BEACHWOOD, Ohio, Nov. 9 /PRNewswire/ -- Aleris International, Inc.
today reported results for the third quarter ended September 30, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO )
Summary
-- Revenues for third quarter 2007 were $1.7 billion, compared with $1.4
billion in third quarter 2006, a 19% increase, driven primarily by the
2006 acquisition of the downstream aluminum business of Corus Group plc
("Corus Aluminum") and the 2007 acquisitions of Wabash Alloys L.L.C.
("Wabash Alloys") and EKCO Products.
-- EBITDA, excluding special items, for third quarter 2007 was $127.5
million compared with $123.0 million for the comparable period last
year.
-- The Company generated free cash flow of $102.4 million in the third
quarter 2007 compared with $87.1 million in the comparable period of
2006 and $277.5 million in the first nine months of 2007 compared with
$163.6 million in the prior year-to-date period.
-- Progress continued on the Company's strategic growth initiatives as the
acquisitions of Wabash Alloys and Alumox Holding AS were completed in
September 2007.
-- Productivity and synergy savings of $32.0 million were achieved in the
third quarter 2007 and total $88.0 million year-to-date.
-- Year-to-date, revenues were $4.9 billion compared with $3.3 billion
last year, while EBITDA, excluding special items, increased 15% to
$349.8 million from $304.1 million.
-- Pro forma EBITDA, excluding special items, and including the
acquisitions of Wabash Alloys and EKCO Products as if they had occurred
on October 1, 2006 and synergies as permitted by the Company's Term
Loan Agreement, for the last 12 months ("Pro Forma Adjusted EBITDA")
was $527.8 million. Net debt was $2.8 billion at quarter end. Net
debt to Pro Forma Adjusted EBITDA, was 5.2x. Pro Forma Adjusted EBITDA
does not include approximately $19.0 million of expected synergies as
our Term Loan Agreement limits expected synergies to $40.0 million.
-- European industrial activity remains strong while demand from the North
American building & construction and transportation end-uses is
expected to remain soft for the rest of 2007.
Aleris International, Inc.
For the three months For the nine months
ended September 30, ended September 30,
2007 2006 2007 2006
(Successor) (Predecessor) (Successor) (Predecessor)
(1) (1) (1) (1)
(unaudited)
(Dollars and pounds in millions)
Shipments (pounds):
Global rolled and
extruded products 596.0 505.4 1,727.7 1,070.9
Global recycling 820.8 776.0 2,433.8 2,321.0
Global zinc 86.9 98.9 263.5 314.9
Revenue $1,664.3 $1,395.0 $4,879.5 $3,255.4
Net income (loss) 3.5 (24.2) (14.7) 59.4
EBITDA, excluding
special items(2) 127.5 123.0 349.8 304.1
Cash flows provided by
operating activities 94.4 84.2 195.0 150.8
Free cash flow(2) 102.4 87.1 277.5 163.6
(1) This press release refers to the periods subsequent to the acquisition
of the Company by TPG as the "Successor Periods" while the periods
prior to the acquisition by TPG are referred to as the "Predecessor
Periods."
(2) This press release refers to various non-GAAP (generally accepted
accounting principles) financial measures including EBITDA, EBITDA,
excluding special items, and free cash flow. 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 SFAS No. 133
unrealized gains and losses on derivative financial instruments, the
impact of the write-up of inventory and other items through purchase
accounting, non-cash stock-based compensation expense, and sponsor
management fees. "Free cash flow," as used in this press release, is
defined as EBITDA, excluding special items, less or plus changes in
accounts receivable, inventory and accounts payable and less capital
expenditures. In determining changes in inventory, the change in the
reported balance sheet amounts due to the impact of the write-up of
inventory through purchase accounting has been excluded. Management
uses EBITDA, EBITDA, excluding special items, and free cash flow as
performance metrics and believes these measures provide additional
information commonly used by our note-holders 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, 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 senior secured asset-based revolving
credit facility uses EBITDA with additional adjustments to measure its
compliance with certain covenants.
