Novelis, the world leader in aluminum rolling and recycling, today reported net income attributable to our common shareholder of $63 million for the third quarter of fiscal year 2017, compared to a net income of $6 million in the prior year period. Excluding tax-effected special items in both periods, the company more than doubled third quarter fiscal 2017 net income to $67 million from $32 million in the prior year. Current year net income reflects record adjusted EBITDA and an 18% reduction in interest expense, a result of the refinancing of two senior note issuances during the second quarter of fiscal 2017.
“Continued operational efficiencies combined with strong aluminum automotive sheet demand and strategic capacity investments delivered record, sustainable adjusted EBITDA results this quarter,” said Steve Fisher, President and Chief Executive Officer for Novelis.
Adjusted EBITDA for the third quarter of fiscal 2017 increased to $251 million from $212 million in the prior year period. Excluding metal price lag in both periods, adjusted EBITDA increased seven percent to a third quarter record of $255 million, driven by higher automotive sheet shipments, productivity gains, lower metal cost, and favorable foreign exchange gains.
Overall, Novelis experienced a four percent decline in total shipments of rolled aluminum products to 750 kilotonnes, mainly due to prior strategic decisions to reduce volumes in China and soft demand in South America. Lower shipments, partially offset by slightly higher average aluminum prices and increased shipments of higher conversion premium products, led to a two percent decrease in net sales to $2.3 billion for the third quarter of fiscal 2017.
The company generated $131 million of free cash flow for the third quarter of fiscal 2017 as compared to negative $12 million in the prior year driven by stronger adjusted EBITDA results, as well as lower interest and capital expenditures. Due to the recent bond refinancing, there were no bond interest payments in the third quarter this fiscal year. Capital expenditures declined to $48 million as compared to $78 million in the prior year period. The company now expects full year fiscal 2017 free cash flow to be on the high end of its previously guided range of $300 million to $350 million.
“Following our successful bond refinancing during the second quarter, we refinanced our $1.8 billion term loan with Asian banks in January,” said Devinder Ahuja, Senior Vice President and Chief Financial Officer. “Together, these bond and term loan transactions will result in an extended debt maturity profile and annual cash interest savings of approximately $80 million.”
As of December 31, 2016, the company reported a strong liquidity position over $1 billion.
Third Quarter of Fiscal Year 2017 Earnings Conference Call
Novelis will discuss its third quarter fiscal year 2017 results via a live webcast and conference call for investors at 8:00 a.m. ET on Tuesday, February 7, 2017. To view slides and listen only, visit the web at https://cc.callinfo.com/r/1wd4xfmmz9lal&eom. To join by telephone, dial toll-free in North America at 800 764 4852, India toll-free at 18002662118 or the international toll line at +1 415 226 5356. Presentation materials and access information may also be found at novelis.com/investors.
