First Quarter 2013 Highlights
| · | Diluted EPS was $0.01, compared to $0.06 in fourth quarter 2012; and $0.24 in first quarter 2012 |
| · | Excluding special items, diluted EPS was a loss of $0.02, compared to a loss of $0.12 in fourth quarter 2012 and a profit of $0.18 in first quarter 2012 |
| · | Total segment profit was $36.3 million, compared to $30.9 million in fourth quarter 2012 and $44.6 million in first quarter 2012 |
| · | Operating activities used $2.1 million of cash flow, compared to $16.4 million used in first quarter 2012 |
| · | Average realized Midwest transaction price per pound shipped was $1.03, compared to $1.01 in fourth quarter 2012 and $1.05 in first quarter 2012 |
| · | Net cash cost was $0.81 per pound, compared to $0.82 in fourth quarter 2012 and $0.78 pound in first quarter 2012 |
| · | Comparing first quarter 2013 to fourth quarter 2012, sales increased $5.5 million, as the effects of improved realized prices and product premium in the Primary Aluminum and Flat-Rolled segments ($9.3 million impact) and seasonally higher Flat-Rolled volumes ($10.9 million impact) were partially offset by lower volumes in the Bauxite, Alumina, and Primary Aluminum segments ($16.0 million impact). |
| · | Comparing first quarter 2013 to first quarter 2012, sales decreased $15.1 million, primarily due to lower first quarter 2013 external volumes in the Alumina segment. This decline occurred because a larger portion of the Alumina segment`s total volume was directed to the Primary Aluminum segment in order to restock the supply chain following third and fourth quarter 2012 production issues in the Alumina segment. |
| · | Comparing first quarter 2013 to fourth quarter 2012, segment profit increased $5.4 million. An improvement in the average realized Midwest transaction price in the Primary Aluminum segment, as well as higher value-added and fabrication premiums in the Primary Aluminum and Flat-Rolled segments contributed to the sequential increase, along with the improvement in |
1
operating reliability in the Bauxite, Alumina, and Primary Aluminum segments. These favorable events were partially offset by higher electricity costs in the Primary Aluminum segment and higher natural gas prices in the Alumina segment.
| · | Comparing first quarter 2013 to first quarter 2012, segment profit decreased by $8.3 million, primarily due to higher electricity costs in the Primary Aluminum segment, higher natural gas prices, and lower overall production volumes in the Alumina segment, as higher value-added and fabrication premiums in the Primary Aluminum and Flat-Rolled segments offset a lower average realized Midwest transaction price in the Primary Aluminum Segment. |
| · | Relative to fourth quarter 2012, the improvement in first quarter 2013 results was due to the effects of a $5.4 million ($3.6 million after tax) increase in segment profit, and a $3.8 million ($2.5 million after tax) favorable change in LIFO-basis inventory adjustments. |
| · | Relative to first quarter 2012, first quarter 2013 results primarily reflect the after-tax effects of an $8.3 million decrease in segment profit, a $5.7 million unfavorable change in LIFO-basis inventory adjustments, and a $3.6 million increase in interest expense following the Company`s February 2012 and March 2013 refinancings. |
| Three months ended | |||||||||
| March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||
| Key Primary Aluminum segment metrics: | |||||||||
| Average realized Midwest transaction price (per pound) | $ | 1.03 | |
$ | 1.01 | |
$ | 1.05 | |
| Net Cash Cost (per pound shipped) | $ | 0.81 | |
$ | 0.82 | |
$ | 0.78 | |
| Total primary aluminum shipments (pounds, in millions) | 141.8 | |
145.1 | |
142.2 | |
|||
| Segment profit (loss) (in millions): | |||||||||
| Bauxite | $ | 4.2 | |
$ | (4.1 | ) | $ | 2.2 | |
| Alumina | 4.1 | |
5.8 | |
13.7 | |
|||
| Primary Aluminum | 24.2 | |
24.8 | |
25.7 | |
|||
| Eliminations | (1.3 | ) | 1.3 | |
(2.8 | ) | |||
| Total integrated upstream business segment profit | 31.2 | |
27.8 | |
38.8 | |
|||
| Flat-Rolled Products | 13.8 | |