Third Quarter 2007 Operating Results
Aleris reported third quarter 2007 revenues of $1.7 billion, segment
income of $54.3 million, and net income of $3.5 million. These results
include losses from special items consisting of $21.6 million of unrealized
losses on derivative financial instruments, $14.2 million for the impact of
recording previously acquired assets at fair value, $2.3 million of
restructuring and other charges, $2.3 million of sponsor management fees,
and $1.1 million of stock-based compensation expense.
During the third quarter of 2007, Aleris also recorded the preliminary
results of an independent appraisal of the tangible and intangible
long-lived assets required as a result of TPG's acquisition of Aleris in
December 2006. Based on those preliminary results, the Company recorded
amortization expense of approximately $28.2 million in the third quarter of
2007 within selling, general and administrative expense. Additionally,
third quarter 2007 income taxes included a $31.6 million one-time benefit
resulting from a decrease in the German statutory rate for corporate income
and trade taxes.
For the third quarter of 2006, Aleris reported revenues of $1.4
billion, segment income of $76.8 million, and a net loss of $24.2 million.
These results included a $53.7 million loss on the early extinguishment of
debt, $30.9 million for the impact of recording previously acquired assets
at fair value, $24.3 million of unrealized losses on derivative financial
instruments, $2.6 million of restructuring and other charges, and $2.6
million of stock- based compensation expense partially offset by $9.8
million of gains on derivative financial instruments used to hedge a
portion of the purchase price paid for Corus Aluminum.
EBITDA, excluding special items, totaled $127.5 million in the third
quarter of 2007 compared with $123.0 million in the same period last year.
Results were driven primarily by the acquired operations of Corus Aluminum,
which were included in our consolidated results for only two months of the
2006 third quarter, and ongoing company-wide productivity initiatives,
partially offset by lower sales volumes in the Company's North American
rolled products and zinc businesses.
Free cash flow for the third quarter of 2007 was $102.4 million
compared to $87.1 million in the third quarter of 2006 as a result of our
continuous focus on working capital management.
Commenting on Aleris's third quarter results, Steven J. Demetriou,
Chairman and Chief Executive Officer, said, "We are pleased with the
performance of the controllable elements of our business, driven by the
step- change productivity improvements across all areas of the Company.
This was essential in partially offsetting the significant volume
reductions in our North American rolled products and zinc businesses,
primarily associated with the construction and transportation end-uses.
"Our various integration activities are yielding strong results. We are
on track to achieve the $65 million of acquisition synergies associated
with the Corus Aluminum acquisition, which is more than double the original
estimate. Also, since completing the Wabash acquisition two months ago, we
have begun executing several initiatives, including plant closures and back
office integration. Estimated annual synergies from the Wabash acquisition
are expected to be $30 million over 12 to 18 months. In addition, we are
achieving significant company-wide productivity benefits associated with
Six Sigma, Rapid Transformation, metal recovery, and energy efficiency
programs."
Year-to-date 2007 Operating Results
Aleris reported revenues of $4.9 billion, segment income of $140.0
million, and a net loss of $14.7 million in the first nine months of 2007.
The results were significantly impacted by unfavorable special items
including $100.4 million for the impact of recording previously acquired
assets at fair value, $11.2 million of restructuring and other charges,
$6.9 million of sponsor management fees, and $2.9 million of stock-based
compensation expense, partially offset by unrealized gains of $26.0 million
on derivative financial instruments. In addition, the 2007 results include
amortization expense of $34.8 million, an increase of $32.9 million over
the comparable period of 2006.
In the first nine months of 2006, Aleris reported revenues of $3.3
billion, segment income of $254.2 million, and net income of $59.4 million.
The 2006 results included a $53.7 million loss on the early extinguishment
of debt, $32.5 million for the impact of recording previously acquired
assets at fair value, $7.1 million for unrealized losses on derivative
financial instruments, $7.1 million of stock-based compensation expense,
and $2.3 million of restructuring and other charges, partially offset by
$9.8 million of gains on derivative financial instruments used to hedge a
portion of the purchase price paid to acquire Corus Aluminum.
