Arconic Corporation

Good day, and welcome to the Iconic Corporation's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host. Mr. Shane Ward, Director of Investor Relations. Sir, the floor is yours.

Thank you, Lara. Good morning, and welcome to the Arconic Corporation first quarter 2021 results conference call. I'm joined today by Tim Myers, Chief Executive Officer, and Eric Asmussen, Executive Vice President and Chief Financial Officer. After comments by Tim and Eric, we will have a question and answer session. For those of you who would like to follow along with the presentation, The slides are posted under the Investors tab on our website. I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the company's actual results to differ materially from the projections listed in today's presentation and earnings press release in our most recent SEC filings. In addition, we've included some non-GAAP financial measures in our discussions. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings press release and in the appendix in today's presentation. With that, I'd like to turn the call over to Tim.

Thank you, Shane. Good morning, everyone. Again, welcome to our first quarter 2021 earnings call. We had a strong start to the year, and Eric and I are excited to update you. So let's start on slide four to discuss the highlights of our first quarter performance. The markets we serve are recovering and revenue increased meaningfully in several markets during the quarter. Industrial revenue grew 18% year over year, 15% on an organic basis. This was due to a combination of the effects of the U.S. trade case and the ramping up of the investment we made in Tennessee. Ground transportation revenue grew 25% or 17% organically year over year, driven by recent platforms we were awarded easily overcoming the semiconductor chip shortage and North American light vehicle production being down 4%. Additionally, our packaging sales were up 23% for 16% organically at our Russia and China facilities. Net income was $52 million, and adjusted EBITDA in the quarter was $179 million, an increase of 19% for $28 million, sequentially benefiting from rebounding markets and the $100 million in structural cost outs we implemented last year. In the quarter, we secured agreements totaling $3.5 billion of expected long-term revenue with multiple customers across packaging and aerospace. In packaging, we negotiated agreements with six customers, including blue chip companies such as Ball Corporation and AB InBev, totaling $1.5 billion of expected revenue from 2022 through 2024, filling the remainder of the 600 million pounds of incremental annual capacity that we've been discussing. We easily could have booked more than two times this volume at attractive prices if we had more incremental capacity available to sell. In aerospace, three customers awarded us new multi-year contracts totaling more than $2 billion in combined future sales and extending our position as a premier supplier through nearly the end of the decade. Looking forward, we expect our results to be supported by favorable sustainability trends such as lightweighting of ground transportation and the shift to electric vehicles. as well as the continued flight from plastic to aluminum packaging as consumers remain concerned about microplastics entering our water and food sources. We anticipate our results will continue to improve and cash generation will benefit from a more than $230 million year-over-year decline in legacy obligation payments starting next year. In the last year, we've reduced legacy gross pension and OPEB liabilities by $1.8 billion, and today we are announcing the authorization of a $300 million share repurchase program. We're very confident of our forward view of the business, and we believe buying shares back may create a great return opportunity for our shareholders. Turning to slide five, I'll provide more detail on how we performed across our end markets. As you see in the bottom right of the slide, in Q1, we grew our revenue sequentially across all of our market segments. Ground transportation sales increased 21% from the prior quarter and 17% organically year over year, largely driven by continued growth in commercial transportation, which is benefiting from increasing heavy-duty truck and trailer builds. Automotive organic revenue grew year over year despite the challenge of the semiconductor chip shortage. We also increased our market share with 11 new or greatly expanded platforms versus a year ago. Sales in the industrial market increased 22% from the prior quarter and 15% organically year-over-year. This improvement was driven by the continued ramp-up of industrial products at our Tennessee facility, as well as the influence that the U.S. trade actions against 16 countries had on demand for domestically produced common alloy sheet. In the building and construction market, we increased 3% sequentially, but were down 6% organically year-over-year. This market remains depressed as pandemic pressures are still affecting non-residential construction builds in North America. We did, however, see an improvement in bidding activity in our North American Conair Architectural Systems business as the quarter progressed. Sales in the packaging market increased 8% sequentially and 16% organically year over year, largely as a result of growing demand in our China and Russia packaging facilities. Finally, aerospace increased 5% sequentially, but was down 55% year-on-year on an organic basis. The first quarter of 2020 was an extremely strong aerospace quarter for us, and we expect the aerospace market to enter a steady, gradual recovery moving forward. Now I'll turn it over to Eric to review the financials.