BEACHWOOD, Ohio, Nov. 8 /PRNewswire-FirstCall/ -- Aleris International,
Inc. (NYSE: ARS) today reported financial results for the third quarter of
2005.
Summary
- Net income totaled $31.5 million or $1.01 per diluted share for the
third quarter 2005 compared with a reported net loss of $0.3 million or
$(0.02) per diluted share in the third quarter of 2004. A reduction in
the expected 2005 effective tax rate contributed $0.17 per share.
- Third quarter 2005 adjusted earnings per share were $0.82 utilizing the
previously forecasted tax rate and compared to $0.14 in the prior year
on a pro forma basis.
- The Company's growth strategy accelerated since the end of the second
quarter with the August 31 completion of the Tomra acquisition, the
October 3 completion of the ALSCO Holdings, Inc. acquisition and the
proposed acquisition of selected assets of the Ormet Corporation
announced November 7.
- Following an evaluation of redundant manufacturing facilities related
to the ALSCO acquisition, the Company announced November 3 the planned
future closing of the Carson, California rolling mill, a key step to
realizing at least $12 million of synergies. A restructuring and asset
impairment charge of $25-$30 million is contemplated.
- Net debt was reduced by $17.6 million during the third quarter,
including the utilization of $17.4 million of cash to acquire Tomra
during the quarter. Strong cash flow from operations has driven down
net debt by $85.8 million since December 31, 2004. Pro forma for the
acquisition of ALSCO, net debt to EBITDA excluding special items on a
last twelve month basis is 1.9x at September 30, 2005 compared with
3.0x at year-end.
- Merger-related synergies and productivity benefits continued to ramp-up
in the third quarter of 2005 and reached an annualized run rate of $32
million during the third quarter of 2005.
Aleris International, Inc.
($ and lbs. in For the Three Months For the Nine Months
millions) Ended September 30, Ended September 30,
2004 2004
2005 Reported Pro Forma 2005 Reported Pro Forma
Volume:
Recycling and
alloys lbs.
processed 835 863 863 2,505 2,533 2,533
Rolled products lbs.
shipped 201 - 263 699 - 758
Revenue $554.9 $283.0 $583.9 $1,803.5 $854.0 $1,666.6
Net income (loss) $31.5 $(0.3) $1.7 $79.5 $2.7 $(6.3)
Earnings (loss)
per diluted share $1.01 $(0.02) $0.06 $2.55 $0.18 $(0.23)
Adjusted earnings
per share(1) $0.82 $0.02 $0.14 $3.11 $0.34 $0.57
EBITDA(1) $52.1 $13.4 $26.6 $152.3 $46.0 $70.6
EBITDA excluding
special items(1) $51.6 $14.2 $29.0 $175.4 $49.9 $93.2
(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
impairment 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. 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.
with Commonwealth Industries, Inc. IMCO was the acquirer for financial
accounting purposes. The Company's "As Reported" financial results for the
third quarter of 2005 include the operations of both companies for 2005, but
the comparable period in 2004 includes only the results of the former IMCO
Recycling Inc. 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.
Third Quarter Operating Results
In the third quarter of 2005, Aleris reported revenues of $554.9 million
and net income of $31.5 million or $1.01 per diluted share. These results
include $0.02 per share of special items including $2.7 million of mark-to-
market FAS 133 metal hedge gains that more than offset $1.2 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 $1.0 million of
restructuring charges related to the merger as well as a $0.17 per share
benefit related to a decrease in our expected 2005 effective tax rate. The
reduction in our expected tax rate was primarily due to the tax benefit from
the reversal of federal valuation allowance resulting from the increased
deferred tax liabilities associated with the deferred gains on our gas hedges.
For the third quarter of 2004, the Company reported revenues of $283.0 million
and a net loss of $0.3 million or $(0.02) per diluted share, including a $0.9
million mark-to-market FAS 133 metal hedge loss.
Reported revenues of $554.9 million and net income of $31.5 million or
$1.01 per diluted share in the third quarter of 2005 compare to pro forma
revenues of $583.9 million and pro forma net income of $1.7 million or $0.06
per share in the third quarter of 2004. Pro forma results in 2004 included
$4.0 million of restructuring costs primarily related to executive severance
costs and other costs related to the Commonwealth merger, $1.2 million of
asset write-offs related to the shut-down of tube enterprises at the rolled
products segment and $2.8 million of mark-to-market FAS 133 metal hedge gains.
