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| EX-99.1 - EX-99.1 - Novelis Inc. | d294483dex991.htm |
| 8-K - 8-K - Novelis Inc. | d294483d8k.htm |
 Novelis Third Quarter 2012
Earnings Conference Call
Philip Martens
President and Chief Executive Officer
Steve Fisher
Senior Vice President and Chief Financial Officer
Brighter Ideas with Aluminum
February 8, 2012
Exhibit 99.2 |
 2
Forward-Looking Statements
Statements
made
in
this
presentation
which
describe
Novelis'
intentions,
expectations,
beliefs
or
predictions
may
be
forward-looking
statements
within
the
meaning
of
securities
laws.
Forward-looking
statements
include
statements
preceded
by,
followed
by,
or
including
the
words
"believes,"
"expects,"
"anticipates,"
"plans,"
"estimates,"
"projects,"
"forecasts,"
or
similar
expressions.
Examples
of
forward-looking
statements
in
this
presentation
are
our
stated
view
regarding
our
ability
to
generate
free
cash
flows
this
fiscal
year,
the
projected
growth
rate
for
aluminum
flat
rolled
products
in
Asia,
the
projected
growth
rate
for
automotive
sheet
growth
in
North
America,
and
anticipated
full-year
EBITDA.
Novelis
cautions
that,
by
their
nature,
forward-looking
statements
involve
risk
and
uncertainty
and
that
Novelis'
actual
results
could
differ
materially
from
those
expressed
or
implied
in
such
statements.
We
do
not
intend,
and
we
disclaim
any
obligation,
to
update
any
forward-looking
statements,
whether
as
a
result
of
new
information,
future
events
or
otherwise.
Factors
that
could
cause
actual
results
or
outcomes
to
differ
from
the
results
expressed
or
implied
by
forward-looking
statements
include,
among
other
things:
changes
in
the
prices
and
availability
of
aluminum
(or
premiums
associated
with
such
prices)
or
other
materials
and
raw
materials
we
use;
the
capacity
and
effectiveness
of
our
metal
hedging
activities;
relationships
with,
and
financial
and
operating
conditions
of,
our
customers,
suppliers
and
other
stakeholders;
fluctuations
in
the
supply
of,
and
prices
for,
energy
in
the
areas
in
which
we
maintain
production
facilities;
our
ability
to
access
financing
for
future
capital
requirements;
changes
in
the
relative
values
of
various
currencies
and
the
effectiveness
of
our
currency
hedging
activities;
factors
affecting
our
operations,
such
as
litigation,
environmental
remediation
and
clean-up
costs,
labor
relations
and
negotiations,
breakdown
of
equipment
and
other
events;
the
impact
of
restructuring
efforts
in
the
future;
economic,
regulatory
and
political
factors
within
the
countries
in
which
we
operate
or
sell
our
products,
including
changes
in
duties
or
tariffs;
competition
from
other
aluminum
rolled
products
producers
as
well
as
from
substitute
materials
such
as
steel,
glass,
plastic
and
composite
materials;
changes
in
general
economic
conditions
including
deterioration
in
the
global
economy,
particularly
sectors
in
which
our
customers
operate;
changes
in
the
fair
value
of
derivative
instruments;
cyclical
demand
and
pricing
within
the
principal
markets
for
our
products
as
well
as
seasonality
in
certain
of
our
customers’
industries;
changes
in
government
regulations,
particularly
those
affecting
taxes,
environmental,
health
or
safety
compliance;
changes
in
interest
rates
that
have
the
effect
of
increasing
the
amounts
we
pay
under
our
principal
credit
agreement
and
other
financing
agreements;
the
effect
of
taxes
and
changes
in
tax
rates;
and
our
indebtedness
and
our
ability
to
generate
cash.
The
above
list
of
factors
is
not
exhaustive.
Other
important
risk
factors
included
under
the
caption
"Risk
Factors"
in
our
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
March
31,
2011
are
specifically
incorporated
by
reference
into
this
presentation.
Non-GAAP Financial Measures
This
presentation
contains
non-GAAP
financial
measures
as
defined
by
SEC
rules.
We
think
that
these
measures
are
helpful
to
investors
in
measuring
our
financial
performance
and
liquidity
and
comparing
our
performance
to
our
peers.
However,
our
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
GAAP
financial
measures.
We
have
included
reconciliations
of
each
of
these
measures
to
the
most
directly
comparable
GAAP
measure.
In
addition,
a
more
detailed
description
of
these
non-GAAP
financial
measures
used
in
this
presentation,
together
with
a
discussion
of
the
usefulness
and
purpose
of
such
measures,
is
included
as
Exhibit
99.2
to
our
Current
Report
on
Form
8-K
furnished
to
the
SEC
with
our
earnings
press
release.
