Exhibit 99.1
| News Release |  |
|
Novelis Reports Record Fiscal Year 2011 Results
Company Poised for Rapid Transformational Growth
Company Poised for Rapid Transformational Growth
| • | Net Income of $116 million | ||
| • | Record Adjusted EBITDA of $1.1 billion, up 42 percent | ||
| • | Sales of $10.6 billion, up 22 percent | ||
| • | Strong Liquidity of $1.1 billion, up 3 percent | ||
| • | Solid Free Cash Flow of $310 million | ||
| • | Strong demand supports $400 million expansion of Asian operations | ||
| • | Aggressive sustainability platform aims to increase recycled content to 80 percent by 2020 |
| (in $M) | Year-Ended | Quarter-Ended | |||||||||||||||||
| 3/31/2011 | 3/31/2010 | 3/31/2011 | 3/31/2010 | ||||||||||||||||
Net Income (Loss) |
$ | 116 | $ | 405 | $ | 50 | ($1 | ) | |||||||||||
Adjusted EBITDA |
$ | 1,072 | $ | 755 | $ | 280 | $ | 232 | |||||||||||
ATLANTA, May 26, 2011 — Novelis Inc., the world’s leading producer of aluminum rolled products,
today reported net income attributable to its common shareholder of $116 million and $50 million
for the full year and fourth quarter of fiscal 2011, respectively.
Adjusted EBITDA for the year was a record $1,072 million, representing a 42 percent increase from
adjusted EBITDA of $755 million posted for the same period a year ago. This significant increase
was driven by higher shipments, price increases, and product portfolio and footprint optimization.
For the fourth quarter, adjusted EBITDA was $280 million, a 21 percent increase compared to the
same period in the previous year, and a record fourth quarter adjusted EBITDA.
“Our record fiscal 2011 results reflect a number of ongoing initiatives to strengthen the business
and prepare it for transformational growth,” said Phil Martens, Novelis President and Chief
Executive Officer. Martens pointed to a number of specific achievements, including:
| • | Global realignment of the organization that has allowed Novelis to move toward its “One Novelis” goal of operating as a fully integrated global company. | ||
| • | Optimizing the Company’s footprint and reducing its cost base by closing underperforming and non-core plants and by investing in recycling initiatives. | ||
| • | Focusing on premium products, which now comprise over 70 percent of Novelis’ product portfolio. | ||
| • | Investing in strategic initiatives like the expansion of the Company’s Pinda mill in Brazil and global debottlenecking projects designed to increase capacity. | ||
| • | Refinancing and recapitalizing the business, which positions the Company to significantly invest over the next few years to capture strong market growth in its key product segments globally. | ||
| • | Operating the Company’s assets at or near capacity for the entire year. |
“Going forward, we see continued strong demand in the aluminum flat rolled products industry. As a
result of our solid financial position, we are now able to invest strategically to capitalize on
this future growth and support our customers’ increasing FRP demand,” said Phil Martens. “We
intend to use our strong operating cash flow to fund $1.5 billion in capital expenditures over the
next three years. Our previously announced rolling mill expansion in Brazil and our recently
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announced expansion in Korea as well as our strategic automotive expansion in North America are key
focus areas in the near term to capitalize on that future growth and solidify our position as the
dominant player in the global FRP industry.”
Shipments of aluminum rolled products totaled 2,969 kilotonnes for fiscal 2011, an increase of 10
percent compared to shipments of 2,708 kilotonnes in the previous year. For the fourth quarter,
shipments were 771 kilotonnes, an increase of 8 percent from shipments of 716 kilotonnes in the
fourth quarter of the previous year. This increase in shipments for both the quarter and the year
were driven by strong end-market conditions across all product segments globally, particularly can,
automotive and electronics.
