BEACHWOOD, Ohio, Aug. 8 /PRNewswire-FirstCall/ -- Aleris International,
Inc. (NYSE: ARS) today reported record results for the second quarter of
2006 and for the six months ended June 30, 2006.
Summary
- Operating income increased to a quarterly record of $102.6 million for
the second quarter of 2006 from last year's $30.8 million, an increase
of $71.8 million, or 233%.
- Second quarter net income was a record $55.4 million, or $1.75 per
share, at an estimated tax rate of 36.9%, compared with reported net
income of $18.9 million, or $0.60 per share, in the second quarter of
2005, based on an estimated tax rate of 9.8%. Last year's reported
second quarter earnings per share would have been $0.42 using the 2006
estimated tax rate.
- Adjusted earnings per share was a record $1.40 in the second quarter of
2006 at the estimated tax rate of 36.9%, compared with adjusted
earnings per share of $0.96 in the prior year's second quarter using an
adjusted effective 2005 tax rate of 8.75%. Adjusted to the estimated
2006 tax rate, last year's adjusted earnings per share would have been
$0.65.
- Sequentially, adjusted earnings per share increased 51% to $1.40 per
share in the second quarter of 2006 compared with $0.93 per share in
the first quarter of 2006.
- Net debt to EBITDA excluding special items on a last-twelve-month basis
decreased to 2.1x at June 30, 2006 compared with 2.8x at year end, due
primarily to significantly higher second quarter EBITDA.
- Merger-related synergies from the Commonwealth acquisition and
companywide productivity initiatives aggregated $15 million for the
quarter while synergies related to the 2005 acquisitions totaled
approximately $11 million, exceeding the Company's expectations.
- The Company is raising its estimate of merger-related synergies from
the Commonwealth acquisition and companywide productivity initiatives
to be realized within 18 to 24 months of the merger to $65 million from
$50 million.
- On August 1, 2006 Aleris closed the acquisition of the downstream
aluminum business of Corus Group plc for a purchase price of euro 695
million ($887 million). Simultaneously, the Company entered into new
credit agreements, the proceeds from which were used to fund the
acquisition and refinance substantially all of the Company's existing
indebtedness. The Company expects to incur charges in the third
quarter of approximately $53.5 million related to the refinancing.
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
(amounts in millions, except
per share data)
Volume
Recycling & alloys lbs
processed 881 838 1,755 1,670
Rolled products lbs shipped 291 238 566 498
Revenue $1,012.8 $603.6 $1,860.4 $1,248.6
Net income 55.4 18.9 83.6 48.0
Earnings per share* 1.75 0.60 2.64 1.54
Adjusted earnings per share* 1.40 0.96 2.33 2.29
EBITDA (1) 117.8 43.7 192.5 100.2
EBITDA excluding
special items (1) 99.9 55.3 176.6 123.8
* - 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, mark-to-market FAS
133 unrealized gains and losses on derivative financial instruments,
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. 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 objectives, as well as our ability to meet 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 new asset-backed lending facility,
term-loan lending facility and senior unsecured facility 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. During the last half of 2005, the Company
made several acquisitions, including Tomra Latasa Reciclagem, which closed
in August, ALSCO Holdings, Inc., which closed in October, and Alumitech,
Inc., and the acquisition of selected assets of Ormet Corporation, both of
which closed in December. The Company's reported results for 2006 include
these acquisitions, but 2005 has not been recast on a comparable basis and
represents 2005 results as reported.
Second Quarter 2006 Operating Results
Aleris reported second quarter 2006 revenues of $1.01 billion and net
income of $55.4 million, or $1.75 per share. Results for 2006 are reported
using a 36.9% estimated tax rate. These results include $0.35 per share of
favorable impact from special items attributable to a $12.5 million
unrealized gain on currency hedges related to a portion of the euro
purchase price for the downstream aluminum operations of Corus Group plc
("Corus Aluminum") and $5.5 million of non-cash mark-to-market FAS 133
unrealized metal hedge gains. The Company completed the Corus Aluminum
acquisition August 1, 2006.
