Fourth Quarter 2020 Highlights
- Sales of $1.5 billion, up 3% from prior quarter, down 14% year
over year
- Net loss of $64 million, or $0.59 per share, compared to net
income of $168 million, or $1.54 per share, in fourth quarter 2019.
The fourth quarter 2020 includes an after-tax charge of $108
million related to a partial annuitization of the Company’s U.S.
pension obligations.
- Adjusted EBITDA of $151 million and Adjusted EBITDA margin of
10.3%
- Cash used for operations was $12 million and capital
expenditures were $37 million
- Quarter-end cash balance of $787 million, debt of $1.3 billion,
and net debt of $504 million
Full Year 2020 Highlights
- Sales of $5.7 billion, down 22% year over year
- Net loss of $109 million, or $1.00 per share, compared to net
income of $177 million, or $1.63 per share, in 2019. Full year 2020
includes after-tax charges of $156 million related to partial
annuitizations of the Company’s U.S. and U.K. pension
obligations.
- Adjusted EBITDA of $619 million and Adjusted EBITDA margin of
10.9%
- Cash provided from operations of $266 million and capital
expenditures of $105 million for the three quarters Q2 2020 – Q4
2020
- Implemented $260 million in cash conservation actions, above
prior target of $250 million
Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”)
today reported fourth quarter 2020 and full year 2020 results.
Fourth Quarter 2020 Results
The Company reported revenue of $1.5 billion, up 3% from the
prior quarter primarily due to growth in ground transportation and
industrial product demand. Year over year, revenues were down 14%
primarily reflecting weaker volumes in aerospace partially offset
by growth in the industrial and packaging end markets. The Company
reported a net loss of $64 million, or $0.59 per share, in fourth
quarter 2020 compared with net income of $168 million, or $1.54 per
share, in fourth quarter 2019. The fourth quarter 2020 net loss
includes a noncash after-tax charge of $108 million related to a
partial annuitization of U.S. pension obligations.
Fourth quarter 2020 Adjusted EBITDA was $151 million and
Adjusted EBITDA margin was 10.3%, down sequentially primarily due
to continued weakness in aerospace volumes and model year
changeovers in ground transportation. Cash used for operations was
$12 million and capital expenditures were $37 million. At
quarter-end, the cash balance was $787 million with total available
liquidity of approximately $1.5 billion.
In December, the Company implemented a partial annuitization of
its U.S. pension obligation without requiring any current
contribution to the pension plan. This annuitization reduced the
Company’s U.S. pension obligation by approximately $240 million and
resulted in expected annual savings of approximately $5 million of
administrative costs. To further reduce its U.S. pension
liabilities and costs, the Company expects to complete additional
annuitizations during the first half of 2021.
Full-Year 2020 Results
Revenues of $5.7 billion declined 22% from 2019 levels primarily
due to COVID-19 pandemic related impacts across the markets we
serve and production declines due to delays associated with the
Boeing 737 MAX. Net loss of $109 million, or $1.00 per share,
declined from net income of $177 million, or $1.63 per share, in
2019. The full-year 2020 net loss includes after-tax charges of
$156 million related to U.S. and U.K. pension annuitizations
executed since separation.
Full-year 2020 Adjusted EBITDA was $619 million and Adjusted
EBITDA margin was 10.9%. During the year, the Company implemented
$260 million in cash conservation measures compared to its revised
target of $250 million. For the three quarters Q2 2020 – Q4 2020,
cash provided from operations was $266 million and capital
expenditures were $105 million.
Tim Myers, Chief Executive Officer, said, “In our first nine
months, we have weathered a global pandemic, made broad
improvements on the corporate and operational fronts, and built a
foundation for growing profitability and free cash flow over the
next several years.” Mr. Myers continued, “Our fourth quarter
results demonstrate a steady climb in revenue since the onset of
the pandemic as several indicators point to growing customer demand
in many of the markets we serve, particularly in the ground
transportation and industrial sectors. In the packaging market, we
are continuing commercial dialogue with key customers and
scheduling qualification trials. Through the remainder of 2021, we
will continue optimizing our capacity utilization to align with
market demand and broader macroeconomic conditions.”
Fourth Quarter Segment Performance
Revenue by Segment (in millions)
Quarter ended
December 31, 2020
December 31, 2019
Rolled Products
$
1,141
$
1,315
Building and Construction Systems
236
263
Extrusions
85
130
Adjusted EBITDA (in millions)
Quarter ended
December 31, 2020
December 31, 2019
Rolled Products
$
139
$
141
Building and Construction Systems
30
30
Extrusions
(4)
(3)
Subtotal
165
168
Corporate
(14)
(9)
Adjusted EBITDA
$
151
$
159
Outlook
The Company expects full-year 2021 revenue to be in a range of
$6.6 billion to $6.9 billion (assuming LME aluminum price of
$2,030/mt and Midwest Premium of $320/mt for the full year).
Adjusted EBITDA for the full-year 2021 is expected to be in a range
of $675 million to $725 million. Free cash flow for full-year 2021
is expected to be in a range of ($50) million to $50 million and
excludes the impacts of future annuitizations and includes
approximately $350 million funding of legacy pension, OPEB, and
environmental liabilities.
Arconic will hold its quarterly conference call at 10:00 AM
Eastern Standard Time on February 23, 2021, to present fourth
quarter and full year 2020 financial results. The call will be
webcast on the Arconic website. Call information and related
details are available at www.arconic.com under “Investors.”
About Arconic
Arconic Corporation (NYSE: ARNC), headquartered in Pittsburgh,
Pennsylvania, is a leading provider of aluminum sheet, plate, and
extrusions, as well as innovative architectural products, that
advance the ground transportation, aerospace, building and
construction, industrial and packaging end markets. For more
information: www.arconic.com.
Dissemination of Company Information
Arconic intends to make future announcements regarding Company
developments and financial performance through its website at
www.arconic.com.
