Arconic Corp. (NYSE: ARNC) (“Arconic” or “the Company”) today
provided a business update regarding the impact of the COVID-19
pandemic on its business and operations as well as certain
preliminary unaudited financial information for the quarter ended
March 31, 2020.
COVID-19 Updates
Chief Executive Officer Tim Myers said, “In the few short weeks
since Arconic’s launch as a standalone company, market conditions
have been changing rapidly and unpredictably. Notwithstanding that,
we believe that Arconic’s diverse end markets and geographic
composition mitigate the impact on the Company from any singular
area of decline. Furthermore, despite the challenges that we
currently face in North America and Europe, we are seeing positive
momentum at our Chinese facilities that felt the full brunt of the
COVID-19 pandemic in early 2020 and are now back to essentially
normal production. Our Russian packaging facility is running at
full operations due to strong end market demand. Moreover, our
operating footprint benefits from a highly variable cost structure
and we are actively managing operations to effectively flex
activity to respond to changing automotive and aerospace market
conditions. As previously announced, in response to market
conditions we took a series of proactive actions to mitigate the
impacts of the pandemic on our business. By our current estimates,
we expect these cost savings to improve our financial profile by
approximately $200 million.” Mr. Myers further added, “As an
update, we resumed operations at our New York facility on April
20th and we expect to ramp back up our operations at our Tennessee
facility this week, where we remain excited by the opportunities
for growth and the enhanced capabilities that are nearing
completion.” Mr. Myers concluded, “We are pleased with the recent
announcement on April 22nd by the ITC initiating antidumping and
countervailing duties trade case against 18 countries on common
alloy sheet products and we expect this will benefit our operations
and others in industrial aluminum processing.”
Chief Financial Officer Erick Asmussen added, “Our liquidity and
financial position remains strong despite the pandemic’s impact to
our business. We have in excess of a billion dollars of available
liquidity today (inclusive of approximately $500 million of cash on
the balance sheet at the time of our separation) and our current
capital structure maturities are well into the future.” Mr.
Asmussen further expanded, “Our business is flexible and cash
requirements are countercyclical and we expect working capital will
be a source of cash in the near team, and together with the benefit
of the recent management actions to reduce costs, we believe we
have adequate liquidity to operate the Company in spite of ongoing
uncertainties.”
Preliminary First Quarter Results
On April 14, 2020, Arconic’s parent company prior to the April
1, 2020 separation, Howmet Aerospace Inc. (“Howmet”), reported
preliminary unaudited financial results for the quarter ended March
31, 2020, including certain financial information related to its
former Global Rolled Products (“GRP”) segment, the underlying
businesses that now comprise Arconic.
On the basis of that information, for the quarter ended March
31, 2020 we expect to report for the quarter:
- Revenue of approximately $1.6 billion, which is down
approximately 12% year-over-year, with organic revenue expected to
be down approximately 7% due to disruptions in the automotive,
commercial transportation and aerospace markets driven by COVID-19
and 737 MAX production declines somewhat offset by growth in the
industrial market;
- Segment operating profit to be approximately $170 million,
which is up approximately 26% year-over-year, driven by net cost
reductions and favorable aluminum prices, partially offset by
volume declines;
- Segment operating profit margin to increase approximately 310
basis points year-over-year to approximately 10.7%; and
- Depreciation and amortization to be approximately $55 million
in the first quarter 2020.
Separately, as previously disclosed, Arconic expects its
corporate costs to be in the range of $75 million to $85 million on
an annual run rate basis beginning April 1, 2020, the date of the
separation, which includes approximately $20 million of
depreciation and amortization.
The financial information of Howmet’s GRP segment included in
this Form 8-K is the information of Howmet’s GRP segment as a
reportable segment of Howmet. This preliminary unaudited combined
financial information for the quarter ended March 31, 2020 may
differ from the final Howmet GRP segment’s unaudited financial
results as well as the unaudited combined financial results to be
reported by Arconic in its Quarterly Report for the period ended
March 31, 2020. Undue reliance should not be placed on this
unaudited financial information.