10.3 | |
14.5 | |
|||
| Corporate | (8.7 | ) | (7.2 | ) | (8.7 | ) | |||
| Total segment profit | $ | 36.3 | |
$ | 30.9 | |
$ | 44.6 | |
| · | Compared to fourth quarter 2012, first quarter 2013, Bauxite segment results reflect a $3.8 million improvement in pricing and a $4.5 million improvement in cost. The improvement in pricing was attributable to both the new third-party bauxite contract which became effective January 1, 2013, as well as a higher internal transfer price to the Alumina segment. Cost improvements came as fourth quarter 2012 operating issues did not recur in first quarter 2013. |
| · | Compared to first quarter 2012, first quarter 2013 Bauxite segment results reflect a $0.6 million improvement in volume and pricing, and a $1.5 million improvement in operating costs, which was primarily due to a reduction in contractor mining costs and government fees. |
| · | Compared to fourth quarter 2012, first quarter 2013 Alumina segment results reflect a $1.5 million improvement in LME-indexed alumina prices, offset by a$2.9 million increase in operating costs, due primarily to an increase in the price of bauxite purchased from the Bauxite segment, and an increase in the price of natural gas. |
| · | Compared to first quarter 2012, first quarter 2013 reflects a $3.6 million negative impact on internal and external revenues from lower LME-indexed alumina prices coupled with a $4.6 million impact from higher 2013 natural gas costs and the depletion in 2012 of low-cost inventory stockpiles. |
| · | Compared to fourth quarter 2012, first quarter 2013 Primary Aluminum segment profit was relatively stable, as a $2.5 million benefit from a higher realized price was offset by a $3.3 million negative impact from higher electricity prices, principally due to a 6.6% rate increase which became effective in February 2013. |
2
| · | Primary Aluminum segment profit in first quarter 2013 decreased $1.5 million compared to first quarter 2012, as the impact from lower LME aluminum prices was partially offset by more favorable raw materials prices for alumina. |
| · | Compared to fourth quarter 2012, first quarter 2013 Net Cash Cost decreased by $0.01 per pound. Net Cash Costs were favorably impacted by improved operating reliability across the integrated upstream business, and by cost offsets from improved value-added premiums and third-party alumina and bauxite prices. These factors were partially offset by higher power costs in the Primary Aluminum segment and higher natural gas prices in the Alumina segment. |
| · | Compared to first quarter 2012, first quarter 2013 Net Cash Cost increased by $0.03 per pound, due primarily to the negative impact on external revenues from lower LME-indexed alumina prices. This decrease, combined with higher power costs in the Primary Aluminum segment and higher natural gas prices in the Alumina segment, more than offset the impact of improved value-added premiums and third-party bauxite prices. |
| · | Compared to fourth quarter 2012, first quarter 2013 Flat-Rolled Products segment profit increased due to a seasonal volume increase and improved fabrication premiums for first quarter 2013. |
| · | Compared to first quarter 2012, first quarter 2013 was relatively stable, as higher 2013 fabrication premiums partially offset the negative impact of metal timing losses and higher natural gas prices. |
| Three months ended | |||||||||
| (in millions) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||
| Segment profit | $ | 36.3 | |
$ | 30.9 | |
$ | 44.6 | |
| Gas hedges | - | |
(8.1 | ) | (9.6 | ) | |||
| Pension and other | 9.8 | |
(2.8 | ) | (6.3 | ) | |||
| Interest | (10.2 | ) | (11.7 | ) | (3.5 | ) | |||
| Taxes paid | - | |
0.1 | |
(1.9 | ) | |||
| Operating working capital | (38.0 | ) | 24.9 | |
(39.7 | ) | |||
| Cash provided by (used in) operating activities | $ | (2.1 | ) | $ | 33.3 | |
$ | (16.4 | ) |
3
NORANDA ALUMINUM HOLDING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in millions, except per share data and where noted)(unaudited)
| Three months ended March 31, | ||||