Forward-Looking Statements
This release contains statements that relate to future events
and expectations and, as such, constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as "anticipates," "believes," "could,"
"estimates," "expects," "forecasts," "goal," "guidance," "intends,"
"may," "outlook," "plans," "projects," "seeks," "sees," "should,"
"targets," "will," "would," or other words of similar meaning. All
statements that reflect Arconic’s expectations, assumptions,
projections, beliefs or opinions about the future, other than
statements of historical fact, are forward-looking statements,
including, without limitation, statements regarding forecasts and
expectations relating to the aerospace, ground transportation,
building and construction, industrial, packaging and other end
markets; statements and guidance regarding future financial
results, operating performance, working capital, cash flows,
liquidity and financial position; statements about cost savings and
restructuring programs; statements about Arconic's strategies,
outlook, business and financial prospects; statements related to
costs associated with pension and other post-retirement benefit
plans; statements regarding projected sources of cash flow;
statements regarding potential legal liability; statements
regarding the potential impact of the COVID-19 pandemic; and
statements regarding actions to mitigate the impact of COVID-19.
These statements reflect beliefs and assumptions that are based on
Arconic’s perception of historical trends, current conditions and
expected future developments, as well as other factors Arconic
believes are appropriate in the circumstances. Forward-looking
statements are not guarantees of future performance. Although
Arconic believes that the expectations reflected in any
forward-looking statements are based on reasonable assumptions,
these expectations may not be attained and it is possible that
actual results may differ materially from those indicated by these
forward-looking statements due to a variety of risks, uncertainties
and changes in circumstances, many of which are beyond Arconic’s
control. Such risks and uncertainties include, but are not limited
to: (a) existing and future adverse effects in connection with
COVID-19 and the potential for COVID-19 related issues to
significantly heighten the other risks customarily associated with
our business (including those identified below); (b) the risk that
we are unable to fully realize the expected benefits of the
separation, or that dissynergy costs, costs of restructuring
transactions and other costs incurred in connection with the
separation, once fully realized, will exceed our estimates; (c) the
risk of operating our business as a standalone company, which could
result in additional demands on Arconic’s resources, systems,
procedures and controls, disruption of its ongoing business, and
diversion of management’s attention from other business concerns;
(d) deterioration in global economic and financial market
conditions generally; (e) unfavorable changes in the markets served
by Arconic; (f) the inability to achieve the level of revenue
growth, cash generation, cost savings, benefits of our management
of legacy liabilities, improvement in profitability and margins,
fiscal discipline, or strengthening of competitiveness and
operations anticipated or targeted; (g) competition from new
product offerings, disruptive technologies, industry consolidation
or other developments; (h) political, economic, and regulatory
risks relating to Arconic’s global operations, including compliance
with U.S. and foreign trade and tax laws, sanctions, embargoes and
other regulations; (i) manufacturing difficulties or other issues
that impact product performance, quality or safety; (j) the
inability to meet demand for our products successfully or to
mitigate the impact of cancellations of orders or reductions or
delays caused by supply chain disruption; (k) a material disruption
of Arconic’s operations, particularly at one or more of Arconic’s
manufacturing facilities; (l) the inability to develop innovative
new products or implement technology initiatives successfully; (m)
challenges to or infringements on Arconic’s intellectual property
rights; (n) Arconic’s inability to realize expected benefits, in
each case as planned and by targeted completion dates, from
acquisitions, divestitures, facility closures, curtailments,
expansions, or joint ventures; (o) the impact of potential cyber
attacks and information technology or data security breaches; (p)
the loss of significant customers or adverse changes in customers’
business or financial condition; (q) a significant downturn in the
business or financial condition of a key supplier; (r) adverse
changes in discount rates or investment returns on pension assets;
(s) our inability to adequately mitigate the impact of changes in
aluminum prices and foreign currency exchange rates on costs and
results; (t) the outcome of contingencies, including legal
proceedings, government or regulatory investigations, and
environmental remediation, which can expose Arconic to substantial
costs and liabilities; (u) a determination by the IRS that the
distribution or certain related transactions should be treated as
taxable transactions; (v) risks associated with indebtedness,
including potential restriction on our operations and the impact of
events of default; and (w) the other risk factors summarized in
Arconic’s Form 10-K for the year ended December 31, 2020 and other
reports filed with the U.S. Securities and Exchange Commission
(SEC). The above list of factors is not exhaustive or necessarily
in order of importance. Market projections are subject to the risks
discussed above and other risks in the market. The statements in
this release are made as of the date of this release, even if
subsequently made available by Arconic on its website or otherwise.
Arconic disclaims any intention or obligation to update publicly
any forward-looking statements, whether in response to new
information, future events, or otherwise, except as required by
applicable law.
Non-GAAP Financial Measures
Some of the information included in this release is derived from
Arconic’s consolidated financial information but is not presented
in Arconic’s financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP). Certain of these financial measures are considered
“non-GAAP financial measures” under SEC rules. These non-GAAP
financial measures supplement our GAAP disclosures and should not
be considered an alternative to any measure of performance or
financial condition as determined in accordance with GAAP, and
investors should consider Arconic’s performance and financial
condition as reported under GAAP and all other relevant information
when assessing the performance or financial condition of Arconic.
Non-GAAP financial measures have limitations as analytical tools,
and investors should not consider them in isolation or as a
substitute for analysis of the results or financial condition as
reported under GAAP. Non-GAAP financial measures presented by
Arconic may not be comparable to non-GAAP financial measures
presented by other companies. Reconciliations to the most directly
comparable GAAP financial measures and management’s rationale for
the use of the non-GAAP financial measures can be found in the
schedules to this release. Arconic has not provided reconciliations
of any forward-looking non-GAAP financial measures, such as
adjusted EBITDA and free cash flow, to the most directly comparable
GAAP financial measures because such reconciliations are not
available without unreasonable efforts due to the variability and
complexity with respect to the charges and other components
excluded from the non-GAAP measures, such as the effects of metal
price lag, foreign currency movements, gains or losses on sales of
assets, taxes, and any future restructuring or impairment charges.
These reconciling items are in addition to the inherent variability
already included in the GAAP measures, which includes, but is not
limited to, price/mix and volume. Arconic believes such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors.
