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8-K - 8-K - Aleris Corp | a8kinvestorpresentationnov.htm |
Aleris Restricted & Confidential
Bank of America / Merrill Lynch
2017 Leveraged Finance Conference November 29, 2017
2
IMPORTANT INFORMATION
This information is current only as of its date and may have changed. We undertake no obligation to update this information in light of new information, future events or otherwise. This information
contains certain forecasts and other forward looking information concerning our business, prospects, financial condition and results of operations, and we are not making any representation or warranty
that this information is accurate or complete. See “Forward-Looking Information” below.
BASIS OF PRESENTATION
We are a direct wholly owned subsidiary of Aleris Corporation. Aleris Corporation currently conducts its business and operations through us and our consolidated subsidiaries. As used in this
presentation, unless otherwise specified or the context otherwise requires, “Aleris,” “we,” “our,” “us,” “ and the “Company” refer to Aleris International, Inc. and its consolidated subsidiaries.
Notwithstanding the foregoing, with respect to the historical financial information and other data presented in this presentation, unless otherwise specified or the context requires, “Aleris,” “we,” “our,”
“us,” and the “Company’ refer to Aleris Corporation. We completed the sale of our recycling and specification alloys and extrusions businesses in the first quarter of 2015. We have reported these
businesses as discontinued operations for all periods presented, and reclassified the results of operations of these businesses as discontinued operations. Except as otherwise indicated, the discussion
of the Company’s business and financial information throughout this presentation refers to the Company’s continuing operations and the financial position and results of operations of its continuing
operations.
FORWARD-LOOKING INFORMATION
Certain statements contained in this presentation are “forward-looking statements” within the meaning of the federal securities laws. Statements under headings with “Outlook” in the title and statements
about our beliefs and expectations and statements containing the words “may,” “could,” “would,” “should,” “will,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “look forward to,”
“intend” and similar expressions intended to connote future events and circumstances constitute forward-looking statements. Forward-looking statements include statements about future costs and
prices of commodities, production volumes, industry trends, anticipated cost savings, anticipated benefits from new products, facilities, acquisitions or divestitures, projected results of operations,
achievement of production efficiencies, capacity expansions, future prices and demand for our products and estimated cash flows and sufficiency of cash flows to fund capital expenditures. Forward-
looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in or implied by any forward-looking statement.
Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the following: (1) our ability to successfully implement our business
strategy; (2) the success of past and future acquisitions or divestitures; (3) the cyclical nature of the aluminum industry, material adverse changes in the aluminum industry or our end-uses, such as
global and regional supply and demand conditions for aluminum and aluminum products, and changes in our customers’ industries; (4) increases in the cost, or limited availability, of raw materials and
energy; (5) our ability to enter into effective metal, energy and other commodity derivatives or arrangements with customers to manage effectively our exposure to commodity price fluctuations and
changes in the pricing of metals, especially London Metal Exchange-based aluminum prices; (6) our ability to generate sufficient cash flows to fund our capital expenditure requirements and to meet our
debt obligations; (7) competitor pricing activity, competition of aluminum with alternative materials and the general impact of competition in the industry end-uses we serve; (8) our ability to retain the
services of certain members of our management; (9) the loss of order volumes from any of our largest customers; (10) our ability to fulfill our substantial capital investment requirements; (11) our ability
to retain customers, a substantial number of whom do not have long-term contractual arrangements with us; (12) risks of investing in and conducting operations on a global basis, including political,
social, economic, currency and regulatory factors; (13) variability in general economic conditions on a global or regional basis; (14) current environmental liabilities and the cost of compliance with and
liabilities under health and safety laws; (15) labor relations (i.e., disruptions, strikes or work stoppages) and labor costs; (16) our internal controls over financial reporting and our disclosure controls and
procedures may not prevent all possible errors that could occur; (17) our levels of indebtedness and debt service obligations, including changes in our credit ratings, material increases in our cost of
borrowing or the failure of financial institutions to fulfill their commitments to us under committed facilities; (18) our ability to access credit or capital markets; (19) the possibility that we may incur
additional indebtedness in the future; (20) limitations on operating our business as a result of covenant restrictions under our indebtedness, and our ability to pay amounts due under the Senior Notes;
and (21) other factors discussed in our filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” contained therein. Investors, potential investors and other
readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether in response to new information, futures events or otherwise, except as otherwise required by law.
NON-GAAP INFORMATION
The non-GAAP financial measures contained in this presentation (including, without limitation, EBITDA, Adjusted EBITDA, commercial margin, and variations thereof) are not measures of financial
performance calculated in accordance with U.S. GAAP and should not be considered as alternatives to net income and loss attributable to Aleris Corporation or any other performance measure derived
in accordance with GAAP or as alternatives to cash flows from operating activities as a measure of our liquidity. Non-GAAP measures have limitations as analytical tools and should be considered in
addition to, not in isolation or as a substitute for, or as superior to, our measures of financial performance prepared in accordance with GAAP. Management believes that certain non-GAAP financial
measures may provide investors with additional meaningful comparisons between current results and results in prior periods. Management uses non-GAAP financial measures as performance metrics
and believes these measures provide additional information commonly used by the holders of our senior debt securities and parties to the 2015 ABL Facility with respect to the ongoing performance of
our underlying business activities, as well as our ability to meet our future debt service, capital expenditure and working capital needs. We calculate our non-GAAP financial measures by eliminating the
impact of a number of items we do not consider indicative of our ongoing operating performance, and certain other items. You are encouraged to evaluate each adjustment and the reasons we consider
it appropriate for supplemental analysis. See “Appendix.”
INDUSTRY INFORMATION
Information regarding market and industry statistics contained in this presentation is based on information from third party sources as well as estimates prepared by us using certain assumptions and our
knowledge of these industries. Our estimates, in particular as they relate to our general expectations concerning the aluminum industry, involve risks and uncertainties and are subject to changes based
on various factors, including those discussed under “Risk Factors” in our filings with the Securities and Exchange Commission.