EBITDA, excluding special items, of $349.8 million for the first nine
months of 2007 represents a 15% increase compared with $304.1 million for
the first nine months of 2006. The increase was primarily driven by the
Corus Aluminum acquisition and company-wide productivity and synergy
initiatives, partially offset by lower sales volumes at the North American
rolled products and zinc businesses. Free cash flow for the first nine
months of 2007 was $277.5 million compared with $163.6 million for the
first nine months of 2006 and benefited from the Company's focus on
reducing working capital.
Global Rolled and Extruded Products
Global Rolled and Extruded Products shipments totaled 596 million
pounds in the third quarter of 2007. This compares with shipments of 505
million pounds for the third quarter of 2006, with the increase driven by
the Corus Aluminum and EKCO Products acquisitions. Excluding these
acquisitions, shipments were down approximately 9% compared with the 2006
third quarter, due to continued weakness in North America. Shipments for
the former Corus Aluminum were 319 million pounds for the third quarter of
2007 compared with shipments of 216 million pounds in August and September
of 2006 and continued to benefit from strong economic growth in aerospace
and automotive applications. The former EKCO Products business, acquired
during the second quarter, contributed a net 15 million pounds to the total
shipments in the third quarter.
Global Rolled and Extruded Products segment income was $41.7 million in
the third quarter of 2007, compared with segment income of $40.4 million in
the prior-year period. Excluding the impact of $13.3 million of purchase
accounting adjustments (recording previously acquired assets at fair value)
which are recorded at the segment level, segment income in the third
quarter of 2007 was $55.0 million, compared with $71.3 million in the
prior-year third quarter, after adjusting for $30.9 million of purchase
accounting adjustments in 2006. The Corus Aluminum acquisition and
productivity initiatives improved segment income, but were more than offset
by reduced volumes in the U.S. and approximately $16.4 million of
incremental amortization expense associated with the preliminary
adjustments to record acquired intangible assets.
Material margins, on a pro forma basis including the Corus Aluminum and
EKCO Products acquisitions, of $0.64 per pound in the third quarter of 2007
increased from $0.61 per pound in the third quarter of 2006 due to more
favorable metal price lag. Cash conversion costs of $0.40 per pound
increased from $0.39 per pound in the third quarter of 2006 as underlying
productivity improvements were more than offset by the unfavorable impact
of the stronger euro and lower volumes.
Global Rolled and Extruded Products shipments totaled 1.7 billion
pounds in the first nine months of 2007 compared with 1.1 billion pounds in
the first nine months of 2006. The increase was primarily driven by the
Corus Aluminum acquisition, which contributed 967 million pounds in 2007
and 216 million pounds in 2006. Excluding the Corus Aluminum and EKCO
Products acquisitions, shipments decreased 15% in the first nine months of
2007 compared with the first nine months of 2006.
The segment's income was $80.0 million and $135.2 million in the first
nine months of 2007 and 2006, respectively. However, year-to-date 2007 and
2006 segment income includes $85.4 million and $32.5 million of unfavorable
purchase accounting adjustments, respectively. After adjusting for purchase
accounting, year-to-date segment income for 2007 would be $165.4 million
compared with segment income of $167.7 million in the first nine months of
2006. The decrease reflects the lower volumes in North America as well as
$21.7 million of incremental amortization expense associated with the
preliminary adjustments to record acquired intangible assets, partially
offset by the incremental segment income generated by the acquired
operations of Corus Aluminum and benefits from productivity improvements.
Year-to-date pro forma material margins improved to $0.64 per pound in
2007 from $0.62 per pound in 2006, while cash conversion costs increased by
$0.02 per pound in 2007 to $0.39 per pound as the stronger euro and reduced
volumes more than offset productivity improvements.