| 2013 | 2012 | |||
| $ | $ | |||
| Statements of operations data: | ||||
| Sales | 338.4 | |
353.5 | |
| Operating costs and expenses: | ||||
| Cost of sales | 305.6 | |
304.2 | |
| Selling, general and administrative expenses | 24.6 | |
25.7 | |
| Total operating costs and expenses | 330.2 | |
329.9 | |
| Operating income | 8.2 | |
23.6 | |
| Other (income) expense: | ||||
| Interest expense, net | 10.1 | |
6.5 | |
| Gain on hedging activities, net | (5.4 | ) | (14.7 | ) |
| Debt refinancing expense | 2.5 | |
8.1 | |
| Total other (income) expense, net | 7.2 | |
(0.1 | ) |
| Income before income taxes | 1.0 | |
23.7 | |
| Income tax expense | 0.4 | |
7.5 | |
| Net income | 0.6 | |
16.2 | |
| Net income per common share: | ||||
| Basic | 0.01 | |
0.24 | |
| Diluted | 0.01 | |
0.24 | |
| Weighted-average common shares outstanding: | ||||
| Basic | 67.78 | |
67.33 | |
| Diluted | 69.06 | |
68.84 | |
| Cash dividends declared per common share | 0.04 | |
1.29 | |
| External sales by segment: | ||||
| Bauxite | 11.8 | |
10.7 | |
| Alumina | 42.0 | |
57.6 | |
| Primary Aluminum | 138.7 | |
140.1 | |
| Flat-Rolled Products | 145.9 | |
145.1 | |
| Total | 338.4 | |
353.5 | |
| Segment profit (loss): | ||||
| Bauxite | 4.2 | |
2.2 | |
| Alumina | 4.1 | |
13.7 | |
| Primary Aluminum | 24.2 | |
25.7 | |
| Flat-Rolled Products | 13.8 | |
14.5 | |
| Corporate | (8.7 | ) | (8.7 | ) |
| Eliminations | (1.3 | ) | (2.8 | ) |
| Total | 36.3 | |
44.6 | |
| Financial and other data: | ||||
| Average realized Midwest transaction price (per pound) | 1.03 | |
1.05 | |
| Net Cash Cost (per pound shipped) | 0.81 | |
0.78 | |
| Shipments: | ||||
| Third party shipments: | ||||
| Bauxite (kMts) | 506.0 | |
448.6 | |
| Alumina (kMts) | 125.0 | |
165.3 | |
| Primary Aluminum (pounds, in millions) | 119.5 | |
121.5 | |
| Flat-Rolled Products (pounds, in millions) | 93.8 | |
93.4 | |
| Intersegment shipments: | ||||
| Bauxite (kMts) | 703.0 | |
696.4 | |
| Alumina (kMts) | 151.0 | |
122.9 | |
| Primary Aluminum (pounds, in millions) | 22.3 | |
20.7 | |
4
NORANDA ALUMINUM HOLDING CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except par value) (unaudited)
| March 31, | December 31, | |||
| 2013 | 2012 | |||
| $ | $ | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | 16.1 | |
36.1 | |
| Accounts receivable, net | 124.9 | |
106.6 | |
| Inventories, net | 203.4 | |
195.8 | |
| Taxes receivable | 2.7 | |
2.0 | |
| Prepaid expenses | 5.0 | |
8.9 | |
| Other current assets | 12.4 | |
18.9 | |
| Total current assets | 364.5 | |
368.3 | |
| Property, plant and equipment, net | 693.0 | |
694.5 | |
| Goodwill | 137.6 | |
137.6 | |
| Other intangible assets, net | 59.7 | |
61.2 | |
| Other assets | 95.9 | |
96.1 | |
| Total assets | 1,350.7 | |
1,357.7 | |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | 96.5 | |
107.2 | |
| Accrued liabilities | 59.4 | |
58.8 | |
| Derivative liabilities, net | 5.5 | |
1.8 | |
| Deferred tax liabilities | 14.6 | |
16.8 | |
| Current portion of long-term debt | 4.4 | |
3.3 | |
| Total current liabilities | 180.4 | |
187.9 | |
| Long-term debt, net | 597.3 | |
592.4 | |
| Long-term derivative liabilities, net | 0.2 | |
0.1 | |
| Pension and other post-retirement benefit ("OPEB") liabilities | 185.5 | |
187.2 | |
| Other long-term liabilities | 50.9 | |
52.3 | |
| Long-term deferred tax liabilities | 186.0 | |
183.5 | |
| Common stock subject to redemption (0.2 shares at December 31, 2012) | - | |
2.0 | |
| Shareholders` equity: | ||||
| Preferred stock (25.0 shares authorized, $0.01 par value; no shares issued and outstanding at March 31, 2013 and December 31, 2012) | - | |
- | |
| Common stock (200.0 shares authorized; $0.01 par value; 67.9 shares issued and outstanding at March 31, 2013; 67.7 shares issued and outstanding at December 31, 2012, including 0.2 shares subject to redemption at December 31, 2012) | 0.7 | |
0.7 | |
| Capital in excess of par value | 235.8 | |
233.4 | |
| Retained earnings | 15.8 | |
17.9 | |
| Accumulated other comprehensive loss | (107.9 | ) | (105.7 | ) |
| Total shareholders` equity | 144.4 | |