WEBSITE POSTING
We use our investor website (investor.aleris.com) as a channel of distribution of Company information. The information we post through this channel may be deemed material. Accordingly, investors
should monitor this channel, in addition to following our press releases, Securities and Exchange Commission ("SEC") filings, and public conference calls and webcasts. The content of our website is
not, however, a part of this presentation.
Forward-Looking and Other Information
3
Metal price pass through business model; limited commodity exposure
Aleris Well-Positioned in Aluminum Value Chain
Processor
4
Aleris Overview
1Revenue includes intra-entity revenue of $34 million and adjusted EBITDA excludes corporate expense of $37 million
Overview
Global leader in Aerospace and Automotive aluminum rolled
products with a presence on three continents and leading North
American Continuous Cast (Building & Construction (“B&C”)
and Truck Trailer) business
Key investments driving strategic transformation complete
− Duffel wide auto sheet ramp-up complete; process
improvements driving throughput increase
− Lewisport running CALP I and commissioning CALP II –
commercial shipments commencing; planned outage tied to
widening of hot mill, approximately $30M of EBITDA impact
− Zhenjiang Aerospace presence established; mix and
portfolio upgrade well underway
− Nichols acquisition and integration resulted in industry-
leading continuous cast capabilities and flexibility
Significant, recent multi-year contract wins with global,
blue-chip customers supports mix shift (Airbus, Bombardier)
Robust research and development (R&D) platform and
technology portfolio
Approximately 5,400 employees and 13 manufacturing facilities
in North America, Europe and Asia
Financial performance gaining momentum
LTM 9/30/17 Revenues1
LTM 9/30/17 Adjusted EBITDA1
($M)
($M)
$1,447
51%
$112
4%
$1,251
45%
Europe
North America
Asia Pacific
Total: $2,810
$135
56%
$95
39%
$12
5%
Asia Pacific
Europe
North America
Total: $2431
5
Investment Highlights
Support from healthy long-term industry fundamentals
Key investments in place and largely complete
Well-positioned for growth with transformation strategy
Blue-chip customer base with contracts that underpin growth
6
Strategic execution delivering on migrating Aleris to high value industry player
Transformation Strategy –
Migrating to the Highest Margin Products
2020
% of Revenues
Leading global Aerospace and Automotive
franchises
Technology led focus, including leveraging
Continuous Cast capabilities
Capital investments, end-use demand
drive substantial margin / mix improvement
North
America
Europe Asia
Pacific
Whole Co
Adjusted EBITDA $ per ton Adjusted EBITDA $ per ton
Formulated and began transformation
strategy
Insourced and re-focused R&D and
technology efforts
Launched Zhenjiang Aerospace focused
greenfield investment
Launched Duffel Wide Auto Body Sheet
(WABS) and Lewisport investments
2010 to 20141
% of Revenues
$199
$400
$70
$130
North
America
Europe Disc Ops Whole Co
2016 to 2017
% of Revenues
Portfolio repositioning through M&A and
investments
− Nichols acquisition
− Recycling divestiture
− Extrusions divestiture
− Continued Lewisport expansion
Delivering results
Rigorous focus on operational excellence
$202
$429
$503
$256
North
America
Europe Asia
Pacific
Whole Co
Adjusted EBITDA $ per ton (LTM 3Q17)
High value-added products (Aerospace and Automotive) All Other Low-cost CC products (B&C and Truck Trailer) Discontinued Ops
Aero + Auto
Aero +
Auto Aero +
Auto
CC
CC
CC Others
Others
Others
Disc Ops
1Includes discontinued operations. EBITDA/ton based upon 2014 results; results not pro forma for Nichols acquisition
7
Aleris’ Recent Investments Have Resulted in a
Realignment of the Business’ Commercial Strategy
Aerospace
Global platform – Germany / China
Leading position in aerospace plate and
sheet
State-of-the-art rolling mill in Zhenjiang was
1st plate mill in China with Western OEM
aerospace qualifications
Long-term sector trends; 8-year backlog
Significant customer momentum - heavily
contractual business (multi-year fixed term
contracts)
Significant volume captured
under new LTAs
Zhenjiang, China
Voerde, Germany (Casthouse)
Koblenz, Germany
World-class aerospace plate facilities
in Koblenz and China
Leading network and cost position
Leading positions in North America
B&C
Truck Trailer
Advanced scrap processing capabilities
Niche-focused light gauge business
Leading coating capabilities
Continuous Cast
Long standing customer relationships and
continued end use demand drives
forecasted continuous cast shipments
Lincolnshire, IL
Uhrichsville, OH Davenport, IA1
Ashville, OH Clayton, NJ
Buckhannon, WV
Richmond, VA
Largest, most flexible CC network serving
North America
1Two facilities located in Davenport, IA
Automotive
Global Platform – Belgium / Germany / U.S.