Net sales for fiscal 2011 were $10.6 billion, an increase of 22 percent compared to the $8.7
billion reported for fiscal year 2010. Net sales for this year’s fourth quarter were $3.0 billion,
an increase of 22 percent compared to the $2.4 billion reported in the same period a year ago, the
result of higher shipments, conversion premiums and aluminum prices.
| (in $M) | Year Ended | Quarter Ended | |||||||||||||||||
| 3/31/2011 | 3/31/2010 | 3/31/2011 | 3/31/2010 | ||||||||||||||||
Income Before Income Taxes |
$ | 243 | $ | 727 | $ | 42 | $ | 24 | |||||||||||
Significant Items Affecting Comparisons: |
|||||||||||||||||||
Restructuring Charges, net |
34 | 14 | (1 | ) | 7 | ||||||||||||||
Unrealized (Gains)/Losses on Derivatives |
64 | (578 | ) | 27 | 37 | ||||||||||||||
Loss on Extinguishment of Debt |
84 | — | 10 | — | |||||||||||||||
(Gain)/Loss on Sale of Assets |
(4 | ) | 1 | 7 | 1 | ||||||||||||||
Brazil Tax Litigation |
3 | (6 | ) | 3 | — | ||||||||||||||
Adjusted Pre-tax Income |
$ | 424 | $ | 158 | $ | 88 | $ | 69 | |||||||||||
Adjusted pre-tax income increased 168 percent and 28 percent for the full year and fourth quarter
of fiscal 2011, respectively. Adjusted pre-tax income excludes restructuring charges, unrealized
gains/losses on derivatives, loss on extinguishment of debt, gain/loss on sale of assets, and
Brazil tax litigation.
| (in $M) | Year Ended | |||||||||
| 3/31/2011 | 3/31/2010 | |||||||||
Cash and cash equivalents |
$ | 311 | $ | 437 | ||||||
Overdrafts |
(17 | ) | (14 | ) | ||||||
Gross availability under the ABL facility |
767 | 603 | ||||||||
Total Liquidity |
$ | 1,061 | $ | 1,026 | ||||||
Free Cash Flow |
$ | 310 | $ | 355 | ||||||
For fiscal 2011, free cash flow was $310 million, compared to $355 million reported in the previous
year. For the fourth quarter, free cash flow was $134 million.
“Our liquidity and free cash flow were strong for the quarter and the year,” said Steve Fisher,
Chief Financial Officer for Novelis. “This is a significant accomplishment considering we
increased our capital expenditures by 132 percent year-over-year and working capital was negatively
impacted by higher LME prices. Our liquidity position remains strong and well above our target of
$750 million.”
Fiscal 2012 Business Targets and Outlook
Over the next year, the Company expects continued strong demand in its key product segments. As a
result, capital expenditures for fiscal 2012 are projected to be between $550 to $600 million.
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The majority of this capital is earmarked for strategic investments which include:
| • | Brazilian and Asian rolling mill expansions; | ||
| • | Strategic automotive capacity increase in North America; and | ||
| • | Recycling initiatives across our operating regions. |
The Company plans to primarily use its strong operating cash flow to fund these capital
expenditures.
Annual Report on Form 10-K
The results described in this press release have been reported in detail on the Company’s Form 10-K
on file with the SEC, and investors are directed to that document for a complete explanation of the
Company’s financial position and results through March 31, 2011. The Novelis Form 10-K and other
SEC filings are available for review on the Company’s website at www.novelis.com.
Fourth Quarter and Fiscal 2011 Earnings Conference Call
Novelis will discuss its fourth quarter and fiscal 2011 results via a live webcast and conference
call for investors at 9:00 a.m. ET on Thursday, May 26, 2011. Participants may access the webcast
at https://cc.callinfo.com/r/1sjzgjhb8c8yn. To join by telephone, dial toll-free in North America
at 800 931 6428, India toll-free at 0008001007108 or the international toll line at +1 212 231
2910. Access information may also be found in the Investors section of www.novelis.com.
About Novelis
Novelis Inc. is the global leader in aluminum rolled products and aluminum can recycling. The
Company operates in 11 countries, has approximately 10,850 employees and reported revenue of $10.6
billion in fiscal year 2011. Novelis supplies premium aluminum sheet and foil products to
automotive, transportation, packaging, construction, industrial, electronics and printing markets
throughout North America, Europe, Asia, and South America. Novelis is a subsidiary of Hindalco
Industries Limited (BSE: HINDALCO), one of Asia’s largest integrated producers of aluminum and a
leading copper producer. Hindalco is a flagship company of the Aditya Birla Group, a multinational
conglomerate based in Mumbai, India. For more information, please visit www.novelis.com.