Third quarter 2005 adjusted earnings per share of $0.82 compared favorably to
$0.14 per share on a pro forma basis in the third quarter of 2004. Third
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. EBITDA, excluding special items, totaled
$51.6 million in the third quarter of 2005, an increase of 78% compared with
$29.0 million on a pro forma basis in the comparable 2004 period. Improved
results were driven principally by continued improvements in rolled products
conversion margins and scrap spreads as well as synergy realization and
productivity benefits.
Net debt was reduced by $17.6 million during the third quarter, including
the utilization of $17.4 million of cash to acquire Tomra during the quarter.
Steven J. Demetriou, Chairman and Chief Executive Officer of Aleris, said,
"We are extremely pleased with the momentum we gained during the third
quarter. We once again exceeded underlying earnings expectations despite weak
rolled products volume as customer destocking continued. More importantly, we
took significant steps to strengthen Aleris and position the Company for
profitable growth. Since the end of the second quarter we completed the
purchase of all of the outstanding stock of Tomra Latasa in Brazil, and
completed the acquisition of ALSCO. Associated with the ALSCO acquisition, we
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. Finally, on November 7 we announced the acquisition of selected
Ormet assets and our plans to produce 125 million pounds of their sheet volume
in our existing facilities, while further diversifying our product offering.
Our continued capture of synergy and productivity benefits and a relentless
focus on cash flow have allowed us to begin to execute our growth strategy and
we expect continued strong execution as we integrate the most recent
acquisitions and accelerate our growth."
Year-to-date Operating Results
For the first nine months of 2005, Aleris reported revenues of $1,803.5
million and net income of $79.5 million or $2.55 per diluted share. These
results include $(0.68) per share of special items including $10.4 million of
mark-to-market FAS 133 metal hedge losses, $7.9 million of purchase accounting
adjustments and $4.8 million of restructuring and asset impairment charges
related to the merger. For the comparable period of 2004, the Company
reported revenues of $854.0 million and net income of $2.7 million or $0.18
per share, including $4.5 million of costs related primarily to executive
severance and $0.6 million of mark-to-market FAS 133 metal hedge gains.
Reported revenues of $1,803.5 million and net income of $79.5 million or
$2.55 per diluted share for the first nine months of 2005 compared favorably
to pro forma revenues of $1,666.6 million and a pro forma net loss of $6.3
million or $(0.23) per share for the first nine months of 2004. Pro forma
results in 2004 included $18.3 million of restructuring charges primarily
related to severance costs associated with the merger and $7.0 million of
asset write-offs related primarily to the shut-down of tube enterprises at the
rolled products segment. 2005 year-to-date adjusted earnings per share of
$3.11 compares to adjusted earnings per share of $0.57 on a pro forma basis
for the comparable year-to-date period of 2004. EBITDA excluding special
items totaled $175.4 million for the first nine months of 2005 compared with
$93.2 million on a pro forma basis in the comparable 2004 period.
Significantly improved results were driven principally by increases in rolled
products material margins and the benefits of synergy realization and
productivity.
Strong cash flow from operations has driven down net debt by $85.8 million
since December 31, 2004. Pro forma for the acquisition of ALSCO net debt to
EBITDA excluding special items on a last twelve month basis is 1.9x at
September 30, 2005 compared with 3.0x at year-end.
Rolled Products
Rolled product shipments totaled 201 million pounds in the third quarter
of 2005 compared to pro forma shipments of 263 million pounds in the same
period of 2004, down approximately 24% as some customers in both the building
and construction and distribution end-use applications continued to adjust
inventory levels during the quarter. Income in the rolled products segment
was $37.1 million in the third quarter of 2005, excluding charges of $1.2
million related to adjustments for purchase accounting, compared with pro
forma segment income of $13.5 million in the comparable 2004 period, an
improvement of 175%. The improvement was driven by significantly higher
rolling margins, favorable scrap spreads and improved productivity.
Material margins in the third quarter of 2005 improved to $0.489 per pound
from $0.335 per pound in the year-earlier period on a pro forma basis.
Sequentially, material margins improved $0.029 per pound during the quarter to
the highest levels of the year as favorable product mix kept rolling margins
high and continually improving scrap spreads more than offset slightly lower
rolling margins. Cash conversion costs increased slightly to $0.229 per pound
in the third quarter of 2005 from $0.222 per pound in the prior year on a pro
forma basis due to a 17% reduction in production volume offset partially by
improved productivity. For comparative purposes, all prior-year pro forma
amounts have been restated utilizing the average cost method of accounting for
inventory compared to previous reporting on a LIFO basis in accordance with
the prior practice of the acquiring company as required by purchase accounting
rules.