Arconic Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Quarter ended
December 31,
September 30,
December 31,
2020
2020
2019(1)
Sales
$
1,462
$
1,415
$
1,708
Cost of goods sold (exclusive of expenses
below)(2),(3)
1,248
1,218
1,483
Selling, general administrative, and other
expenses(2)
64
59
91
Research and development expenses(2)
9
8
11
Provision for depreciation and
amortization
60
63
62
Restructuring and other charges(4)
127
3
(17
)
Operating (loss) income(3)
(46
)
64
78
Interest expense
21
22
29
Other expenses (income), net(2),(5)
1
27
(11
)
(Loss) Income before income taxes(3)
(68
)
15
60
(Benefit) Provision for income
taxes(3)
(4
)
10
(108
)
Net (loss) income(3)
(64
)
5
168
Less: Net income attributable to
noncontrolling interest
–
–
–
NET (LOSS) INCOME ATTRIBUTABLE TO ARCONIC
CORPORATION(3)
$
(64
)
$
5
$
168
EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net (loss) income(3)
$
(0.59
)
$
0.05
$
1.54
Weighted-average number of shares(6)
109,152,402
109,073,635
109,021,376
Diluted:
Net (loss) income(3)
$
(0.59
)
$
0.05
$
1.54
Weighted-average number of shares(6)
109,152,402
112,813,853
109,021,376
COMMON STOCK OUTSTANDING AT THE END OF THE
PERIOD
109,205,226
109,087,034
–
(1)
Prior to April 1, 2020, Arconic
Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Arconic Corporation’s former parent
company’s financial statements. Accordingly, the Company’s results
of operations for the quarter ended December 31, 2019 were prepared
on such basis. The carve-out financial statements of Arconic
Corporation are not necessarily indicative of the Company’s
consolidated results of operations had it been a standalone company
during the referenced period. See the Combined Financial Statements
included in each of (i) Exhibit 99.1 to Arconic Corporation’s Form
10 Registration Statement (filed on February 7, 2020), (ii) the
Company’s Annual Report on Form 10-K for the year ended December
31, 2019 (filed on March 30, 2020), and (iii) the Company’s
Quarterly Report on Form 10-Q for the period ended March 31, 2020
(filed on May 18, 2020), for additional information.
(2)
In preparation for the separation of
Arconic Corporation from its former parent company, effective
January 1, 2020, certain U.S. defined benefit pension and other
postretirement plans previously sponsored by the former parent
company were separated into standalone plans for both Arconic
Corporation and the former parent company. Additionally, effective
April 1, 2020, Arconic Corporation assumed a portion of the
obligations associated with certain non-U.S. defined benefit
pension plans that included participants related to both Arconic
Corporation and its former parent company, as well as legacy
defined benefit pension plans assigned to the Company as a result
of the separation from the former parent company. As a result,
beginning in the first quarter of 2020 for these U.S. plans and in
the second quarter of 2020 for these non-U.S. plans, Arconic
Corporation applied defined benefit plan accounting resulting in
benefit plan expense being recorded in operating income (service
cost) and nonoperating income (nonservice cost). In all historical
periods prior to these respective timeframes, Arconic Corporation
was considered a participating employer in the former parent
company’s defined benefit plans and, therefore, applied
multiemployer plan accounting resulting in the Company’s share of
benefit plan expense being recorded entirely in operating income.
Also, Arconic Corporation is the plan sponsor of certain other
non-U.S. defined benefit plans that contain participants related
only to the underlying operations of the Company and, therefore,
the related benefit plan expense was recorded in accordance with
defined benefit plan accounting in all periods presented. The
following table presents the total benefit plan expense (excluding
settlements and curtailments) recorded by Arconic Corporation based
on the foregoing in each period presented:
Quarter ended
December 31,
September 30,
December 31,
2020
2020
2019
Cost of goods sold (exclusive of expenses
below)
$
7
$
7
$
23
Selling, general administrative, and other
expenses
–
–
3
Research and development expenses
–
–
1
Other expenses, net
19
20
–
$
26
$
27
$
27
(3)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at last-in, first-in (LIFO) cost.
Management believes the average cost method more closely reflects
the physical flow of inventories, improves comparability of the
Company’s operating results with its industry peers, and provides
an increased level of consistency in the measurement of inventories
in the Company’s consolidated financial statements. The effects of
the change in accounting principle from LIFO to average cost have
been retrospectively applied to the Company’s Statement of
Consolidated Operations for the quarter ended December 31, 2019.
Accordingly, Net income attributable to Arconic Corporation
decreased $18 (comprised of a $23 increase to Cost of goods sold
and a $5 increase to Benefit for income taxes), or $0.17 per share,
from the amount previously reported in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019 (filed on March
30, 2020). See the Consolidated Financial Statements included in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020 for additional information.
(4)
In the quarter ended December 31, 2020,
Restructuring and other charges includes a $140 settlement charge
related to the annuitization of a portion of the Company’s U.S.
defined benefit pension plan obligation and a $25 benefit for
contingent consideration received related to the October 2018 sale
of the Texarkana (Texas) rolling mill. In the quarter ended
December 31, 2019, Restructuring and other charges includes a $20
benefit for contingent consideration received related to the
October 2018 sale of the Texarkana (Texas) rolling mill.
(5)
In the quarter ended December 31, 2020,
Other expenses (income), net includes a $20 benefit for the
reversal of a liability previously established on April 1, 2020
related to a potential indemnification to Howmet Aerospace by
Arconic Corporation for an outstanding income tax matter in Spain.
In November 2020, Howmet Aerospace received a favorable ruling from
Spain’s Supreme Court bringing a final conclusion to this matter as
this decision may not be appealed any further. As no further income
tax payment was required of Howmet Aerospace likewise Arconic
Corporation no longer has a requirement to perform under the
indemnification.
(6)
In the quarter ended December 31, 2020,
the diluted weighted-average number of shares does not include any
common share equivalents associated with outstanding employee stock
awards as their effect was anti-dilutive since the Company
generated a net loss for the period. In the quarter ended September
30, 2020, the difference between the diluted weighted-average
number of shares and the basic weighted-average number of shares
relates to common share equivalents associated with outstanding
employee stock awards. Prior to April 1, 2020, the Company did not
have any publicly-traded issued and outstanding common stock or any
common share equivalents. Accordingly, the respective basic and
diluted earnings per share for the quarter ended December 31, 2019
were calculated based on the 109,021,376 shares of Arconic
Corporation common stock distributed on April 1, 2020 in connection
with the completion of Arconic Corporation’s separation from its
former parent company.