146.3 | |
| Non-controlling interest | 6.0 | |
6.0 | |
| Total equity | 150.4 | |
152.3 | |
| Total liabilities and equity | 1,350.7 | |
1,357.7 | |
5
NORANDA ALUMINUM HOLDING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
| Three months ended March 31, | ||||
| 2013 | 2012 | |||
| $ | $ | |||
| OPERATING ACTIVITIES | ||||
| Net income | 0.6 | |
16.2 | |
| Adjustments to reconcile net income to cash used in operating activities: | ||||
| Depreciation and amortization | 23.2 | |
22.9 | |
| Non-cash interest expense | 0.7 | |
0.7 | |
| Last in, first out and lower of cost or market inventory adjustments | 0.8 | |
(4.9 | ) |
| (Gain) loss on disposal of assets | (0.2 | ) | 0.6 | |
| Gain on hedging activities, excluding cash settlements | (5.4 | ) | (26.0 | ) |
| Debt refinancing expense | 2.5 | |
8.1 | |
| Deferred income taxes | 1.5 | |
(2.3 | ) |
| Share-based compensation expense | 1.0 | |
2.2 | |
| Changes in other assets | (1.4 | ) | (1.4 | ) |
| Changes in pension, other post-retirement and other long-term liabilities | 0.7 | |
(1.3 | ) |
| Changes in current operating assets and liabilities: | ||||
| Accounts receivable, net | (18.3 | ) | (28.9 | ) |
| Inventories, net | (8.4 | ) | (22.9 | ) |
| Taxes receivable and taxes payable | (1.1 | ) | 7.8 | |
| Other current assets | 12.3 | |
32.2 | |
| Accounts payable | (11.3 | ) | 12.1 | |
| Accrued liabilities | 0.7 | |
(31.5 | ) |
| Cash used in operating activities | (2.1 | ) | (16.4 | ) |
| INVESTING ACTIVITIES | ||||
| Capital expenditures | (18.9 | ) | (21.6 | ) |
| Proceeds from sale of property, plant and equipment | 0.2 | |
- | |
| Cash used in investing activities | (18.7 | ) | (21.6 | ) |
| FINANCING ACTIVITIES | ||||
| Shares tendered for taxes, share-based payment arrangements, net of proceeds from issuance of common shares | (0.2 | ) | (0.2 | ) |
| Dividends paid to shareholders | (2.7 | ) | (86.9 | ) |
| Distributions paid to share-based award holders | - | |
(3.1 | ) |
| Repayments of long-term debt | (276.4 | ) | (153.2 | ) |
| Borrowings on long-term debt, net | 282.3 | |
322.6 | |
| Payments of financing costs | (2.2 | ) | (10.9 | ) |
| Cash provided by financing activities | 0.8 | |
68.3 | |
| Change in cash and cash equivalents | (20.0 | ) | 30.3 | |
| Cash and cash equivalents, beginning of period | 36.1 | |
42.7 | |
| Cash and cash equivalents, end of period | 16.1 | |
73.0 | |
6
NORANDA ALUMINUM HOLDING CORPORATION SEGMENT RESULTS (in millions) (unaudited)
| Three months ended March 31, 2013 | ||||||||||||||
| Bauxite | Alumina | Primary Aluminum | Flat-Rolled Products | Corporate | Eliminations | Consolidated | ||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||
| Sales: | ||||||||||||||
| External customers | 11.8 | |
42.0 | |
138.7 | |
145.9 | |
- | |
- | |
338.4 | |
| Intersegment | 23.7 | |
44.1 | |
22.5 | |
- | |
- | |
(90.3 | ) | - | |
| Total sales | 35.5 | |
86.1 | |
161.2 | |
145.9 | |
- | |
(90.3 | ) | 338.4 | |
| |
||||||||||||||
| Capital expenditures | 0.8 | |
5.1 | |
8.4 | |
3.4 | |
1.2 | |
- | |
18.9 | |
| Reconciliation of segment profit (loss) to operating income: | ||||||||||||||
| Segment profit (loss) | 4.2 | |
4.1 | |
24.2 | |
13.8 | |
(8.7 | ) | (1.3 | ) | 36.3 | |
| Depreciation and amortization | (2.0 | ) | (5.3 | ) | (11.1 | ) | (4.6 | ) | (0.2 | ) | - | |
(23.2 | ) |
| Last in, first out and lower of cost or market inventory adjustments | - | |
- | |
1.7 | |
(2.5 | ) | - | |
- | |
(0.8 | ) |
| Gain on disposal of assets | - | |
0.1 | |
0.1 | |
- | |
- | |
- | |
0.2 | |
| Non-cash pension, accretion and stock compensation | - | |
(0.2 | ) | (1.8 | ) | (1.3 | ) | (1.4 | ) | - | |
(4.7 | ) |
| Relocation and severance | - | |
(0.1 | ) | (0.2 | ) | - | |
(0.3 | ) | - | |
(0.6 | ) |
| Consulting fees | - | |
- | |
- | |
- | |
(0.3 | ) | - | |
(0.3 | ) |
| Cash settlements on hedging transactions | - | |
- | |
0.1 | |
0.5 | |
- | |
- | |
0.6 | |
| Other, net | - | |
(0.1 | ) | - | |
(0.1 | ) | - | |
0.9 | |
0.7 | |
| Operating income (loss) | 2.2 | |
(1.5 | ) | 13.0 | |
5.8 | |
(10.9 | ) | (0.4 | ) | 8.2 | |