On a year-to-date basis, rolled products shipments totaled 699 million
pounds compared with 758 million pounds in the year-earlier period on a pro
forma basis. Segment income totaled $123.7 million in 2005 compared with pro
forma segment income of $42.2 million in the comparable 2004 year-to-date
period. The increased earnings were principally the result of higher rolling
margins, improved scrap spreads and increased productivity.
Aluminum Recycling
Third quarter processing volume of 503 million pounds for the aluminum
recycling segment was down approximately 5% compared with 530 million pounds
in the prior-year period. Segment income increased to $8.0 million in the
third quarter of 2005 from $4.3 million in the third quarter of 2004 due
primarily to a significant specification alloy customer bankruptcy recorded in
2004 offset partially by higher natural gas costs and tighter specification
alloy scrap spreads compared to 2004.
Aluminum recycling year-to-date 2005 processing volume was 1,521 million
pounds compared with 1,567 million pounds in the comparable 2004 period, down
3% primarily due to lower automotive volumes. Segment income of $21.0 million
for 2005 year-to-date was higher than September 2004 year-to-date segment
income of $20.2 million, due primarily to the 2004 bankruptcy discussed above
offset partially by lower than anticipated metal recovery performance, higher
natural gas costs and tighter specification alloy scrap spreads.
International
Processing volume of 273 million pounds for the international segment was
3% higher in the third quarter of 2005 than in the comparable period of 2004.
The increase was due to wrought alloy volume increases in Germany and to the
inclusion of one month of results for the recently acquired business in
Brazil. Third quarter 2005 segment income was $2.7 million compared with $6.1
million in the comparable 2004 quarter as lower profitability in Germany
caused by mix-related lower margins and higher material costs offset the
higher volume. In addition, 2004 results included a one-time gain of $1.0
million from a favorable settlement with a customer which did not recur in the
2005 period.
Year-to-date international processing volume of 812 million pounds
compares favorably to 780 million pounds processed in the comparable 2004
period due primarily to higher volumes in Europe and Brazil. Segment income
on a year-to-date basis was $10.4 million in 2005 compared to $16.5 million
for the first nine months of 2004 due primarily to lower margins in both
Germany and Mexico and the $1.0 million one-time gain in 2004.
Zinc
Third quarter 2005 processing volume of 58 million pounds for the zinc
segment was 13% below the level of the year-ago period, due primarily to
continued slow demand from the steel galvanizing industry related to the auto
production slowdown. Income in this segment, however, doubled to $4.8 million
in the third quarter of 2005 from $2.4 million in the prior-year period, due
principally to higher average selling prices of zinc and resulting better
margins. Zinc prices averaged $0.59 per pound in the third quarter compared
to $0.44 per pound in the comparable 2004 period.
Zinc year-to-date 2005 processing volume of 171 million pounds was 8%
lower than the comparable 2004 period, due primarily to reduced demand from
steel galvanizers. Year-to-date segment income of $14.9 million was 62%
higher than the comparable 2004 period, due principally to higher zinc prices.
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 third quarter of 2005, Aleris recorded gains of $1.7
million related to special items which included $2.7 million of mark-to-market
FAS 133 metal hedge gains offset partially by $1.0 million of restructuring
and asset impairment charges related to the merger. On a pro forma basis,
special items in the third quarter of 2004 totaled $2.4 million and
represented $4.0 million of restructuring costs primarily related to executive
severance costs and other costs related to the merger, mark-to-market FAS 133
metal hedge gains of $2.8 million and $1.2 million of asset write-offs related
to the shut-down of tube enterprises at the rolled products segment. Reported
corporate SG&A expense and interest expense were significantly higher in the
third quarter of 2005 than in the comparable 2004 period due to the merger
with Commonwealth.
Corporate SG&A in the third quarter of 2005 increased to $14.4 million
from $11.3 million in the comparable 2004 period on a pro forma basis, as some
functional expenses that were previously recorded in the business units have
been centralized and will be recorded at the corporate level in the future and
higher incentive compensation accruals more than offset the benefits of
corporate merger synergies. Interest expense for 2005 declined 11% to $9.8
million from 2004 on a pro forma basis, due primarily to lower interest rates
and borrowing levels.
On a year-to-date basis, corporate SG&A declined to $42.4 million in 2005
from $43.9 million in the comparable 2004 period on a pro forma basis with
corporate merger synergies more than offsetting higher incentive compensation
accruals and additional costs recorded at the corporate level related to the
centralization of certain functions that were previously recorded in the
business units. Interest expense for year-to-date 2005 declined to $30.1
million from $32.9 million in the prior-year period on a pro forma basis.
