ATLANTA, Feb. 12, 2013
/PRNewswire/ -- Novelis Inc., the world's leading producer of
aluminum rolled products, today reported net income attributable to
its common shareholder of $3 million
for the third quarter of fiscal 2013. Excluding tax-effected
restructuring in both periods, net income for the third quarter of
2013 was $8 million, compared to a
net loss of $11 million for the same
period in 2012.
Adjusted EBITDA was $185 million
for the third quarter of 2013, compared to $213 million reported for the same period in
2012. This decline was primarily due to the implementation of
an Enterprise Resource Planning (ERP) system which resulted in lost
shipments, reduced productivity and stabilization costs, and
negatively impacted the third quarter of fiscal 2013 by
approximately $39 million. In
addition, the Company experienced unfavorable pricing dynamics in
several regions, higher metal input costs in North America, and incremental project
start-up costs associated with its global expansions.
Phil Martens, Novelis President
and Chief Executive Officer commented, "The third quarter was
challenging as we experienced more production disruptions than
expected related to our ERP implementation in North America.
These implementation issues are largely behind us and production
has returned to near normal levels."
"This is a heavy investment period for us that is necessary to
maintain and grow our leadership position in the industry and allow
us to capitalize on the significant growth we see ahead in our key
end-markets," said Martens. "While we were disappointed with
our results in the third quarter, we are pleased with the strong
execution of our strategy. In fact, Brazil is a good example of this, with record
shipments and the successful commissioning of our rolling expansion
in the region."
Shipments of aluminum rolled products totaled 647 kilotonnes for
the third quarter of fiscal 2013, flat compared to shipments of 648
kilotonnes for the same period last year.
Net sales for the third quarter of fiscal 2013 were $2.3 billion, a 6 percent decrease compared to
the $2.5 billion reported in the same
period a year ago, which included sales from the Company's three
foil plants in Europe that were
divested. In addition, sales were also impacted by lower
conversion premiums as well as lower average aluminum prices when
compared to last year.
(in
$M)
|
|
|
|
Q3FY13
|
|
|
Q2FY13
|
|
|
|
|
|
12/31/2012
|
|
|
9/30/2012
|
|
Cash and cash equivalents
|
|
$
|
340
|
|
|
$
|
227
|
|
|
Availability under the ABL facility
|
435
|
|
|
695
|
|
|
Total
Liquidity
|
|
$
|
775
|
|
|
$
|
922
|
|
|
(in
$M)
|
|
|
|
Q3FY13
|
|
Q3FY12
|
|
|
|
|
|
12/31/2012
|
|
12/31/2011
|
|
Free Cash Flow
|
|
$
|
(309)
|
|
|
$
|
63
|
|
|
CapEx
|
|
|
193
|
|
|
123
|
|
|
Free Cash Flow before CapEx
|
$
|
(116)
|
|
|
$
|
186
|
|
|
For the third quarter of fiscal 2013, Novelis reported liquidity
of $775 million. "Despite our
semi-annual bond interest payment and our substantial capital
expenditure program, we reported solid liquidity in the quarter,"
said Steve Fisher, SVP and Chief
Financial Officer of Novelis. Free cash flow was a negative
$309 million for the third quarter of
2013, primarily due to capital expenditures of $193 million, a $107
million bond interest payment and negative changes in
working capital.
Strategic Expansions & Footprint
Optimization
The Company continues to make progress
on its strategy. In October, it began the commissioning
process at its 265 kilotonne fully-integrated recycling facility in
Korea, Asia's largest beverage can
recycling center. In November, it broke ground on a 120
kilotonne automotive heat treatment line, the first of its kind in
China, and the world's largest 400
kilotonne aluminum recycling and casting center in Germany.
In December, it began the commissioning process at its Pinda mill
in Brazil, which will add an
incremental 220 kilotonnes of capacity once fully operational over
the next two to three years, bringing total rolling capacity in
South America to approximately 600
kilotonnes.
In addition, in line with the Company's strategy to divest or
close non-core or underperforming assets, in January, it announced
the closure of a pot line at its Ouro
Preto smelter in Brazil as
it is no longer competitive to operate.
Business Outlook
Going forward, the Company
sees solid demand across its regions and key end-market segments.
It expects operating performance to improve, with fourth quarter of
fiscal 2013 EBITDA above fourth quarter of fiscal 2012.
Quarterly Report on Form 10-Q
The results
described in this press release have been reported in detail on the
Company's Form 10-Q on file with the SEC, and investors are
directed to that document for a complete explanation of the
Company's financial position and results through December 31, 2012. The Novelis Form 10-Q
and other SEC filings are available for review on the Company's
website at www.novelis.com.
