BEACHWOOD, Ohio, March 16 /PRNewswire-FirstCall/ -- Aleris International,
Inc. (NYSE: ARS) today reported financial results for the fourth quarter and
total year 2005.
Summary
- Total year net income was a record $74.3 million or $2.38 per share(*)
for 2005 compared with a net loss of $23.8 million or ($1.51) per share
for 2004 on a reported basis. Results include a reduction in the total
year effective tax rate from 4.2% to 0.6%.
- Total year adjusted earnings per share were $3.94 in 2005, utilizing the
previously forecasted adjusted tax rate of 8.75%, compared with
adjusted earnings per share of $0.97 on a pro forma basis in 2004.
- The Company continued to implement its acquisition strategy with the
October 3 acquisition of ALSCO Holdings, Inc.; the December 12
acquisition of Alumitech, Inc.; and the December 20 acquisition of
selected assets of the Ormet Corporation. Synergies from the ALSCO
acquisition are now expected to be higher than originally announced and
in the range of $12-$14 million on an annualized basis.
- The Company recorded a restructuring and asset impairment charge of $25
million in fourth quarter 2005 primarily related to the previously
announced March 31, 2006 closing of the Carson, California rolling mill.
- Primarily as a result of the $25 million restructuring and asset
impairment charge, our net loss totaled $5.2 million or ($0.17) per
share for the fourth quarter 2005 compared with a reported net loss of
$26.5 million or ($1.42) per share in the fourth quarter of 2004.
- Fourth quarter 2005 adjusted earnings per share were $0.83, utilizing
the previously forecasted tax rate of 8.75%, compared to $0.39 in the
prior year on a pro forma basis.
- Net debt increased by $336 million during the fourth quarter as a result
of the previously announced acquisitions, increased inventory levels to
accommodate acquisition integration and higher working capital levels
due to the rising price of aluminum and zinc. Pro forma for the
acquisitions during 2005 and the Commonwealth acquisition in 2004, net
debt to EBITDA excluding special items on a last twelve month basis was
2.3x at December 31, 2005 compared with 3.0x at year-end 2004.
- Merger-related synergies from the Commonwealth acquisition and
productivity benefits continued to ramp-up in the fourth quarter of 2005
and reached an annualized run rate of $39 million.
Aleris International, Inc.
($ and lbs. For the Three Months Ended For the Year Ended
in millions) December 31, December 31,
2004 2004
2005 Reported Pro Forma 2005 Reported Pro Forma
Volume:
Recycling lbs.
processed 861 846 846 3,366 3,379 3,379
Rolled products
lbs. shipped 224 77 248 922 77 1,006
Revenue $625.5 $372.6 $578.1 $2,429.0 $1,226.6 $2,244.7
Net income (loss) ($5.2) ($26.5) ($16.4) $74.3 ($23.8) ($22.7)
Earnings (loss)
per share ($0.17) ($1.42) ($0.57) $2.38 ($1.51) ($0.80)
Adjusted earnings
per share(1) $0.83 ($0.28) $0.39 $3.94 $(0.01) $0.97
EBITDA(1) $18.1 ($3.4) $13.8 $170.4 $42.6 $84.4
EBITDA excluding
special items(1) $55.4 $ 15.1 $38.1 $230.8 $65.0 $131.2
* - all per share data is presented on a fully diluted basis, unless
otherwise noted.