About Arconic Corporation
Arconic Corporation (NYSE: ARNC), headquartered in Pittsburgh,
Pennsylvania, is a leading provider of aluminum sheet, plate and
extrusions, as well as innovative architectural products, that
advance the ground transportation, aerospace, industrial, packaging
and building and construction markets. For more information, visit
www.arconic.com.
Forward-Looking Statements
This release contains that relate to future events and
expectations and as such constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include those containing such
words as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “forecasts,” goal,” “guidance,” “intends,” “may,”
“outlook,” “plans,” “projects,” “seeks,” “sees,” “should,”
“targets,” “will,” “would,” or other words of similar meaning. All
statements that reflect Arconic Corporation’s expectations,
assumptions or projections about the future, other than statements
of historical fact, are forward-looking statements, including,
without limitation, forecasts and expectations relating to
operations or customer demand; statements and guidance regarding
future financial results or operating performance, including first
quarter 2020 results; reduction in operating costs and capital
expenditures; statements regarding future actions to mitigate the
impact of COVID-19; and statements about Arconic Corporation’s
strategies, outlook, business and financial prospects. These
statements reflect beliefs and assumptions that are based on
Arconic Corporation’s perception of historical trends, current
conditions and expected future developments, as well as other
factors Arconic Corporation believes are appropriate in the
circumstances. Forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties, and
changes in circumstances that are difficult to predict. Although
Arconic Corporation believes that the expectations reflected in any
forward-looking statements are based on reasonable assumptions, it
can give no assurance that these expectations will be attained and
it is possible that actual results may differ materially from those
indicated by these forward-looking statements due to a variety of
risks and uncertainties. Such risks and uncertainties, include, but
are not limited to: (a) the possible impacts and our preparedness
to respond to implications of COVID-19 and (b) the other risk
factors summarized in Arconic Corporation’s Form 10-K for the year
ended December 31, 2019 and other reports filed with the U.S.
Securities and Exchange Commission. Market projections are subject
to the risks discussed above and other risks in the market. The
statements herein are made as of the date of this release, even if
subsequently made available by Arconic Corporation on its website
or otherwise. Arconic Corporation disclaims any intention or
obligation to update publicly any forward-looking statements,
whether in response to new information, future events, or
otherwise, except as required by applicable law.
Non-GAAP Financial Measures
Some of the financial information included herein is not
presented in accordance with accounting principles generally
accepted in the United States of America (GAAP) and are considered
“non-GAAP financial measures” under SEC rules. These non-GAAP
financial measures supplement GAAP disclosures and should not be
considered an alternative to the GAAP measure.
Howmet GRP Segment Information
(unaudited)
(dollars in millions)
Quarter Ended March
31,
Global Rolled Products
2019 (Actual)
2020 (Estimated)
Third-party sales
$
1,784
$
~1,580
Intersegment sales
$
52
$
~35
Segment operating profit
$
135
$
~170
Segment operating profit margin
7.6%
~10.7%
Third-party aluminum shipments (kmt)
331
~312
Howmet GRP Organic Revenue
(dollars in millions)
Quarter Ended March
31,
Global Rolled Products
2019 (Actual)
2020 (Estimated)
Sales
$
1,784
$
~1,580
Less:
Sales – Itapissuma
40
~11
Sales – South Korea
13
~8
Aluminum price impact
n/a
~(46)
Foreign currency impact
n/a
~3
Global rolled products organic revenue
$
1,731
$
~1,604
Organic revenue is a non-GAAP financial measure. According to
the Howmet release, Howmet management believes this measure is
meaningful to investors as it presents revenue on a comparable
basis for all periods presented due to the impact of the sale of
the aluminum rolling mill in Itapissuma, Brazil (divested in
February 2020), the sale of the hard alloy extrusions plant in
South Korea (divested in March 2020), and the impact of changes in
aluminum prices and foreign currency fluctuations relative to the
prior year periods.
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version on businesswire.com: https://www.businesswire.com/news/home/20200427005372/en/
Investor Contact Jason Secore Shane Rourke (412) 315-2984
Investor.Relations@arconic.com
Media Contact Tracie Gliozzi (412) 992-2525
Tracie.Gliozzi@arconic.com
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