Arconic Corporation and subsidiaries
Statement of Consolidated Operations
(unaudited), continued
(dollars in millions, except per-share
amounts)
Year ended
December
31,
2020(1)
2019(1)
Sales
$
5,675
$
7,277
Cost of goods sold (exclusive of expenses
below)(2),(3)
4,862
6,332
Selling, general administrative, and other
expenses(2)
258
346
Research and development expenses(2)
36
45
Provision for depreciation and
amortization
251
252
Restructuring and other charges(4)
188
87
Operating income(3)
80
215
Interest expense
118
115
Other expenses (income), net(2),(5)
70
(15
)
(Loss) Income before income taxes(3)
(108
)
115
Provision (Benefit) for income
taxes(3)
1
(62
)
Net (loss) income(3)
(109
)
177
Less: Net income attributable to
noncontrolling interest
–
–
NET (LOSS) INCOME ATTRIBUTABLE TO ARCONIC
CORPORATION(3)
$
(109
)
$
177
EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net (loss) income(3)
$
(1.00
)
$
1.63
Weighted-average number of shares(6)
109,073,652
109,021,376
Diluted:
Net (loss) income(3)
$
(1.00
)
$
1.63
Weighted-average number of shares(6)
109,073,652
109,021,376
COMMON STOCK OUTSTANDING AT THE END OF THE
PERIOD
109,205,226
–
(1)
Prior to April 1, 2020, Arconic
Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Arconic Corporation’s former parent
company’s financial statements. Accordingly, the Company’s results
of operations for the first three months included in the year ended
December 31, 2020 and all months included in the year ended
December 31, 2019 were prepared on such basis. The carve-out
financial statements of Arconic Corporation are not necessarily
indicative of the Company’s consolidated results of operations had
it been a standalone company during the referenced periods. See the
Combined Financial Statements included in each of (i) Exhibit 99.1
to Arconic Corporation’s Form 10 Registration Statement (filed on
February 7, 2020), (ii) the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019 (filed on March 30, 2020), and
(iii) the Company’s Quarterly Report on Form 10-Q for the period
ended March 31, 2020 (filed on May 18, 2020), for additional
information.
(2)
In preparation for the separation of
Arconic Corporation from its former parent company, effective
January 1, 2020, certain U.S. defined benefit pension and other
postretirement plans previously sponsored by the former parent
company were separated into standalone plans for both Arconic
Corporation and the former parent company. Additionally, effective
April 1, 2020, Arconic Corporation assumed a portion of the
obligations associated with certain non-U.S. defined benefit
pension plans that included participants related to both Arconic
Corporation and its former parent company, as well as legacy
defined benefit pension plans assigned to the Company as a result
of the separation from the former parent company. As a result,
beginning in the first quarter of 2020 for these U.S. plans and in
the second quarter of 2020 for these non-U.S. plans, Arconic
Corporation applied defined benefit plan accounting resulting in
benefit plan expense being recorded in operating income (service
cost) and nonoperating income (nonservice cost). In all historical
periods prior to these respective timeframes, Arconic Corporation
was considered a participating employer in the former parent
company’s defined benefit plans and, therefore, applied
multiemployer plan accounting resulting in the Company’s share of
benefit plan expense being recorded entirely in operating income.
Also, Arconic Corporation is the plan sponsor of certain other
non-U.S. defined benefit plans that contain participants related
only to the underlying operations of the Company and, therefore,
the related benefit plan expense was recorded in accordance with
defined benefit plan accounting in all periods presented. The
following table presents the total benefit plan expense (excluding
settlements and curtailments) recorded by Arconic Corporation based
on the foregoing in each period presented:
Year ended
December
31,
2020
2019
Cost of goods sold (exclusive of expenses
below)
$
25
$
94
Selling, general administrative, and other
expenses
–
13
Research and development expenses
–
2
Other expenses (income), net
78
2
$
103
$
111
(3)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at last-in, first-in (LIFO) cost.
Management believes the average cost method more closely reflects
the physical flow of inventories, improves comparability of the
Company’s operating results with its industry peers, and provides
an increased level of consistency in the measurement of inventories
in the Company’s consolidated financial statements. The effects of
the change in accounting principle from LIFO to average cost have
been retrospectively applied to the Company’s Statement of
Consolidated Operations for the year ended December 31, 2019.
Accordingly, Net income attributable to Arconic Corporation
decreased $48 (comprised of a $62 increase to Cost of goods sold
and a $14 increase to Benefit for income taxes), or $0.44 per
share, from the amount previously reported in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2019 (filed on
March 30, 2020). See the Consolidated Financial Statements included
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020 for additional information.
(4)
In the year ended December 31, 2020,
Restructuring and other charges includes a $198 settlement charge
related to the annuitizations of a portion of the Company’s U.S.
and U.K. defined benefit pension plan obligations and a $25 benefit
for contingent consideration received related to the October 2018
sale of the Texarkana (Texas) rolling mill. In the year ended
December 31, 2019, Restructuring and other charges includes a $20
benefit for contingent consideration received related to the
October 2018 sale of the Texarkana (Texas) rolling mill.
(5)
In the year ended December 31, 2020, Other
expenses (income), net includes a $20 benefit for the reversal of a
liability previously established on April 1, 2020 related to a
potential indemnification to Howmet Aerospace by Arconic
Corporation for an outstanding income tax matter in Spain. In
November 2020, Howmet Aerospace received a favorable ruling from
Spain’s Supreme Court bringing a final conclusion to this matter as
this decision may not be appealed any further. As no further income
tax payment was required of Howmet Aerospace likewise Arconic
Corporation no longer has a requirement to perform under the
indemnification.
(6)
In the year ended December 31, 2020, the
diluted weighted-average number of shares does not include any
common share equivalents associated with outstanding employee stock
awards as their effect was anti-dilutive since the Company
generated a net loss for the period. Prior to April 1, 2020, the
Company did not have any publicly-traded issued and outstanding
common stock or any common share equivalents. Accordingly, the
respective basic and diluted earnings per share for the year ended
December 31, 2019 were calculated based on the 109,021,376 shares
of Arconic Corporation common stock distributed on April 1, 2020 in
connection with the completion of Arconic Corporation’s separation
from its former parent company.