(1) In this press release, we refer to various non-GAAP (generally
accepted accounting principles) financial measures including (i)
EBITDA, (ii) EBITDA excluding special items and (iii) adjusted
earnings per share. The methods used to compute these measures are
likely to differ from the methods used by other companies. These non-
GAAP measures have limitations as analytical tools and should be
considered in addition to, not in isolation or as a substitute for, or
superior to, Aleris's measures of financial performance prepared in
accordance with GAAP. Investors are encouraged to review the
accompanying tables reconciling the non-GAAP financial measures to
comparable GAAP amounts. "EBITDA," as used in this press release, is
defined as net income before interest income and expense, taxes,
depreciation and amortization and minority interests. "EBITDA
excluding special items," as used in this press release, is defined as
EBITDA excluding restructuring and other charges, executive severance
costs, mark-to-market FAS 133 metal hedge unrealized gains and losses,
and the non-cash cost of sales impact of the write-up of inventory and
other items through purchase accounting. "Adjusted earnings per share"
excludes the per-share impact of these special items. Adjusted
earnings per share for 2005 have been computed using an effective tax
rate of 8.75%, the rate previously used to estimate our full year
adjusted earnings per share. Adjusted earnings per share for 2004
were computed using a rate of 12.73%. Management uses EBITDA as a
performance metric and believes this measure provides additional
information commonly used by our stockholders, noteholders and lenders
with respect to the performance of our fundamental business
activities, as well as our ability to meet our future debt service,
capital expenditures and working capital needs. Management believes
EBITDA excluding special items and adjusted earnings per share is
useful to our stakeholders in understanding our operating results and
the ongoing performance of our underlying businesses without the
impact of these special items. Additionally, management uses EBITDA
because the Company's revolving credit agreement and indentures for
its outstanding senior notes use EBITDA with additional adjustments to
measure its compliance with covenants such as fixed charge coverage
and debt incurrence.
Aleris resulted from the December 9, 2004 merger of IMCO Recycling Inc.
and Commonwealth Industries, Inc. IMCO was the acquirer for financial
accounting purposes. The Company's "As Reported" financial results for the
fourth quarter and full year of 2005 include the operations of both companies
for 2005, but the comparable periods in 2004 include three and twelve months
results for the former IMCO Recycling Inc. and one month result for
Commonwealth. The "Pro Forma" results combine the operations of both
companies and are adjusted to exclude the results of Commonwealth's
discontinued Alflex division and inter-company sales and to include the change
to the average cost method of accounting for inventory for the rolled products
segment (formerly Commonwealth), the incremental depreciation expense related
to the write-up of the acquired fixed assets of rolled products to their
estimated fair value, as well as incremental interest expense associated with
the financing of the merger.
Fourth Quarter 2005 Operating Results
In the fourth quarter of 2005, Aleris reported revenues of $625.5 million
and a net loss of $5.2 million or ($0.17) per share. These results include a
loss of ($1.00) per share from special items including $25.0 million related
primarily to the closure of the Carson, California rolling mill scheduled for
the end of the first quarter of 2006; $8.3 million of non-cash mark-to-market
FAS 133 metal hedge losses; and $4.0 million related primarily to the non-cash
cost of sales impact of the write-up of rolled products assets to fair value
at date of purchase. For the fourth quarter of 2004, the Company reported
revenues of $372.6 million and a net loss of $26.5 million or ($1.42) per
share which included $10.7 million of restructuring and severance costs
related to the Commonwealth merger; $4.2 million of non-cash impairment
charges; $6.5 million related primarily to the non-cash cost of sales impact
of the write-up of rolled products assets to fair value at date of purchase;
and other non-recurring costs of $0.7 million. These unfavorable impacts were
offset partially by a $3.6 million non-cash mark-to-market FAS 133 metal hedge
gain.
Reported revenues of $625.5 million and a net loss of $5.2 million or
($0.17) per share in the fourth quarter of 2005 compare to pro forma revenues
of $578.1 million and a pro forma net loss of $16.4 million or ($0.57) per
share in the fourth quarter of 2004. Pro forma results in 2004 included $15.1
million of restructuring and severance costs related to the Commonwealth
merger, $4.2 million of non-cash impairment charges and $6.5 million related
primarily to the non-cash cost of sales impact of the write-up of rolled
products assets to fair value at date of purchase; offset partially by a $2.3
million non-cash mark-to-market FAS 133 metal hedge gain.
Fourth quarter 2005 adjusted earnings per share of $0.83 compared
favorably to $0.39 per share on a pro forma basis in the fourth quarter of
2004. Fourth quarter adjusted earnings per share for 2005 have been computed
using an effective tax rate of 8.75%, the rate previously used to estimate our
full year adjusted earnings per share while the results for 2004 were
calculated using a 12.73% rate. EBITDA, excluding special items, totaled
$55.4 million in the fourth quarter of 2005, an increase of 45% compared with
$38.1 million on a pro forma basis in the comparable 2004 period. Improved
results continued to be driven by improvements in rolled products rolling
margins and scrap spreads as well as synergy realization and productivity
benefits.