Third Quarter of Fiscal 2013 Earnings Conference
Call
Novelis will discuss its third quarter of fiscal
2013 results via a live webcast and conference call for investors
at 9:00 a.m. ET on Tuesday,
February 12, 2013. Participants may access the webcast
at https://cc.callinfo.com/r/1cp05dopcfmnp. To join by
telephone, dial toll-free in North
America at 800 381 7839, India toll-free at 0008001007108 or the
international toll line at +1 212 231 2901. Access
information may also be found at www.novelis.com/investors.
About Novelis
Novelis Inc. is the global leader
in aluminum rolled products and the world's largest recycler of
aluminum. For fiscal year 2012, the company operated in 11
countries, had more than 11,000 employees and reported revenue of
$11.1 billion. Novelis supplies
premium aluminum sheet and foil products to automotive,
transportation, packaging, construction, industrial, electronics
and printing markets throughout North
America, Europe,
Asia and South
America. Novelis is a subsidiary of Hindalco Industries
Limited (BSE: HINDALCO), one of Asia's largest integrated producers of
aluminum and a leading copper producer. Hindalco is a
flagship company of the Aditya Birla Group, a multinational
conglomerate based in Mumbai,
India. For more information, visit www.novelis.com and
follow us on 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 Condensed
Consolidated Statements of Operations, Condensed Consolidated
Balance Sheets, Condensed Consolidated Statements of Cash Flows,
Reconciliation to Net Income excluding Certain Items,
Reconciliation to Adjusted EBITDA and Free Cash Flow.
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 that fourth quarter fiscal 2013
EBITDA will exceed fourth quarter fiscal 2012 EBITDA. 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, 2012 and our Quarterly Report on Form
10-Q for the quarter ended December 31,
2012, are specifically incorporated by reference into this
news release.
Novelis Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In
millions)
|
Three Months Ended
|
|
Nine Months Ended
|
|
December 31,
|
|
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(unaudited)
|
|
(unaudited)
|
Net
sales
|
$
|
2,321
|
|
|
$
|
2,462
|
|
|
$
|
7,312
|
|
|
$
|
8,455
|
|
Cost of
goods sold (exclusive of depreciation and amortization)
|
2,036
|
|
|
2,224
|
|
|
6,315
|
|
|
7,481
|
|
Selling,
general and administrative expenses
|
101
|
|
|
95
|
|
|
305
|
|
|
281
|
|
Depreciation and amortization
|
76
|
|
|
79
|
|
|
218
|
|
|
249
|
|
Research
and development expenses
|
11
|
|
|
10
|
|
|
36
|
|
|
34
|
|
Interest
expense and amortization of debt issuance costs
|
76
|
|
|
74
|
|
|
223
|
|
|
228
|
|
Gain on
assets held for sale
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
Restructuring charges, net
|
5
|
|
|
1
|
|
|
26
|
|
|
31
|
|
Equity in
net loss of non-consolidated affiliates
|
10
|
|
|
4
|
|
|
15
|
|
|
9
|
|
Other
income, net
|
(8)
|
|
|
(4)
|
|
|
(36)
|
|
|
(96)
|
|
|
2,307
|
|
|
2,483
|
|
|
7,099
|
|
|
8,217
|
|
Income
(loss) before income taxes
|
14
|
|
|
(21)
|
|
|
213
|
|
|
238
|
|
Income tax provision (benefit)
|
11
|
|
|
(10)
|
|
|
69
|
|
|
42
|
|
Net income (loss)
|
3
|
|
|
(11)
|
|
|
144
|
|
|
196
|
|
Net income attributable to noncontrolling
interests
|
—
|
|
|
1
|
|
|
1
|
|
|
26
|
|
Net income (loss) attributable to our common
shareholder
|
$
|
3
|
|
|
$
|
(12)
|
|
|
$
|
143
|
|
|
$
|
170
|
|
Novelis Inc.
