Novelis Reports Third Quarter Fiscal Year 2024 Results
Significant year-over-year recovery in Net Income and Adjusted EBITDA
Q3 Fiscal Year 2024 Highlights
- Net income attributable to our common shareholder of
$121 million , up significantly compared to$12 million in the prior year period; Net income excluding special items was$174 million , up 81% YoY - Adjusted EBITDA of
$454 million , up 33% YoY - Rolled product shipments of 910 kilotonnes, flat YoY
- Adjusted EBITDA per tonne shipped of
$499 , up 33% YoY
"Novelis delivered a substantial year-over-year improvement in Adjusted EBITDA and Adjusted EBITDA per tonne margin, in line with our expectations of continued margin recovery this fiscal year," said
Net sales decreased 6% versus the prior year period to
Net income attributable to our common shareholder significantly improved versus the prior year to
Net cash flow provided by operating activities was
"We continue to expect adjusted EBITDA per tonne to return to a sustainable
The company had a strong total liquidity position of
Bay Minette Update
Novelis is constructing a state-of-the-art, greenfield rolling and recycling plant in
"We are building this plant not just for today, but for the next 40 years and beyond," said Fisher. "
Third Quarter Fiscal Year 2024 Earnings Conference Call
Novelis will discuss its third quarter fiscal year 2024 results via a live webcast and conference call for investors at
About Novelis
Non-GAAP Financial Measures
This news release and the presentation slides for the earnings call contain non-GAAP financial measures as defined by
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 of Adjusted EBITDA, Adjusted EBITDA per Tonne, Adjusted Free Cash Flow, Net Leverage Ratio, income from continuing operations excluding special 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 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. Examples of forward-looking statements in this news release are statements about our beliefs that the business will only be further strengthened in the coming years as we complete strategic investments under way in new rolling and recycling capacity, including our
Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things: disruptions or changes in the business or financial condition of our significant customers or the loss of their business or reduction in their requirements; price and other forms of competition from other aluminum rolled products producers and potential new market entrants; competition in our end-markets, and the willingness of our customer to accept substitutes for our products, including steel, plastics, composite materials and glass; our inability to realize the anticipated benefits of strategic investments; increases in the cost of volatility in the availability of primary aluminum, scrap aluminum, sheet ingot, or other raw materials used in the production of our products; rises in energy costs or disruptions to our energy supplies; downturns in the automotive and ground transportation industries or changes in consumer demand; public health crises, such as the recently experienced COVID-19 pandemic; union disputes and other employee relations issues; loss of our key management and other personnel, or an inability to attract and retain such management and other personnel; unplanned disruptions at our operating facilities; exposure to economic and political risk associated with our global operations; economic uncertainty, capital markets disruption and supply chain interruptions, including as a result of geopolitical instability due to the ongoing military conflict between
Novelis Inc. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
|||||||
|
|||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(in millions) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ 3,935 |
|
$ 4,201 |
|
$ 12,133 |
|
$ 14,089 |
Cost of goods sold (exclusive of depreciation and amortization) |
3,309 |
|
3,794 |
|
10,287 |
|
12,199 |
Selling, general and administrative expenses |
189 |
|
164 |
|
545 |
|
509 |
Depreciation and amortization |
139 |
|
133 |
|
406 |
|
405 |
Interest expense and amortization of debt issuance costs |
73 |
|
75 |
|
228 |
|
198 |
Research and development expenses |
24 |
|
23 |
|
72 |
|
69 |
Loss on extinguishment of debt, net |
— |
|
— |
|
5 |
|
— |
Restructuring and impairment expenses, net |
26 |
|
5 |
|
33 |
|
7 |
Equity in net loss (income) of non-consolidated affiliates |
6 |
|
(6) |
|
(1) |
|
(14) |
Other (income) expenses, net |
(6) |
|
7 |
|
(35) |
|
67 |
|
3,760 |
|
4,195 |
|
11,540 |
|
13,440 |
Income from continuing operations before income tax provision |
175 |
|
6 |
|
593 |
|
649 |
Income tax provision (benefit) |
54 |
|
(6) |
|
159 |
|
146 |
Net income from continuing operations |
121 |
|
12 |
|
434 |
|
503 |
Loss from discontinued operations, net of tax |
— |
|
— |
|
— |
|
(2) |
Net income |
121 |
|
12 |
|
434 |
|
501 |
Net loss attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(1) |
Net income attributable to our common shareholder |
$ 121 |
|
$ 12 |
|
$ 434 |
|
$ 502 |
|
|||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
|||
|
|||