Global Recycling
Global Recycling shipments of 821 million pounds in the third quarter
of 2007 were up 6% compared with the 776 million pounds shipped in the
year- earlier quarter. The increase was driven by the acquired operations
of Wabash Alloys, which contributed 42 million pounds since their
acquisition. Excluding the acquired operations of Wabash Alloys, shipments
in the third quarter of 2007 were consistent with those of the prior year
quarter as increased European demand was offset by reduced demand in the
North American specification alloy business. Segment income was $9.0
million in the third quarter of 2007 compared with $22.2 million in the
third quarter of 2006. The decrease in segment income was driven by lower
scrap spreads in North America and $6.9 million of incremental amortization
expense associated with the preliminary adjustments to record acquired
intangible assets, partially offset by volume increases, primarily in
Europe, and productivity improvements overall. The acquired operations of
Wabash Alloys incurred a segment loss of $0.6 million, including $1.4
million of purchase accounting adjustments related to acquired inventories.
For the first nine months of 2007, shipments increased to 2.4 billion
pounds from 2.3 billion pounds in 2006, primarily driven by a 65 million
pound increase in Europe and the acquisition of Wabash Alloys. Segment
income for the first nine months of 2007 was $49.9 million compared with
$69.8 million for the year-earlier period. Excluding purchase accounting
adjustments of $3.8 million, segment income of $53.7 million was $16.1
million less than the prior year's first nine months, driven by less
favorable scrap spreads in the specification alloy business and $6.9
million of incremental amortization expense.
Global Zinc
Global Zinc reported third quarter 2007 volume of 87 million pounds, a
decrease of 12% from 99 million pounds in the third quarter of 2006.
Segment income of $3.6 million for the third quarter of 2007 compared with
$14.2 million of segment income for the third quarter of 2006. The decrease
in segment income from the prior-year period was due to lower volume caused
by lower demand by tire and rubber customers, lower margins from trading
activities, higher material costs and approximately $4.0 million of
incremental amortization expense.
Year-to-date shipments for the segment totaled 264 million pounds in
2007 compared with 315 million pounds in 2006. Year-to-date segment income
of $10.1 million in 2007 compared with $49.2 million in the prior-year
period. The decrease in segment income was driven primarily by a purchase
accounting adjustment of $11.2 million, lower volume, less favorable scrap
spreads, an unfavorable metal price lag resulting from the first quarter
2007 liquidation of inventory acquired at historically high fourth quarter
2006 prices, and $4.0 million of incremental amortization expense.
Corporate Expense
Corporate expense primarily includes corporate general and
administrative expense (G&A), other income/expense, certain realized gains
and losses on derivative financial instruments resulting from the
centralization of our risk management functions, and interest expense. In
addition, in order to simplify the understanding of ongoing segment
operations, corporate expense includes all restructuring and other charges
as well as non-cash adjustments associated with mark-to-market accounting
for derivative financial instruments. In the third quarter of 2007,
Aleris's results included $21.6 million of unrealized losses on derivative
financial instruments, $2.3 million of sponsor management fees, $2.3
million of restructuring and other charges, and $1.1 million of charges for
non-cash stock-based compensation.
Corporate G&A increased to $20.5 million in the third quarter of 2007
from $18.9 million in the same period of 2006 as the addition of sponsor
management fees and increased operating costs at the Company's European
headquarters were only partially offset by lower incentive and stock-based
compensation expense. Year-to-date Corporate G&A increased by $5.5 million
for the same reasons.
Interest expense for the third quarter of 2007 increased to $58.3
million from $26.6 million in the third quarter of 2006 due to higher
borrowings associated with the refinancing to fund the acquisition of Corus
Aluminum in August 2006, the refinancing to fund TPG's acquisition of
Aleris in December 2006, and the additional indebtedness incurred to fund
the acquisition of Wabash Alloys in September 2007. For the first nine
months of 2007, interest expense increased to $168.8 million from $54.3
million in the same period of 2006.
For the nine months ended September 30, 2007, the Company's effective
tax (benefit) rate was (78.4)% compared with 36.8% in the comparable period
of 2006. The 2007 effective rate benefited from the new tax rules in
Germany and our financing structure in Europe. Cash taxes are expected to
total approximately $25.0 million for 2007.
Capital expenditures were $43.3 million for the third quarter of 2007,
compared with $27.7 million for the previous year's third quarter. Year-to-
date capital expenditures were $135.5 million compared with $53.5 million
in the first nine months of 2006. The increase is primarily attributable to
the Corus Aluminum acquisition which accounted for $98.3 million of capital
expenditures in the first nine months of 2007.