Safe Harbor Statement |
 3
Agenda |
 4 |
 5
Business Review & Outlook
Tough Quarter: Felt Economic Impact + Seasonally Low Quarter
Fourth Quarter Recovering & Full-Year on Par with Last Year’s
Record EBITDA Results
While Economic Pressure Persists, Our Business Model Reduces
Exposure (EBITDA/ton flat YOY)
Expansions on Track and Budget. Continued Investments to Support
Strategy
Pressure in Q3, on Track with Strategic Expansion Plans
|
 6
Novelis Business Model |
 7
Regional Business Outlook (Q4FY12)
7 |
 8 |
 9
Novelis’
Strategy |
 10
Source: Novelis Estimates and November 2011 CRU
Long-Term Global Trends in Aluminum Demand
Electronics & High-End
Specialties
Beverage Can
Automotive
Long-term
(CY11-16)
~25%
~25%
~6%
~6%
~4-5%
~4-5%
Strong Long-Term Outlook |
 11
Asia –
Invested $350M to Acquire Minority Interest
•
Completed purchase of minority stake in Korean Operations
•
Provides greater control of our manufacturing assets
•
Drives our ongoing initiatives for globally integrated operations
|
 12
Asia –
Korea Expansion Update
•
Total Investment of ~$400M
•
On Track for Incremental Capacity of ~350kt
•
Expect to begin commissioning by end of CY 2013
•
FRP CAGR of 8% for Asia over the next 5 years |
 13
Brazil –
Expansions Update
Rolling Expansion
•
Total Investment of ~$300M
•
Expect to begin commissioning ~220kt by end of CY 2012
•
Beverage Can CAGR of 7% over next 5 years
Recycling Line
•
Total Investment of ~$30M
•
Recycling Capacity of ~190 kts begins commissioning by end of CY 2013
•
Drives Towards 80% Recycled Content Goal, Ensures Metal Supply and
Reduces Costs
Can End Stock (CES) Coating Line
•
Total Investment of ~$50M
•
Capacity of ~100 kts begins commissioning by end of CY 2013
•
Captures Growth, Reduces costs and Reliability on Third Parties
Creating a World Class, Fully-Integrated Rolling System
|
 14
North America –
Expansion Update
•
Total Investment of ~$200M
•
On Track for Incremental Capacity of ~200kt
•
Expect to begin commissioning by mid CY 2013
•
Strong Double Digit Auto Sheet CAGR in N.A. over the next 5
years |
 15 |
 16
Third Quarter Financial Highlights
(Q3FY12 vs. Q3FY11)
Shipments Down 9% to 648 Kilotonnes
Net Sales Down 4% to $2.5 Billion
Adjusted EBITDA Down 11% to $213 Million
Free Cash Flow Before CapEx of $186 Million
Liquidity of $857 Million
Net Loss of $12 Million
Solid Performance in a Tough Market |
 17
Shipments & Sales
Total Company
Sales (Billions) •
Shipments (Kt)
Shipments by Region
Short-term Softness in Most Regions |
 18
(Millions)
Adjusted EBITDA Trend
Short-term Softness Impacting EBITDA |
 EBITDA
& Shipments EBITDA (Millions) •
Shipments (Kt)
19
Business Model Drives Performance
$128
$200
$238
$213
0
100
200
300
400
500
600
700
$100
$125
$150
$175
$200
$225
$250
$275
Q3FY09
Q3FY10
Q3FY11
Q3FY12
Shipments
Adjusted EBITDA |
 20
Adjusted EBITDA
Q3FY11 vs. Q3FY12 (Millions) |
 21
Free Cash Flow Before CapEx
On Track to Generate ~$600-700 Million for FY12
308
544
296
$50
$150
$250
$350
$450
$550
$650
$750
YTD
FY
FY11
FY12
(Millions)
~600-700 |
 22
(Millions)
Capital Expenditures
Focused on Strategic Investments
132
234
297
$0
$100
$200
$300
$400
$500
$600
$700
YTD
FY
FY11
FY12
~550-600 |
 23 |
 Summary & Outlook
While Economic Pressure Persists, Our Business Model
Reduces Exposure (EBITDA/ton flat YOY)
Fourth Quarter Recovering & Full-Year on Par with Last
Year’s Record EBITDA Results
•
FY12 Adjusted EBITDA between $1.05-1.08B
Long-Term Outlook Supports Significant Global Expansion
Projects
•
Three Large Mill Expansions on Track & Budget
24 |
 25 |
 26 |
   27
(in $ m)
Q1
FY10
Q2
FY10
Q3
