Arconic Cuts FY22 Top-Line Outlook Citing Declining Aluminum Prices

  • Arconic Corp ARNC reported second-quarter sales growth of 41.5% year-over-year to $2.55 billion, beating the consensus of $2.43 billion.
  • EPS was $1.05, beating the consensus of $0.77.
  • Sales by segments: Rolled Products $2.11 billion (+43.4% Y/Y), Building and Construction Systems $329 million (+28% Y/Y) and Extrusions $105 million (+50% Y/Y).
  • Adjusted EBITDA was $204 million (+9.1% Y/Y), and the margin contracted by 238 bps to 8%.
  • "We are on track to deliver double-digit adjusted EBITDA growth for a second straight year and, as we announced at our recent investor day, are positioned for several more years of annual growth at similar rates," commented CEO Tim Myers.
  • Arconic's cash provided by operating activities for the quarter was $162 million, compared to cash used of $(167) million a year ago. Free cash flow was $129 million. The cash balance was $252 million as of June 30. 2022.
  • The operating income was $144 million for the quarter, compared to a loss of $(495) million a year ago, and the margin was 5.6%.
  • The company repurchased ~1.3 million during the quarter for ~$37 million.
  • FY22 Outlook: ARNC updated its FY22 outlook to reflect the impact of declining aluminum prices on revenue and working capital.
  • Arconic now expects revenue of $9.6 billion - $10.0 billion, compared to the prior $10.1 billion - $10.5 billion, above the consensus of $9.35 billion.
  • Adjusted EBITDA is expected to be at the low end of the previously guided range of $820 million - $870 million. Free cash flow is now anticipated to be ~$300 million (prior outlook $250 million).
  • Price Action: ARNC shares are trading lower by 8.79% at $27.75 on the last check Tuesday.
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