For the second quarter of 2005, Aleris reported revenues of $603.6
million and net income of $18.9 million, or $0.60 per diluted share, using
an effective tax rate of approximately 9.8%. These results include $0.36
per share of unfavorable special items, including $9.5 million of
mark-to-market FAS 133 metal hedge losses, $1.1 million related to the
non-cash cost of sales impact of the write-up of rolled products assets to
fair value at the date of purchase, and $1.0 million of restructuring and
asset impairment charges. Last year's reported second quarter earnings per
share would have been $0.42 using the 2006 estimated tax rate.
Second quarter 2006 adjusted earnings per share was $1.40 compared with
$0.96 in the comparable year-ago period. Prior-year adjusted EPS would have
been $0.65 on a comparable tax rate basis. EBITDA excluding special items
totaled $99.9 million in the second quarter of 2006, an increase of 81%
compared with $55.3 million in the second quarter of 2005. The Company's
improved results were driven primarily by continued improvements in both
the aluminum recycling and zinc businesses, the impact of 2005
acquisitions, as well as synergies and productivity gains companywide.
Steven J. Demetriou, Chairman and Chief Executive Officer of Aleris,
said, "We are extremely pleased with the record results we achieved for the
second quarter of 2006 with operating income increasing more than 200% from
the prior-year period. The results not only exceeded our expectations but
also reaffirmed the strength of our businesses. Our rolled products
business benefited from acquisitions, strengthened margins from improved
scrap spreads, the favorable FIFO impact of the rising London Metal
Exchange (LME) on a year- over-year basis and continued productivity
improvements. Aluminum recycling increased the momentum begun over the last
several quarters, while zinc continued to generate record earnings. We are
particularly pleased with the impact of the acquisitions we made in 2005
which are contributing substantially to our increased profitability."
Year-to-date Operating Results
For the first half of 2006, Aleris reported revenues of $1.86 billion
and net income of $83.6 million or $2.64 per share. These results include
$0.31 per share of favorable impact from special items, including the $12.5
million Corus Aluminum acquisition-related unrealized currency hedge gain,
$4.7 million of non-cash mark-to-market FAS 133 unrealized metal hedge
gains and $0.3 million related to adjustments to reduce a restructuring
accrual, offset partially by $1.6 million of non-cash cost of sales impact
related to the writeup of acquired assets to fair value. For the comparable
2005 period, the Company reported revenues of $1.25 billion and net income
of $48.0 million, or $1.54 per share. Those results included $0.75 per
share of special items, including $13.1 million of mark-to-market FAS 133
metal hedge losses, $6.7 million related primarily to the non-cash cost of
sales impact of the write-up of rolled products inventory to fair value at
date of purchase, and $3.8 million of asset impairment charges.
First half 2006 adjusted earnings per share of $2.33 compare to $2.29
per share in 2005, or $1.57 using the 2006 tax rate of 36.9%. EBITDA
excluding special items was $176.6 million in the first half of 2006
compared with $123.8 million for the prior-year period. The improved
results for 2006 were largely the result of 2005 acquisitions and continued
gains from synergies and productivity improvements.
Net debt decreased by $36.3 million since December 31, 2005, resulting
in net debt to EBITDA excluding special items on a last-twelve-month basis
declining to 2.1x at June 30, 2006 compared with 2.8x at year end.
Rolled Products
Rolled products shipments totaled 291 million pounds in the second
quarter of 2006, including approximately 68 million pounds from
acquisitions. This compared with shipments of 238 million pounds for the
comparable period in 2005. Excluding acquisitions, rolled products
shipments were down approximately 6% compared with the 2005 second quarter
as customers continued to delay orders due to high LME prices and as the
Company continued to focus on profitability rather than volume. Rolled
products segment income was $52.4 million in the second quarter of 2006,
compared with segment income of $38.3 million in the prior-year period.
Increased income was driven primarily by the 2005 acquisitions of ALSCO and
certain assets of Ormet, favorable scrap spreads, improved productivity and
the favorable FIFO impact of the rising LME, which more than offset
expected declines in rolling margins and volume as well as inflation in
freight, energy and other conversion costs.
Excluding acquisitions, material margins for the second quarter
improved to $0.481 per pound, compared with $0.460 in the year-earlier
period as improving scrap spreads and the favorable FIFO impact of the
rising LME more than offset an expected decline in rolling margins.
Sequentially, material margins excluding acquisitions declined $0.052 due
to the significant favorable impact of the rising LME on first quarter
results, partially offset by improving scrap spreads in the second quarter.