Steven J. Demetriou, Chairman and Chief Executive Officer of Aleris, said
"We are very pleased with our overall performance that delivered adjusted
earnings per share of $0.83 in the fourth quarter. In particular, rolled
products material margins were very strong as continually improving scrap
spreads were augmented by continued stability in rolling margins. We continue
to build momentum with our growth strategy and I am extremely pleased with our
progress through the end of 2005. During the fourth quarter, we completed the
acquisition of ALSCO and announced the closing of our Carson rolling mill,
which will further reduce our costs and allow us to produce more cost-
effectively at our other facilities. On December 12, we completed the
acquisition of Alumitech, which allows us to provide additional services to
our North American aluminum recycling customers. Finally, we completed the
acquisition of selected Ormet assets on December 20 and are proceeding with
our plans to produce 125 million pounds of their sheet volume in our existing
facilities, while further diversifying our product offering."
Total Year 2005 Operating Results
For 2005, Aleris reported revenues of $2.43 billion and net income of
$74.3 million or $2.38 per share. These results include a pre-tax loss of
($1.94) per share from special items including $29.9 million of restructuring
and asset impairment charges related primarily to the closing of the Carson,
California rolling mill; $18.6 million of non-cash mark-to-market FAS 133
metal hedge losses; and $11.9 million related primarily to the non-cash cost
of sales impact of the write-up of rolled products assets to fair value at
date of purchase. The effective tax rate for the year was 0.6% which reflects
the reversal of valuation allowances against certain deferred tax assets. The
prior year-to-date tax rate through September 30, 2005 was 4.2 % and we
recorded a $3.4 million tax benefit in the fourth quarter of 2005 to reduce
this rate to the effective rate for the year. We anticipate future effective
tax rates will approximate the statutory rate of 35%. For the full year of
2004, the Company reported revenues of $1.23 billion and a net loss of $23.8
million or ($1.51) per share, including $15.2 million of restructuring and
severance costs related primarily to the Commonwealth merger; $4.2 million of
non-cash impairment charges; $6.5 million related primarily to the non-cash
cost of sales impact of the write-up of rolled products assets to fair value
at date of purchase; and $0.7 million of other non-recurring costs. These
unfavorable impacts were offset partially by $4.2 million of non-cash mark-to-
market FAS 133 metal hedge gains.
Reported revenues of $2.43 billion and net income of $74.3 million or
$2.38 per share for 2005 compared favorably to pro forma revenues of $2.24
billion and a pro forma net loss of $22.7 million or ($0.80) per share for
2004. Pro forma results in 2004 included $34.6 million of restructuring and
severance costs related primarily to the Commonwealth merger; $4.2 million of
non-cash impairment charges; $6.5 million related primarily to the non-cash
cost of sales impact of the write-up of rolled products assets to fair value
at date of purchase; and $6.5 million of asset write-offs related primarily to
the shut-down of tube enterprises at the rolled products segment. These
unfavorable impacts were offset primarily by $5.0 million of non-cash mark-to-
market FAS 133 metal hedge gains. 2005 adjusted earnings per share of $3.94
compares to adjusted earnings per share of $0.97 on a pro forma basis for
2004. EBITDA excluding special items totaled $230.8 million for 2005 compared
with $131.2 million on a pro forma basis for 2004. Significantly improved
results continue to be driven principally by increases in rolled products
material margins and the benefits of synergy realization and productivity.
Net debt increased $336 million during the quarter due primarily to
acquisitions, inventory builds to accommodate acquisition integration and the
impact of the rising LME prices of aluminum and zinc on working capital. On a
pro forma basis including the acquisitions, net debt to EBITDA excluding
special items on a last twelve month basis was 2.3x at December 31, 2005
compared with 3.0x at year-end 2004.