Conference Call and Webcast Information
Aleris will hold a conference call November 9, 2007 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 800-901-5241 or 617-786-2963 and
referencing passcode 37733695 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 on 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 78440558
beginning at 1:00 pm Eastern time, November 9, 2007 until 11:59 p.m.
Eastern time, November 23, 2007.
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 has 55 production facilities in North America,
Europe, South America and Asia, and has approximately 9,100 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 2007 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 2007; future benefits from acquisitions and new
products; expected benefits from changes in the industry landscape; 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 acquisitions;
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 Aleris processes; the ability of Aleris
to enter into effective metals, natural gas and other commodity
derivatives; continued increases in natural gas and other fuel costs of
Aleris; 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
Aleris's various facilities; a continuation of building and construction
customers and distribution customers reducing their inventory levels and
reducing the volume of Aleris's shipments; restrictions on and future
levels and timing of capital expenditures; retention of Aleris'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 Aleris's filings with the Securities and
Exchange Commission (the "SEC"), including but not limited to Aleris's
annual report on Form 10-K for the fiscal year ended December 31, 2006 and
quarterly report on Form 10-Q for the quarters ended March 31, 2007 and
June 30, 2007, particularly the sections entitled "Risk Factors" contained
therein.
Aleris International, Inc.
Consolidated Statement of Operations
(unaudited)
(in millions)
For the three For the nine
months ended months ended
September 30, September 30,
2007 2006 2007 2006
(Successor) (Predecessor) (Successor) (Predecessor)
Revenues $1,664.3 $1,395.0 $4,879.5 $3,255.4
Cost of sales 1,575.8 1,289.6 4,603.7 2,933.6
Gross profit 88.5 105.4 275.8 321.8
Selling, general and
administrative expense 83.8 54.2 204.1 114.2
Restructuring and other
charges 2.3 2.6 11.2 2.3
(Gains) losses on derivative
financial instruments (12.4) 10.7 (47.7) 5.5
Operating income 14.8 37.9 108.2 199.8
Interest expense 58.3 26.6 168.8 54.3
Interest income (3.4) (0.9) (5.6) (1.5)
Other expense, net 0.8 50.9 8.1 52.0
(Loss) income before
provision for
income taxes and minority
interests (40.9) (38.7) (63.1) 95.0
(Benefit from) provision
for income taxes (44.6) (14.7) (49.0) 35.0
Income (loss) before
minority interests 3.7 (24.0) (14.1) 60.0
Minority interests, net
of provision for income
taxes 0.2 0.2 0.6 0.6
Net income (loss) $3.5 $(24.2) $(14.7) $59.4
Aleris International, Inc.
(unaudited)
(in millions)
For the three For the nine
months ended months ended
September 30, September 30,
2007 2006 2007 2006
(Successor) (Predecessor) (Successor) (Predecessor)
Supplemental
information:
Depreciation and
amortization $72.0 $31.7 $154.3 $63.4
Capital
expenditures 43.3 27.7 135.5 53.5
Segment reporting:
Shipments (pounds)
Global rolled and
extruded products 596.0 505.4 1,727.7 1,070.9
Global recycling 820.8 776.0 2,433.8 2,321.0
Global zinc 86.9 98.9 263.5 314.9
Revenues:
Global rolled and
extruded
products $1,146.3 $877.6 $3,299.8 $1,767.9
Global recycling 425.1 375.7 1,267.1 1,110.3
Global zinc 133.0 148.8 423.6 397.4
Intersegment
eliminations (40.1) (7.1) (111.0) (20.2)
$1,664.3 $1,395.0 $4,879.5 $3,255.4
Segment income:
Global rolled and
extruded products $41.7 $40.4 $80.0 $135.2
Global recycling 9.0 22.2 49.9 69.8
Global zinc 3.6 14.2 10.1 49.2
$54.3 $76.8 $140.0 $254.2
Corporate general and
administrative
expense $(20.5) $(18.9) $(57.6) $(52.1)
Restructuring and other
charges (2.3) (2.6) (11.2) (2.3)
Unrealized (losses)
gains from derivative
financial instruments (21.6) (24.3) 26.0 (7.1)
Interest expense (58.3) (26.6) (168.8) (54.3)
Interest and other income
(expense), net 7.5 (43.1) 8.5 (43.4)
(Loss) income before
income taxes and
minority interests $(40.9) $(38.7) $(63.1) $95.0
Aleris International, Inc.