Including acquisitions, material margins were $0.513 per pound as ALSCO
products have higher material margins than the underlying rolled products
business. Including acquisitions, cash conversion costs were $0.223 per
pound. Sequentially, cash conversion costs declined $0.026 per pound during
the second quarter of 2006 due to higher volumes and continued productivity
improvements.
During the second quarter 2006, the rolled products business segment
completed the closure of its Carson, California, plant which ceased
production on March 31, 2006 and realized $2.6 million in synergies from
the closure.
Year-to-date rolled products shipments totaled 566 million pounds
compared with 498 million pounds reported in the first half of 2005.
Excluding acquisitions, material margins for the first half of 2006
improved to $0.507 per pound, compared with $0.474 in the first half of
2005 as the favorable FIFO impact of the rising LME, favorable scrap
spreads and improved productivity more than offset an expected decline in
rolling margins. Including acquisitions, material margins were $0.524 per
pound in the first half of 2006 while cash conversion costs were $0.236 per
pound. Segment income was $94.8 million for the first half of 2006 compared
with $87.8 million in the comparable prior-year period. Contributing to the
earnings increase were the 2005 acquisitions of both ALSCO and certain
assets of Ormet, which drove shipped pounds higher, as well as widening
scrap spreads and the favorable FIFO impact of the rising LME. In addition,
the rolled products segment has achieved excellent results in its Six Sigma
and productivity initiatives. These factors have more than offset decreases
in legacy business volumes primarily due to the high LME, slightly lower
rolling margins and increases in freight, paint and certain conversion
costs such as labor and natural gas.
Aluminum Recycling
Aluminum recycling segment income improved to $22.5 million in the
second quarter of 2006 from $8.7 million in the second quarter of 2005.
Second quarter 2006 processing volume of 524 million pounds compared with
the 510 million pounds processed in the year-earlier second quarter.
Increased volume related to the acquisition of Alumitech and certain assets
of Ormet was partially offset by lower volume due to the shift of
management responsibility for certain recycling facilities to rolled
products beginning in 2006. The almost three-fold increase in segment
income was driven by the capture of synergies and operational improvements,
the Alumitech acquisition, increased volume and higher scrap spreads.
Year-to-date 2006 processing volume was 1.03 billion pounds compared
with 1.02 billion pounds reported in the first half of 2005. Segment income
in the first half of 2006 was $38.2 million compared with $12.9 million for
the year- earlier period. This improvement was due to synergy capture,
higher scrap spreads and the Alumitech acquisition.
International
International processing volume of 290 million pounds for the second
quarter of 2006 was 7% higher than the 272 million pounds processed in the
prior year period. Second quarter 2006 segment income of $7.7 million was
$4.5 million higher than the $3.2 million reported in the 2005 second
quarter. Improved results at the Company's German recycling operations and
the 2005 acquisition of Tomra Latasa accounted for the majority of the
increase. Sequentially, segment income improved 221% from the first quarter
of 2006 as issues related to the startup of the Deizisau, Germany,
recycling facility were resolved and expected margin improvements at the
Company's German recycling operations were realized.
Year-to-date international processing volume of 605 million pounds was
12% higher than the 539 million pounds processed in the first half of 2005.
Segment income on a year-to-date basis was $10.1 million in 2006 compared
with $7.7 million for the comparable period a year ago due primarily to the
acquisition of Tomra Latasa.
Zinc
Zinc segment income of $19.2 million for the second quarter of 2006
quadrupled from the $4.8 million reported for the same period in 2005.
Second quarter 2006 processing volume of 67 million pounds was up from the
56 million pounds processed in the second quarter of 2005 due to throughput
improvements in zinc metal. The substantial increase in zinc segment income
was due primarily to the unprecedented rise in LME zinc prices which has
occurred this year, with the average LME price of zinc at $1.49 per pound
in the second quarter of 2006 compared with $0.58 per pound in the
comparable period of 2005.
Year-to-date segment income of $34.3 million compared with $10.1
million for the first half of 2005, while year-to-date processing volume of
125 million pounds compared with 113 million pounds reported for the first
six months of 2005.