Rolled Products
Rolled product shipments totaled 224 million pounds in the fourth quarter
of 2005, including 43 million pounds principally from the ALSCO acquisition,
compared with pro forma shipments of 248 million pounds in the same period of
2004 excluding ALSCO. Excluding the acquisition of ALSCO, rolled products
shipments were down approximately 26% from an extremely strong comparable
quarter in 2004 as inventory destocking came to an end and customers delayed
some orders due to high LME prices during the 2005 quarter. Income in the
rolled products segment was $40.9 million in the fourth quarter of 2005,
excluding charges of $4.0 million related to adjustments for purchase
accounting, compared with pro forma segment income of $27.5 million in the
comparable 2004 period on the same basis. The improvement was driven by higher
rolling margins, favorable scrap spreads, the favorable FIFO impact of the
rising LME and improved productivity.
Material margins in the fourth quarter of 2005 improved to $0.539 per
pound from $0.407 per pound in the year-earlier period on a pro forma basis.
Sequentially, material margins improved $0.050 per pound during the quarter to
the highest levels of the year due to continually improving scrap spreads and
the favorable FIFO impact of the rising LME during the quarter. Cash
conversion costs increased to $0.269 per pound in the fourth quarter of 2005
from $0.240 per pound in the prior year on a pro forma basis due to a 20%
reduction in production volume and higher planned production outage
expenditures during the 2005 quarter. The acquisition of ALSCO had a minimal
impact on margins and conversion costs during the quarter. For comparative
purposes, all prior-year pro forma amounts have been restated utilizing the
average cost method of accounting for inventory for Rolled Products compared
to previous reporting on a LIFO basis in accordance with the prior practice of
the acquiring company as required by purchase accounting rules.
For 2005, rolled products shipments totaled 922 million pounds including
43 million pounds principally from the ALSCO acquisition compared with 1.01
billion pounds in the year-earlier period on a pro forma basis, excluding
ALSCO. Segment income totaled $172.5 million in 2005, excluding charges of
$11.9 million related to adjustments for purchase accounting, compared with
pro forma segment income of $69.6 million in 2004 on the same basis. The
increased earnings were the result of higher rolling margins, improved scrap
spreads, the favorable FIFO impact of the rising LME, increased productivity
and the acquisition of ALSCO.
Aluminum Recycling
Fourth quarter processing volume of 508 million pounds for the aluminum
recycling segment was down approximately 5% compared with 533 million pounds
in the prior-year period. Segment income improved to $7.6 million in the
fourth quarter of 2005 from $6.2 million in the same quarter of 2004. The
increase was due primarily to higher selling prices and margins, and synergy
capture which offset the higher natural gas costs compared with 2004 and the
recording of a $1.2 million write-down of a recycling joint venture.
For the full year, processing volume was 2.03 billion pounds compared with
2.10 billion pounds in 2004, down 3% due almost entirely to lower automotive
volume. Segment income was $28.6 million in 2005 compared with $26.4 million
in 2004. In 2004, a major customer declared bankruptcy, which reduced the
Company's revenue by $3.2 million. In addition, in 2005, Aleris achieved
certain merger synergies and productivity benefits including lower worker
compensation and insurance expenses. These items substantially offset higher
gas costs and lower processing volumes.
International
Processing volume of 297 million pounds for the international segment in
the fourth quarter was 17% higher than the 253 million pounds processed in the
fourth quarter of 2004. The increase was due to higher volume in Europe and
volume increases in Brazil reflecting the first full quarter of results from
the Tomra Latasa acquisition. Fourth quarter 2005 segment income was $2.9
million compared with $3.2 million in the comparable 2004 quarter as lower
profitability in Germany caused by higher material costs, as well as start-up
costs associated with our new plant in Stuttgart, more than offset the higher
income recorded in Brazil.
Full year processing volume of 1.11 billion pounds compares favorably with
1.03 billion pounds processed in 2004 due primarily to higher volumes in
Europe and Brazil. Volumes and income in Mexico were below last year as the
Company transitions this plant from a facility with one large customer to one
with a variety of different customers. Segment income for 2005 was $13.3
million compared with $19.7 million in 2004. Reduced income in Germany caused
principally by higher scrap costs was partially offset by higher income in
Brazil as a result of the acquisition of Tomra Latasa.
Zinc
Fourth quarter 2005 processing volume of 57 million pounds for the zinc
segment was 5% below the level of the year-ago period due primarily to lower
demand for zinc oxide and zinc metal related to lower auto production. Income
in this segment, however, more than doubled to $6.1 million in the fourth
quarter of 2005 from $2.8 million in the prior-year period, due principally to
higher average selling prices of zinc and resulting better margins. Zinc
prices averaged $0.74 per pound in the fourth quarter compared with $0.51 per
pound in the comparable 2004 period.