Leading position in EU ABS; U.S. poised to
ramp up
Strong shift by automotive OEMs to aluminum
sheet
Customer requirements becoming more
precise (e.g. design, formability)
Significant North America volume and margin
secured through 2025
Significant volume under LTAs
Lewisport, KY
Duffel, Belgium
Detroit, MI (R&D)
With the completion of Lewisport, Aleris
offers a global supply of ABS with the
potential for additional capacity in China
8
Recent investments target high growth, high margin and high cash flow end uses
Key Investments Driving
Strategic Transformation
% CAPEX
SPENT
LTM EBITDA AS
% OF EXPECTED
RUN-RATE
STRATEGIC
FOCUS
KEY
INVESTMENTS
NICHOLS
ACQUISITION
$110 million
ACQUIRED
Complementary asset
base; similar technologies
Significant synergies
captured and exceeding
expectations
Well-timed to benefit from
continued housing
strengths
Leading cost position
Significant value stream
from scrap utilization
Increased focus on
product development
CONTINUOUS CAST
DUFFEL
WABS
$85 million
COMPLETED
Technology leader in
Europe with 15-year
presence
Widest ABS capabilities in
Europe
Working with long-
standing global OEM
customers
“Overshoot” program
driving further throughput
AUTOMOTIVE
CHINA
$350 million
COMPLETED
Capturing Aerospace
growth and shift in
demand to Asia
Built to exacting, state-of-
art standards
Western OEM Aerospace
qualifications in place
Adjusted EBITDA
ramping
Adding 5-axis machining
capability
AEROSPACE
LEWISPORT
ABS
$425 million
NEARLY COMPLETE
Massive product mix
upgrades
Leveraging global leading
ABS capabilities
Significant customer
commitments / contracts
back investment
Significant ABS readiness
spend nearly complete
Commercial shipments
underway
220 kT CALP ABS
installed capacity
AUTOMOTIVE
9
Long-term relationships and contracts with global blue-chip customers
Long-Term Relationships with Blue-Chip,
Contracted Customer Base
NORTH
AMERICA
EUROPE
& APAC
Selected Customers
Regional
Brazing Coil and Sheet Specialty Coil and Sheet
Commercial Plate and
Distribution
B&C Truck Trailer Distribution and Consumer
Global
Automotive Aerospace
10
49 69 113
172 237
290 322 357
404
455
549
663
833
877
940 966
1,023
1,174
368
403
443
479
512
566
614
660
714
872
1,021
1,219
1,484
1,626
1,796
1,902
2,040
2,292
2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Shortage of CALP ABS supply expected over the medium term
ABS – Global Transformation Opportunity
Projected CALP Supply and Demand in North America Global ABS Industry Demand
(Metric tons in thousands) (Metric tons in thousands)
Source: CRU, Ducker International / Aluminum Association, IHS Automotive, McKinsey, Company analysis and customer data
1Capacity includes Aleris investment in 2 CALP lines in North America
Europe North America China
Potential Capacity
Tightness
403
543
671
788
836
890 890 890 890
1,174
20 6 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Capacity Demand
95% 76% 95% 92% 87% 95% 101% 99% 89%
% of Demand Satisfied 1
11
Lewisport Outage Update:
Complex Outage Completed
Scalper First Wide Coil Reversing Mill
Widened the scalper
Widened the hot mill
Upgraded pre-heating equipment
Upgraded hot mill controls
ABS spec-ready
Improved reliability and uptime
Over 4,000 individual projects successfully completed during ~60-day outage
Approximately $30M Adjusted EBITDA impact from Lewisport outage in 2017
12
First commercial ABS coil recently shipped, focused on additional customer qualifications and contracts
Wide Cold Mill: Provisional acceptance complete
CALP I: Provisional acceptance complete; moved into production mode
CALP II: Commissioning well underway
Three of four alloys approved by primary OEM; fourth currently in aging process
North America ABS Project Update
2014 2015 2016 2017E
$13 $153 $185 $72
AUTOMOTIVE BODY SHEET (ABS) PROJECT CAPEX ($M)
3Q17
$16
CALP I CALP II Wide Cold Mill
Automotive expansion on target to hit critical milestones
13
Approximately 50% of the 2017E – 2036E
growth will be driven by Asia Pacific
Aircraft Backlogs and Deliveries
Driving Growth
Aircraft Backlog1,2
(units)
(units)
Global Fleet Projections by Region3
OVER 34,000 NEW COMMERCIAL AIRCRAFT TO BE BUILT OVER THE NEXT 20 YEARS
Aircraft Deliveries1
1Airbus and Boeing Equity Research Reports, 2017; Company Websites