Condensed Consolidated Balance Sheet
(in millions)
September 30, 2007 December 31, 2006
------------------ ------------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $124.5 $126.1
Accounts receivable, net 896.1 692.5
Inventories 946.0 1,023.6
Deferred income taxes 34.6 34.6
Derivative financial instruments 55.9 77.5
Other current assets 45.9 38.9
Total Current Assets 2,103.0 1,993.2
Property, plant and equipment, net 1,388.0 1,223.1
Goodwill 1,345.4 1,362.4
Intangible assets, net 375.2 84.1
Other assets 164.7 145.6
TOTAL ASSETS $5,376.3 $4,808.4
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $721.4 $554.3
Accrued liabilities 268.9 338.7
Deferred income taxes 33.9 37.7
Current maturities of long-term debt 18.6 20.5
Total Current Liabilities 1,042.8 951.2
Deferred income taxes 256.3 141.2
Long-term debt 2,869.4 2,567.5
Other long-term liabilities 324.1 303.1
Stockholder's equity 883.7 845.4
TOTAL LIABILITIES AND EQUITY $5,376.3 $4,808.4
Aleris International, Inc.
Reconciliation of (Loss) Net Income to
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and EBITDA, Excluding Special Items (1)
(unaudited)
(in millions)
For the three For the nine
months ended months ended
September 30, September 30,
2007 2006 2007 2006
(Successor) (Predecessor) (Successor) (Predecessor)
Net income (loss) $3.5 $(24.2) $(14.7) $59.4
Interest expense, net 54.9 25.7 163.2 52.8
Income taxes (44.6) (14.7) (49.0) 35.0
Minority interests 0.2 0.2 0.6 0.6
Depreciation and 72.0 31.7 154.3 63.4
amortization
EBITDA 86.0 18.7 254.4 211.2
Unrealized losses
(gains) on derivative
financial instruments 21.6 24.3 (26.0) 7.1
Restructuring and
other charges 2.3 2.6 11.2 2.3
Impact of recording
acquired assets at
fair value 14.2 30.9 100.4 32.5
Sponsor management fee 2.3 - 6.9 -
Stock-based
compensation expense 1.1 2.6 2.9 7.1
Loss on early
extinguishment of debt - 53.7 - 53.7
Realized hedge gain-
Corus Aluminum
acquisition - (9.8) - (9.8)
EBITDA, excluding
special items $127.5 $123.0 $349.8 $304.1
(1) See note 2 on page 2.
Aleris International, Inc.
