Aleris reports second quarter 2015 results

Aleris Corporation today reported results for the three and six months ended June 30, 2015. Except as otherwise indicated, all amounts reflect the divested recycling and extrusions businesses as discontinued operations.

Second Quarter Summary

• Adjusted EBITDA of $60 million, up 53 percent compared to second quarter of 2014
• Global automotive volumes up 23 percent compared to prior year
• Global aerospace volumes up 13 percent compared to prior year
• Improved North America results driven by higher margins and wider scrap spreads
• Solid productivity in North America led by Nichols integration and supply chain optimization efforts
• Stronger U.S. dollar positively impacted Europe profitability
• Asia Pacific achieved break even Adjusted EBITDA
• Steep decline in regional premiums led to significant unfavorable metal lag
• Refinanced asset based credit facility; liquidity of $698 million as of June 30, 2015

"Our solid performance this quarter further validates the Aleris growth strategy, which is to expand our aluminum rolled products capabilities on multiple continents to serve fast-growing, high-value industries including aerospace, automotive and building and construction," Sean Stack, Aleris President and Chief Executive Officer said. "The success of our expansion projects, coupled with our steady improvement in operational performance and integration of Nichols, places Aleris in a very strong position for continued growth and profitability."

Year-to-Date Results

Key financial highlights for the six months ended June 30, 2015 include:

• Revenues from continuing operations of approximately $1,520.1 million compared to approximately $1,340.3 million for the prior year period. The increase of 13 percent was attributable to a stronger mix of higher value-added products sold, increased rolling margins, higher primary aluminum prices, revenue from the Nichols acquisition and Asia Pacific segment revenues.
• Adjusted EBITDA from continuing operations increased from $83 million in 2014 to $115 million in the current year as a result of stronger margins, increased scrap spreads and stronger U.S. dollar.
• Loss from continuing operations of $33 million in the current year compared to $47 million in 2014.
• Cash used by operating activities totaled $73 million compared to $7 million during the prior year period.
• Capital expenditures increased to $121 million from $78 million during the prior period as spending on our Lewisport expansion has accelerated.

Outlook

Aleris estimates third quarter 2015 segment income and Adjusted EBITDA will be meaningfully higher than the third quarter of 2014. Factors influencing anticipated third quarter 2015 performance include:

• Automotive and aerospace volumes expected to exceed prior year;
• Continued year-over-year improvement in North America rolling margins; sequential volume growth;
• Aerospace margins expected to benefit from a stronger U.S. dollar;
• Asia Pacific aerospace volume ramp up to continue; expect positive segment Adjusted EBITDA;
• Weaker sequential scrap spreads due to declining aluminum prices; and
• Aleris Operating System and Nichols synergies expected to drive increased productivity compared to prior year; and
• Continued unfavorable metal lag, should current aluminum prices persist.

Capital expenditures during the third quarter of 2015 are expected to be significantly higher than the third quarter of 2014 and higher than second quarter of 2015 as work continues on upgrading and expanding our capabilities in Lewisport, Kentucky. We expect capital spending of approximately $325 million in 2015, including the amounts spent in the first half of the year.