2Backlog defined as Net Orders (Gross Orders – Conversions/Cancellations) – Deliveries
3Airbus Global Market Forecast 2017-2036
3,887
12,150 12,582 12,528 12,350
2005 2014 2015 2016 Sep-17
Boeing Airbus
894 858
979 972 1,011
1,189
1,274
1,352 1,397
1,436
1,569
1,693
1,860 1,901
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E2018E2019E2020E
Boeing Airbus
17E-20E
CAGR: 7%
6,456
17,749 4,697
7,997
5,216
7,286
1,249
3,322
1,411
2,882
831
1,702
640
1,592
20,500
42,530
2017E 2036E
Africa
CIS
Latin America
Middle East
North America
Europe
Asia-Pacific
4% CAGR
5% CAGR
14
5,609
8,281
-
2,000
4,000
6,000
8,000
10,000
2010 2011 2012 2013 2014 2015 2016
Housing Starts Household Formation
Demographics support continued housing growth
Healthy B&C Fundamentals
Source: Zelman Associates Macro Housing Forecasts (July 2017), Moody’s Analytic Forecast
1Cumulative 2010-2016 data; updated annually (last update 1/9/2017)
2Weighted index of data from the Zelman Building Products Survey, shifts in business days, Home Depot and Lowe’s Results, Hardware Co-Ops, BEA Structural Home Improvements and Home Improvement Research Institute
U.S. Total Housing Starts U.S. Total Single-Family Housing Starts
Cumulative Household Formation vs. Housing Starts1
(thousands) (thousands)
(thousands)
375 462 462
529 578 635
710 780
160
155 187
185
203
215
235
250
535
617 649
714
781
850
945
1,030
2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E
Production Single-Family Starts Contractor/Owner Built Starts
U.S. Home Improvement Index2
4.4%
6.2% 5.9% 6.0% 5.8%
5.3%
4.9% 4.7%
2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E
780
924
1,004
1,112 1,173
1,250 1,320 1,360
2 12A 2013A 2014A 2015A 2016A 2017E 2018E 2019E
Household formation has outgrown the
new housing starts over the past 6
years, which has created a shortage in
supply
15
Strong Metal Practices Helping
Maintain Spreads
$0.95
$0.16
$0.24
$0.26
$1.10
$0.85
$0.14
$0.22
$1.00
$0.90
$0.70
$0.20
$0.18
$0.80
$0.75
$1.05
$0.36
$0.34
$0.30
$0.32
$0.28
Dec
2016
Sep
2017
Jun
2017
Mar
2016
Dec
2015
Sep
2016
Jun
2016
Mar
2017
Sep
2015
Jun
2015
Dec
2014
Mar
2015
P1020 (left axis) Weighted Painted Siding, Mixed Low Copper, Sheet Spread
North America Scrap Spreads1
Higher P1020 driving better spreads in 2017
Productivity / best practice integration yielding better margins
Disciplined approach around go-long
1Platts, Aleris Management Analysis, October 2017
16
FX and short-term volume headwinds creating temporary challenges
2017 YTD EBITDA Performance
3Q17 YTD vs. 3Q16 YTD Adj. EBITDA Bridge ($M)
$162 $164
$11
$12
200
80
120
160
Metal
Spreads
Volume/Mix Price 3Q16 YTD
($2)
Base Inflation Productivity Currency/
Translation/
Other
3Q17 YTD
($7)
Commodity
Inflation
($17) $0 $5
2016 2017 2016 2017
Shipments (kT) 426 418 214 199
Adj. EBITDA ($M) $109 $118 $53 $46
Adj. EBITDA/Ton $256 $282 $249 $229
1H 3Q
17
Transformation Driving Improving
Performance
LTM Adjusted EBITDA1,3,4 Volume1,2,3,4
(Metric tons in thousands) ($M)
452
372
482 493 486 471
396
299
301
314 327
316
23
2015
829
25
822
22
806
LTM
3Q17
2016 2014 2013
794
673
13
848
5
2007
North America2 Europe Asia Pacific
1Excludes discontinued operations
2Segment volumes include intercompany shipments
3Not pro forma for Nichols volumes in 2007, 2013 and 2014
42014 results not pro forma for Nichols acquisition
$206
$145
3Q17 1Q17
+43%
4Q16 2Q17 1Q15 2Q16 4Q15 1Q16 3Q16 3Q15 2Q15 3Q14 4Q14
18
Investments for growth mostly in place, expect to return to positive free cash flow in 2018
CapEx1 Investments Ramping Down
$82
$96 $88
$74
$201
$276
$157
$14
$107
2017E
$1251
2018E 2015
$10
2013
$7
$358
2016
$121
$230 - $2402
$65 - $75
$8
$298
$188
2014
$11
Other Growth North America ABS Project & Other Upgrades Maintenance
($M)
1Excludes discontinued operations CapEx of $50M, $43M, $15M in 2013-2015
2Guidance does not include capitalized interest
19
Capital Structure and Liquidity
9/30/2017
Cash and Restricted Cash1 $76
ABL 245
7.875% Senior Notes due 20202 440
9.500% Senior Notes due 20213 800
Zhenjiang Term Loan due 2024 167
Zhenjiang Revolver due 2021 7
Other 10
Net Debt4 $1,593
LTM 9/30/17 Adjusted EBITDA $206
Net Debt / Adj. EBITDA 7.7x
Net Recourse Debt5 / Adj. EBITDA 6.9x
1Includes $4 million of restricted cash for payoff of China Loan Facility