Arconic Corporation and subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
December 31, 2020
December 31, 2019(1)
ASSETS
Current assets:
Cash and cash equivalents
$
787
$
72
Receivables from customers, less
allowances of $1 in 2020 and $2 in 2019(2)
631
384
Other receivables
128
136
Inventories(3)
1,043
1,137
Prepaid expenses and other current
assets
53
28
Total current assets
2,642
1,757
Properties, plants, and equipment
7,409
7,210
Less: accumulated depreciation and
amortization
4,697
4,466
Properties, plants, and equipment, net
2,712
2,744
Goodwill
390
386
Operating lease right-of-use-assets
144
125
Deferred income taxes
329
14
Other noncurrent assets
97
32
Total assets
$
6,314
$
5,058
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,106
$
1,061
Accrued compensation and retirement
costs
118
80
Taxes, including income taxes
33
21
Environmental remediation
90
83
Operating lease liabilities
36
33
Other current liabilities
90
63
Total current liabilities
1,473
1,341
Long-term debt
1,278
250
Accrued pension benefits
1,343
63
Accrued other postretirement benefits
479
1
Environmental remediation
66
125
Operating lease liabilities
111
96
Deferred income taxes(3)
15
159
Other noncurrent liabilities and deferred
credits
102
50
Total liabilities
4,867
2,085
EQUITY
Arconic Corporation shareholders’
equity:
Parent Company net investment(3)
–
2,664
Common stock
1
–
Additional capital
3,348
–
Accumulated deficit
(155
)
–
Accumulated other comprehensive (loss)
income
(1,761
)
295
Total Arconic Corporation shareholders'
equity
1,433
2,959
Noncontrolling interest
14
14
Total equity
1,447
2,973
Total liabilities and equity
$
6,314
$
5,058
(1)
Prior to April 1, 2020, Arconic
Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Arconic Corporation’s former parent
company’s financial statements. Accordingly, the Company’s
financial position as of December 31, 2019 was prepared on such
basis. The carve-out financial statements of Arconic Corporation
are not necessarily indicative of the Company’s financial position
had it been a standalone company during the referenced period. See
the Combined Financial Statements included in each of (i) Exhibit
99.1 to Arconic Corporation’s Form 10 Registration Statement (filed
on February 7, 2020), (ii) the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019 (filed on March 30, 2020), and
(iii) the Company’s Quarterly Report on Form 10-Q for the period
ended March 31, 2020 (filed on May 18, 2020), for additional
information.
(2)
Prior to January 1, 2020, certain of
Arconic Corporation’s customer receivables were sold to its former
parent company, which had an arrangement with several financial
institutions to sell certain customer receivables without recourse
on a revolving basis. As of December 31, 2019, the amount of
Arconic Corporation’s outstanding customer receivables sold to its
former parent company was $281. In preparation for the separation
of Arconic Corporation from its former parent company, effective
January 2, 2020, the former parent company’s arrangement was
amended to no longer include customer receivables associated with
Arconic Corporation in this program.
(3)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at last-in, first-in (LIFO) cost.
Management believes the average cost method more closely reflects
the physical flow of inventories, improves comparability of the
Company’s operating results with its industry peers, and provides
an increased level of consistency in the measurement of inventories
in the Company’s consolidated financial statements. The effects of
the change in accounting principle from LIFO to average cost have
been retrospectively applied to the Company’s Consolidated Balance
Sheet as of December 31, 2019. Accordingly, Inventories, Deferred
income taxes, and Parent Company net investment increased $317,
$72, and $245, respectively, from amounts previously reported in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 (filed March 30, 2020). The increase to Parent
Company net investment includes a cumulative effect of accounting
change of $293 recorded on January 1, 2019. See the Consolidated
Financial Statements included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2020 for additional
information.
Arconic Corporation and subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Quarter ended
December 31,
September 30,
June 30,
2020
2020
2020
OPERATING ACTIVITIES
Net (loss) income(1)
$
(64
)
$
5
$
(96
)
Adjustments to reconcile net (loss) income
to cash (used for) provided from operations:
Depreciation and amortization
60
63
68
Deferred income taxes(1)
(44
)
(22
)
28
Restructuring and other charges
127
3
77
Net periodic pension benefit cost
21
22
18
Stock-based compensation
5
6
5
Amortization of debt issuance costs
2
2
21
Other
1
(4
)
2
Changes in assets and liabilities,
excluding effects of acquisitions, divestitures, and foreign
currency translation adjustments:
Decrease (Increase) in receivables
15
(66
)
125
(Increase) Decrease in inventories(1)
(132
)
82
171
Decrease (Increase) in prepaid expenses
and other current assets
8
1
(8
)
Increase (Decrease) in accounts payable,
trade(2)
247
169
(295
)
(Decrease) in accrued expenses
(64
)
(61
)
(39
)
Increase (Decrease) in taxes, including
income taxes
24
21
(48
)
Pension contributions
(227
)
–
(12
)
Decrease in noncurrent assets
7
7
11
Increase in noncurrent liabilities
2
12
10
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(12
)
240
38
FINANCING ACTIVITIES
Separation payment to former parent
company(3)
–
–
(728
)
Additions to debt (original maturities
greater than three months)(3)
–
–
1,200
Debt issuance costs
–
–
(15
)
Payments on debt (original maturities
greater than three months)(3)
–
–
(1,100
)
Other
9
4
–
CASH PROVIDED FROM (USED FOR) FINANCING
ACTIVITIES
9
4
(643
)
INVESTING ACTIVITIES
Capital expenditures(2)
(37
)
(39
)
(29
)
Proceeds from the sale of assets and
businesses
23
–
1
CASH USED FOR INVESTING ACTIVITIES
(14
)
(39
)
(28
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
2
2
–
Net change in cash and cash equivalents
and restricted cash
(15
)
207
(633
)
Cash and cash equivalents and restricted
cash at beginning of period(4)
802
595
1,228
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD(4)
$
787
$
802
$
595
(1)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at last-in, first-in (LIFO) cost.
