|
|
|
(State or other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Item 2.02. |
Results of Operations and Financial Condition.
|
(in millions, unaudited)
|
Quarter ended
|
|||
June 30, 2023
|
||||
Sales
|
$
|
1,940 – $2,040
|
||
Net income*
|
$
|
50 – $70
|
||
Adjusted EBITDA
|
$
|
193 – $203
|
* |
Assuming the Transaction closes, the Company expects to recognize approximately $60 million of additional acquisition-related expenses, which have not been accrued to date,
associated with contractual agreements that are contingent upon the closing of the Transaction.
|
Item 9.01. |
Financial Statements and Exhibits.
|
Exhibit No. |
Exhibit
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
Adjusted EBITDA |
Quarter ended | |||||
June 30, 2023 | ||||||
|
LOW |
HIGH
|
||||
Net income attributable to Arconic Corporation
|
|
~$50
|
-
|
~$70
|
||
Add:
|
||||||
Provision for income taxes
|
|
~17
|
||||
Other expenses, net
|
|
~17
|
||||
Interest expense
|
|
~25
|
||||
Restructuring and other charges(1)
|
|
~9
|
||||
Provision for depreciation and amortization
|
|
~52
|
||||
Stock-based compensation
|
|
~12
|
||||
Metal price lag(2)
|
|
~20
|
||||
Unrealized gains on mark-to-market hedging instruments and derivatives
|
|
|
~(18)
|
|||
Other special items(3)
|
|
~9
|
-
|
~(1)
|
||
Adjusted EBITDA
|
|
~$193
|
-
|
~$203
|
(1) |
Restructuring and other charges primarily includes approximately $11 for costs incurred related to the Transaction.
|
(2) |
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.
|
(3) |
Other special items include costs related to several legal matters, including Grenfell Tower.
|
Quarter ended
|
||||||||||||||||||||||||||||||||||||||||||||||||
Mar. 31,
2023
|
Dec. 31,
2022
|
Sept. 30,
2022
|
June 30,
2022
|
Mar. 31,
2022
|
Dec. 31,
2021
|
Sept. 30,
2021
|
June 30,
2021
|
Mar. 31,
2021
|
Dec. 31,
2020
|
Sept. 30,
2020
|
June 30,
2020
|
|||||||||||||||||||||||||||||||||||||
Net (loss) income attributable to Arconic Corporation
|
$
|
25
|
$
|
(273
|
)
|
$
|
(65
|
)
|
$
|
114
|
$
|
42
|
$
|
(38
|
)
|
$
|
16
|
$
|
(427
|
)
|
$
|
52
|
$
|
(64
|
)
|
$
|
5
|
$
|
(96
|
)
|
||||||||||||||||||
Add:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest(1)
|
–
|
–
|
–
|
1
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||||||||
(Benefit) Provision for income taxes
|
10
|
(36
|
)
|
(25
|
)
|
38
|
12
|
19
|
11
|
(108
|
)
|
16
|
(4
|
)
|
10
|
(32
|
)
|
|||||||||||||||||||||||||||||||
Other expenses (income), net(2)
|
11
|
32
|
27
|
(35
|
)
|
17
|
15
|
15
|
15
|
22
|
1
|
27
|
16
|
|||||||||||||||||||||||||||||||||||
Interest expense
|
25
|
26
|
27
|
26
|
25
|
26
|
26
|
25
|
23
|
21
|
22
|
40
|
||||||||||||||||||||||||||||||||||||
Restructuring and other charges(3)
|
–
|
337
|
112
|
2
|
5
|
12
|
14
|
597
|
1
|
127
|
3
|
77
|
||||||||||||||||||||||||||||||||||||
Impairment of goodwill(4)
|
–
|
–
|
–
|
–
|
–
|
65
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||||||||
Provision for depreciation and amortization
|
53
|
56
|
59
|
62
|
60
|
67
|
61
|
62
|
63
|
60
|
63
|
68
|
||||||||||||||||||||||||||||||||||||
Stock-based compensation
|
6
|
(4
|
)
|
6
|
8
|
5
|
7
|
8
|
5
|
2
|
5
|
6
|
5
|
|||||||||||||||||||||||||||||||||||
Metal price lag(5)
|
–
|
(8
|
)
|
(15
|
)
|
(30
|
)
|
36
|
(11
|
)
|
21
|
11
|
(5
|
)
|
(3
|
)
|
16
|
10
|
||||||||||||||||||||||||||||||
Unrealized (gains) losses on mark-to-market hedging instruments and derivatives
|
20
|
10
|
7
|
(21
|
)
|
(2
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||||||
Other special items(6)
|
7
|
14
|
10
|
39
|
5
|
13
|
(1
|
)
|
7
|
5
|
8
|
13
|
11
|
|||||||||||||||||||||||||||||||||||
Adjusted EBITDA
|
$
|
157
|
$
|
154
|
$
|
143
|
$
|
204
|
$
|
205
|
$
|
175
|
$
|
171
|
$
|
187
|
$
|
179
|
$
|
151
|
$
|
165
|
$
|
99
|
1) |
Prior to the sale of Arconic’s operations in Russia (see footnote 3 below), VSMPO-AVISMA Corporation owned a limited portion of one of the legal entities included in the sale.