2Amounts exclude discount and deferred issuance costs
3Amounts exclude net premiums and deferred issuance costs
4Excludes $45 million of exchangeable notes
5Excludes China Loan Facilities
6Includes $60M cash payment and $20M letter of credit relief
Pro Forma Liquidity Summary – 9/30/2017 Capital Structure Highlights
Debt Maturity Profile – 9/30/2017 Capital Structure
No material near term amortization requirements
No restrictive cash dominion covenants unless liquidity drops
substantially
Amount
Cash and Restricted Cash1 $76
Availability under ABL Facility 206
Primary OEM Capacity Reservation Fees6 80
Pro Forma Liquidity $361
($M)
($M)
$800
$440
$245
$5 $7
$18
$27
$36 $36 $38
$7
Q4 2017 2018E 2019E 2020E 2021E 2022E 2023E 2024E
9.500% Senior Notes 7.875% Senior Notes
ABL Zhenjiang Term Loan
Zhenjiang Revolver
Aleris Restricted & Confidential
Appendix
21
Historical Financial Performance
Shipments and Revenues1,*
Adjusted EBITDA* Adjusted EBITDA – Capex2,*
Commercial Margin*
*2013 and 2014 results not pro forma for Nichols acquisition
1Excludes slab and billet sales from Voerde and Koblenz cast houses of 14 kT in 2013
2Excludes discontinued operations CapEx of $50M, $43M, $15M in 2013-2015
($M) ($M)
(metric tons in thousands; $B) ($M)
$2.5 $2.9 $2.9 $2.7 Revenues:
$233 $222 $271 $247 per ton1:
% of Revs
% of CM
7%
16%
6%
15%
8%
18%
8%
17%
Capex
Maintenance
Growth
Total
$82
106
$188
$96
25
$121
$88
210
$298
$74
284
$358
$2.8
806829822794
673
2016 2015 2014 2013 LTM 9/30/17
Shipments:
$1,192 $1,193 $1,204
$1,167
$1,052
LTM 9/30/17 2016 2013 2014 2015
$256
$206 $205
$223
$176
$157
2014 2013 2015 LTM 9/30/17 2016
7%
17%
$(75)
$(153)
$55
$(31)
$144 $131 $135
$80 $75
2014 2015 2013 2016 LTM
9/30/17
$(31)
EBITDA - Maintenance Capex EBITDA - Total Capex
$62
175
$237
22
Robust risk management discipline minimizes commodity price exposure
Limited Commodity Exposure
Pass through pricing and tolling
Minimize inventory levels
Sell 100% of open inventory forward
LME and regional premium volatility
(inventory exposure)
Risk Impact Mitigation Strategy
Lowers margin volatility
Minimizes earnings impact
Risk limited to turn of inventory
(“metal lag”)
Match sales with physical purchases or LME
forwards
Attempt to minimize LT fixed price sales
Forward price sales Locks in rolling margin
Reduces multiyear dated
derivatives
Adjusted EBITDA vs. Metal price lag
Adj. EBITDA including metal lag $40 $48 $61 $52 $47 $54 $62 $45
(–) Income / (expense) from metal
price lag
1 4 (3) (1) 4 2 (5) (1)
Adj. EBITDA as reported $39 $45 $65 $53 $43 $52 $66 $46
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
Metal price lag impact on gross
profit
$0 $11 $6 $8 $8 $22 $8 ($5)
(+) Realized (losses) / gains on
metal derivatives
1 (7) (9) (9) (5) (19) (12) 4
Favorable / (unfavorable) metal
price lag net of realized
derivative gains / losses
$1 $4 ($3) ($1) $4 $2 ($5) ($1)
23
LTM Adjusted EBITDA Reconciliation
($M)
2015 2016 2017 2015 2016 2017 2014 2015 2016 2017 2013 2014 2015 2016 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Adjusted EBITDA of continuing operations 188.1$ 212.3$ 212.4$ 208.9$ 216.5$ 214.2$ Adjusted EBITDA of continuing operations 144.7$ 222.0$ 201.6$ 206.4$ 156.9$ 176.5$ 222.8$ 205.1$ 203.8$ 196.7$ 180.1$ 156.9$ 152.0$ 133.5$ 144.7$ 176.5$ 188.1$ 208.9$ 222.0$ 222.8$ 212.3$ 216.5$ 201.6$ 205.1$ 212.4$ 214.2$ 206.4$
Unrealized (losses) gains on derivative financial instruments of continuing operations (4.5) (1.3) 1.9 10.8 (10.9) 21.4 Unrealized (losses) gains on derivative financial instruments of continuing operations 7.2 (24.2) 19.2 (6.2) 2.2 5.4 (30.1) 19.0 11.4 11.6 10.9 2.2 (17.8) (10.4) 7.2 5.4 (4.5) 10.8 (24.2) (30.1) (1.3) (10.9) 19.2 19.0 1.9 21.4 (6.2)
Impact of recording inventory at fair value through purchase accounting (8.0) - - (5.0) - - Impact of recording inventory at fair value through purchase accounting (5.5) (2.5) - - - (8.1) - - - - - - - (3.0) (5.5) (8.1) (8.0) (5.0) (2.5) - - - - - - - -
Restructuring charges (5.3) (8.3) (1.0) (9.7) (4.0) (1.2) Restructuring charges (1.2) (10.1) (3.3) (1.8) (5.0) (2.8) (10.3) (1.5) (5.9) (12.8) (12.8) (5.0) (7.8) (1.2) (1.2) (2.8) (5.3) (9.7) (10.1) (10.3) (8.3) (4.0) (3.3) (1.5) (1.0) (1.2) (1.8)
