Aleris reports Q1 Results: Adjusted EBITDA declines due to low aluminium prices and reduced scrap availability

Aleris Corporation reported results for the three months ended March 31, 2016.

First Quarter 2016 Results:

Adjusted EBITDA totalled $45 million for the first quarter of 2016 compared to $55 million for the first quarter of 2015. First quarter results were impacted by unfavourable year-over-year scrap spreads in North America caused by continued low aluminum prices and reduced scrap availability, and changing currency exchange rates which decreased Adjusted EBITDA by approximately $9 million. The U.S. dollar weakened 4 percent in the first quarter of 2016 while it strengthened 11 percent in the first quarter of 2015. This resulted in $3 million of losses on the remeasurement of U.S. dollar working capital in Europe during the first quarter of 2016 and $5 million of gains in the prior year.

An increase in volumes, including 23 percent higher global automotive volumes and 20 percent higher global aerospace volumes, increased Adjusted EBITDA approximately $6 million.

Improved rolling margins in Europe and North America increased Adjusted EBITDA approximately $5 million.

Losses from continuing operations totaled $6 million for the first quarter of 2016 compared to $26 million for the first quarter of 2015.

In the first quarter of 2016, capital expenditures were $122 million, the majority of which was spent on our North America autobody sheet project at the company's Lewisport, Kentucky facility. That project continues to progress on schedule with shipments anticipated to commence in 2017.

As of March 31, 2016, Aleris had liquidity of $379 million and Net cash received totalled $90 million.

Second Quarter Outlook:

• Year-over-year performance expected to improve despite negative scrap spread and foreign currency impacts
• Global automotive and aerospace volumes expected to exceed prior year
• Improved North America building and construction and distribution volumes
• Order patterns for regionally-based Europe plate and sheet products expected to outpace prior year
• Aleris Operating System expected to drive favourable productivity as operating performance improves

"Strong demand in the global automotive and aerospace industries and positive trends in our regional businesses, especially in North America building and construction, helped to offset the impact of headwinds from metal spreads and currencies, as well as some operational issues early in the quarter that impacted our ability to maximize results," Aleris President & CEO Sean Stack said. "We are now gaining traction on a number of operational excellence initiatives that will enable us to capture the full benefit of this strong demand going forward."