Management believes the average cost method more closely reflects
the physical flow of inventories, improves comparability of the
Company’s operating results with its industry peers, and provides
an increased level of consistency in the measurement of inventories
in the Company’s consolidated financial results. The effects of the
change in accounting principle from LIFO to average cost have been
retrospectively applied to the Company’s Statement of Consolidated
Cash Flows for the quarter ended June 30, 2020. Accordingly, Net
loss increased $4, Deferred income taxes decreased $1, and Decrease
in inventories positively changed by $5. See the Consolidated
Financial Statements included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2020 for additional
information.
(2)
In preparing the Statement of Consolidated
Cash Flows for the nine months ended September 30, 2020, management
discovered that the amount of (Decrease) in account payable, trade
previously reported for the quarter ended June 30, 2020 was
overstated by $8 and the amount of Capital expenditures previously
reported for the quarter ended June 30, 2020 was understated by $8.
As a result, for the quarter ended June 30, 2020, management has
corrected both (Decrease) in accounts payable, trade and Capital
expenditures from previously reported amounts to remove the
respective effect of this $8. Additionally, financial information
for prior periods not presented herein will be corrected, as
applicable, in future filings.
(3)
On April 1, 2020, Arconic Inc. separated
into two standalone, publicly-traded companies, Arconic Corporation
and Howmet Aerospace Inc. (the “Separation”). In connection with
the capital structure to be established at the time of the
Separation, Arconic Corporation secured $1,200 in third-party
indebtedness during the first quarter of 2020. The net proceeds
from a portion of this indebtedness was held in escrow until the
satisfaction of the escrow release conditions, which included the
substantially concurrent completion of the Separation. Accordingly,
the escrowed cash was included in Restricted cash as of March 31,
2020 (see footnote 4). The Company used a portion of the net
proceeds from the aggregate indebtedness to make a $728 payment to
its former parent company on April 1, 2020 to fund the transfer of
certain net assets from the former parent company to Arconic
Corporation in connection with the completion of the Separation. On
April 2, 2020, Arconic Corporation incurred an additional $500 of
indebtedness as a proactive measure taken by the Company to bolster
its liquidity and preserve financial flexibility in light of
uncertainties resulting from the COVID-19 outbreak. On May 13,
2020, in order to provide improved financial flexibility, Arconic
Corporation executed a refinancing of a portion of its outstanding
indebtedness by securing $700 in new third-party indebtedness. The
Company used the net proceeds from the new indebtedness, together
with cash on hand, to repay $1,100 of outstanding indebtedness.
(4)
Cash and cash equivalents and restricted
cash at beginning of period for the quarters ended December 31,
2020 and September 30, 2020 and Cash and cash equivalents and
restricted cash at end of period for all periods includes
Restricted cash of less than $0.03. For the quarter ended June 30,
2020, Cash and cash equivalents and restricted cash at beginning of
period includes Restricted cash of $593 (see footnote 3).
Arconic Corporation and subsidiaries
Segment Adjusted EBITDA Reconciliation
(unaudited)
(in millions)
Quarter ended
December
31,
2020
2019(1)
Total Segment Adjusted
EBITDA(2),(3),(4)
$
165
$
168
Unallocated amounts:
Corporate expenses(3),(5)
(9
)
(10
)
Stock-based compensation expense
(5
)
(12
)
Metal price lag(6)
3
(6
)
Provision for depreciation and
amortization
(60
)
(62
)
Restructuring and other charges
(127
)
17
Other(3),(7)
(13
)
(17
)
Operating (loss) income(4)
(46
)
78
Interest expense
(21
)
(29
)
Other (expenses) income, net(3)
(1
)
11
Benefit for income taxes(4)
4
108
Net income attributable to noncontrolling
interest
–
–
Consolidated net (loss) income
attributable to Arconic Corporation(4)
$
(64
)
$
168
(1)
Prior to April 1, 2020, Arconic
Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Arconic Corporation’s former parent
company’s financial statements. Accordingly, the Company’s results
of operations for the quarter ended December 31, 2019 were prepared
on such basis. The carve-out financial statements of Arconic
Corporation are not necessarily indicative of the Company’s
consolidated results of operations had it been a standalone company
during the referenced period. See the Combined Financial Statements
included in each of (i) Exhibit 99.1 to Arconic Corporation’s Form
10 Registration Statement (filed on February 7, 2020), (ii) the
Company’s Annual Report on Form 10-K for the year ended December
31, 2019 (filed on March 30, 2020), and (iii) the Company’s
Quarterly Report on Form 10-Q for the period ended March 31, 2020
(filed on May 18, 2020), for additional information.
(2)
Effective in the second quarter of 2020,
management elected to change the profit or loss measure of the
Company’s reportable segments from Segment operating profit to
Segment Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) for internal reporting and
performance measurement purposes. This change was made to enhance
the transparency and visibility of the underlying operating
performance of each segment. Effective in the third quarter of
2020, management refined the Company’s Segment Adjusted EBITDA
measure to remove the impact of metal price lag (see footnote 6).
This change was made to further enhance the transparency and
visibility of the underlying operating performance of each segment
by removing the volatility associated with metal prices.
Arconic Corporation calculates Segment
Adjusted EBITDA as Total sales (third-party and intersegment) minus
each of (i) Cost of goods sold, (ii) Selling, general
administrative, and other expenses, and (iii) and Research and
development expenses, plus Stock-based compensation expense and
Metal price lag. Previously, the Company calculated Segment
operating profit as Segment Adjusted EBITDA minus each of (i) the
Provision for depreciation and amortization, (ii) Stock-based
compensation expense, and (iii) Metal price lag. Arconic
Corporation’s Segment Adjusted EBITDA may not be comparable to
similarly titled measures of other companies’ reportable
segments.
Also, effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at last-in, first-in (LIFO) cost.
The effects of the change in accounting principle have been
retrospectively applied to the Company’s Statement of Consolidated
Operations for the quarter ended December 31, 2019. See footnote 4
for additional information.
Segment Adjusted EBITDA for the quarter
ended December 31, 2019 was recast to reflect the new measure of
segment profit or loss and the change in inventory cost method.
