Research Desk Line-up: Century Aluminum Post Earnings Coverage
LONDON, UK / ACCESSWIRE / October 31, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Arconic Inc. (NYSE: ARNC), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ARNC, following the Company's release of its third quarter fiscal 2017 operating results on October 23, 2017. The maker of engineered products for the aerospace and other industries delivered its third consecutive quarter of y-o-y revenue and earnings before interest, tax, depreciation, and amortization (EBITDA) growth, and also raised its revenue forecast for FY17. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Aluminum industry. Pro-TD has currently selected Century Aluminum Company (NASDAQ: CENX) for due-diligence and potential coverage as the Company announced on October 26, 2017, its financial results for Q3 2017. Register for a free membership today, and be among the early birds that get access to our report on Century Aluminum when we publish it.
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Earnings Reviewed
For the third quarter of 2017, Arconic reported revenues of $3.24 billion, up 3% compared to revenues of $3.14 billion in Q3 2016, driven by higher volumes across all business segments as well as higher aluminum prices. The Company's organic revenue grew 5% on a y-o-y basis. Arconic's revenue numbers topped analysts' expectations of $3.09 billion.
During Q3 2017, Arconic delivered net cost savings of 1.5% of revenue and improved its full-year selling, general, and administrative expenses (SG&A) guidance by approximately $25 million. The Company noted that it is on track to deliver an improvement of approximately $100 million y-o-y in SG&A, with additional run-rate savings expected in 2018.
For Q3 2017, Arconic's consolidated adjusted EBITDA totaled $430 million, up 14% y-o-y. The Company's consolidated adjusted EBITDA, excluding special items, was $437 million for the reported quarter, up 2% y-o-y. Arconic's consolidated adjusted EBITDA margin excluding special items was 13.5%, down 20 basis points y-o-y, as rising aluminum prices had the dual impact of increasing revenue and a larger last-in-first-out (LIFO) charge.
Net income attributable to Arconic in Q3 2017 was $119 million, or $0.22 per share. The results included a LIFO and metal lag-related $30 million charge and $13 million in special items. This compared to net income of $166 million, or $0.34 per share, in Q3 2016. Excluding special items, the Company's reported quarter adjusted income was $132 million, or $0.25 per share, below Wall Street's estimates of $0.27 per share.
Arconic's annualized return on net assets (RONA) was 8.1%, based on year-to-date results.
Arconic's Segment Performance
During Q3 2017, the Engineered Products and Solutions (EP&S) segment reported revenue of $1.48 billion, up 5% from $1.41 billion y-o-y in Q3 2016, while the segment's adjusted EBITDA was $312 million, up $16 million compared to the year-ago same period. The Company stated that increased aerospace volume and continued net cost savings were partially offset by unfavorable price and mix. EP&S division's adjusted EBITDA margin was 21.1%, flat compared to the year-ago corresponding period.
For Q3 2017, the Global Rolled Products (GRP) unit reported revenue of $1.2 billion, down 4% compared to revenue of $1.29 billion in Q3 2016. The segment's organic revenue grew 1% on a y-o-y basis. GRP posted adjusted EBITDA was $140 million for the reported quarter, down $3 million y-o-y, driven by reduced aerospace wide-body build rates, airframe destocking, and pricing pressure in regional specialties. The segment's adjusted EBITDA margin was 11.3% for Q3 2017, up 20 basis points y-o-y, including a 170 basis point negative impact of higher aluminum prices.
During Q3 2017, the Transportation and Construction Solutions (TCS) segment's revenue surged 15% to $517 million versus $450 million in Q3 2016, and adjusted EBITDA of $83 million, grew $7 million y-o-y, attributed to higher volume and cost reductions, which more than offset headwinds, including unfavorable price and mix and higher aluminum prices. TCS' adjusted EBITDA margin was 16.1% for the reported quarter, down 80 basis points y-o-y, including a 120 basis point negative impact of higher aluminum prices.
Balance Sheet
As of September 30, 2017, Arconic had cash on hand of $1.82 billion. The Company's cash from operations was $172 million, and free cash flow was $41 million for the reported quarter, while cash used for financing activities was $15 million and cash used for investing activities totaled $128 million.
Reincorporation in Delaware
Arconic announced that it will hold a special meeting of shareholders on November 30, 2017, to approve the change of the Company's jurisdiction of incorporation from Pennsylvania to Delaware (Reincorporation). If approved, the Company expects the Reincorporation to occur on or about December 31, 2017.
Outlook
For FY17, Arconic raised its revenue forecast to be between $12.6 billion to $12.8 billion versus the earlier guidance of $12.3 billion to $12.7 billion. The Company also re-affirmed its adjusted earnings guidance of $1.15 to $1.20 per share.
Stock Performance
Arconic's share price finished yesterday's trading session at $24.78, slightly advancing 0.69%. A total volume of 2.92 million shares have exchanged hands. The Company's stock price surged 16.52% in the previous twelve months. Additionally, the stock soared 33.66% since the start of the year. Shares of the Company have a dividend yield of 0.97% and currently have a market cap of $11.92 billion.
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