FY10
Q4
FY10
FY 10
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Net Income (loss) Attributable to Our
Common Shareholder
143
195
68
(1)
405
50
62
(46)
50
116
62
120
(12)
-
Interest, net
(40)
(41)
(42)
(41)
(164)
(36)
(37)
(42)
(79)
(194)
(73)
(73)
(71)
-
Income tax (provision) benefit
(112)
(87)
(48)
(15)
(262)
(15)
(56)
(33)
21
(83)
(59)
7
10
-
Depreciation and amortization
(100)
(92)
(93)
(99)
(384)
(103)
(104)
(100)
(97)
(404)
(89)
(81)
(79)
-
Noncontrolling interests
(18)
(19)
(13)
(10)
(60)
(9)
(11)
(11)
(13)
(44)
(15)
(10)
(1)
EBITDA
413
434
264
164
1,275
213
270
140
218
841
298
277
129
-
Unrealized gain (loss) on derivatives
299
254
62
(37)
578
(47)
1
9
(27)
(64)
26
(1)
(63)
-
Realized gain on derivative instruments not included
in segment income
-
-
-
-
-
-
-
4
1
5
2
-
(3)
-
Loss on early extinguishment of debt
-
-
-
-
-
-
-
(74)
(10)
(84)
-
-
-
-
Proportional consolidation
(16)
(17)
2
(21)
(52)
(10)
(11)
(10)
(14)
(45)
(13)
(12)
(9)
-
Restructuring charges, net
(3)
(3)
(1)
(7)
(14)
(6)
(9)
(20)
1
(34)
(19)
(11)
(1)
-
Others costs, net
9
1
1
(3)
8
13
(2)
(7)
(13)
(9)
(4)
-
(8)
Adjusted EBITDA
124
199
200
232
755
263
291
238
280
1,072
306
301
213
Other Income (expense) Included in Adjusted
EBITDA
-
Metal price lag
(30)
(10)
3
2
(35)
9
19
-
(3)
25
5
15
8
-
Foreign currency remeasurement
5
13
(6)
4
16
(22)
20
1
9
8
(8)
-
(2)
-
Purchase accounting
52
49
42
(2)
141
(3)
(4)
(3)
(3)
(13)
(3)
(3)
(3)
-
Can price ceiling, net
(54)
(54)
(20)
-
(128)
-
-
-
-
-
-
-
-
Income Statement Reconciliation to Adjusted EBITDA
|
   28
(in $m)
FY10
FY11
FY12
Q1
Q2
Q3
Q4
Full
Year
Q1
Q2
Q3
Q4
Full
Year
Q1
Q2
Q3
Cash Provided by (used in)
Operating Activities
256
195
179
214
844
22
102
94
236
454
(115)
171
145
Cash Provided by (used in)
Investing Activities)
(233)
(196)
(55)
0
(484)
27
(2)
(39)
(99)
(113)
(79)
(40)
(72)
Less: Proceeds from Sales of
Fixed Assets
(3)
(1)
0
(1)
(5)
(15)
(3)
(10)
(3)
(31)
0
1
(10)
Free Cash Flow
20
(2)
124
213
355
34
97
45
134
310
(194)
130
63
Free Cash Flow |
 29
Explanation of Other Income (Expenses)
Included in our Adjusted EBITDA
1) Metal Price Lag Net of Related Hedges:
On certain sales contracts we experience timing differences on the pass through of
changing aluminum prices from our suppliers to our customers. Additional
timing differences occur in the flow of metal costs through moving average inventory
cost values and cost of goods sold. This timing difference is referred to as Metal
Price Lag. We have a risk management program in place to minimize impact of
this “lag”. 2) Foreign Currency Remeasurement Net of Related
Hedges: All non-functional currency denominated Working Capital and Debt
gets remeasured every period by the period end exchange rates. This impacts
our profitability. Like Metal Price Lag, we have a risk management program
in place to minimize impact of such Remeasurement.
3) Purchase Accounting:
Following our acquisition, the consideration and transaction costs paid by Hindalco
in connection with the transaction were “pushed down”
to us and were allocated to the assets acquired and the liabilities assumed. These
allocations are amortized over periods, impacting our profitability. A
significant portion of such amortizations pertain to ceiling
contracts. 4) Can Price Ceilings:
Some sales contracts contained a ceiling over which metal prices could not be
contractually passed through to certain customers. This negatively impacted
our margins and cash flows when the price we paid for metal was above the ceiling
price contained in these contracts. These contracts expired December 31,
2009. |