Reconciliation of Free Cash Flow to Net Income (Loss) and
Cash Provided by Operating Activities
For the three For the nine
months ended months ended
September 30, September 30,
2007 2006 2007 2006
(Successor) (Predecessor)(Successor) (Predecessor)
Free cash flow $102.4 $87.1 $277.5 $163.6
Increase in accounts
receivable, net 75.9 246.1 203.6 411.8
Increase (decrease)
in inventories 9.4 425.8 (77.6) 469.6
Impact of recording
acquired inventory
at fair value - - 58.4 -
Increase in accounts
payable (48.5) (213.9) (167.1) (344.6)
Less purchased
working capital (55.0) (449.8) (80.5) (449.8)
Capital expenditures 43.3 27.7 135.5 53.5
EBITDA, excluding
special items 127.5 123.0 349.8 304.1
Unrealized (losses)
gains on derivative
financial instruments (21.6) (24.3) 26.0 (7.1)
Loss on early
extinguishment of debt - (53.7) - (53.7)
Realized hedge gain-
Corus Aluminum
acquisition - 9.8 - 9.8
Restructuring and
other charges (2.3) (2.6) (11.2) (2.3)
Impact of recording
acquired assets at
fair value (14.2) (30.9) (100.4) (32.5)
Sponsor management fee (2.3) - (6.9) -
Stock-based
compensation expense (1.1) (2.6) (2.9) (7.1)
EBITDA 86.0 18.7 254.4 211.2
Interest expense, net (54.9) (25.7) (163.2) (52.8)
Benefit from
(provision for)
income taxes 44.6 14.7 49.0 (35.0)
Depreciation and
amortization (72.0) (31.7) (154.3) (63.4)
Minority interest,
net of provision for
income taxes (0.2) (0.2) (0.6) (0.6)
Net income (loss) $3.5 (24.2) $(14.7) $59.4
Depreciation and
amortization 72.0 31.7 154.3 63.4
Benefit from
deferred income taxes (44.5) (15.9) (50.3) (2.9)
Excess income tax
benefits from
exercise of stock
options - (0.6) - (3.6)
Restructuring and
other charges:
Charges 2.3 2.6 11.2 2.3
Payments (2.7) (2.2) (11.9) (5.9)
Non-cash loss on
early extinguishment
of debt - 16.4 - 16.4
Stock-based
compensation expense 1.1 2.6 2.9 7.1
Unrealized losses
(gains) on
derivative financial
instruments 21.6 24.3 (26.0) 7.1
Non-cash charges
related to step-up
in carrying value of
inventory 1.6 - 57.2 -
Other non-cash charges 2.7 - 8.1 3.7
Net change in
operating assets and
liabilities 36.8 49.5 64.2 3.8
Cash provided by
operating activities $94.4 $84.2 $195.0 $150.8
Aleris International, Inc.
Reconciliation of Pro Forma Net Loss to
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and Pro Forma Adjusted EBITDA (1)(2)
(unaudited)
(in millions)
For the twelve months
ended September 30, 2007
Net loss (3) $(46.3)
Interest expense, net 230.2
Income taxes (18.4)
Minority interests 0.1
Depreciation and amortization 216.3
EBITDA 381.9
Unrealized (gains) losses on derivative financial instruments (61.7)
Restructuring and other charges 51.7
Impact of recording acquired assets at fair value 113.4
Sponsor management fee 9.1
Stock-based compensation expense 6.5
Sale of Carson, CA property (13.8)
Loss on early extinguishment of debt 0.7
Estimated synergies - Corus Aluminum 27.0
Estimated synergies - Wabash Alloys 11.0
Estimated synergies - EKCO Products 2.0
Pro forma adjusted EBITDA $527.8
(1) See note 2 on page 2.
(2) Represents unaudited pro forma financial information for the 12 months
ended September 30, 2007 and presents the Company's combined results
of operations as if the acquisitions of EKCO Products and Wabash
Alloys and, the Acquisition had occurred on October 1, 2006. Term
Loan EBITDA excludes a reported one-time gain related to the sale of
the Carson, California rolling mill and the reported loss on the early
extinguishment of debt but includes the expected synergy savings from
the Corus Aluminum and EKCO Products acquisitions as well as a portion
of the expected synergies from the Wabash Alloys acquisition as
permitted by the Company's Term Loan Agreement. The unaudited pro
forma information is not necessarily indicative of the consolidated
results of operations that would have occurred had the acquisitions of
EKCO Products and Wabash Alloys and the Acquisition been made at the
beginning of the period presented or the future results of combined
operations.
(3) Pro forma net loss of $46.3 million consists of Aleris's historical
net loss of $3.8 million, Wabash Alloys' historical net income of $7.8
million, EKCO Products' historical net income of $1.4 million, and pro
forma adjustments of ($51.7) million. The net income of Wabash Alloys
and EKCO Products are estimates and are based on estimated financial
information provided by the management of Wabash Alloys and EKCO
Products.
(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:
NewsCom: 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, +1-216-910-3503, Joseph M.
Mallak, +1-216-910-3455, both of Aleris International, Inc.
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