Corporate Expense
Corporate expense includes primarily corporate general and
administrative expense (G&A) and interest expense. In addition, in order to
simplify understanding of ongoing segment operations, corporate expense
includes all restructuring and asset impairment charges as well as non-cash
adjustments associated with mark-to-market FAS 133 accounting for hedging
activity. In the second quarter of 2006, Aleris recorded $18.0 million of
unrealized hedge gains, $12.5 million of which were related to hedging a
portion of the purchase price paid to acquire Corus Aluminum. The balance
of this amount was non-cash mark-to-market FAS 133 unrealized metal hedge
gains. In addition, the Company reduced an accrual for restructuring costs
related to the closure of the Carson, California, plant by $0.3 million. In
the same period of 2005, Aleris recorded $9.5 million of non-cash
mark-to-market FAS 133 unrealized metal hedge losses and $1.0 million of
restructuring and other charges. Corporate G&A increased 38% to $19.2
million in the second quarter of 2006 from the comparable 2005 period due
to increased incentive compensation expense, higher stock-based
compensation expense partially resulting from the adoption of FAS 123R, and
the Company's centralization of certain functions. However, as a percentage
of revenues, corporate G&A expense decreased to 1.9% in the second quarter
of 2006 from 2.3% in the second quarter of 2005. Interest expense for the
second quarter of 2006 increased to $13.7 million from $9.9 million in the
second quarter of 2005 due to borrowings associated with the 2005
acquisitions and higher interest rates.
On a year-to-date basis, corporate G&A increased 24% to $34.6 million
from $28.0 million in the comparable 2005 period due to increased incentive
compensation and higher stock-based compensation expense and the
centralization of certain functions. However, as a percentage of revenues,
corporate G&A expense decreased to 1.9% in the first half of 2006 from 2.2%
in the first half of 2005. Interest expense for year-to-date 2006 increased
to $27.7 million from the $20.3 million in the prior-year period because of
higher rates and higher borrowings related to the 2005 acquisitions.
Capital expenditures were $14.8 million for the second quarter of 2006,
compared with $13.1 million for the previous year's quarter. The increase
primarily resulted from expansions at the Company's rolled products
facilities in Lewisport, Kentucky, and Uhrichsville, Ohio. Year-to-date
capital expenditures were $25.8 million compared with $22.0 million in the
first half of 2005.
Outlook
Mr. Demetriou said, "We are particularly pleased to have completed the
Corus acquisition, which should strengthen our product portfolio, expand
our global capabilities and contribute significantly to our future
profitability. We welcome all 4,600 former Corus employees onto the Aleris
team and look forward to building a world-class global aluminum company. In
addition, we remain focused on achieving maximum benefit from the original
Commonwealth merger and are again raising our estimated synergy target to
$65 million from $50 million to be achieved within 18 to 24 months of the
original merger."
Conference Call and Webcast Information
Aleris will host a conference call on Tuesday, August 8, 2006 at 10
a.m. Eastern Time. Steven J. Demetriou, Aleris International's 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 800-329-9097 and referencing
passcode # 39963935 at least 10 minutes prior to the presentation, which
will begin promptly at 10 a.m. Eastern Time. 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
# 82736773 beginning at 12:00 p.m. Eastern Time, August 8 until 11:59 p.m.
Eastern Time, August 22, 2006.
About Aleris
Aleris International, Inc. is a global leader in aluminum rolled
products and extrusions, aluminum recycling and specification alloy
production. The Company is also a recycler of zinc and a leading U.S.
manufacturer of zinc metal and value-added zinc products that include zinc
oxide and zinc dust. Headquartered in Beachwood, Ohio, a suburb of
Cleveland, the Company operates 50 production facilities in North America,
Europe, South America and Asia, and employs approximately 8,600 employees.
For more information about Aleris, please visit our Web site at
http://www.aleris.com.
Important Additional Information Regarding The Merger Will Be Filed
With The SEC
In connection with the proposed merger, Aleris International, Inc. will
file a proxy statement with the Securities and Exchange Commission.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN
IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE MERGER AND THE PARTIES THERETO. Investors and security holders may
obtain a free copy of the proxy statement (when available) and other
documents filed by Aleris International, Inc. at the Securities and
Exchange Commission's web site at http://www.sec.gov. The proxy statement
and such other documents may also be obtained for free from Aleris by
directing such request to Aleris International, Inc., Investor Relations,
25825 Science Park Drive, Beachwood, Ohio, 44072. Telephone: (216)
910-3634.