Unallocated currency exchange (losses) gains on debt 21.8 (8.7) (0.7) 19.7 (7.4) (1.4) Unallocated currency exchange (losses) gains on debt 6.0 7.8 (3.0) (2.8) (2.1) 12.0 1.0 (0.6) (1.2) 2.2 0.4 (2.1) (1.9) (2.3) 6.0 12.0 21.8 19.7 7.8 1.0 (8.7) (7.4) (3.0) (0.6) (0.7) (1.4) (2.8)
Stock-based compensation expense (12.4) (3.8) (5.9) (11.0) (2.9) (4.6) Stock-based compensation expense (14.1) (6.7) (6.2) (3.2) (14.3) (13.8) (4.8) (7.0) (11.6) (11.5) (14.5) (14.3) (15.8) (17.1) (14.1) (13.8) (12.4) (11.0) (6.7) (4.8) (3.8) (2.9) (6.2) (7.0) (5.9) (4.6) (3.2)
Start-up costs (19.6) (23.5) (54.1) (16.5) (29.6) (59.5) Start-up costs (23.8) (19.8) (36.9) (68.2) (35.6) (24.5) (21.1) (46.0) (37.2) (43.0) (41.7) (35.6) (32.9) (28.0) (23.8) (24.5) (19.6) (16.5) (19.8) (21.1) (23.5) (29.6) (36.9) (46.0) (54.1) (59.5) (68.2)
Favorable (unfavorable) metal price lag 27.7 (20.4) 1.6 (5.4) (1.8) - Favorable (unfavorable) metal price lag 30.4 (11.0) 0.7 0.2 22.3 33.7 (18.6) 3.2 15.7 18.9 20.8 22.3 28.9 33.6 30.4 33.7 27.7 (5.4) (11.0) (18.6) (20.4) (1.8) 0.7 3.2 1.6 - 0.2
Loss on extinguisment of debt - - (12.6) - (12.6) - Loss on extinguisment of debt - - (12.6) - - - - (12.6) - - - - - - - - - - - - - (12.6) (12.6) (12.6) (12.6) - -
Other (28.7) (11.7) (5.0) (29.6) (2.5) (8.8) Other (14.4) (29.8) (3.3) (6.6) (6.6) (24.4) (16.1) (4.5) (2.2) (4.4) (5.0) (6.6) (9.8) (13.2) (14.4) (24.4) (28.7) (29.6) (29.8) (16.1) (11.7) (2.5) (3.3) (4.5) (5.0) (8.8) (6.6)
EBITDA 159.1 134.6 136.6 162.2 144.8 160.1 EBITDA 129.3 125.7 156.2 117.8 117.8 154.0 122.8 155.1 172.8 157.7 138.2 117.8 94.9 91.9 129.3 154.0 159.1 162.2 125.7 122.8 134.6 144.8 156.2 155.1 136.6 160.1 117.8
Interest expense, net (107.9) (85.6) (91.5) (105.5) (82.2) (101.7) Interest expense, net (106.4) (101.8) (77.8) (114.5) (97.4) (107.4) (94.1) (82.5) (50.1) (74.6) (90.1) (97.4) (102.7) (105.1) (106.4) (107.4) (107.9) (105.5) (101.8) (94.1) (85.6) (82.2) (77.8) (82.5) (91.5) (101.7) (114.5)
Benefit from income taxes 132.2 11.8 (41.9) 145.2 (10.3) (45.3) Benefit from income taxes 12.8 142.9 (23.6) (34.6) 3.1 129.5 22.7 (40.0) (11.9) (14.3) (9.3) 3.1 6.7 8.8 12.8 129.5 132.2 145.2 142.9 22.7 11.8 (10.3) (23.6) (40.0) (41.9) (45.3) (34.6)
Depreciation and amortization from continuing operations (134.7) (113.6) (104.3) (134.2) (111.3) (103.7) Depreciation and amortization from continuing operations (115.4) (128.3) (109.8) (108.0) (98.7) (123.2) (123.8) (104.9) (52.0) (79.8) (89.4) (98.7) (104.6) (106.0) (115.4) (123.2) (134.7) (134.2) (128.3) (123.8) (113.6) (111.3) (109.8) (104.9) (104.3) (103.7) (108.0)
Income from discontinued operations, net of tax 161.3 (10.1) (3.3) 141.2 1.7 (3.3) Income from discontinued operations, net of tax 42.0 118.6 1.5 1.3 38.1 34.2 121.1 (3.3) 26.7 36.1 35.6 38.1 40.1 39.0 42.0 34.2 161.3 141.2 118.6 121.1 (10.1) 1.7 1.5 (3.3) (3.3) (3.3) 1.3
Net (loss) income attributable to Aleris Corporation 210.0 (62.9) (104.4) 208.9 (57.3) (93.9) Net (loss) income attributable to Aleris Corporation (37.7) 157.1 (53.5) (138.0) (37.1) 87.1 48.7 (75.6) 85.5 25.1 (15.0) (37.1) (65.6) (71.4) (37.7) 87.1 210.0 208.9 157.1 48.7 (62.9) (57.3) (53.5) (75.6) (104.4) (93.9) (138.0)
Net income (loss) from discontinued operations attributable to noncontrolling interest 0.8 - - 0.4 - - Net income (loss) from discontinued operations attributable to noncontrolling interest 1.1 0.2 - - 1.0 0.9 0.1 - 0.5 0.7 1.2 1.0 0.9 1.1 1.1 0.9 0.8 0.4 0.2 0.1 - - - - - - -
Net (loss) income 210.8$ (62.9)$ (104.4)$ 209.3$ (57.3)$ (93.9)$ Net (loss) income (36.6)$ 157.3$ (53.5)$ (138.0)$ (36.1)$ 88.0$ 48.8$ (75.6)$ 86.0$ 25.8$ (13.8)$ (36.1)$ (64.7)$ (70.3)$ (36.6)$ 88.0$ 210.8$ 209.3$ 157.3$ 48.8$ (62.9)$ (57.3)$ (53.5)$ (75.6)$ (104.4)$ (93.9)$ (138.0)$
TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE
For the last twelve months ended
March 31,
For the last twelve months ended
June 30,
For the last twelve months ended
September 30,
For the last twelve months ended
December 31, LTM ending LTM ending LTM ending LTM ending LTM ending
2015 2016 2017 2015 2016 2017 2014 2015 2016 2017 2013 2014 2015 2016 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Adjusted EBITDA of continuing operations 188.1$ 212.3$ 212.4$ 208.9$ 216.5$ 214.2$ Adjusted EBITDA of continuing operations 144.7$ 222.0$ 201.6$ 206.4$ 156.9$ 176.5$ 222.8$ 205.1$ 203.8$ 196.7$ 180.1$ 156.9$ 152.0$ 133.5$ 144.7$ 176.5$ 188.1$ 208.9$ 222.0$ 222.8$ 212.3$ 216.5$ 201.6$ 205.1$ 212.4$ 214.2$ 206.4$
