Aleris reports first quarter 2015 results

First Quarter 2015 Results
Adjusted EBITDA totaled $55 million for the first quarter of 2015 compared to $43 million for the first quarter of 2014. First quarter results were impacted by the following:

• Higher shipment volumes of 15 percent, due primarily to our acquisition of Nichols, 17 percent higher automotive volumes, 3 percent higher global aerospace volumes, and 24 percent higher truck trailer volumes, led to an increase of approximately $5 million of Adjusted EBITDA;
• Improved rolling margins, primarily from North America, contributed $4 million of Adjusted EBITDA;
• Improved scrap spreads, as well as lower raw material prices in Europe, increased Adjusted EBITDA by approximately $2 million;
• A stronger U.S. dollar contributed to higher margins and currency exchange gains inEurope, which increased Adjusted EBITDA by approximately $11 million;
• Increases in commodity pricing decreased Adjusted EBITDA by $2 million;
• Base inflation of $5 million was partially offset by productivity savings of $3 million; and
• Other expenses, including investments in quality and reliability as well as losses in China, decreased Adjusted EBITDA by $7 million.

Loss from continuing operations for the first quarter of 2015 was $26 million compared to a net loss of $21 million for the first quarter of 2014. Offsetting the impact of higher Adjusted EBITDA were:

• An $11 million increase in depreciation expense from continuing operations related to the acquisition of Nichols and the completion of our recent capital investments;
• A $2 million increase in restructuring expenses, primarily related to exit costs associated with closed sites;
• A $10 million increase in unrealized losses on derivative financial instruments as a result of LME price movements and derivative settlements;
• A $3 million increase in other expenses not included in Adjusted EBITDA; and
• A $6 million unfavorable variation in metal price lag (metal price lag represents the difference between the price of primary aluminum included in our revenues and the price of aluminum impacting our cost of sales).

Partially offsetting these unfavorable items were:

• A $10 million favorable variation in currency exchange gains on debt which is not included in Adjusted EBITDA; and
• A $5 million reduction in start-up costs as our Asia Pacific operations have exited start-up phase.

In the first quarter of 2015, $50 million was spent on capital expenditures for our continuing operations; the majority being spent on the Lewisport upgrade and expansion project.

Aleris had $527 million of liquidity as of March 31, 2015, which consisted of approximately $381 million of availability under the ABL Facility plus approximately $146 million of cash on hand. The divestitures generated $518 million in proceeds, net of cash transferred, prior to fees, taxes and working capital and other adjustments. We expect the working capital adjustments to deliver an additional $60 million of cash to the Company during the second quarter of 2015, $57 million of which was received in April.

"As our solid first quarter performance demonstrates, we continue to realize the benefits of the investments we have made to capitalize on the growth in demand across a number of key industries, including global automotive and aerospace, along with our building and construction business in North America," Steve Demetriou, Aleris chairman and CEO said. "Looking ahead to the next quarter, we expect to see continued strength in these segments."