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. 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. To the extent we discuss any non-GAAP financial measures on the earnings call, a
reconciliation of each measure to the most directly comparable GAAP measure will be available in
the presentation slides filed as Exhibit 99.2 to our Current Report on Form 8-K furnished to the
SEC concurrent with the issuance of this press release. In addition, the Form 8-K includes a more
detailed description of each of these non-GAAP financial measures, together with a discussion of
the usefulness and purpose of such measures.
Attached to this news release are tables showing the Condensed Consolidated Statements of
Operations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows,
Reconciliation to Adjusted EBITDA and Free Cash Flow.
Forward-Looking Statements
Statements made in this news release 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 such statements in this news release include our plans to increase
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production capacity, our growth plans, our expectations with respect to the flat rolled products
market and our view of our ability to generate free cash flow this fiscal year. 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, including our internal used beverage cans (UBCs) and smelter hedges;
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 and our ability to purchase 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, derivative instruments, 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; the impact
of timing differences between the pricing periods for the purchase and sale of aluminum; our
ability to increase production capacity 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 news release.
Media Contact:
|
Investor Contact: | |
Charles Belbin
|
Megan Cochard | |
+1 404 760 4120
|
+1 404 760 4170 | |
charles.belbin@novelis.com
|
megan.cochard@novelis.com |
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Novelis Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
(In millions)
| Quarter Ended | Year Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 2,960 | $ | 2,420 | $ | 10,577 | $ | 8,673 | ||||||||
Cost of goods sold (exclusive of depreciation and amortization) |
2,599 | 2,147 | 9,227 | 7,213 | ||||||||||||
Selling, general and administrative expenses |
103 | 94 | 375 | 337 | ||||||||||||
Depreciation and amortization. |
97 | 99 | 404 | 384 | ||||||||||||
Research and development expenses |
13 | 11 | 40 | 38 | ||||||||||||
Interest expense and amortization of debt issuance costs |
82 | 44 | 207 | 175 | ||||||||||||
Interest income |
(3 | ) | (3 | ) | (13 | ) | (11 | ) | ||||||||
(Gain) loss on change in fair value of derivative instruments, net |
15 | 2 | (43 | ) | (194 | ) | ||||||||||
Loss on extinguishment of debt |
10 | — | 84 | — | ||||||||||||
Restructuring charges, net |
(1 | ) | 7 | 34 | 14 | |||||||||||
Equity in net loss of non-consolidated affiliates |
1 | 3 | 12 | 15 | ||||||||||||
Other (income) expenses, net |
2 | (4 | ) | 7 | (25 | ) | ||||||||||
| 2,918 | 2,396 | 10,334 | 7,946 | |||||||||||||
Income before income taxes |
42 | 24 | 243 | 727 | ||||||||||||
Income tax provision (benefit) |
(21 | ) | 15 | 83 | 262 | |||||||||||
Net income |
63 | 9 | 160 | 465 | ||||||||||||
Net income attributable to noncontrolling interests |
13 | 10 | 44 | 60 | ||||||||||||
Net income (loss) attributable to our common shareholder |
$ | 50 | $ | (1 | ) | $ | 116 | $ | 405 | |||||||