Zinc total year 2005 processing volume of 228 million pounds was 7% lower
than in 2004, primarily due to reduced demand from steel galvanizers and to
lower oxide demand related to lower auto production. Segment income of $21.0
million was 76% higher than in 2004, due principally to higher zinc prices
which offset lower volume.
Corporate Expense
Corporate expense primarily includes corporate SG&A and interest expense.
In addition, corporate expense includes all restructuring and asset impairment
charges, as well as non-cash adjustments associated with mark-to-market FAS
133 accounting for metal hedging activity that were previously shown within
the business segments, in order to simplify understanding of ongoing segment
operations. The Company's 2004 results of operations have been recast on a
comparable basis. In the fourth quarter of 2005, Aleris recorded losses of
$33.3 million related to special items which included $25.0 million
restructuring and asset impairment charge related primarily to the previously
announced closing of the Carson, California rolling mill and $8.3 million of
non-cash mark-to-market FAS 133 metal hedge losses. On a pro forma basis,
special items in the fourth quarter of 2004 totaled $17.7 million and included
$20.0 million of restructuring and severance costs related primarily to the
Commonwealth merger offset partially by non-cash mark-to-market FAS 133 metal
hedge gains of $2.3 million. Reported corporate SG&A expense and interest
expense were significantly higher in the fourth quarter of 2005 than in the
comparable 2004 period due to the merger with Commonwealth.
Corporate SG&A in the fourth quarter of 2005 decreased to $15.8 million
from $16.7 million in the comparable 2004 period on a pro forma basis, as the
benefits of the synergies realized in the merger more than offset higher
incentive compensation accruals. Interest expense for 2005 increased 2% to
$11.8 million from 2004 on a pro forma basis as lower interest rates were more
than offset by higher outstandings on the Company's revolving credit facility
due to the acquisition of both ALSCO and certain assets of Ormet Corporation.
For 2005, corporate SG&A declined to $58.2 million from $60.5 million in
2004 on a pro forma basis with corporate merger synergies more than offsetting
higher incentive compensation accruals. Interest expense for 2005 declined to
$41.9 million from $44.5 million in the prior-year period on a pro forma
basis.
Outlook
Mr. Demetriou said, "We are excited about the future of Aleris and look
forward to 2006 and beyond as we pursue our growth strategy. We anticipate a
continued favorable economic environment in 2006 with Aleris top-line results
benefiting from acquisitions and new products. Reduced costs from merger and
acquisition synergies, continued favorable scrap spreads in rolled products,
improvement in our recycling operations and an intensified Six Sigma effort
should provide additional benefits in 2006. First quarter 2005 adjusted
earnings per share were approximately $0.95 adjusted to an estimated 2006 tax
rate basis and represented the strongest quarter of the year from a volume and
pricing perspective. For 2006, we are expecting adjusted earnings per share
for each of the second through fourth quarters to be significantly higher than
the comparable 2005 quarters at the 2006 estimated tax rate. However,
compared to the peak level achieved in the first quarter of 2005, we expect
first quarter 2006 adjusted earnings per share to approach the prior year
level." Demetriou continued, "We are expecting lower volume in the core
rolled products business compared to the extremely robust prior year quarter
to be offset by the favorable impact of acquisitions, improved scrap spreads
and operational and productivity improvements, as well as the benefit of the
rising LME and associated inventory accounting adjustments."
Conference Call and Webcast Information
Aleris will host a conference call March 16, 2006 at 9 a.m. Eastern time.
Steven J. Demetriou, Chairman and Chief Executive Officer, and Michael D.
Friday, Executive Vice President and Chief Financial Officer, will host the
call to discuss results.
The call can be accessed by dialing 866-314-9013 or 617-213-8053 and
referencing passcode #47472408 at least 10 minutes prior to the presentation.
In addition, the conference call will be broadcast live over the Internet at
http://www.aleris.com.