(in millions, except number of shares) |
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 787 |
|
$ 1,498 |
Accounts receivable, net |
|
|
|
— third parties (net of allowance for uncollectible accounts of |
1,973 |
|
1,751 |
— related parties |
122 |
|
156 |
Inventories |
2,677 |
|
2,729 |
Prepaid expenses and other current assets |
160 |
|
178 |
Fair value of derivative instruments |
136 |
|
145 |
Assets held for sale |
1 |
|
3 |
Total current assets |
5,856 |
|
6,460 |
Property, plant and equipment, net |
5,498 |
|
4,900 |
|
1,076 |
|
1,076 |
Intangible assets, net |
558 |
|
589 |
Investment in and advances to non–consolidated affiliates |
918 |
|
877 |
Deferred income tax assets |
145 |
|
166 |
Other long-term assets |
|
|
|
— third parties |
277 |
|
293 |
— related parties |
3 |
|
3 |
Total assets |
$ 14,331 |
|
$ 14,364 |
LIABILITIES AND SHAREHOLDER'S EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of long-term debt |
$ 31 |
|
$ 88 |
Short-term borrowings |
552 |
|
671 |
Accounts payable |
|
|
|
— third parties |
2,785 |
|
3,100 |
— related parties |
266 |
|
277 |
Fair value of derivative instruments |
173 |
|
130 |
Accrued expenses and other current liabilities |
650 |
|
633 |
Total current liabilities |
4,457 |
|
4,899 |
Long-term debt, net of current portion |
4,883 |
|
4,881 |
Deferred income tax liabilities |
263 |
|
288 |
Accrued postretirement benefits |
540 |
|
554 |
Other long-term liabilities |
302 |
|
288 |
Total liabilities |
10,445 |
|
10,910 |
Commitments and contingencies |
|
|
|
Shareholder's equity |
|
|
|
Common stock, no par value; unlimited number of shares authorized; 1,100 shares issued and outstanding as of |
— |
|
— |
Additional paid-in capital |
1,208 |
|
1,208 |
Retained earnings |
2,906 |
|
2,472 |
Accumulated other comprehensive loss |
(239) |
|
(238) |
Total equity of our common shareholder |
3,875 |
|
3,442 |
Noncontrolling interest |
11 |
|
12 |
Total equity |
3,886 |
|
3,454 |
Total liabilities and equity |
$ 14,331 |
|
$ 14,364 |
|
|||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||
|
|||
|
Nine Months Ended
|
||
(in millions) |
2023 |
|
2022 |
OPERATING ACTIVITIES |
|
|
|
Net income |
$ 434 |
|
$ 501 |
Net loss from discontinued operations |
— |
|
(2) |
Net income from continuing operations |
$ 434 |
|
$ 503 |
Adjustments to determine net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
406 |
|
405 |
Gain on unrealized derivatives and other realized derivatives in investing activities, net |
(34) |
|
(19) |
Loss on sale of assets, net |
4 |
|
1 |
Non-cash restructuring and impairment charges |
24 |
|
5 |
Loss on extinguishment of debt, net |
5 |
|
— |
Deferred income taxes, net |
12 |
|
(7) |
Equity in net income of non-consolidated affiliates |
(1) |
|
(14) |
Loss (gain) on foreign exchange remeasurement of debt |
14 |
|
(8) |
Amortization of debt issuance costs and carrying value adjustments |
8 |
|
12 |
Other, net |
3 |
|
— |
Changes in assets and liabilities including assets and liabilities held for sale (net of effects from divestitures): |
|
|
|
Accounts receivable |
(183) |
|
669 |
Inventories |
61 |
|
(96) |
Accounts payable |
(355) |
|
(1,061) |
Other assets |
43 |
|
(4) |
Other liabilities |
(21) |
|
(65) |
Net cash provided by operating activities – continuing operations |
420 |
|
321 |
Net cash used in operating activities – discontinued operations |
— |
|
(12) |
Net cash provided by operating activities |
$ 420 |
|
$ 309 |
INVESTING ACTIVITIES |
|
|
|
Capital expenditures |
$ (960) |
|
$ (462) |
Acquisition of business and other investments, net of cash acquired |
— |
|
(4) |
Proceeds from sales of assets, third party, net of transaction fees and hedging |
— |
|
2 |
Proceeds from the sale of a business |
2 |
|
3 |
Proceeds (outflows) from investment in and advances to non-consolidated affiliates, net |
3 |
|
(37) |
Proceeds from the settlement of derivative instruments, net |
9 |
|
5 |
Other |
11 |
|
15 |
Net cash used in investing activities |
$ (935) |
|
$ (478) |
FINANCING ACTIVITIES |
|
|
|
Proceeds from issuance of long-term and short-term borrowings |
$ 699 |
|
$ — |
Principal payments of long-term and short-term borrowings |
(604) |
|
(380) |
Revolving credit facilities and other, net |
(281) |
|
749 |
Debt issuance costs |
(3) |
|
(6) |
Return of capital to our common shareholder |
— |
|
(100) |
Net cash (used in) provided by financing activities |
$ (189) |
|
$ 263 |
Net (decrease) increase in cash, cash equivalents and restricted cash |
(704) |
|
94 |
Effect of exchange rate changes on cash |
(6) |
|
(39) |
Cash, cash equivalents and restricted cash — beginning of period |
1,511 |
|
1,084 |
Cash, cash equivalents and restricted cash — end of period |
$ 801 |
|
$ 1,139 |
|
|
|
|
Cash and cash equivalents |
$ 787 |
|
$ 1,126 |
Restricted cash (included in other long-term assets) |
14 |
|
13 |
Cash, cash equivalents and restricted cash — end of period |
$ 801 |
|
$ 1,139 |
Reconciliation of Adjusted EBITDA (unaudited) to Net Income Attributable to our Common Shareholder
The following table reconciles Adjusted EBITDA, a non-GAAP financial measure, to net income attributable to our common shareholder.