VSMPO-AVISMA Corporation’s share of net income (loss) of this legal entity was reported in this line item. Subsequent to the sale, there is no longer a noncontrolling interest in Arconic Corporation and its subsidiaries.
|
2) |
In the quarters ended September 30, 2022 and June 30, 2022, Other expenses (income), net includes an $11 loss and a $54 gain, respectively, for the remeasurement of monetary
balances, primarily cash, related to the Company’s operations in Russia from rubles to the U.S. dollar. This loss and gain were the result of a significant weakening and strengthening, respectively, of the ruble against the U.S. dollar in the
respective periods.
|
3) |
On November 15, 2022, Arconic completed the sale of 100% of its operations in Russia to Promishlennie Investitsii LLC, the majority owner of VSMPO-AVISMA Corporation, for cash
proceeds of $230. The transaction closed after the Company received all required approvals, resulting in the receipt of the cash consideration in exchange for all of Arconic’s net assets in Russia. These net assets included $203 of cash held
in Russia that was not available for distribution to the parent company because of injunctions imposed as a result of litigation initiated in March 2020 by the Federal Antimonopoly Service of The Russian Federation. In the quarter ended
December 31, 2022, the Company recorded a loss of $306 ($304 after-tax) in connection with this transaction. At a hearing on December 22, 2022, the Samara Court dismissed the litigation.
|
In the quarter ended September 30, 2022, the Company updated its five-year strategic plan, the results of which indicated that there was a decline in the forecasted
financial performance for the Extrusions segment (and asset group). As such, management evaluated the recoverability of the long-lived assets of the Extrusions asset group and, ultimately, determined that such assets were impaired.
Accordingly, in the quarter ended September 30, 2022, the Company recorded an impairment charge of $92, composed of $90 for Properties, plants, and equipment and $2 for intangible assets.
|
Also, in the quarters ended September 30, 2022 and December 31, 2022, Restructuring and other charges includes $15 and $31, respectively, related to the settlement
of a portion of the Company’s U.S. defined benefit pension plan obligations as a result of elections by certain plan participants to receive lump-sum benefit payments. In the year ended December 31, 2021, Restructuring and other charges
includes $584 related to the settlement of a portion of the Company’s U.S. defined benefit pension plan obligations as a result of the purchase of a group annuity contract ($549–2Q21) and elections by certain plan participants to receive
lump-sum benefit payments ($11-4Q21, $5-3Q21, $19-2Q21). 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. ($140-4Q20)
and U.K. ($3-3Q20, $55-2Q20) defined benefit pension plan obligations and a $25 benefit (4Q20) for contingent consideration received related to the October 2018 sale of the Texarkana (Texas) rolling mill.
|
4) |
In the quarter ended December 31, 2021, Arconic completed its annual review of goodwill for impairment for each of its three reporting units: Rolled Products, Building and
Construction Systems, and Extrusions. The results of this review indicated that the carrying value of the Extrusions reporting unit’s goodwill was fully impaired. Accordingly, in the quarter ended December 31, 2021, the Company recognized an
impairment charge of $65. This impairment was primarily driven by a combination of market-based factors, including delays in aerospace market improvement and significant cost inflation, resulting in increasingly limited margin expansion. The
Company had not previously identified any triggering events during 2021 prior to the annual review.