A replay of the conference call will be posted to the Company's Web site
at http://www.aleris.com. A taped replay of the call will also be available
by dialing 888-286-8010 or 617-801-6888 and referencing passcode #49189540
beginning at 11a.m. Eastern time, March 16 until 11:59 p.m. Eastern time,
March 21, 2006.
About Aleris
Aleris International, Inc. is a major North American manufacturer of
rolled aluminum products and is a global leader in aluminum recycling and the
production of specification alloys. We are also a leading manufacturer of
value-added zinc products that include zinc oxide, zinc dust and zinc metal.
Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates
42 production facilities in the United States, Brazil, Germany, Mexico and
Wales, and employs approximately 4,200 employees. For more information about
Aleris, please visit our Web site at http://www.aleris.com.
SAFE HARBOR REGARDING FORWARD-LOOKING STATEMENTS
Forward-looking statements made in this news release are made pursuant to
the safe harbor provision of the Private Securities Litigation Reform Act of
1995. These include statements that contain words such as "believe,"
"expect," "anticipate," "intend," "estimate," "should" and similar expressions
intended to connote future events and circumstances, and include statements
regarding future actual and adjusted earnings and earnings per share; future
improvements in margins, processing volumes and pricing; overall 2006
operating performance; anticipated higher adjusted effective tax rates;
expected cost savings; success in integrating Aleris's recent acquisitions;
its future growth; an anticipated favorable economic environment in 2006;
future benefits from acquisitions and new products; expected benefits from
industry consolidation and post-hurricane reconstruction; and anticipated
synergies resulting from the merger with Commonwealth and other acquisitions.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, and that actual results could differ materially from those
described in the forward-looking statements. These risks and uncertainties
would include, without limitation, Aleris's levels of indebtedness and debt
service obligations; its ability to effectively integrate the business and
operations of its acquisition; further slowdowns in automotive production in
the U.S. and Europe, the financial condition of Aleris' customers and future
bankruptcies and defaults by major customers; the availability at favorable
cost of aluminum scrap and other metal supplies that the Company processes;
the ability of the Company to enter into effective metals, natural gas and
other commodity derivatives; continued increases in natural gas and other fuel
costs of the Company; a weakening in industrial demand resulting from a
decline in U.S. or world economic conditions caused by terrorist activities or
other unanticipated events; future utilized capacity of the Company's various
facilities; a continuation of building and construction customers and
distribution customers reducing their inventory levels and reducing the volume
of the Company's shipments; restrictions on and future levels and timing of
capital expenditures; retention of the Company's major customers; the timing
and amounts of collections; currency exchange fluctuations; future write-downs
or impairment charges which may be required because of the occurrence of some
of the uncertainties listed above; and other risks listed in the Company's
filings with the Securities and Exchange Commission, including but not limited
to the Company's quarterly reports on Form 10-Q for the periods ended March
31, 2005, June 30, 2005 and September 30, 2005 and its annual report on Form
10-K for the fiscal year ended December 31, 2005, particularly the sections
entitled "Risk Factors" contained therein.
Aleris International, Inc.
------------------------------------
Consolidated Statement of Income
(in thousands, except per share data)
For the Three Months Ended For the Year Ended
December 31, December 31,
--------------------------- ---------------------
2005 2004 2005 2004
----(unaudited)---
REVENUES $625,467 $372,606 $2,428,974 $1,226,597
Cost of sales 560,027 357,548 2,170,715 1,148,711
------- ------- --------- ----------
GROSS PROFIT 65,440 15,058 258,259 77,886
Selling, general and
administrative expense 26,209 16,740 91,089 54,507
Interest and other
(income) expense 2,488 (420) 1,533 51
Restructuring charge 25,044 14,912 29,865 14,912
Unrealized (gains) losses
on derivatives 8,259 (3,595) 18,648 (4,235)
Interest expense 11,833 8,842 41,886 28,790
------- ------- --------- -------
73,833 36,479 183,021 94,025
(Loss)income before
provision for income
taxes, and minority
interests (8,393) (21,421) 75,238 (16,139)
(Benefit from) provision
for income taxes (3,382) 5,009 424 7,484
------- ------- -------- --------
(Loss)income before
minority interests (5,011) (26,430) 74,814 (23,623)
Minority interests, net of
provision for income taxes 168 92 466 214
------- ------- -------- --------
Net (loss) income $(5,179) $ (26,522) $ 74,348 $ (23,837)
======= ======= ======= ========
Net earnings (loss) per common share:
-------------------------------------
Basic $ (0.17) $ (1.42) $ 2.44 $ (1.51)
Diluted $ (0.17) $ (1.42) $ 2.38 $ (1.51)
Weighted Average Shares Outstanding:
------------------------------------
Basic 30,689 18,647 30,448 15,793
Diluted 30,689 18,647 31,252 15,793
Aleris International, Inc.