|
Three Months Ended
|
|
Nine Months Ended
|
|
Year Ended |
|
TTM Ended |
||||
(in millions) |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
Net income attributable to our common shareholder |
$ 121 |
|
$ 12 |
|
$ 434 |
|
$ 502 |
|
$ 658 |
|
$ 590 |
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(1) |
|
(1) |
|
— |
Income tax provision (benefit) |
54 |
|
(6) |
|
159 |
|
146 |
|
147 |
|
160 |
Interest, net |
67 |
|
69 |
|
211 |
|
184 |
|
254 |
|
281 |
Depreciation and amortization |
139 |
|
133 |
|
406 |
|
405 |
|
540 |
|
541 |
EBITDA |
$ 381 |
|
$ 208 |
|
$ 1,210 |
|
$ 1,236 |
|
$ 1,598 |
|
$ 1,572 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reconcile proportional consolidation |
$ 8 |
|
$ 13 |
|
$ 33 |
|
$ 40 |
|
$ 53 |
|
$ 46 |
Unrealized (gains) losses on change in fair value of derivative instruments, net |
(15) |
|
1 |
|
4 |
|
(20) |
|
(23) |
|
1 |
Realized gains on derivative instruments not included in Adjusted EBITDA |
— |
|
(1) |
|
(4) |
|
(3) |
|
(4) |
|
(5) |
Loss on extinguishment of debt, net |
— |
|
— |
|
5 |
|
— |
|
— |
|
5 |
Restructuring and impairment expenses, net |
26 |
|
5 |
|
33 |
|
7 |
|
33 |
|
59 |
Loss on sale or disposal of assets, net |
4 |
|
— |
|
4 |
|
1 |
|
1 |
|
4 |
Loss from discontinued operations, net of tax |
— |
|
— |
|
— |
|
2 |
|
2 |
|
— |
Metal price lag |
45 |
|
109 |
|
62 |
|
130 |
|
130 |
|
62 |
Other, net |
5 |
|
6 |
|
12 |
|
15 |
|
21 |
|
18 |
Adjusted EBITDA |
$ 454 |
|
$ 341 |
|
$ 1,359 |
|
$ 1,408 |
|
$ 1,811 |
|
$ 1,762 |
|
|
|
|
|
|
(1) |
The mounts in the TTM column are calculated by taking the amounts for the year ended |
The following table presents the calculation of Adjusted EBITDA per tonne.
|
Three Months Ended
|
||
|
2023 |
|
2022 |
Adjusted EBITDA (in millions) (numerator) |
$ 454 |
|
$ 341 |
Rolled product shipments (in kt) (denominator) |
910 |
|
908 |
Adjusted EBITDA per tonne |
$ 499 |
|
$ 376 |
Adjusted Free Cash Flow (unaudited)
The following table reconciles Adjusted Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations, non-GAAP financial measures, to net cash provided by operating activities - continuing operations.
|
Nine Months Ended
|
||
(in millions) |
2023 |
|
2022 |
Net cash provided by operating activities – continuing operations |
$ 420 |
|
$ 321 |
Net cash used in investing activities – continuing operations |
(935) |
|
(478) |
Plus: Cash used in the acquisition of business and other investments, net of cash acquired |
— |
|
4 |
Less: Proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging |
(2) |
|
(5) |
Adjusted Free Cash Flow from continuing operations |
(517) |
|
(158) |
Net cash used in operating activities – discontinued operations |
— |
|
(12) |
Adjusted Free Cash Flow |
$ (517) |
|
$ (170) |
Net Leverage Ratio (unaudited)
The following table reconciles long-term debt, net of current portion to Net Debt.