|
5) |
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.
|
6) |
Other special items include the following:
|
• |
for the quarter ended March 31, 2023, costs related to several legal matters, including Grenfell Tower ($3) and other ($1), and other items ($3);
|
• |
for the quarter ended December 31, 2022, a charge related to environmental remediation matters ($9), costs related to several legal matters ($1), and other items ($4);
|
• |
for the quarter ended September 30, 2022, a charge related to the Grasse River environmental remediation matter ($9), costs related to the Grenfell Tower legal matter ($3), and
other items ($(2));
|
• |
for the quarter ended June 30, 2022, costs related to a new labor agreement with the United Steelworkers ($19), a charge for two environmental remediation matters ($9), costs
related to several legal matters, including Grenfell Tower ($3) and other ($4), and other items ($4);
|
• |
for the quarter ended March 31, 2022, costs related to several legal matters ($2), costs related to the packaging restart at the Tennessee rolling mill ($2), and other items
($1);
|
• |
for the quarter ended December 31, 2021, costs related to several legal matters, including Grenfell Tower ($4) and other ($2), costs related to both an equipment fire and
packaging restart at the Tennessee rolling mill ($5), and other items ($2);
|
• |
for the quarter ended September 30, 2021, a partial reversal of a previously established reserve related to the Grasse River environmental remediation matter ($11), costs related
to several legal matters ($7), and other items ($3);
|
• |
for the quarter ended June 30, 2021, a write-down of inventory related to the idling of both the remaining operations at the Chandler (Arizona) extrusions facility and the
casthouse operations at the Lafayette (Indiana) extrusions facility ($4) and costs related to several legal matters ($3);
|
• |
for the quarter ended March 31, 2021, costs related to several legal matters, including Grenfell Tower ($4) and other ($1);
|
• |
for the quarter ended December 31, 2020, costs related to several legal matters ($5) and other items ($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 idling of
the casthouse operations at the Chandler (Arizona) extrusions facility ($5), and other items ($2); and
|
• |
for the quarter ended June 30, 2020, costs related to several legal matters, including a customer settlement ($5), Grenfell Tower ($3), and other ($3).
|
Year ended December 31, 2022
|
Year ended December 31, 2021
|
|||||||||||||||||||||||
As reported
|
Russia(1)
|
As recast(1)
|
As reported
|
Russia(1)
|
As recast(1)
|
|||||||||||||||||||
Net (loss) income attributable to Arconic Corporation
|
$
|
(182
|
)
|
$
|
75
|
$
|
(257
|
)
|
$
|
(397
|
)
|
$
|
46
|
$
|
(443
|
)
|
||||||||
Add:
|
||||||||||||||||||||||||
Net income attributable to noncontrolling interest
|
1
|
1
|
–
|
–
|
–
|
–
|
||||||||||||||||||
(Benefit) Provision for income taxes
|
(11
|
)
|
17
|
(28
|
)
|
(62
|
)
|
14
|
(76
|
)
|
||||||||||||||
Other expenses (income), net(2)
|
41
|
(44
|
)
|
85
|
67
|
2
|
65
|
|||||||||||||||||
Interest expense
|
104
|
–
|
104
|
100
|
–
|
100
|
||||||||||||||||||
Restructuring and other charges(3)
|
456
|
–
|
456
|
624
|
–
|
624
|
||||||||||||||||||
Impairment of goodwill(7)
|
–
|
–
|
–
|
65
|
–
|
65
|
||||||||||||||||||
Provision for depreciation and amortization
|
237
|
22
|
215
|
253
|
25
|
228
|
||||||||||||||||||
Stock-based compensation
|
15
|
–
|
15
|
22
|
–
|
22
|
||||||||||||||||||
Metal price lag(4)
|
(17
|
)
|
–
|
(17
|
)
|
16
|
–
|
16
|
||||||||||||||||
Unrealized gains on mark-to-market hedging instruments and derivatives
|
(6
|
)
|
–
|
(6
|
)
|
–
|
–
|
–
|
||||||||||||||||
Other special items(5)
|
68
|
–
|
68
|
24
|
–
|
24
|
||||||||||||||||||
Adjusted EBITDA
|
$
|
706
|
$
|
71
|
$
|
635
|
$
|
712
|
$
|
87
|
$
|
625
|
||||||||||||