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Novelis Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares)
(In millions, except number of shares)
| March 31, | ||||||||
| 2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 311 | $ | 437 | ||||
Accounts receivable (net of allowances of $7 and $4 as of March 31, 2011 and 2010, respectively) |
||||||||
— third parties |
1,480 | 1,143 | ||||||
— related parties |
28 | 24 | ||||||
Inventories, net |
1,338 | 1,083 | ||||||
Prepaid expenses and other current assets |
50 | 39 | ||||||
Fair value of derivative instruments |
165 | 197 | ||||||
Deferred income tax assets |
39 | 12 | ||||||
Total current assets |
3,411 | 2,935 | ||||||
Property, plant and equipment, net |
2,543 | 2,632 | ||||||
Goodwill |
611 | 611 | ||||||
Intangible assets, net |
707 | 749 | ||||||
Investment in and advances to non-consolidated affiliates |
743 | 709 | ||||||
Fair value of derivative instruments, net of current portion |
17 | 7 | ||||||
Deferred income tax assets |
52 | 5 | ||||||
Other long-term assets |
||||||||
— third parties |
193 | 93 | ||||||
— related parties |
19 | 21 | ||||||
Total assets |
$ | 8,296 | $ | 7,762 | ||||
LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 21 | $ | 116 | ||||
Short-term borrowings |
17 | 75 | ||||||
Accounts payable |
||||||||
— third parties |
1,378 | 1,076 | ||||||
— related parties |
50 | 53 | ||||||
Fair value of derivative instruments |
82 | 110 | ||||||
Accrued expenses and other current liabilities |
568 | 436 | ||||||
Deferred income tax liabilities |
43 | 34 | ||||||
Total current liabilities |
2,159 | 1,900 | ||||||
Long-term debt, net of current portion |
4,065 | 2,480 | ||||||
Deferred income tax liabilities |
552 | 497 | ||||||
Accrued postretirement benefits |
526 | 499 | ||||||
Other long-term liabilities |
359 | 376 | ||||||
| 7,661 | 5,752 | |||||||
Commitments and contingencies |
||||||||
Shareholder’s equity |
||||||||
Common stock, no par value; unlimited number of shares authorized; 1,000 shares issued and
outstanding as of March 31, 2011 and 2010, respectively |
— | — | ||||||
Additional paid-in capital |
1,830 | 3,530 | ||||||
Accumulated deficit |
(1,442 | ) | (1,558 | ) | ||||
Accumulated other comprehensive income (loss) |
57 | (103 | ) | |||||
Total equity of our common shareholder |
445 | 1,869 | ||||||
Noncontrolling interests |
190 | 141 | ||||||
Total equity |
635 | 2,010 | ||||||
Total liabilities and equity |
$ | 8,296 | $ | 7,762 | ||||
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Novelis Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(In millions)
| Year Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
OPERATING ACTIVITIES |
||||||||
Net income |
$ | 160 | $ | 465 | ||||
Adjustments to determine net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
404 | 384 | ||||||
Gain on change in fair value of derivative instruments, net |
(43 | ) | (194 | ) | ||||
Loss on extinguishment of debt |
84 | — | ||||||
Non-cash restructuring charges, net |
5 | 2 | ||||||
Deferred income taxes |
(45 | ) | 229 | |||||
Write-off and amortization of fair value adjustments, net |
4 | (134 | ) | |||||
Equity in net loss of non-consolidated affiliates |
12 | 15 | ||||||
Foreign exchange remeasurement on debt |
— | (20 | ) | |||||
(Gain) loss on sale of assets |
(4 | ) | 1 | |||||
Gain on reversal of accrued legal claim |
— | (3 | ) | |||||
Other, net |
2 | 10 | ||||||
Changes in assets and liabilities (net of effects from acquisitions and
divestitures): |
||||||||
Accounts receivable |
(295 | ) | (46 | ) | ||||
Inventories |
(218 | ) | (264 | ) | ||||
Accounts payable |