Aleris and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the
solicitation of proxies from its stockholders in connection with the
proposed merger. Information concerning the interests of Aleris's
participants in the solicitation, which may be different than those of
Aleris stockholders generally, is set forth in Aleris's proxy statements
and Annual Reports on Form 10-K, previously filed with the Securities and
Exchange Commission, and in the proxy statement relating to the merger when
it becomes available.
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, including the acquisition of the downstream aluminum
businesses of Corus Group plc; its future growth; an anticipated favorable
economic environment in 2006; future benefits from acquisitions and new
products; expected benefits from changes in the industry landscape and
post-hurricane reconstruction; and anticipated synergies resulting from the
merger with Commonwealth, the acquisition of the downstream aluminum
businesses of Corus Group plc 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's 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, including
any decline 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
(the "SEC"), including but not limited to the Company's annual report on
Form 10-K for the fiscal year ended December 31, 2005, and quarterly report
on Form 10-Q for the quarter ended March 31, 2006, particularly the
sections entitled "Risk Factors" contained therein and in the section
entitled "Risk Factors" contained in the Company's Current Report on Form
8-K filed with the SEC on June 30, 2006.
Aleris International, Inc.
------------------------------------
Consolidated Statement of Income
(in millions, except share and per share data)
(unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------ -----------------------
2006 2005 2006 2005
REVENUES $1,012.8 $603.6 $1,860.4 $1,248.6
Cost of sales 898.8 542.1 1,659.3 1,114.9
-------- ------ -------- --------
GROSS PROFIT 114.0 61.5 201.1 133.7
Selling, general
and administrative
expense 29.7 20.2 56.5 42.8
Restructuring and
other (credits)
charges (0.3) 1.0 (0.3) 3.8
Unrealized (gains)
losses on Derivative
instruments (18.0) 9.5 (17.2) 13.1
------- ------- -------- --------
Operating income 102.6 30.8 162.1 74.0
Interest expense 13.7 9.9 27.7 20.3
Interest income (0.4) (0.4) (0.6) (0.6)
Other expense
(income), net 0.8 (0.2) 1.3 (0.3)
Equity in net loss
of affiliate -- 0.1 -- 0.2
------- ------- --------- ---------
Income before provision
for income taxes and
minority interests 88.5 21.4 133.7 54.4
Provision for
income taxes 32.9 2.4 49.7 6.2
------- ------- -------- --------
Income before
minority interests 55.6 19.0 84.0 48.2
Minority interests,
net of provision
for income taxes 0.2 0.1 0.4 0.2
------- ------- -------- ---------
Net income $55.4 $18.9 $83.6 $48.0
======= ======= ======= =========
Earnings per share:
---------------------
Basic $1.79 $0.62 $2.71 $1.58
Diluted $1.75 $0.60 $2.64 $1.54
Weighted Average
Shares Outstanding
(in thousands):
---------------------
Basic 30,936 30,732 30,857 30,303
Diluted 31,743 31,496 31,652 31,087
(1) This statement reconciles (i)earnings per share as reported,(ii) to
earnings per share as adjusted to exclude the impact of purchase
accounting adjustments, unrealized gains and losses on derivative
financial instruments and restructuring and other credits and charges.
For 2005, the "tax impact" represents the impact of using an 8.75%
effective tax rate to compute adjusted earnings per share rather than
the quarterly and year-to-date reported rates of 9.8% and 10.8%
respectively. The 8.75% rate was used to develop our estimated
adjusted earnings per share. For 2006 pro forma adjusted earnings per
share, the "tax impact" was determined by using an annual tax rate of
38% on the adjusted items as shown. 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's 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.
Aleris International, Inc.
--------------------------
Supplementary Information
(in millions, except percentages and per share data)
(unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2006 2005 2006 2005
Depreciation
and amortization $16.0 $12.8 $31.7 $26.2
Capital spending $14.8 $13.1 $25.8 $22.0
Segment Reporting
------------------
Volume (pounds processed):
Aluminum recycling 523.6 509.8 1,025.8 1,017.9
International 290.1 272.3 604.6 539.1
Zinc 67.2 55.8 124.5 112.9
------- ------- -------- --------
880.9 837.9 1,754.9 1,669.9
Percent tolled: 52% 50% 53% 50%
Shipped pounds -
Rolled products 290.6 238.5 565.5 497.7
Revenues:
Rolled products $477.8 $ 322.1 $890.3 $672.3
Aluminum recycling 200.9 129.9 379.8 274.4
International 188.1 101.0 354.8 203.6
Zinc 151.7 59.9 248.6 114.9
Intersegment
eliminations (5.7) (9.3) (13.1) (16.6)
------- ------- ------- -------
$1,012.8 $603.6 $ 1,860.4 $ 1,248.6
Segment Income:
Rolled products $52.4 $38.3 $94.8 $87.8
Aluminum recycling 22.5 8.7 38.2 12.9
International 7.7 3.2 10.1 7.7
Zinc 19.2 4.8 34.3 10.1
------- ------- ------- -------
$101.8 $55.0 $ 177.4 $118.5
Aleris International, Inc.