Year ended December 31, 2020
|
Year ended December 31, 2019
|
|||||||||||||||||||||||
As reported
|
Russia(1)
|
As recast(1)
|
As reported
|
Russia(1)
|
As recast(1)
|
|||||||||||||||||||
Net income (loss) attributable to Arconic Corporation
|
$
|
(109
|
)
|
$
|
45
|
$
|
(154
|
)
|
$
|
177
|
$
|
45
|
$
|
132
|
||||||||||
Add:
|
||||||||||||||||||||||||
(Benefit) Provision for income taxes
|
1
|
12
|
(11
|
)
|
(62
|
)
|
9
|
(71
|
)
|
|||||||||||||||
Other (income) expenses, net(2)
|
70
|
11
|
59
|
(15
|
)
|
(5
|
)
|
(10
|
)
|
|||||||||||||||
Interest expense
|
118
|
–
|
118
|
115
|
–
|
115
|
||||||||||||||||||
Restructuring and other charges(3)
|
188
|
–
|
188
|
87
|
–
|
87
|
||||||||||||||||||
Provision for depreciation and amortization
|
251
|
24
|
227
|
252
|
30
|
222
|
||||||||||||||||||
Stock-based compensation
|
23
|
–
|
23
|
40
|
–
|
40
|
||||||||||||||||||
Metal price lag(4)
|
27
|
–
|
27
|
39
|
–
|
39
|
||||||||||||||||||
Other special items(5)
|
50
|
–
|
50
|
81
|
–
|
81
|
||||||||||||||||||
Adjusted EBITDA
|
$
|
619
|
$
|
92
|
$
|
527
|
$
|
714
|
$
|
79
|
$
|
635
|
||||||||||||
Pension/OPEB non-service costs(6)
|
(1
|
)
|
–
|
(1
|
)
|
86
|
–
|
86
|
||||||||||||||||
Adjusted EBITDA excluding non-service costs
|
$
|
618
|
$
|
92
|
$
|
526
|
$
|
800
|
$
|
79
|
$
|
721
|
1) |
Adjusted EBITDA is a non-GAAP financial measure. See Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix for (i) the Company’s definition of Adjusted EBITDA
and (ii) management’s rationale for the presentation of this non-GAAP measure. The “As reported” column presents a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure.
|
2) |
See footnote 2 to the Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix.
|
3) |
See footnote 3 to the Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix.
|
4) |
See footnote 5 to the Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix.
|
5) |
See footnote 6 to the Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix.
|
6) |
In preparation for the separation of Arconic 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 and the former parent company. Additionally, effective April 1, 2020, Arconic assumed a portion of the obligations associated with certain
non-U.S. defined benefit pension plans that included participants related to both Arconic 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 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 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 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. Accordingly, this adjustment reflects a proxy of non-service cost associated with certain defined benefit pension and other postretirement plan obligations had standalone plans existed for all the
Company’s participants instead of participating in defined benefit plans sponsored by Arconic’s former parent company.
|
7) |
See footnote 4 to the Reconciliation of Adjusted EBITDA presented elsewhere in this Appendix.
|
Quarter ended
|
Year ended
December 31,
|
|||||||||||||||||||||||||||||||
December 31,
2022
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
2022
|
2021
|
2020
|
2019
|
|||||||||||||||||||||||||
Sales
|
$
|
1,942
|
$
|
2,280
|
$
|
2,548
|
$
|
2,191
|
$
|
8,961
|
$
|
7,504
|
$
|
5,675
|
$
|
7,277
|
||||||||||||||||
Less: Sales related to Russian Operations*
|
116
|
240
|
314
|
233
|
903
|
968
|
705
|
703
|
||||||||||||||||||||||||
Sales excluding Russian Operations
|
$
|
1,826
|
$
|
2,040
|
$
|
2,234
|
$
|
1,958
|
$
|
8,058
|
$
|
6,536
|
$
|
4,970
|
$
|
6,574
|
• |
30 kmt in quarter ended December 31, 2022,
|
• |
53 kmt in quarter ended September 30, 2022,
|
• |
64 kmt in quarter ended June 30, 2022,
|
• |
58 kmt in quarter ended March 31, 2022,
|
• |
206 kmt in year ended December 31, 2022,
|
• |
263 kmt in year ended December 31, 2021,
|
• |
244 kmt in year ended December 31, 2020, and
|
• |
229 kmt in year ended December 31, 2019.