--------------------------
Supplementary Information
(in thousands, unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
--------------------------- -----------------------
2005 2004 2005 2004
Depreciation
and amortization $ 15,188 $ 9,514 $ 54,952 $ 30,627
Capital spending $ 23,200 $ 22,523 $ 62,115 $ 44,825
Segment Reporting:
------------------
Volume (pounds):
Aluminum recycling 507,694 532,797 2,028,789 2,099,617
International 296,511 253,483 1,108,720 1,033,518
Zinc 57,130 59,993 228,349 246,108
------- ------- -------- --------
861,335 846,273 3,365,858 3,379,243
Percent tolled: 51% 51%(1) 50% 49%(1)
Shipped pounds -
Rolled products 223,517 76,803 922,248 76,803
Revenues:
Rolled products $303,809 $ 95,104 $1,246,639 $ 95,104
Aluminum recycling 142,262 135,166 551,398 554,849
International 116,749 94,943 416,523 371,679
Zinc 69,015 49,277 244,083 206,849
Intersegment
eliminations (6,368) (1,884) (29,669) (1,884)
------- ------- ------- -------
$625,467 $372,606 $2,428,974 $1,226,597
Segment Income:
Rolled products $ 36,880 $(3,115) $160,604 $ (3,115)
Aluminum recycling 7,636 6,180 28,589 26,405
International 2,859 3,178 13,253 19,704
Zinc 6,121 2,793 20,986 11,954
------- ------- ------- -------
$ 53,496 $9,036 $223,432 $ 54,948
(1) Recast to include former Commonwealth Industries sales as buy/sell due
to the acquisition.
Aleris International, Inc.
------------------------------------
Consolidated Balance Sheet
(in thousands)
December 31, 2005 December 31, 2004(1)
------------------ -----------------
ASSETS
Current Assets:
Cash $ 6,822 $ 17,828
Accounts Receivable, Net 325,111 229,018
Inventories 404,780 263,455
Derivative financial instruments 27,958 17,324
Other Current Assets 46,137 15,609
------- -------
Total Current Assets 810,808 543,234
PP&E, Net 537,797 432,779
Goodwill 152,845 63,940
Restricted Cash 6,183 16,007
Other Assets 46,497 25,189
------- -------
TOTAL ASSETS $1,554,130 $1,081,149
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $200,773 $178,943
Accrued Liabilities 135,448 88,405
Current Maturities of long-term debt 20,813 61
------- -------
Total Current Liabilities 357,034 267,409
Deferred Income Taxes 51,837 11,280
Long-Term Debt 631,024 412,338
Other Long-Term Liabilities 120,466 107,452
Stockholders' Equity 393,769 282,670
------- -------
TOTAL LIABILITIES AND EQUITY $1,554,130 $1,081,149
--------- ---------
--------- ---------
(1) Certain items have been reclassified to conform to the current period
presentation.
Aleris International, Inc.