Outlook
Mr. Demetriou said, "We are very excited about the future of Aleris and
look forward to completing a record year in 2005. We have begun to see signs
that the aluminum sheet inventory correction executed by a portion of our
customer base is ending. Although underlying economic activity remains quite
strong, our outlook for the remainder of the year will likely be affected by
numerous acquisition integration-related initiatives currently underway at
Aleris. We continue to expect full year 2005 adjusted earnings per share of
$3.80 to $3.90. Looking beyond the current year, we anticipate a continued
favorable economic environment in 2006 with Aleris top-line results benefiting
from acquisitions, new products and hurricane reconstruction. Reduced costs
from merger and acquisition synergies ramp-up, the closing of the Carson
rolling mill, continued favorable scrap spreads in rolled products and an
intensified Six Sigma effort should provide additional benefits in 2006. We
expect to provide more specific guidance for 2006 once we have completed our
budgeting process later this year."
Conference Call and Webcast Information
Aleris will host a conference call November 8, 2005 at 11 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 866-831-6270 or 617-213-8858 and
referencing passcode #83648350 at least 10 minutes prior to the presentation,
which will begin promptly at 11 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 #69229914
beginning at 1 p.m. Eastern time, November 8 until 11:59 p.m. Eastern time,
November 15, 2005.
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
33 production facilities in the United States, Brazil, Germany, Mexico and
Wales, and employs approximately 4,000 employees. For more information about
Aleris, please visit the 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 2005
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, 2004, particularly the sections
entitled "Risk Factors" contained therein.
Aleris International, Inc.
------------------------------------
Consolidated Statement of Income
(in thousands, except per share data)
(unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2005 2004 2005 2004
REVENUES $554,919 $283,044 $1,803,507 $853,991
Cost of sales 495,757 264,280 1,610,688 791,163
------- ------- --------- -------
GROSS PROFIT 59,162 18,764 192,819 62,828
Selling, general and
administrative expense 22,111 11,119 64,880 37,767
Interest and other
(income) expense (261) 242 (955) 471
Restructuring charge 1,024 -- 4,821 --
Unrealized (gains) losses
on derivatives (2,747) 859 10,389 (640)
Interest expense 9,777 6,643 30,053 19,948
------- ------- --------- -------
29,904 18,863 109,188 57,546
Income (loss) before
provision for income
taxes, and
minority interests 29,258 (99) 83,631 5,282
(Benefit from)
provision for
income taxes (2,374) 180 3,806 2,475
------- ------- -------- -------
Income (loss) before
minority interests 31,632 (279) 79,825 2,807
Minority interests,
net of
provision for
income taxes 107 35 298 122
------- ------- -------- --------
Net income (loss) $31,525 $ (314) $ 79,527 $ 2,685
======= ======= ======= ========
Net earnings (loss)
per common share:
-------------------
Basic $ 1.03 $ (0.02) $ 2.62 $ 0.18
Diluted $ 1.01 $ (0.02) $ 2.55 $ 0.18
Weighted Average
Shares Outstanding:
--------------------
Basic 30,495 15,186 30,367 14,835
Diluted 31,276 15,186 31,151 15,277
Aleris International, Inc.
--------------------------
Supplementary Information
(in thousands, unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2005 2004 2005 2004
Depreciation
and amortization $13,593 $ 6,916 $ 39,764 $ 21,113
Capital spending $16,969 $ 9,739 $ 38,915 $ 22,302
Segment Reporting:
------------------
Volume (pounds):
Aluminum recycling 503,164 530,399 1,521,095 1,566,820
International 273,053 265,608 812,209 780,035
Zinc 58,358 67,040 171,219 186,115
------- ------- -------- --------
834,575 863,047 2,504,523 2,532,970
Percent tolled: 51% 51% (1) 50% 49% (1)
Shipped pounds -
Rolled products 201,079 -- 698,731 --
Revenues:
Rolled products $270,521 $ -- $ 942,830 $ --
Aluminum recycling 134,696 138,072 409,136 419,682
International 96,155 93,472 299,774 276,739
Zinc 60,149 51,500 175,068 157,570
Intersegment
eliminations (6,602) -- (23,301) --
------- ------- ------- -------
$554,919 $283,044 $1,803,507 $853,991
Segment Income:
Rolled products $ 35,920 $ -- $ 123,724 $ --
Aluminum recycling 7,987 4,338 20,953 20,225
International 2,713 6,082 10,394 16,526
Zinc 4,773 2,384 14,865 9,161
------- ------- ------- -------
$ 51,393 $ 12,804 $169,936 $ 45,912
(1) Recast to include former Commonwealth Industries sales as buy/sell due
to the acquisition.