Unrealized (losses) gains on derivative financial instruments of continuing operations (4.5) (1.3) 1.9 10.8 (10.9) 21.4 Unrealized (losses) gains on derivative financial instruments of continuing operations 7.2 (24.2) 19.2 (6.2) 2.2 5.4 (30.1) 19.0 11.4 11.6 10.9 2.2 (17.8) (10.4) 7.2 5.4 (4.5) 10.8 (24.2) (30.1) (1.3) (10.9) 19.2 19.0 1.9 21.4 (6.2)
Impact of recording inventory at fair value through purchase accounting (8.0) - - (5.0) - - Impact of recording inventory at fair value through purchase accounting (5.5) (2.5) - - - (8.1) - - - - - - - (3.0) (5.5) (8.1) (8.0) (5.0) (2.5) - - - - - - - -
Restructuring charges (5.3) (8.3) (1.0) (9.7) (4.0) (1.2) Restructuring charges (1.2) (10.1) (3.3) (1.8) (5.0) (2.8) (10.3) (1.5) (5.9) (12.8) (12.8) (5.0) (7.8) (1.2) (1.2) (2.8) (5.3) (9.7) (10.1) (10.3) (8.3) (4.0) (3.3) (1.5) (1.0) (1.2) (1.8)
Unallocated currency exchange (losses) gains on debt 21.8 (8.7) (0.7) 19.7 (7.4) (1.4) Unallocated currency exchange (losses) gains on debt 6.0 7.8 (3.0) (2.8) (2.1) 12.0 1.0 (0.6) (1.2) 2.2 0.4 (2.1) (1.9) (2.3) 6.0 12.0 21.8 19.7 7.8 1.0 (8.7) (7.4) (3.0) (0.6) (0.7) (1.4) (2.8)
Stock-based compensation expense (12.4) (3.8) (5.9) (11.0) (2.9) (4.6) Stock-based compensation expense (14.1) (6.7) (6.2) (3.2) (14.3) (13.8) (4.8) (7.0) (11.6) (11.5) (14.5) (14.3) (15.8) (17.1) (14.1) (13.8) (12.4) (11.0) (6.7) (4.8) (3.8) (2.9) (6.2) (7.0) (5.9) (4.6) (3.2)
Start-up costs (19.6) (23.5) (54.1) (16.5) (29.6) (59.5) Start-up costs (23.8) (1 .8) (36.9) (68.2) (35.6) (24.5) (21.1) (46.0) (37. ) (43.0) (41.7) (35.6) (32.9) (28.0) (23.8) (24.5) (19.6) (16.5) (19.8) (21.1) (23.5) (29.6) (36.9) (46.0) (54.1) (59.5) (68.2)
Favorable (unfavorable) metal price lag 27.7 (20.4) 1.6 (5.4) (1.8) - Favorable (unfavorable) metal price lag 30.4 (11.0) 0.7 0.2 22.3 33.7 (18.6) 3.2 15.7 18.9 20.8 22.3 28.9 33.6 30.4 33.7 27.7 (5.4) (11.0) (18.6) (20.4) (1.8) 0.7 3.2 1.6 - 0.2
Loss on extinguisment of debt - - (12.6) - (12.6) - Loss on extinguisment of debt - - (12.6) - - - - (12.6) - - - - - - - - - - - - - (12.6) (12.6) (12.6) (12.6) - -
Other (28.7) (11.7) (5.0) (29.6) (2.5) (8.8) Other (14.4) (29.8) (3.3) (6.6) (6.6) (24.4) (16.1) (4.5) (2.2) (4.4) (5.0) (6.6) (9.8) (13.2) (14.4) 24.4) (28.7) (29.6) (29.8) (16.1) (11.7) (2.5) (3.3) (4.5) (5.0) (8.8) (6.6)
EBITDA 159.1 134.6 136.6 162.2 144.8 160.1 EBITDA 129.3 125.7 156.2 117.8 117.8 154.0 122.8 155.1 172.8 157.7 138.2 117.8 94.9 91.9 29.3 154.0 159.1 162.2 125.7 122.8 134.6 144.8 156.2 155.1 136.6 160.1 117.8
Int rest expense, net (107.9) (85.6) (91.5) (105.5) (82.2) (101.7) Interest expense, net (106.4) (101.8) (77.8) (114.5) (97.4) (107.4) (94.1) (82.5) (50.1) (74.6) (90.1) (97.4) (102.7) 105.1) 10 .4) (107.4) (107.9) (105.5) (101.8) (94.1) (85.6) (82.2) (77.8) (82.5) (91.5) (101.7) (114.5)
Benefit from income taxes 132.2 11.8 (41.9) 145.2 (10.3) (45.3) Benefit from income taxes 12.8 142.9 (23.6) (34.6) 3.1 129.5 22.7 (40.0) (11.9) (14.3) (9.3) 3.1 6.7 8.8 12.8 129.5 132.2 145.2 142.9 22.7 11.8 (10.3) (23.6) (40.0) (41.9) (45.3) (34.6)
Dep eciation and amortization from ontinuing operations (134.7) (113.6) (104.3) (134.2) (111.3) (103.7) Depreciation and amortization from continuing operations (115.4) (128.3) (109.8) (108.0) (98.7) (123.2) (123.8) (104.9) (52.0) (79.8) (89.4) (98.7) (104.6) ( 0 .0) (115.4) (123.2) (134.7) (134.2) (128.3) (123.8) (113.6) (111.3) (109.8) (104.9) (104.3) (103.7) (108.0)
Income from disconti ued operations, net of tax 161.3 (10.1) (3.3) 141.2 1.7 (3.3) Income from discontinued operations, net of tax 42.0 118.6 1.5 1.3 38.1 34.2 121.1 (3.3) 26.7 36.1 35.6 38.1 40.1 39.0 42.0 34.2 161.3 141.2 118.6 121.1 (10.1) 1.7 1.5 (3.3) (3.3) (3.3) 1.3
Net (loss) income attributable to Aleris Corporation 210.0 (62.9) (104.4) 208.9 (57.3) (93.9) Net (loss) income attributable to Aleris Corporation (37.7) 157.1 (53.5) (138.0) (37.1) 87.1 48.7 (75.6) 85.5 25. (15.0) (37.1) 65.6) (71.4) (37.7) 87.1 210.0 208.9 157.1 48.7 (62.9) (57.3) (53.5) (75.6) (104.4) (93.9) (138.0)