--------------------------------
Reconciliation of Net Income (Loss) to
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and EBITDA Excluding Special Items
(in thousands)
(unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
------------------------- --------------------
2005 2004 2005 2004
Net (Loss) income $ (5,179) $ (26,522) $74,348 $(23,837)
Interest expense(net) 11,332 8,471 40,216 28,076
Income taxes (3,382) 5,009 424 7,484
Minority interest 168 92 466 214
Depreciation and
amortization 15,188 9,514 54,952 30,627
EBITDA $ 18,127 $(3,436) $170,406 $ 42,564
Mark-to-market FAS
133 metal hedge
(gain) / loss 8,259 (3,595) 18,648 (4,235)
Restructuring, merger
related and executive
separation charges 25,044 15,597 29,865 20,109
Non-cash cost of sales
impact of recording
acquired assets at
fair value 4,013 6,532 11,927 6,532
------ ------- ------ -------
EBITDA, excluding
special items $ 55,443 $15,098 $230,846 $ 64,970
======= ======== ======= ========
Reconciliation of Actual and Pro Forma Net Income (Loss) to Actual and
Pro Forma Earnings Before Interest, Taxes, Depreciation and
Amortization and Actual and Pro Forma EBITDA Excluding Special Items
(in thousands)
(unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
--------------------- --------------------
2005 2004 2005 2004
Actual Pro Forma Actual Pro Forma
------- --------- ------- ---------
Net (Loss) income $ (5,179) $ (16,351) $74,348 $(22,655)
Interest expense(net) 11,332 11,179 40,216 43,736
Income taxes (3,382) 4,910 424 7,515
Minority interest 168 92 466 214
Depreciation and
amortization 15,188 13,986 54,952 55,600
EBITDA 18,127 13,816 170,406 84,410
Mark-to-market FAS
133 metal hedge
(gain) / loss 8,259 (2,276) 18,648 (5,002)
Restructuring,
merger related and
executive separation
charges 25,044 20,004 29,865 45,304
Non-cash cost of
sales impact of
recording acquired
assets at fair
value 4,013 6,532 11,927 6,532
------- -------- ------- --------
EBITDA, excluding
special items $ 55,443 $ 38,076 $230,846 $131,244
======= ========= ======= =========
Aleris International, Inc.
Reconciliation of Earnings per Diluted Share to
Adjusted Earnings per Diluted Share(1)
(unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
----------------------- --------------------
2004 2004
------------------- -------------------
2005 Reported Pro Forma 2005 Reported Pro Forma
------- -------- --------- ------ -------- ---------
(Loss) earnings
per share
as reported $(0.17) $(1.42) $(0.57) $2.38 $(1.51) $(0.80)
Purchase
accounting
adjustments 0.13 0.35 0.23 0.38 0.41 0.23
Ineffective metal
hedging 0.27 (0.19) (0.08) 0.60 (0.27) (0.18)
Restructuring costs 0.82 0.84 0.69 0.96 1.27 1.58
Tax impact (0.22) 0.14 0.12 (0.38) 0.09 0.14
------- ------- ------ ------- ------ ------
Earnings per
Share as
adjusted $0.83 $(0.28) $0.39 $3.94 $(0.01) $0.97
===== ===== ===== ===== ===== =====
(1) This statement reconciles (i)earnings (loss) per share as
reported,(ii) to earnings per share as adjusted to exclude the impact
of purchase accounting adjustments, the impact of mark-to-market FAS
133 metal hedge gains and losses, and the impact of executive
severance costs, restructuring costs associated with management
actions related to pre merger restructuring initiatives of
Commonwealth Industries and the merger of the Company with
Commonwealth. For 2005, the "tax impact" represents the impact of
using an 8.75% effective tax rate to compute adjusted earnings per
share. The 8.75% rate was previously used to develop our estimated
adjusted earnings per share. For 2004 reported and pro forma adjusted
earnings per share, the "tax impact" was determined by computing an
adjusted annual tax rate and associated expense excluding the
adjustments from pre-tax income. In 2004 this rate is 12.73% on a pro
forma basis. The adjusted expense was compared to the reported or pro
forma expense with the difference, on a per share basis, reflected in
the statement. The methods used to compute these measures may differ
from the methods used by other companies. Earnings per share as
adjusted is a non GAAP measure. This non-GAAP measure has limitations
as an analytical tool and should be considered in addition to, not in
isolation or as a substitute for, or superior to, Aleris' measures of
financial performance prepared in accordance with GAAP. Investors are
encouraged to review the tables contained herein reconciling the non-
GAAP financial measures to comparable GAAP amounts. Management
believes earnings per share as adjusted to exclude special items is
useful to our stakeholders in better understanding our operating
results from period to period and the ongoing performance of our
underlying businesses without the impact of these special items.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO )
SOURCE Aleris International, Inc.
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Related links:
http://aleris.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Michael D. Friday of Aleris International,
Inc., +1-216-910-3503
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