| Interest expense, net | 10.1 | |
||||||||||||
| Gain on hedging activities, net | (5.4 | ) | ||||||||||||
| Debt refinancing expense | 2.5 | |
||||||||||||
| Total other income, net | 7.2 | |
||||||||||||
| Income before income taxes | 1.0 | |
||||||||||||
7
NORANDA ALUMINUM HOLDING CORPORATION SEGMENT RESULTS (in millions) (unaudited)
| Three months ended March 31, 2012 | ||||||||||||||
| Bauxite | Alumina | Primary Aluminum | Flat-Rolled Products | Corporate | Eliminations | Consolidated | ||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||
| Sales: | ||||||||||||||
| External customers | 10.7 | |
57.6 | |
140.1 | |
145.1 | |
- | |
- | |
353.5 | |
| Intersegment | 22.5 | |
36.9 | |
21.8 | |
- | |
- | |
(81.2 | ) | - | |
| Total sales | 33.2 | |
94.5 | |
161.9 | |
145.1 | |
- | |
(81.2 | ) | 353.5 | |
| Capital expenditures | 1.3 | |
4.3 | |
12.7 | |
2.8 | |
0.5 | |
- | |
21.6 | |
| Reconciliation of segment profit (loss) to operating income: | ||||||||||||||
| Segment profit (loss) | 2.2 | |
13.7 | |
25.7 | |
14.5 | |
(8.7 | ) | (2.8 | ) | 44.6 | |
| Depreciation and amortization | (2.0 | ) | (5.2 | ) | (10.8 | ) | (4.5 | ) | (0.4 | ) | - | |
(22.9 | ) |
| Last in, first out and lower of cost or market inventory adjustments | - | |
- | |
3.4 | |
2.0 | |
- | |
(0.5 | ) | 4.9 | |
| Loss on disposal of assets | - | |
- | |
(0.5 | ) | (0.1 | ) | - | |
- | |
(0.6 | ) |
| Non-cash pension, accretion and stock compensation | - | |
(0.2 | ) | (1.4 | ) | (1.3 | ) | (2.2 | ) | - | |
(5.1 | ) |
| Relocation and severance | - | |
- | |
(0.2 | ) | - | |
- | |
- | |
(0.2 | ) |
| Consulting fees | - | |
- | |
- | |
- | |
(0.5 | ) | - | |
(0.5 | ) |
| Cash settlements on hedging transactions | - | |
- | |
- | |
1.2 | |
- | |
- | |
1.2 | |
| Other, net | - | |
(0.1 | ) | - | |
- | |
(0.2 | ) | 2.5 | |
2.2 | |
| Operating income (loss) | 0.2 | |
8.2 | |
16.2 | |
11.8 | |
(12.0 | ) | (0.8 | ) | 23.6 | |
| Interest expense, net | 6.5 | |
||||||||||||
| Gain on hedging activities, net | (14.7 | ) | ||||||||||||
| Debt refinancing expense | 8.1 | |
||||||||||||
| Total other income, net | (0.1 | ) | ||||||||||||
| Income before income taxes | 23.7 | |
||||||||||||
8
ADJUSTED EBITDA (in millions) (unaudited) Management uses "Adjusted EBITDA" as a liquidity measure in respect of the ratios disclosed below, as defined in the Company`s debt agreements. As used herein, Adjusted EBITDA means net income before income taxes, net interest expense, depreciation and amortization, adjusted to eliminate certain non-cash expenses and other specified items of income or expense as outlined below (in millions):
| Three Months Ended March 31, | Twelve Months Ended | |||||||
| March 31, | December 31, | |||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| $ | $ | $ | $ | |||||
| Adjusted EBITDA | 36.3 | |
35.0 | |
98.2 | |
96.9 | |
| Last in, first out and lower of cost or market inventory adjustments (a) | (0.8 | ) | 4.9 | |
4.0 | |
9.7 | |
| Gain (loss) on disposal of assets | 0.2 | |
(0.6 | ) | 5.8 | |
5.0 | |
| Non-cash pension, accretion and stock compensation | (4.7 | ) | (5.1 | ) | (17.1 | ) | (17.5 | ) |
| Relocation and severance | (0.6 | ) | (0.2 | ) | (1.3 | ) | (0.9 | ) |
| Consulting fees | (0.3 | ) | (0.5 | ) | (0.5 | ) | (0.7 | ) |
| Debt refinancing expense | (2.5 | ) | (8.1 | ) | (2.5 | ) | (8.1 | ) |
| Non-cash derivative gains (b) | 6.0 | |
25.5 | |
107.2 | |
126.7 | |
| Other, net | 0.7 | |
2.2 | |
(6.4 | ) | (4.9 | ) |
| Depreciation and amortization | (23.2 | ) | (22.9 | ) | (98.8 | ) | (98.5 | ) |
| Interest expense, net | (10.1 | ) | (6.5 | ) | (36.7 | ) | (33.1 | ) |
| Income tax | (0.4 | ) | (7.5 | ) | (18.0 | ) | (25.1 | ) |
| Net income | 0.6 | |
16.2 | |
33.9 | |
49.5 | |
| (a) | The Company`s New Madrid smelter and the Company`s rolling mills use the LIFO method of inventory accounting for financial reporting and tax purposes. This adjustment restates net income to the FIFO method by eliminating LIFO expenses related to inventories held at the New Madrid smelter and the rolling mills. Product inventories at Gramercy and St. Ann and supplies inventories at New Madrid are stated at lower of weighted-average cost or market, and are not subject to the LIFO adjustment. The Company also reduces inventories to the lower of cost (adjusted for purchase accounting) or market value. |
