Arconic (ARNC) Provides Preliminary Third Quarter Operating Results, Trims FY Outlook

Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”) today provided preliminary operating results for the third quarter 2022 and updates to its outlook for the full-year 2022.

Preliminary Third Quarter Results and Revised Outlook

Third quarter 2022 Adjusted EBITDA is expected to be in the range of $135 million to $150 million. The third quarter results will be impacted by production outages and other operational challenges in Tennessee and Davenport that have reduced production from planned operating rates. Additionally, hyperinflationary energy costs are driving increased cost pressures and declining demand in Europe, which are expected to have an increasingly negative impact on third and fourth quarter results.

The Company is updating its full-year 2022 outlook to reflect the impact of operational issues and the combination of demand declines and higher unhedged energy costs in Europe. Revenue expectations are now in the range of $9.2 billion to $9.5 billion for full-year 2022 compared with the prior expected range of $9.6 billion to $10.0 billion. This assumes LME aluminum price of $2,300/mt and Midwest Premium of $550/mt, compared with prior assumptions for LME of $2,500/mt and Midwest Premium of $700/mt. Adjusted EBITDA is expected to be in the range of $715 million to $765 million compared with the previous expectation of the low end of the range of $820 million to $870 million. Free cash flow for full-year 2022 is now anticipated to be approximately $200 million compared with the prior outlook of approximately $300 million due to the impact of lower profitability and working capital pressure related to operational disruptions.

Tim Myers, Chief Executive Officer, said, “The third quarter has been substantially impacted by production disruptions. In addition to the previously discussed seasonality effect on our European facilities and the full quarter disruption related to the de-lacquering equipment at our Tennessee facility, we have had further operational issues. Our Tennessee hot mill had electrical and mechanical issues following planned maintenance in early August. Also, our Davenport and Tennessee casting operations experienced disruptions in recent weeks that further reduced volumes at both facilities. Major equipment repairs are being executed throughout September that will lead to higher production rates at Tennessee and Davenport in the fourth quarter.”

Management expects to complete a business review of the Extrusions segment in the third quarter aimed at identifying alternatives to improve the financial performance of this segment in future periods. Such alternatives could include changes to the operations that may result in asset impairment charges. As of June 30, 2022, the aggregate carrying value of the Extrusions segment’s properties, plants, and equipment, intangible assets, and operating lease right-of-use assets was approximately $230 million.

Arconic will hold its quarterly conference call at 10:00 AM Eastern Time on November 1, 2022, to present third quarter 2022 financial results. The call will be webcast on the Arconic website. Call information and related details will be available at www.arconic.com under “Investors.”

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