263 | 311 | ||||||
Other current assets |
(8 | ) | 14 | |||||
Other current liabilities |
134 | 47 | ||||||
Other noncurrent assets |
(6 | ) | (15 | ) | ||||
Other noncurrent liabilities |
5 | 42 | ||||||
Net cash provided by operating activities |
454 | 844 | ||||||
INVESTING ACTIVITIES |
||||||||
Capital expenditures |
(234 | ) | (101 | ) | ||||
Proceeds from sales of assets |
||||||||
— third parties |
21 | 5 | ||||||
— related parties |
10 | — | ||||||
Changes to investment in and advances to non-consolidated affiliates |
— | 3 | ||||||
Proceeds from related party loans receivable, net |
(1 | ) | 4 | |||||
Net proceeds from settlement of derivative instruments |
91 | (395 | ) | |||||
Net cash used in investing activities |
(113 | ) | (484 | ) | ||||
FINANCING ACTIVITIES |
||||||||
Proceeds from issuance of debt |
||||||||
— third parties |
3,985 | 177 | ||||||
— related parties |
— | 4 | ||||||
Principal repayments |
||||||||
— third parties |
(2,489 | ) | (67 | ) | ||||
— related parties |
— | (95 | ) | |||||
Short-term borrowings, net |
(56 | ) | (193 | ) | ||||
Return of capital to our common shareholder |
(1,700 | ) | — | |||||
Dividends, noncontrolling interest |
(18 | ) | (13 | ) | ||||
Debt issuance costs |
(193 | ) | (1 | ) | ||||
Net cash used in financing activities |
(471 | ) | (188 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
(130 | ) | 172 | |||||
Effect of exchange rate changes on cash balances held in foreign currencies |
4 | 17 | ||||||
Cash and cash equivalents — beginning of period |
437 | 248 | ||||||
Cash and cash equivalents — end of period |
$ | 311 | $ | 437 | ||||
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RECONCILIATION FROM NET INCOME (LOSS) ATTRIBUTABLE TO OUR COMMON SHAREHOLDER TO ADJUSTED EBITDA
Novelis is providing disclosure of the reconciliation of reported non-GAAP financial measures to
their comparable financial measures on a GAAP basis.
| Quarter Ended | Year Ended | |||||||||||||||
| (in millions) | March 31, | March 31, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) attributable
to our common shareholder |
$ | 50 | $ | (1 | ) | $ | 116 | $ | 405 | |||||||
Noncontrolling interests |
(13 | ) | (10 | ) | (44 | ) | (60 | ) | ||||||||
Income tax (provision) benefit |
21 | (15 | ) | (83 | ) | (262 | ) | |||||||||
Interest, net |
(79 | ) | (41 | ) | (194 | ) | (164 | ) | ||||||||
Depreciation and amortization |
(97 | ) | (99 | ) | (404 | ) | (384 | ) | ||||||||
EBITDA |
218 | 164 | 841 | 1,275 | ||||||||||||
Unrealized gain (loss) on derivatives |
(27 | ) | (37 | ) | (64 | ) | 578 | |||||||||
Realized gain on derivative
instruments not included in
segment income |
1 | — | 5 | — | ||||||||||||
Loss on early extinguishment of debt. |
(10 | ) | — | (84 | ) | — | ||||||||||
Proportional consolidation |
(14 | ) | (21 | ) | (45 | ) | (52 | ) | ||||||||
Restructuring charges, net |
1 | (7 | ) | (34 | ) | (14 | ) | |||||||||
Others costs, net |
(13 | ) | (3 | ) | (9 | ) | 8 | |||||||||
Adjusted EBITDA |
$ | 280 | $ | 232 | $ | 1,072 | $ | 755 | ||||||||
The following table shows the free cash flow for the fiscal year ended March 31, 2011 and
2010, and the ending balances of cash and cash equivalents (in millions).
| Year Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Net cash provided by operating activities |
$ | 454 | $ | 844 | ||||
Net cash used in investing activities |
(113 | ) | (484 | ) | ||||
Less: Proceeds from sales of assets |
(31 | ) | (5 | ) | ||||
Free cash flow |
$ | 310 | $ | 355 | ||||
Ending cash and cash equivalents |
$ | 311 | $ | 437 | ||||
8