| (b) | At various times, the Company has used derivative financial instruments to mitigate effects of fluctuations in aluminum and natural gas prices. This adjustment eliminates the non-cash gains and losses resulting from fair market value changes of those derivative financial instruments. |
9
The following table reconciles Adjusted EBITDA to cash flow from operating activities for the periods presented (in millions):
| Three Months Ended March 31, | Twelve Months Ended | |||||||
| March 31, | December 31, | |||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| $ | $ | $ | $ | |||||
| Adjusted EBITDA | 36.3 | |
35.0 | |
98.2 | |
96.9 | |
| Stock compensation expense | 1.0 | |
2.2 | |
3.6 | |
4.8 | |
| Changes in other assets | (1.4 | ) | (1.4 | ) | (10.3 | ) | (10.3 | ) |
| Changes in pension, other post-retirement liabilities and other long-term liabilities | 0.7 | |
(1.3 | ) | 6.7 | |
4.7 | |
| Changes in current operating assets and liabilities | (26.1 | ) | (31.2 | ) | 10.5 | |
5.4 | |
| Changes in current income taxes | 1.1 | |
(9.8 | ) | (16.6 | ) | (27.5 | ) |
| Changes in accrued interest | (9.4 | ) | (5.8 | ) | (33.9 | ) | (30.3 | ) |
| Non-cash pension, accretion and stock compensation | (4.7 | ) | (5.1 | ) | (17.1 | ) | (17.5 | ) |
| Restructuring, relocation and severance | (0.6 | ) | (0.2 | ) | (1.3 | ) | (0.9 | ) |
| Consulting and sponsor fees | (0.3 | ) | (0.5 | ) | (0.5 | ) | (0.7 | ) |
| Other, net | 1.3 | |
1.7 | |
(6.1 | ) | (5.7 | ) |
| Cash flow provided by (used in) operating activities | (2.1 | ) | (16.4 | ) | 33.2 | |
18.9 | |
| Requirements | Actual as of | |||
| March 31, 2013 | December 31, 2012 | |||
| AcquisitionCo Notes (1) | Fixed-Charge Coverage Ratio | Minimum 2.0 to 1.0 |
2.0 to 1.0 | 2.8 to 1.0 |
| Revolver (2) | Revolver Fixed-Charge Coverage Ratio | Minimum 1.0 to 1.0 |
-- | -- |
| Term B Loan and Revolver (3) | Total Net Senior First Lien Secured Leverage Ratio | Maximum 2.25 to 1.0 |
4.2 to 1.0 | 2.9 to 1.0 |
| (1) | For Noranda Aluminum Acquisition Corp, fixed charges on a pro forma basis (giving effect to debt repayments) for the four quarters ended March 31, 2013 and the year ended December 31, 2012 were $49.6 million and $35.2 million, respectively. |
| (2) | As defined in the credit agreement governing Revolver, fixed charges for the four quarters ended March 31, 2013 and the year ended December 31, 2012 were $38.3 million and $33.6 million respectively. For the four quarters ended March 31, 2013, the Revolver Fixed-Charge Coverage Ratio was less than 1.0 to 1.0. |
| (3) | As used in calculating this ratio, "senior first-lien secured net debt" means the amount outstanding under the Term B Loan and the Revolver and any debt secured by a first priority lien on assets of Noranda Aluminum Acquisition Corp and/or any of its subsidiaries, less "unrestricted cash" and "permitted investments" (as defined under the Company`s Senior Secured Credit Facilities) up to a cap of $100.0 million. At March 31, 2013 and December 31, 2012, senior first lien secured debt was $431.5 million and $322.6 million, respectively, and unrestricted cash and permitted investments were $15.9 million and $35.8 million, respectively, resulting in senior first lien secured net debt of $415.6 million and $286.8 million, respectively. |
10
Because the Revolver Fixed-Charge Coverage Ratio (as defined above) was less than 1.0 to 1.0 as of March 31, 2013, the Company must maintain at least $20.0 million of available borrowing capacity under its Revolver. Net of the impact of reducing availability by $20.0 million, the Company`s available borrowing capacity under the Revolver was $142.7 million, calculated as of March 31, 2013. The Company`s debt agreements do not otherwise require it to maintain any financial performance metric or ratio in order to avoid a default.
