Second Quarter Fiscal Year 2020 Highlights
- Net income attributable to common shareholder of $123 million, up 6% YoY; excluding special items, net income of $160 million, up 31% YoY
- Adjusted EBITDA of $374 million, up 5% YoY
- Net sales of $2.9 billion, down 9% YoY
- Shipments of 835 kilotonnes, up 3% YoY
- Improved net leverage ratio to 2.4x
Novelis Inc., the world leader in aluminum rolling and recycling, today reported net income attributable to its common shareholder of $123 million for the second quarter of fiscal year 2020, compared to $116 million in the prior year period. Excluding tax-effected special items, such as $32 million for restructuring actions in the current period, the company reported net income of $160 million in the second quarter of fiscal 2020, compared to $122 million in the prior year period. This 31 percent increase is primarily due to higher Adjusted EBITDA and a lower effective tax rate.
Adjusted EBITDA increased five percent over the prior year period to $374 million in the second quarter of fiscal 2020, primarily driven by higher shipments as well as favorable price and product mix, partially offset by less favorable recycling benefits due to lower aluminum prices. Adjusted EBITDA per ton reached $448 in the quarter, as compared to $440 in the prior year period.
Net sales decreased nine percent from the prior year period to $2.9 billion for the second quarter of fiscal 2020, driven by lower average LME aluminum prices and local market premiums, partially offset by higher total shipments. Strong overall operational performance and solid demand for lightweight, sustainable aluminum products led to a three percent increase in flat rolled product shipments to 835 kilotonnes.
“Our outstanding operational performance resulted in record second quarter shipments and strong financials, while we continue to make excellent progress on our strategic growth initiatives,” said Steve Fisher, President and CEO, Novelis Inc. “Our customers continue to enhance their sustainability initiatives through more sustainable packaging, automotive closed-loop recycling systems, and adopting more recycled content into their products. I believe we are making the right investments, such as the recent announcement to increase recycling capacity at our Greensboro, Georgia facility, to support our customers and deliver on our purpose of shaping a sustainable world together.”
The company reported $112 million of free cash flow for the second quarter of fiscal 2020. On a year-to-date basis, fiscal 2020 free cash flow of $18 million includes a significant increase in capital expenditures year-over-year to $300 million mainly to support strategic investments in incremental rolling, recycling and automotive finishing capacity. Free cash flow before capital expenditures improved 46 percent over the prior year to $318 million, driven primarily by higher Adjusted EBITDA and a lower use of working capital year-to-date. Each of the three previously announced significant capacity expansion projects underway in the U.S., China and Brazil continue to progress on time and on budget.
| (in $ millions, non-GAAP measures) | Three Months Ended | Six Months Ended | ||||||
| September 30, | September 30, | |||||||
| 2019 | 2018 | 2019 | 2018 | |||||
| Free cash flow | $ | 112 | $ | 108 | $ | 18 | $ | 104 |
| Capital expenditures | 138 | 60 | 300 | 114 | ||||
| Free cash flow before capital expenditures | $ | 250 | $ | 168 | $ | 318 | $ | 218 |
“Strong financial performance allowed us to further improve our net leverage ratio during the quarter, despite a significant increase in strategic capital investments to meet growing demand for sustainable aluminum solutions,” said Devinder Ahuja, Senior Vice President and Chief Financial Officer, Novelis Inc.
As of September 30, 2019, the company reported a strong total liquidity position of $1.8 billion, and reduced its net leverage ratio to 2.4x as compared to 2.8x in the prior year period.
Aleris Acquisition
On July 26, 2018, Novelis announced it signed a definitive agreement to acquire Aleris Corporation. Having received conditional approval in the European Union, as well as a clear path forward for approval in the U.S., Novelis continues to work closely with the Chinese State Administration for Market Regulation to receive its approval. The company expects to close the transaction by January 21, 2020, the outside date under the merger agreement.
Second Quarter of Fiscal Year 2020 Earnings Conference Call
Novelis will discuss its second quarter of fiscal year 2020 results via a live webcast and conference call for investors at 7:30 a.m. ET on Wednesday, November 6, 2019. To view slides and listen only, visit the web at https://cc.callinfo.com/r/z3xmd1ss8840&eom. To join by telephone, dial toll-free in North America at 877 256 3669, India toll-free at 1800 266 0834 or the international toll line at +1 415 226 5361. Presentation materials and access information may also be found at novelis.com/investors.
Please click here to view the full press release.
SOURCE: Novelis