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (In millions)
|
December 31, 2012
|
|
March
31, 2012
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and
cash equivalents
|
$
|
340
|
|
|
$
|
317
|
|
Accounts
receivable, net
|
|
|
|
— third parties (net of allowances of $5 as of
December 31, 2012 and March 31, 2012)
|
1,271
|
|
|
1,331
|
|
— related parties
|
28
|
|
|
36
|
|
Inventories
|
1,222
|
|
|
1,024
|
|
Prepaid
expenses and other current assets
|
80
|
|
|
61
|
|
Fair value
of derivative instruments
|
59
|
|
|
99
|
|
Deferred
income tax assets
|
145
|
|
|
151
|
|
Assets
held for sale
|
10
|
|
|
81
|
|
Total
current assets
|
3,155
|
|
|
3,100
|
|
Property,
plant and equipment, net
|
2,989
|
|
|
2,689
|
|
Goodwill
|
611
|
|
|
611
|
|
Intangible
assets, net
|
668
|
|
|
678
|
|
Investment
in and advances to non–consolidated affiliates
|
659
|
|
|
683
|
|
Fair value
of derivative instruments, net of current portion
|
4
|
|
|
2
|
|
Deferred
income tax assets
|
91
|
|
|
74
|
|
Other
long–term assets
|
|
|
|
— third parties
|
176
|
|
|
168
|
|
— related parties
|
14
|
|
|
16
|
|
Total assets
|
$
|
8,367
|
|
|
$
|
8,021
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Current
portion of long–term debt
|
$
|
28
|
|
|
$
|
23
|
|
Short–term
borrowings
|
421
|
|
|
18
|
|
Accounts
payable
|
|
|
|
— third parties
|
1,096
|
|
|
1,245
|
|
— related parties
|
45
|
|
|
51
|
|
Fair value
of derivative instruments
|
84
|
|
|
95
|
|
Accrued
expenses and other current liabilities
|
447
|
|
|
476
|
|
Deferred
income tax liabilities
|
30
|
|
|
34
|
|
Liabilities held for sale
|
1
|
|
|
57
|
|
Total current liabilities
|
2,152
|
|
|
1,999
|
|
Long–term
debt, net of current portion
|
4,441
|
|
|
4,321
|
|
Deferred
income tax liabilities
|
546
|
|
|
581
|
|
Accrued
postretirement benefits
|
666
|
|
|
687
|
|
Other
long–term liabilities
|
274
|
|
|
310
|
|
Total liabilities
|
8,079
|
|
|
7,898
|
|
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, 2012 and
March 31, 2012
|
—
|
|
|
—
|
|
Additional
paid–in capital
|
1,654
|
|
|
1,659
|
|
Accumulated deficit
|
(1,236)
|
|
|
(1,379)
|
|
Accumulated other comprehensive loss
|
(160)
|
|
|
(191)
|
|
Total equity of our common
shareholder
|
258
|
|
|
89
|
|
Noncontrolling interests
|
30
|
|
|
34
|
|
Total equity
|
288
|
|
|
123
|
|
Total liabilities and equity
|
$
|
8,367
|
|
|
$
|
8,021
|
|
Novelis Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(In
millions)
|
Nine
Months Ended December 31,
|
|
2012
|
|
2011
|
OPERATING ACTIVITIES
|
|
|
|
Net
income
|
$
|
144
|
|
|
$
|
196
|
|
Adjustments to determine net cash provided by
operating activities:
|
|
|
|
Depreciation and amortization
|
218
|
|
|
249
|
|
(Gain) loss on unrealized derivatives and other
realized derivatives in investing activities, net
|
11
|
|
|
(67)
|
|
Gain on assets held for sale
|
(3)
|
|
|
—
|
|
Deferred income taxes
|
3
|
|
|
11
|
|
Write–off and amortization of fair value adjustments,
net
|
18
|
|
|
20
|
|
Equity in net loss of non–consolidated
affiliates
|
15
|
|
|
9
|
|
(Gain) loss on foreign exchange remeasurement of
debt
|
(5)
|
|
|
16
|
|
Loss on sale of assets
|
1
|
|
|
1
|
|
Non-cash impairment charges
|
3
|
|
|
14
|
|
Amortization of debt issuance costs
|
13
|
|
|
12
|
|
Other, net
|
(5)
|
|
|
(9)
|
|
Changes in assets and liabilities including assets
and liabilities held for sale (net of effects from acquisitions and
divestitures):
|
|
|
|
Accounts receivable
|
78
|
|
|
152
|
|
Inventories
|
(193)
|
|
|
193
|
|
Accounts payable
|
(139)
|
|
|
(426)
|
|
Other current assets
|
(23)
|
|
|
(16)
|
|