11
NORANDA ALUMINUM HOLDING CORPORATION NET CASH COST OF PRIMARY ALUMINUM (unaudited) Net cash cost of primary aluminum per pound represents the costs of producing commodity grade aluminum net of value-added premiums on primary aluminum sales. The Company has provided net cash cost per pound of aluminum shipped because it provides investors with additional information to measure operating performance. Using this metric, investors are able to assess the prevailing LME price plus Midwest premium per pound versus unit net costs per pound shipped. Net cash cost per pound is positively or negatively impacted by changes in primary aluminum, alumina and bauxite production and sales volumes, natural gas and oil related costs, seasonality in electrical contract rates, and increases or decreases in other production related costs. Net cash cost per pound is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Net cash cost per pound shipped should not be considered in isolation from or as an alternative to any performance measures derived in accordance with U.S. GAAP. The following table shows the calculation of net cash cost of primary aluminum:
| Three months ended March 31, | ||||||
| 2013 | 2012 | |||||
| Total primary aluminum cash cost (in millions)(a) | $ | 115.1 | |
$ | 110.8 | |
| Total shipments (pounds in millions) | 141.8 | |
142.2 | |
||
| Net Cash Cost (per pound shipped) | $ | 0.81 | |
$ | 0.78 | |
| |
||||||
| (a) Total primary aluminum cash cost is calculated below (in millions): | ||||||
| Total primary aluminum revenue | $ | 161.2 | |
$ | 161.9 | |
| Less fabrication premiums and other revenue | (14.9 | ) | (12.3 | ) | ||
| Realized Midwest transaction price revenue | 146.3 | |
149.6 | |
||
| |
||||||
| Primary Aluminum segment profit | 24.2 | |
25.7 | |
||
| Alumina segment profit | 4.1 | |
13.7 | |
||
| Bauxite segment profit | 4.2 | |
2.2 | |
||
| Profit Eliminations | (1.3 | ) | (2.8 | ) | ||
| Total | 31.2 | |
38.8 | |
||
| Total primary aluminum cash cost (in millions) | $ | 115.1 | |
$ | 110.8 | |
12
NORANDA ALUMINUM HOLDING CORPORATION CALCULATION OF DILUTED EARNINGS (LOSS) PER SHARE, EXCLUDING SPECIAL ITEMS (in millions, except per share information) (unaudited) "Net income (loss), excluding special items" means net income (loss) adjusted to eliminate the impact of certain transactions and events referred to as "special items," as listed herein. "Diluted earnings (loss) per share, excluding special items" refers to net income (loss) excluding special items, divided by the number of diluted weighted-average common shares outstanding. Management has provided net income (loss), excluding special items and diluted earnings (loss) per share, excluding special items because the measure provides investors with additional information with which to measure operating results. Using these metrics, investors are able to assess the impact of certain transactions and events on earnings and to compare net income (loss) from period to period with the impact of those transactions and events removed from all periods. Management believes this metric is a valuable tool in assisting investors to compare financial results from period to period. Net income (loss), excluding special items may not be comparable to similarly titled measures used by other companies. Net income (loss), excluding special items should not be considered in isolation from or as an alternative to net income (loss) or any other performance measures derived in accordance with U.S. GAAP. Net income (loss), excluding special items has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Special items and diluted earnings (loss) per share, excluding special items are outlined below (in millions):
| Three months ended March 31, | ||||
| 2013 | 2012 | |||
| $ | $ | |||
| Increase (decrease) to net income | ||||
| Special items: | ||||
| Transaction costs (1) | (2.5 | ) | (8.6 | ) |
| Modification of stock options (2) | - | |
(1.2 | ) |
| Gain on hedging activities | 5.4 | |
14.7 | |
| Total special items (pre-tax) | 2.9 | |
4.9 | |
| Diluted earnings per share, excluding special items: | ||||
| Pre-tax income | 1.0 | |
23.7 | |
| Pre-tax impact of special items | (2.9 | ) | (4.9 | ) |
| Pre-tax income (loss), excluding special items | (1.9 | ) | 18.8 | |
| Income taxes, excluding special items (3) | (0.6 | ) | 6.1 | |
| Net income (loss), excluding special items | (1.3 | ) | 12.7 | |
| Weighted-average common shares outstanding, diluted (shares, in millions) (4) | 67.78 | |
68.84 | |
| Diluted earnings (loss) per share, excluding special items | (0.02 | ) | 0.18 | |
| (1) | First quarter 2013 amount includes $2.5 million related to the 2013 Refinancing, representing the write-off of deferred financing costs and third party fees related to the AcquisitionCo Notes due 2015. In first quarter 2012, the Company incurred $8.1 million of costs related to the 2012 refinancing and the related tender offer, including creditor and third-party fees as well as the write-off of deferred financing fees. The first quarter 2012 amount also includes $0.5 million of costs related to the public secondary offering of 10 million shares of common stock by Apollo during the period. |
