBITDA”). We use
Segment Adjusted EBITDA as our primary financial performance metric
and believe this measure provides additional information commonly
used by holders of our common stock, as well as the holders of the
Senior Secured Notes and parties to the Asset-Based Facility with
respect to the ongoing performance of our underlying business
activities.
Our Segment Adjusted EBITDA calculations represent segment
earnings (loss) before interest, taxes, depreciation and
amortization, unrealized gains and losses on derivative financial
instruments, charges and expenses related to acquisitions, and
certain other gains and losses. Segment Adjusted EBITDA as we use
it may not be comparable to similarly titled measures used by other
companies. We calculate Segment Adjusted EBITDA by eliminating the
impact of a number of items we do not consider indicative of our
ongoing operating performance and certain other items. Readers are
encouraged to evaluate each adjustment shown in the reconciliation
and the reasons we consider it appropriate for supplemental
analysis, however, Segment Adjusted EBITDA is not a financial
measurement calculated and presented in accordance with GAAP. When
analyzing our operating performance, we encourage investors to use
Segment Adjusted EBITDA in addition to, and not as an alternative
for, net earnings (loss) derived in accordance with GAAP. Segment
Adjusted EBITDA has limitations as an analytical tool, and it
should not be considered in isolation, or as a substitute for, or
superior to, our measures of financial performance prepared in
accordance with GAAP.
These limitations include, but are not limited to:
- Does not reflect our cash expenditures
or future requirements for capital expenditures or contractual
commitments;
- Does not reflect changes in, or cash
requirements for, working capital needs;
- Does not reflect interest expense or
cash requirements necessary to service interest and/or principal
payments under the Senior Secured Notes or Asset-Based
Facility;
- Does not reflect certain tax payments
that may represent a reduction in cash available to us;
- Does not reflect the operating results
of Corporate and Other; and
- Although depreciation and amortization
are noncash charges, the assets being depreciated and amortized may
have to be replaced in the future, and Segment Adjusted EBITDA does
not reflect cash requirements for such replacements.
Other companies, including companies in our industry, may
calculate Segment Adjusted EBITDA differently and the degree of the
usefulness of Segment Adjusted EBITDA as a comparative measure
correspondingly decreases as the number of differences in its
computation increases.
In addition, in evaluating Segment Adjusted EBITDA it should be
noted that in the future we may incur expenses similar to the
adjustments in the below presentation. Our presentation of Segment
Adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by unusual or nonrecurring
items.
The table below provides a reconciliation of Segment Adjusted
EBITDA to the most directly comparable financial measure presented
in accordance with GAAP, net loss, for the three months and years
ended December 31, 2016 and 2015:
Real Industry, Inc.
Unaudited Reconciliation of Segment
Adjusted EBITDA to Net Loss
Three Months EndedDecember
31,
Year EndedDecember 31,
(In millions) 2016 2015 2016
2015 Segment Adjusted EBITDA $ 11.8 $ 17.1 $ 67.9 $ 70.3
Unrealized gains (losses) on derivative financial instruments 0.1 —
1.0 (0.8 ) Segment depreciation and amortization (11.9 ) (8.3 )
(48.5 ) (32.5 ) Amortization of inventories and supplies purchase
accounting adjustments
(0.2 ) (0.7 ) (1.1 ) (9.2 ) Corporate and Other selling, general
and administrative expenses (3.1 ) (3.4 ) (15.5 ) (13.9 ) Goodwill
impairment (61.8 ) — (61.8 ) — Other, net (2.1 ) (1.5
) (6.7 ) (3.7 ) Operating profit (loss) (67.2 ) 3.2
(64.7 ) 10.2 Interest expense, net (9.8 ) (8.3 ) (37.3 ) (34.9 )
Change in fair value of common stock warrant liability (0.2 ) 0.7
2.4 (1.5 ) Acquisition-related costs and expenses (1.0 ) — (1.0 )
(14.8 ) Foreign exchange losses on intercompany loans (3.4 ) (1.3 )
(2.4 ) (1.3 ) Loss from equity method investment (1.1 ) — (1.1 ) —
Other nonoperating income, net
0.6
0.8
0.3 1.5 Income tax benefit 1.0 2.4 0.6 9.1
Earnings (loss) from discontinued
operations, net of income taxes
0.5 (1.6 ) 0.6 24.9
Net loss $ (80.6 ) $
(4.1
) $ (102.6 ) $ (6.8 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170313006446/en/
Real Industry, Inc.Jeff Crusinberry, 805-435-1255Senior Vice
President and Treasurerinvestor.relations@realindustryinc.com
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