Other current liabilities
|
(83)
|
|
|
(123)
|
|
Other noncurrent assets
|
(18)
|
|
|
14
|
|
Other noncurrent liabilities
|
(13)
|
|
|
(41)
|
|
Net
cash provided by operating activities
|
22
|
|
|
205
|
|
INVESTING ACTIVITIES
|
|
|
|
Capital
expenditures
|
(538)
|
|
|
(297)
|
|
Proceeds
from sales of assets, third party
|
18
|
|
|
11
|
|
Proceeds
from sale of assets, related party
|
2
|
|
|
—
|
|
Proceeds
from investment in and advances to non–consolidated affiliates,
net
|
1
|
|
|
1
|
|
Proceeds
(outflow) from related party loans receivable, net
|
2
|
|
|
(5)
|
|
Proceeds
from settlement of other undesignated derivative instruments,
net
|
10
|
|
|
95
|
|
Net
cash used in investing activities
|
(505)
|
|
|
(195)
|
|
FINANCING ACTIVITIES
|
|
|
|
Proceeds
from issuance of debt
|
296
|
|
|
274
|
|
Principal
payments
|
(93)
|
|
|
(16)
|
|
Short–term
borrowings, net
|
304
|
|
|
211
|
|
Dividends,
noncontrolling interest
|
(2)
|
|
|
(1)
|
|
Acquisition of noncontrolling interest in Novelis
Korea Ltd
|
(9)
|
|
|
(343)
|
|
Debt
issuance costs
|
(3)
|
|
|
(2)
|
|
Net
cash provided by financing activities
|
493
|
|
|
123
|
|
Net
increase in cash and cash equivalents
|
10
|
|
|
133
|
|
Effect
of exchange rate changes on cash
|
13
|
|
|
(8)
|
|
Cash and
cash equivalents — beginning of period
|
317
|
|
|
311
|
|
Cash and
cash equivalents — end of period
|
$
|
340
|
|
|
$
|
436
|
|
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.
|
Three
Months Ended
|
|
Nine
Months Ended
|
(in
millions)
|
December 31,
|
|
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net
income attributable to our common shareholder
|
$
|
3
|
|
|
$
|
(12)
|
|
|
$
|
143
|
|
|
$
|
170
|
|
Noncontrolling interests
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(26)
|
|
Income tax
(provision) benefit
|
(11)
|
|
|
10
|
|
|
(69)
|
|
|
(42)
|
|
Interest,
net
|
(74)
|
|
|
(71)
|
|
|
(219)
|
|
|
(217)
|
|
Depreciation and amortization
|
(76)
|
|
|
(79)
|
|
|
(218)
|
|
|
(249)
|
|
EBITDA
|
164
|
|
|
129
|
|
|
650
|
|
|
704
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on derivatives
|
4
|
|
|
(63)
|
|
|
(7)
|
|
|
(38)
|
|
Realized gain (loss) on derivative instruments
not included in segment
income
|
—
|
|
|
(3)
|
|
|
2
|
|
|
(1)
|
|
Proportional consolidation
|
(11)
|
|
|
(9)
|
|
|
(31)
|
|
|
(34)
|
|
Gain on
assets held for sale
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Restructuring charges, net
|
(5)
|
|
|
(1)
|
|
|
(26)
|
|
|
(31)
|
|
Other
income, net
|
(9)
|
|
|
(8)
|
|
|
(12)
|
|
|
(12)
|
|
Adjusted EBITDA
|
$
|
185
|
|
|
$
|
213
|
|
|
$
|
721
|
|
|
$
|
820
|
|
The following table shows the negative "Free cash flow" for the
nine months ended December 31, 2012
and 2011 and the ending balances of cash and cash equivalents (in
millions).
|
Nine
Months Ended December 31,
|
|
2012
|
|
2011
|
Net cash
provided by operating activities
|
$
|
22
|
|
|
$
|
205
|
|
Net cash
used in investing activities
|
(505)
|
|
|
(195)
|
|
Less:
Proceeds from sales of assets
|
(20)
|
|
|
(11)
|
|
Free cash
flow
|
$
|
(503)
|
|
|
$
|
(1)
|
|
Ending
cash and cash equivalents
|
$
|
340
|
|
|
$
|
436
|
|
The following table shows Net income (loss) attributable to our
common shareholder excluding Certain Items for the three months
ended December 31, 2012 and 2011 (in
millions).
|
Three
Months Ended December 31,
|
|
2012
|
|
2011
|
|
|
|
|
Net income
(loss)
|
$
|
3
|
|
|
$
|
(12)
|
|
Certain
Items:
|
|
|
|
Restructuring charges
|
5
|
|
|
1
|
|
Tax effect
on Certain Items
|
0
|
|
|
0
|
|
Net income
(loss), excluding Certain Items
|
$
|
8
|
|
|
$
|
(11)
|
|
SOURCE Novelis Inc.