Arconic reports 3 percent increase in revenue for Q3 2017
Arconic reports 3 percent increase in revenue for Q3 2017
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Arconic Inc., headquartered in Norcross, Georgia, has reported revenue of $3.2 billion for the third quarter of 2017, an increase of 3 percent year over year, driven by higher volumes across all business segments as well as higher aluminum prices. Organic revenue was up 5 percent year over year, the company says.
Net income attributable to Arconic in the third quarter of 2017 was $119 million, or 22 cents per share. The results included a last-in-first-out- (LIFO-) and metal-lag-related $30 million charge ($46 million pretax) and $13 million in special items, primarily charges related to restructuring, the company says.
Excluding special items, third quarter 2017 adjusted income was $132 million, or 25 cents per share. Annualized return on net assets (RONA) was 8.1 percent, based on year-to-date results.
Arconic says it continued its focus on cost reduction in the third quarter. The company delivered net cost savings of 1.5 percent of revenue and improved its full year selling, general and administrative expenses (SG&A) guidance by approximately $25 million versus the original 2017 target. Arconic says it is on track to deliver an improvement of approximately $100 million year over year in SG&A, with additional run-rate savings expected in 2018.
Third quarter 2017 consolidated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $430 million, up 14 percent year over year. Consolidated adjusted EBITDA excluding special items was $437 million, up 2 percent year over year. Consolidated adjusted EBITDA margin excluding special items was 13.5 percent, down 20 basis points year over year, as rising aluminum prices had the dual impact of increasing revenue and a larger LIFO charge.
“Arconic delivered its third consecutive quarter of year-over-year revenue and EBITDA growth,” says Arconic Interim Chief Executive Officer David Hess. “We are demonstrating consistent improvements in operating performance on the back of healthy organic revenue growth, coupled with better-than-planned progress on streamlining, restructuring and net cost reduction. Uniquely this quarter, our results were negatively impacted by a sharply higher, noncash LIFO charge, resulting from a spike in aluminum prices. We remain focused on a strong finish to 2017, and reaffirm the Arconic full-year earnings guidance.”
The company’s Engineered Products and Solutions (EP&S) segment reported revenue of $1.5 billion, up 5 percent year over year, and adjusted EBITDA of $312 million, up $16 million year over year. Increased aerospace volume and continued net cost savings were partially offset by unfavorable price and mix, Arconic says. Engine ramp costs were higher than expected. Adjusted EBITDA margin was 21.1 percent, flat year over year.
Its Global Rolled Products (GRP) segment reported revenue of $1.2 billion, a decrease of 4 percent year over year. Organic revenue was up 1. Adjusted EBITDA was $140 million, down $3 million year over year, driven by reduced aerospace wide-body build rates, airframe destocking and pricing pressure in regional specialties, partially offset by net cost savings of 1.6 percent of revenue. Adjusted EBITDA margin was 11.3 percent, up 20 basis points year over year, including a 170 basis point negative impact of higher aluminum prices, the company says.
Arconic’s Transportation and Construction Solutions (TCS) segment delivered revenue of $517 million, an increase of 15 percent year over year, and adjusted EBITDA of $83 million, up $7 million year over year. Higher volume and cost reductions more than offset headwinds, the company says, including unfavorable price and mix and higher aluminum prices. Adjusted EBITDA margin was 16.1 percent, down 80 basis points year over year, including a 120 basis point negative impact of higher aluminum prices.
The company ended the third quarter of 2017 with $1.8 billion in cash on hand. Cash from operations was $172 million, and free cash flow was $41 million. Cash used for financing activities was $15 million and cash used for investing activities was $128 million.
Arconic says it will hold a special meeting of shareholders Nov. 30, 2017, to approve the change of the company’s jurisdiction of incorporation from Pennsylvania to Delaware. Holders of record of Arconic common stock at the close of business Oct. 5, 2017, are entitled to vote at the special meeting. If approved, Arconic says it currently expects the reincorporation to occur on or about Dec. 31, 2017. The company’s post-reincorporation Certificate of Incorporation and Bylaws will not contain any supermajority voting requirements, will provide that the board of directors be completely declassified and that all directors be elected annually.
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Source: Recycling Today
Arconic reports 3 percent increase in revenue for Q3 2017
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