Total Segment Adjusted EBITDA is the sum
of the respective Segment Adjusted EBITDA for each of the Company's
three reportable segments: Rolled Products, Building and
Construction Systems, and Extrusions. This amount is being
presented for the sole purpose of reconciling Segment Adjusted
EBITDA to the Company's Consolidated net (loss) income.
(3)
In preparation for the separation of
Arconic Corporation from its former parent company, effective
January 1, 2020, certain U.S. defined benefit pension and other
postretirement plans previously sponsored by the former parent
company were separated into standalone plans for both Arconic
Corporation and the former parent company. Additionally, effective
April 1, 2020, Arconic Corporation assumed a portion of the
obligations associated with certain non-U.S. defined benefit
pension plans that included participants related to both Arconic
Corporation and its former parent company, as well as legacy
defined benefit pension plans assigned to the Company as a result
of the separation from the former parent company. As a result,
beginning in the first quarter of 2020 for these U.S. plans and in
the second quarter of 2020 for these non-U.S. plans, Arconic
Corporation applied defined benefit plan accounting resulting in
benefit plan expense being recorded in operating income (service
cost) and nonoperating income (nonservice cost). In all historical
periods prior to these respective timeframes, Arconic Corporation
was considered a participating employer in the former parent
company’s defined benefit plans and, therefore, applied
multiemployer plan accounting resulting in the Company’s share of
benefit plan expense being recorded entirely in operating income.
Also, Arconic Corporation is the plan sponsor of certain other
non-U.S. defined benefit plans that contain participants related
only to the underlying operations of the Company and, therefore,
the related benefit plan expense was recorded in accordance with
defined benefit plan accounting in all periods presented. The
following table presents the total benefit plan expense (excluding
settlements and curtailments) recorded by Arconic Corporation based
on the foregoing in each period presented:
Quarter ended
December
31,
2020
2019
Total Segment Adjusted EBITDA
$
(7
)
$
(21
)
Unallocated amounts:
Corporate expenses
–
(4
)
Other
–
(2
)
Subtotal
–
(6
)
Other expenses, net
(19
)
–
Total
$
(26
)
$
(27
)
(4
)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at LIFO cost. Management believes
the average cost method more closely reflects the physical flow of
inventories, improves comparability of the Company’s operating
results with its industry peers, and provides an increased level of
consistency in the measurement of inventories in the Company’s
consolidated financial statements. The effects of the change in
accounting principle from LIFO to average cost have been
retrospectively applied to the Company’s Statement of Consolidated
Operations for the quarter ended December 31, 2019. Accordingly,
Net income attributable to Arconic Corporation decreased $18
(comprised of a $23 increase to Cost of goods sold and a $5
increase to Benefit for income taxes) from the amount previously
reported in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019 (filed on March 30, 2020). See the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2020 for
additional information.
(5
)
Corporate expenses are composed of general
administrative and other expenses of operating the corporate
headquarters and other global administrative facilities, as well as
research and development expenses of the corporate technical
center. The amount presented for the quarter ended December 31,
2019 represents an allocation of Arconic Corporation’s former
parent company’s corporate expenses (see footnote 1).
(6
)
Metal price lag represents the financial
impact of the timing difference between when aluminum prices
included in Sales are recognized and when aluminum purchase prices
included in Cost of goods sold are realized. This adjustment aims
to remove the effect of the volatility in metal prices and the
calculation of this impact considers applicable metal hedging
transactions.
(7
)
Other includes certain items that impact
Cost of goods sold and Selling, general administrative, and other
expenses on the Company’s Statement of Consolidated Operations that
are not included in Segment Adjusted EBITDA, including those
described as “Other special items” (see footnote 5 to the
reconciliation of Adjusted EBITDA within Calculation of Non-GAAP
Financial Measures included in this release).
Arconic Corporation and subsidiaries
Calculation of Non-GAAP Financial
Measures (unaudited)
(in millions)
Adjusted EBITDA
Quarter ended
Year ended
December 31,
September 30,
December 31,
December 31,
December 31,
2020
2020
2019(1)
2020(1)
2019(1)
Net (loss) income attributable to Arconic
Corporation(2)
$
(64
)
$
5
$
168
$
(109
)
$
177
Add:
Net income attributable to noncontrolling
interest
–
–
–
–
–
(Benefit) Provision for income
taxes(2)
(4
)
10
(108
)
1
(62
)
Other expenses (income), net(3)
1
27
(11
)
70
(15
)
Interest expense
21
22
29
118
115
Restructuring and other charges
127
3
(17
)
188
87
Provision for depreciation and
amortization
60
63
62
251
252
Stock-based compensation
5
6
12
23
40
Metal price lag(4)
(3
)
16
6
27
39
Other special items(5)
8
13
18
50
81
Adjusted EBITDA(2),(3)
$
151
$
165
$
159
$
619
$
714
Sales
$
1,462
$
1,415
$
1,708
$
5,675
$
7,277
Adjusted EBITDA Margin
10.3
%
11.7
%
9.3
%
10.9
%
9.8
%
Arconic Corporation’s definition of
Adjusted EBITDA (Earnings before interest, taxes, depreciation, and
amortization) is net margin plus an add-back for the following
items: Provision for depreciation and amortization; Stock-based
compensation; Metal price lag (see below); and Other special items.
Net margin is equivalent to Sales minus the following items: Cost
of goods sold; Selling, general administrative, and other expenses;
Research and development expenses; and Provision for depreciation
and amortization. Special items are composed of restructuring and
other charges, discrete income tax items, and other items as deemed
appropriate by management. There can be no assurances that
additional special items will not occur in future periods. Adjusted
EBITDA is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because Adjusted EBITDA
provides additional information with respect to Arconic
Corporation’s operating performance and the Company’s ability to
meet its financial obligations. The Adjusted EBITDA presented may
not be comparable to similarly titled measures of other
companies.
Effective in the third quarter of 2020,
management refined the Company’s Adjusted EBITDA measure to remove
the impact of metal price lag (see footnote 4). This change was
made to further enhance the transparency and visibility of the
underlying operating performance of the Company by removing the
volatility associated with metal prices. Also, effective July 1,
2020, the Company changed its inventory cost method to average cost
for all U.S. inventories previously carried at last-in, first-in
(LIFO) cost. The effects of the change in accounting principle have
been retrospectively applied to the Company’s Statement of
Consolidated Operations for the quarter and year ended December 31,
2019. See footnote 2 for additional information. Adjusted EBITDA
for the quarter and year ended December 31, 2019 was recast to
reflect both these changes.