Aleris International, Inc.
------------------------------------
Condensed Consolidated Balance Sheet
(in thousands)
September 30, 2005 December 31, 2004(1)
------------------ -----------------
(unaudited)
ASSETS
Current Assets:
Cash $ 64,444 $ 17,828
Accounts Receivable, Net 260,362 229,018
Inventories 251,680 262,210
Derivative financial
instruments 42,856 17,324
Other Current Assets 15,787 16,854
------- -------
Total Current Assets 635,129 543,234
PP&E, Net 427,095 432,779
Goodwill 72,950 63,940
Restricted Cash 6,166 16,007
Other Assets 29,470 25,189
------- -------
TOTAL ASSETS $ 1,170,810 $1,081,149
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts Payable $ 161,871 $ 178,943
Accrued Liabilities 103,376 88,405
Current Maturities of
long-term debt 8,882 61
------- -------
Total Current Liabilities 274,129 267,409
Deferred Income Taxes Payable 11,325 11,280
Long-Term Debt 364,334 412,338
Other Long-Term Liabilities 108,271 107,452
Stockholders' Equity 412,751 282,670
------- -------
TOTAL LIABILITIES AND EQUITY $ 1,170,810 $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 Nine Months Ended
September 30, September 30,
--------------------------- -----------------------
2005 2004 2005 2004
Net Income (loss) $ 31,525 $ (314) $79,527 $ 2,685
Interest expense (net) 9,244 6,533 28,884 19,605
Income taxes (2,374) 180 3,806 2,475
Minority interest 107 35 298 122
Depreciation and
amortization 13,593 6,916 39,764 21,113
EBITDA $ 52,095 $ 13,350 $152,279 $ 46,000
Mark-to-market FAS 133
metal hedge (gain) / loss (2,747) 859 10,389 (640)
Restructuring, merger
related and executive
separation charges 1,024 -- 4,821 4,512
Non-cash cost of sales
impact of recording
acquired assets at
fair value 1,219 -- 7,914 --
------ ------- ------ ------
EBITDA, excluding
special items $ 51,591 $14,209 $175,403 $ 49,872
======= ======== ======= ========
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 Nine Months Ended
September 30, September 30,
--------------------------- -----------------------
2005 2004 2005 2004
Actual Pro Forma Actual Pro Forma
------- --------- ------- ---------
Net Income (loss) $ 31,525 $ 1,674 $ 79,527 $ (6,305)
Interest expense (net) 9,244 10,901 28,884 32,557
Income taxes (2,374) 267 3,806 2,606
Minority interest 107 35 298 122
Depreciation and
amortization 13,593 13,708 39,764 41,615
EBITDA 52,095 26,585 152,279 70,595
Mark-to-market FAS
133 metal hedge
(gain) / loss (2,747) (2,786) 10,389 (2,730)
Restructuring, merger
related and executive
separation charges 1,024 5,243 4,821 25,300
Non-cash cost of sales
impact of recording
acquired assets at
fair value 1,219 -- 7,914 --
------- -------- ------- --------
EBITDA, excluding
special items $ 51,591 $ 29,042 $175,403 $ 93,165
======= ========= ======= =========
Aleris International, Inc.
Reconciliation of Earnings per Diluted Share to
Adjusted Earnings per Diluted Share(1)
(unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- -----------------
2004 2004
-------------------- --------------------
2005 Reported Pro Forma 2005 Reported Pro Forma
------- -------- --------- ------ -------- --------
Earnings (loss)
per Share
as reported $1.01 $(0.02) $ 0.06 $2.55 $0.18 $(0.23)
Purchase accounting
adjustments 0.03 -- -- 0.23 -- --
Ineffective metal
hedging (0.08) 0.02 (0.08) 0.31 (0.02) (0.08)
Restructuring costs 0.03 -- 0.16 0.14 0.17 0.77
Tax impact (0.17) 0.02 0.00 (0.12) 0.01 0.11
------- ------- ------ ------- ------- ------
Earnings per Share
as adjusted $0.82 $0.02 $0.14 $3.11 $0.34 $0.57
----- ----- ----- ----- ----- -----
(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 rather than the reported rate of 4.2%. 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.
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
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CONTACT:
Michael D. Friday of Aleris International,
Inc., +1-216-910-3503
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