------------------------------------
Condensed Consolidated Balance Sheet
(in millions)
June 30, 2006 December 31, 2005
------------------ -----------------
(unaudited)
ASSETS
Current Assets:
Cash $ 19.9 $ 6.8
Accounts receivable, net 490.8 325.1
Inventories 448.6 404.8
Derivative financial instruments 26.0 28.0
Other current assets 46.6 46.1
------- -------
Total Current Assets 1,031.9 810.8
PP&E, net 521.5 537.8
Goodwill 178.2 152.8
Restricted cash 6.2 6.2
Other assets 40.3 46.5
------- -------
TOTAL ASSETS $ 1,778.1 $ 1,554.1
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 331.5 $ 200.8
Accrued liabilities 168.3 135.4
Current maturities of long-term debt 22.9 20.8
------- -------
Total Current Liabilities 522.7 357.0
Deferred income taxes payable 51.8 51.8
Long-term debt 605.7 631.0
Other long-term liabilities 120.4 120.5
Stockholders' Equity 477.5 393.8
------- -------
TOTAL LIABILITIES AND EQUITY $ 1,778.1 $ 1,554.1
========= =========
Aleris International, Inc.
--------------------------------
Reconciliation of Net Income to
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and EBITDA Excluding Special Items
(in millions)
(unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
Net income $55.4 $ 18.9 83.6 $48.0
Interest expense, net 13.3 9.5 27.1 19.6
Income taxes 32.9 2.4 49.7 6.2
Minority interests 0.2 0.1 0.4 0.2
Depreciation and
amortization 16.0 12.8 31.7 26.2
EBITDA $ 117.8 $ 43.7 $ 192.5 $ 100.2
Unrealized (gains)
losses on derivative
financial instruments (18.0) 9.5 (17.2) 13.1
Restructuring and other
(credits) charges (.3) 1.0 (.3) 3.8
Non-cash cost of sales
impact of recording
acquired assets at
fair value .4 1.1 1.6 6.7
------ ------- ------- -------
EBITDA, excluding
special items $99.9 $55.3 $ 176.6 $123.8
======= ====== ======= ======
Aleris International, Inc.
Reconciliation of Earnings per Diluted Share to
Adjusted Earnings per Diluted Share(1)
(unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
Earnings per share as
reported $1.75 $0.60 $2.64 $1.54
Purchase accounting
adjustments 0.01 0.04 0.05 0.22
Unrealized (gains)
losses on derivative
financial instruments (0.57) 0.30 (0.54) 0.42
Restructuring and other
(credits) charges (0.01) 0.03 (0.01) 0.12
Tax impact 0.22 (0.01) 0.19 (0.01)
------ ------ ------ ------
Earnings per share
as adjusted $1.40 $0.96 $2.33 $ 2.29
------ ------ ------ ------
(1) This statement reconciles (i) earnings per share as reported,(ii) to
earnings per share as adjusted to exclude the impact of purchase
accounting adjustments, unrealized gains and losses on derivative
financial instruments and restructuring and other credits and charges.
For 2005, the "tax impact" represents the impact of using an 8.75%
effective tax rate to compute adjusted earnings per share rather than
the quarterly and year-to-date reported rates of 9.8% and 10.8%
respectively. The 8.75% rate was used to develop our estimated
adjusted earnings per share. For 2006 pro forma adjusted earnings per
share, the "tax impact" was determined by using an annual tax rate of
38% on the adjusted items as shown. 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's 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://www.aleris.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO
AP Archive: http://photoarchive.ap.org PRN Photo Desk
photodesk@prnewswire.com
CONTACT:
Michael D. Friday of Aleris International,
Inc., +1-216-910-3503
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