(1)
Prior to April 1, 2020, Arconic
Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Arconic Corporation’s former parent
company’s financial statements. Accordingly, the Company’s results
of operations for the quarter ended December 31, 2019, the first
three months included in the year ended December 31, 2020, and all
months included in the year ended December 31, 2019 were prepared
on such basis. The carve-out financial statements of Arconic
Corporation are not necessarily indicative of the Company’s
consolidated results of operations had it been a standalone company
during the referenced periods. See the Combined Financial
Statements included in each of (i) Exhibit 99.1 to Arconic
Corporation’s Form 10 Registration Statement (filed on February 7,
2020), (ii) the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019 (filed on March 30, 2020), and (iii) the
Company’s Quarterly Report on Form 10-Q for the period ended March
31, 2020 (filed on May 18, 2020), for additional information.
(2)
Effective July 1, 2020, the Company
changed its inventory cost method to average cost for all U.S.
inventories previously carried at LIFO cost. Management believes
the average cost method more closely reflects the physical flow of
inventories, improves comparability of the Company’s operating
results with its industry peers, and provides an increased level of
consistency in the measurement of inventories in the Company’s
consolidated financial statements. The effects of the change in
accounting principle from LIFO to average cost have been
retrospectively applied to the Company’s Statement of Consolidated
Operations for the quarter and year ended December 31, 2019.
Accordingly, for the quarter ended December 31, 2019, Net income
attributable to Arconic Corporation decreased $18 (comprised of a
$23 increase to Cost of goods sold and a $5 increase to Benefit for
income taxes) from the amount previously reported in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019
(filed on March 30, 2020). Additionally, for the year ended
December 31, 2019, Net income attributable to Arconic Corporation
decreased $48 (comprised of a $62 increase to Cost of goods sold
and a $14 increase to Benefit for income taxes) from the amount
previously reported in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2019 (filed on March 30, 2020). See the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2020 for
additional information.
(3)
In preparation for the separation of
Arconic Corporation from its former parent company, effective
January 1, 2020, certain U.S. defined benefit pension and other
postretirement plans previously sponsored by the former parent
company were separated into standalone plans for both Arconic
Corporation and the former parent company. Additionally, effective
April 1, 2020, Arconic Corporation assumed a portion of the
obligations associated with certain non-U.S. defined benefit
pension plans that included participants related to both Arconic
Corporation and its former parent company, as well as legacy
defined benefit pension plans assigned to the Company as a result
of the separation from the former parent company. As a result,
beginning in the first quarter of 2020 for these U.S. plans and in
the second quarter of 2020 for these non-U.S. plans, Arconic
Corporation applied defined benefit plan accounting resulting in
benefit plan expense being recorded in operating income (service
cost) and nonoperating income (nonservice cost). In all historical
periods prior to these respective timeframes, Arconic Corporation
was considered a participating employer in the former parent
company’s defined benefit plans and, therefore, applied
multiemployer plan accounting resulting in the Company’s share of
benefit plan expense being recorded entirely in operating income.
Also, Arconic Corporation is the plan sponsor of certain other
non-U.S. defined benefit plans that contain participants related
only to the underlying operations of the Company and, therefore,
the related benefit plan expense (excluding settlements and
curtailments) was recorded in accordance with defined benefit plan
accounting in all periods presented. See footnote 2 to the
Statement of Consolidated Operations included in this release for
additional information.
(4)
Metal price lag represents the financial
impact of the timing difference between when aluminum prices
included in Sales are recognized and when aluminum purchase prices
included in Cost of goods sold are realized. This adjustment aims
to remove the effect of the volatility in metal prices and the
calculation of this impact considers applicable metal hedging
transactions.
(5)
Other special items include the
following:
- for the quarter ended December 31, 2020, costs related to
several legal matters ($5) and other ($3);
- for the quarter ended September 30, 2020, costs related to
several legal matters, including Grenfell Tower ($4) and other
($2), a write-down of inventory related to the curtailment of the
casthouse operations at the Chandler (Arizona) extrusions facility
($5), and other ($2);
- for the quarter ended December 31, 2019, an allocation of costs
incurred by Arconic Corporation’s former parent company associated
with the April 1, 2020 separation of Arconic Inc. into two
standalone publicly-traded companies ($17) and costs related to the
Grenfell Tower legal matter ($1);
- for the year December 31, 2020, costs related to several legal
matters, including Grenfell Tower ($7), a customer settlement ($5),
and other ($10), an allocation of costs incurred by Arconic
Corporation’s former parent company associated with the April 1,
2020 separation of Arconic Inc. into two standalone publicly-traded
companies ($18), a write-down of inventory related to the
curtailment of the casthouse operations at the Chandler (Arizona)
extrusions facility ($3), and other ($7); and
- for the year ended December 31, 2019, a charge for an ongoing
environmental remediation matter referred to as Grasse River ($25)
and an allocation of costs incurred by Arconic Corporation’s former
parent company associated with the following matters: the April 1,
2020 separation of Arconic Inc. into two standalone publicly-traded
companies ($40), negotiation of a collective bargaining agreement
with the United Steelworkers ($9), the Grenfell Tower legal matter
($4), and a company-wide strategy and portfolio review by ParentCo
management ($3).
Net Debt
December 31, 2020
Long-term debt
$
1,278
Short-term borrowings
13
Total debt
$
1,291
Less: Cash and cash equivalents
787
Net debt
$
504
Net debt is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because management assesses Arconic Corporation’s leverage position
after considering available cash that could be used to repay
outstanding debt. Long-term debt equals $1,300 principal of
outstanding indebtedness less $22 of unamortized debt issuance
costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210223005190/en/
Investor Contact Jason Secore Shane Rourke (412) 315-2984
Investor.Relations@arconic.com
Media Contact Tracie Gliozzi (412) 992-2525
Tracie.Gliozzi@arconic.com
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