|
Year ended December 31,
|
||||||||||||||||
2022
|
2021
|
2020
|
2019
|
|||||||||||||
Reconciliation of Rolled Products Third-party Sales
|
||||||||||||||||
As reported
|
$
|
7,313
|
$
|
6,187
|
$
|
4,335
|
$
|
5,609
|
||||||||
Less: Russian Operations
|
903
|
968
|
705
|
703
|
||||||||||||
As recast
|
$
|
6,410
|
$
|
5,219
|
$
|
3,630
|
$
|
4,906
|
||||||||
Reconciliation of Segment Adjusted EBITDA
|
||||||||||||||||
Rolled Products (As reported)
|
$
|
581
|
$
|
655
|
$
|
527
|
$
|
640
|
||||||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
–
|
47
|
||||||||||||
Less: Russian Operations
|
71
|
87
|
92
|
79
|
||||||||||||
Rolled Products (As recast)
|
$
|
510
|
$
|
568
|
$
|
435
|
$
|
608
|
||||||||
Building and Construction Systems (As reported)
|
$
|
195
|
$
|
130
|
$
|
137
|
$
|
126
|
||||||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
–
|
3
|
||||||||||||
Building and Construction Systems (As recast)
|
$
|
195
|
$
|
130
|
$
|
137
|
$
|
129
|
||||||||
Extrusions (As reported)
|
$
|
(47
|
)
|
$
|
(28
|
)
|
$
|
(16
|
)
|
$
|
(9
|
)
|
||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
–
|
12
|
||||||||||||
Extrusions (As recast)
|
$
|
(47
|
)
|
$
|
(28
|
)
|
$
|
(16
|
)
|
$
|
3
|
|||||
Total Segment (As reported)
|
$
|
729
|
$
|
757
|
$
|
648
|
$
|
757
|
||||||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
–
|
62
|
||||||||||||
Less: Russian Operations
|
71
|
87
|
92
|
79
|
||||||||||||
Total Segment (As recast)
|
$
|
658
|
$
|
670
|
$
|
556
|
$
|
740
|
||||||||
Corporate (As reported)
|
$
|
(23
|
)
|
$
|
(45
|
)
|
$
|
(29
|
)
|
$
|
(43
|
)
|
||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
(1
|
)
|
24
|
|||||||||||
Corporate (As recast)
|
$
|
(23
|
)
|
$
|
(45
|
)
|
$
|
(30
|
)
|
$
|
(19
|
)
|
||||
Total Company Adjusted EBITDA (As reported)
|
$
|
706
|
$
|
712
|
$
|
619
|
$
|
714
|
||||||||
Add: Pension/OPEB non-service costs*
|
–
|
–
|
(1
|
)
|
86
|
|||||||||||
Less: Russian Operations
|
71
|
87
|
92
|
79
|
||||||||||||
Total Company Adjusted EBITDA (As recast)
|
$
|
635
|
$
|
625
|
$
|
526
|
$
|
721
|
Quarter ended
|
Year ended
December 31,
|
|||||||||||||||||||||||||||||||
December 31,
2022
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
2022
|
2021
|
2020
|
2019
|
|||||||||||||||||||||||||
Capital Expenditures
|
$
|
70
|
$
|
47
|
$
|
33
|
$
|
95
|
$
|
245
|
$
|
184
|
$
|
163
|
$
|
201
|
||||||||||||||||
Less: Capital Expenditures related to Russian Operations
|
2
|
2
|
1
|
2
|
7
|
13
|
5
|
9
|
||||||||||||||||||||||||
Capital Expenditures excluding Russian Operations
|
$
|
68
|
$
|
45
|
$
|
32
|
$
|
93
|
$
|
238
|
$
|
171
|
$
|
158
|
$
|
192
|
ARCONIC CORPORATION
|
||
Dated: July 13, 2023
|
By:
|
/s/ Erick R. Asmussen
|
Name:
|
Erick R. Asmussen
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|