(in millions) |
|
|
|
Long–term debt, net of current portion |
$ 4,883 |
|
$ 4,881 |
Current portion of long-term debt |
31 |
|
88 |
Short-term borrowings |
552 |
|
671 |
Cash and cash equivalents |
(787) |
|
(1,498) |
Net Debt |
$ 4,679 |
|
$ 4,142 |
The following table shows the calculation of the Net Leverage Ratio (in millions, except for the Net Leverage Ratio).
|
|
|
|
Net debt (numerator) |
$ 4,679 |
|
$ 4,142 |
TTM Adjusted EBITDA (denominator) |
$ 1,762 |
|
$ 1,811 |
Net Leverage Ratio |
2.7 |
|
2.3 |
Reconciliation of Net Income from Continuing Operations, Excluding Special Items (unaudited) to Net Income from Continuing Operations
The following table presents net income from continuing operations excluding special items. 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
|
|
Nine Months Ended
|
||||
(in millions) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income from continuing operations |
$ 121 |
|
$ 12 |
|
$ 434 |
|
$ 503 |
Special Items: |
|
|
|
|
|
|
|
Loss on extinguishment of debt, net |
— |
|
— |
|
5 |
|
— |
Metal price lag |
45 |
|
109 |
|
62 |
|
130 |
Restructuring and impairment expenses, net |
26 |
|
5 |
|
33 |
|
7 |
Tax effect on special items |
(18) |
|
(30) |
|
(25) |
|
(34) |
Net income from continuing operations, excluding special items |
$ 174 |
|
$ 96 |
|
$ 509 |
|
$ 606 |
Segment Information (unaudited)
The following tables present selected segment financial information (in millions, except shipments which are in kilotonnes).
Selected Operating Results
Three Months Ended |
|
North |
|
|
|
|
|
South |
|
Eliminations |
|
Total |
Adjusted EBITDA |
|
$ 165 |
|
$ 59 |
|
$ 81 |
|
$ 150 |
|
$ (1) |
|
$ 454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (in kt) |
|
|
|
|
|
|
|
|
|
|
|
|
Rolled products – third party |
|
362 |
|
226 |
|
150 |
|
172 |
|
— |
|
910 |
Rolled products – intersegment |
|
— |
|
4 |
|
26 |
|
4 |
|
(34) |
|
— |
Total rolled products |
|
362 |
|
230 |
|
176 |
|
176 |
|
(34) |
|
910 |
Selected Operating Results
Three Months Ended |
|
North |
|
|
|
|
|
South |
|
Eliminations |
|
Total |
Adjusted EBITDA |
|
$ 124 |
|
$ 38 |
|
$ 60 |
|
$ 124 |
|
$ (5) |
|
$ 341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (in kt) |
|
|
|
|
|
|
|
|
|
|
|
|
Rolled products – third party |
|
380 |
|
232 |
|
139 |
|
157 |
|
— |
|
908 |
Rolled products – intersegment |
|
— |
|
10 |
|
2 |
|
5 |
|
(17) |
|
— |
Total rolled products |
|
380 |
|
242 |
|
141 |
|
162 |
|
(17) |
|
908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Results Nine Months Ended December 31, 2023 |
|
North |
|
|
|
|
|
South |
|
Eliminations |
|
Total |
Adjusted EBITDA |
|
$ 539 |
|
$ 247 |
|
$ 250 |
|
$ 327 |
|
$ (4) |
|
$ 1,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (in kt) |
|
|
|
|
|
|
|
|
|
|
|
|
Rolled products – third party |
|
1,122 |
|
723 |
|
458 |
|
419 |
|
— |
|
2,722 |
Rolled products – intersegment |
|
— |
|
13 |
|
69 |
|
20 |
|
(102) |
|
— |
Total rolled products |
|
1,122 |
|
736 |
|
527 |
|
439 |
|
(102) |
|
2,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Results Nine Months Ended December 31, 2022 |
|
North |
|
|
|
|
|
|
|
Eliminations |
|
Total |
Adjusted EBITDA |
|
$ 542 |
|
$ 195 |
|
$ 267 |
|
$ 407 |
|
$ (3) |
|
$ 1,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (in kt) |
|
|
|
|
|
|
|
|
|
|
|
|
Rolled products – third party |
|
1,152 |
|
754 |
|
493 |
|
455 |
|
— |
|
2,854 |
Rolled products – intersegment |
|
— |
|
28 |
|
41 |
|
17 |
|
(86) |
|
— |
Total rolled products |
|
1,152 |
|
782 |
|
534 |
|
472 |
|
(86) |
|
2,854 |
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