Net income (loss) from discontinued operations attributable to noncontrolling interest 0.8 - - 0.4 - - Net income (loss) from discontinued operations attributable to noncontrolling interest 1.1 0.2 - - 1.0 0.9 0.1 - 0.5 0.7 1.2 1.0 0.9 1.1 .1 0.9 0.8 0.4 0.2 0.1 - - - - - - -
N t (loss) incom 210.8$ (62.9)$ (104.4)$ 209.3$ (57.3)$ (93.9)$ Net (loss) income (36.6)$ 157.3$ (53.5)$ (138.0)$ (36.1)$ 88.0$ 48.8$ (75.6)$ 86.0$ 25.$ (13.8)$ (36.1)$ (64.7)$ (70.3)$ (36.6)$ 88.0$ 210.8$ 209.3$ 157.3$ 48.8$ (62.9)$ (57.3)$ (53.5)$ (75.6)$ (104.4)$ (93.9)$ (138.0)$
TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE
For the last twelve months ended
March 31,
For the last twelve months ended
June 30,
For the last twelve months ended
September 30,
For the last twelve months ended
December 31, LTM ending LTM ending LTM ending LTM ending LTM ending
24
LTM Adjusted EBITDA Reconciliation by Segment
($M)
2014 2017 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
North America
Segment Income 94.6$ 91.5$ 114.9$ 112.8$ 104.0$ 81.8$ 85.3$ 75.0$ 79.9$ 94.6$ 99.7$ 101.9$ 111.9$ 107.9$ 100.1$ 103.1$ 84.8$ 86.1$
Impact of recording inventory at fair value through purchase accounting 8.1 - - - - - - 3.0 5.5 8.1 8.0 5.0 2.5 - - - - -
(Favorable) unfavorable metal price lag (6.8) 3.8 (5.5) (6.1) (6.7) (5.6) (9.3) (10.1) (6.8) (6.8) (6.3) 6.1 1.8 1.1 1.0 (7.9) (5.6) (4.7)
Segment Adjusted EBITDA 96.0$ 95.3$ 109.5$ 106.8$ 97.5$ 76.2$ 76.1$ 68.0$ 78.6$ 96.0$ 101.4$ 113.0$ 116.2$ 109.1$ 101.0$ 95.1$ 79.1$ 81.4$
Europe
Segment Income 147.6$ 137.3$ 142.1$ 138.8$ 133.3$ 132.1$ 131.7$ 126.7$ 127.7$ 147.6$ 150.9$ 139.5$ 136.5$ 131.8$ 123.3$ 140.5$ 146.1$ 149.4$
Impact of recording inventory at fair value through purchase accounting - - (0.6) (0.4) (0.2) (0.1) - - - - - - - - - - - -
(Favorable) unfavorable metal price lag (26.9) (1.7) (10.2) (12.9) (14.3) (16.6) (19.8) (23.6) (23.6) (26.9) (21.4) (0.7) 9.2 17.4 19.5 9.8 5.0 1.9
Segment Adjusted EBITDA 120.7$ 135.6$ 131.1$ 125.3$ 118.6$ 115.3$ 111.9$ 103.2$ 104.3$ 120.7$ 129.6$ 138.9$ 145.7$ 149.3$ 142.8$ 150.3$ 151.0$ 151.3$
Asia Pacific
Segment (Loss) Income -$ 14.6$ (0.3)$ (0.3)$ (0.3)$ (0.2)$ -$ -$ -$ -$ (1.9)$ (1.8)$ (1.2)$ -$ 2.9$ 5.3$ 7.5$ 10.8$
(Favorable) unfavorable metal price lag - (2.2) - - - - - - - - - - - - - - - (0.4)
Segment Adjusted EBITDA -$ 12.4$ (0.3)$ (0.3)$ (0.3)$ (0.2)$ -$ -$ -$ -$ (1.9)$ (1.8)$ (1.2)$ -$ 2.9$ 5.3$ 7.5$ 10.4$
For the last twelve months
ended September 30,
For the last twelve months
ended December 31,
25
LTM Commercial Margin Reconciliation
($M)
For the last twelve months
ended September 30,
2013 2014 2015 2016 2017 1Q17 2Q17 3Q17 4Q17 Q1 Q2 Q3 Q4
Aleris Corp
Revenues 2,520.8$ 2,882.4$ 2,917.8$ 2,663.9$ 2,776.3$ Revenues 2,675.6$ 2,746.9$ 2,776.3$ 674.2$ 776.2$ 712.8$
Hedged cost of metal (1,446.4) (1,682.1) (1,732.1) (1,467.6) (1,584.4) Hedged cost of Metal (1,480.4) (1,541.3) (1,584.4) (378.1) (455.4) (425.2)
Unfavorable (favorable) metal price lag (22.3) (33.7) 18.6 (3.2) (0.2) Unfavorable (favorable) metal price lag (1.6) - (0.2) (2.1) 4.7 1.0
Commercial Margin 1,052.1$ 1,166.6$ 1,204.3$ 1,193.1$ 1,191.7$ Commercial Margin 1,193.6$ 1,205.6$ 1,191.7$ 294.0$ 325.5$ 288.6$
2017LTM ending
For the last twelve months ended
December 31,
26
2014 Discontinued Operations EBITDA Reconciliations
($M)
Total Aleris Cont. Ops. Disc. Ops.
Adjusted EBITDA 265.5$ 176.5$ 89.0$
Unrealized (losses) gains on derivative financial instruments of continuing operations 6.5 5.4 1.1
Impact of recording inventory at fair value through purchase accounting (8.1) (8.1) -
Restructuring charges and impairments (8.6) (2.8) (5.8)
Unallocated currency exchange (losses) gains on debt 11.4 12.0 (0.6)
Stock-based compensation expense (13.8) (13.8) -
Start-up costs (24.5) (24.5) -
Favorable (unfavorable) metal price lag 37.2 33.7 3.5
Loss on extinguisment of debt - - -
Other (40.4) (24.4) (16.0)
EBITDA 225.2 154.0 71.2
Interest expense, net (108.1) (107.4) (0.7)
Benefit from (provision for) income taxes 127.6 129.5 (1.9)
Depreciation and amortization (157.6) (123.2) (34.4)
Income from discontinued operations, net of tax - 34.2 (34.2)
Net (loss) income attributable to Aleris Corporation 87.1 87.1 -
Net income (loss) from discontinued operations attributable to noncontrolling interest 0.9 0.9 -
Net (loss) income 88.0$ 88.0$ -$
For the year ended December 31, 2014