| (2) | During first quarter 2012, holders of stock options, service-vesting restricted stock and restricted stock units were paid cash for the $1.25 per share supplemental dividend. The Company accelerated $1.2 million of share-based payment compensation expense in connection with this award modification. |
| (3) | Income taxes, excluding special items were calculated using the Company`s estimated annual effective tax rate from continuing operations, which was 33.6% for the three months ended March 31, 2013 and 32.7% for the three months ended March 31, 2012. |
| (4) | Due to the first quarter 2013 net loss excluding special items, potential common shares were excluded from the weighted-average common shares outstanding because these potential shares would have been antidilutive. |
13
Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause the Company`s actual results to differ materially from those expressed in forward-looking statements, including, without limitation: the cyclical nature of the aluminum industry and fluctuating commodity prices, which cause variability in earnings and cash flows; a downturn in general economic conditions, including changes in interest rates, as well as a downturn in the end-use markets for certain of the Company`s products; fluctuations in the relative cost of certain raw materials and energy compared to the price of primary aluminum and aluminum rolled products; the effects of competition in Noranda`s business lines; Noranda`s ability to retain customers, a substantial number of which do not have long-term contractual arrangements with the Company; the ability to fulfill the business`s substantial capital investment needs; labor relations (i.e. disruptions, strikes or work stoppages) and labor costs; unexpected issues arising in connection with Noranda`s operations outside of the United States; the ability to retain key management personnel; and Noranda`s expectations with respect to its acquisition activity, or difficulties encountered in connection with acquisitions, dispositions or similar transactions. Forward-looking statements contain words such as "believes," "expects," "may," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions that relate to Noranda`s strategy, plans or intentions. All statements Noranda makes relating to its estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to the Company`s expectations regarding future industry trends are forward-looking statements. Noranda undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise except as otherwise required by law. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management`s current estimates, projections, expectations or beliefs. For a discussion of additional risks and uncertainties that may affect the future results of Noranda, please see the Company`s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Non-GAAP Financial Measures This press release and the presentation slides for the earnings call contain non-GAAP financial measures as defined by SEC rules. Management believes that these measures are helpful to investors in measuring financial performance and comparing performance to that of its peers. However, these non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies. These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for U.S. GAAP financial measures. To the extent non-GAAP financial measures are discussed on the earnings call, a reconciliation of each measure to the most directly comparable U.S. GAAP measure will be available within this press release or within the presentation slides filed as Exhibit 99.2 to the Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release. About the Company Noranda Aluminum Holding Corporation is a leading North American integrated producer of value-added primary aluminum products, as well as high quality rolled aluminum coils. Noranda is a public company affiliated with its private equity sponsor. For Question-and-Answer Participants Participants are strongly encouraged to pre-register for the conference call using the URL below, as it will expedite entry into the conference call. Pre-registrants are issued an individual PIN number that provides immediate access into the live conference call. If you do not wish to pre-register, please dial the appropriate number below at least 15 minutes prior to the start of the call to participate in the question-and-answer session. Preregistration URL: https://www.theconferencingservice.com/prereg/key.process?key=P4FKPKU48 U.S. participants: 888-713-4216 International participants: 617-213-4868 Participant Passcode: 64246685
14
Contact Robert Mahoney Chief Financial Officer (615) 771-5752 robert.mahoney@noralinc.com
John A. Parker Vice President of Communication and Investor Relations (615) 771-5734 john.parker@noralinc.com
15 Conference Call Materials
Earnings Release
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Noranda Aluminum Holding Corporation via Thomson Reuters ONE
HUG#1695625
