Arconic Corporation

Good day and welcome to the Artonic Corporation second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, we ask that you please pick up your handset before pressing the key. To withdraw your question, please press star button two. Please note today's event is being recorded. I would now like to turn the conference over to Shane Roark, Director of Investor Relations. Please go ahead, sir.

Thank you, Rocco. Good morning, and welcome to the Arconic Corporation Second Quarter 2022 Earnings 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 may cause the company's actual results to differ materially from the projections presented in today's presentation and earnings press release in our most recent SEC filing. In addition, we've included some non-GAAP financial measures in our discussion. 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. And good morning, everyone. I'll start on slide four with some key highlights for the quarter. In the second quarter, we grew adjusted EBITDA by 9% over last year, which would have been better absent some ramp-up issues in our Tennessee facility. And we remain on pace to deliver another year of solid double-digit growth in 2022. Demand across our end markets remains strong, and our operations generated $162 million in cash in the quarter. which will be fundamental to growing as growing free cash flow is supporting high return organic investment and substantial returns to our shareholders. In June, we held an investor day and announced long-term adjusted EBITDA targets along with our phase three organic investment program. I enjoyed the opportunity to tell our story and meet many of you live for the first time. While we're just setting off on that journey, The demand we saw in the second quarter gives us continued confidence in meeting those targets. Packaging demand continues to grow as can makers add capacity and consumer preferences shift to aluminum. Industrial pricing and orders are strong as trade actions have leveled the playing field in that market. Despite that strong demand, our industrial performance suffered in the second quarter due to equipment related issues hindering our production ramp up at Tennessee. We are working to resolve those issues within this quarter and expect to reach full production rates at the facility in the fourth quarter. Ground transportation is improving modestly as semiconductor supplies stabilize, but production still remains depressed versus historic levels. The aerospace recovery is accelerating, and the strong building construction growth is supported by North American non-residential demand. Our long-term plan is expected to deliver adjusted EBITDA at a roughly 10% CAGR through year-end 2025 to an approximate $1.2 billion run rate. At our investor day in June, we also announced that we were evaluating the sale of our Conair business. We have decided to pause that process due to current uncertainty in the debt markets. Conair is a very valuable and highly performing business, and we do not believe we would receive proper value for it under current economic and market conditions. Moving to slide five, I'll provide some more detail on how we performed across our key markets. So what should you take away? First, organic revenue growth in the quarter was again led by aerospace, packaging, and building and construction. Aerospace grew at the highest relative rate for Arconic. for the first time since separation as the market recovery continues to accelerate and the channel continues to destock. Packaging continued to ramp up in Tennessee through the quarter and remained strong internationally. Building construction was very strong again due to the combination of pricing and sustained demand. Now let's go around the corner on the bottom right corner of the slide. In total, our organic revenue was up 17% over last year. Ground transportation sales increased 10% organically year on year, reversing course from a 10% year on year decline in the first quarter. We're beginning to see some stability in automotive and heavy duty truck demand, but production levels remain soundly below historical levels. Following a 22% organic increase in the first quarter, second quarter building construction sales increased 29% organically year on year. This is again a result of pricing actions as well as strength in North American non-residential construction spending. Sales in the packaging market grew 47% organically year on year due to the ongoing ramp up at our Tennessee facility. Sales grew 30% sequentially as the ramp accelerated substantially in the second quarter. Russian packaging organic revenue was flat year on year. Second quarter sales in the industrial market declined 11% organically year on year. The market and pricing remained strong for industrials, but we had some facility-specific issues in Tennessee that limited our ability to meet available industrial demand. As we ramped the facility to full capacity across automotive, industrial, and packaging, we had equipment problems that disrupted the efficiency of the flow paths. We'll address these issues this quarter, but it will require an outage in Tennessee that will create a similar headwind in the third quarter. We expect to be back at full capacity in the fourth quarter. Finally, second quarter aerospace sales were up 50% year on year on an organic basis. If you look back at the last several quarters, year on year organic growth continues to accelerate. Our aerospace shipments declined by double digits in the first half of last year. They were down 4% organically in the third quarter of 2021, before returning to organic growth of 19% in the fourth quarter, 32% in the first quarter, and now up 50% in the second quarter. We're encouraged by consumer demand for air travel and the ramp of orders and production in large commercial aircraft. I'll now turn it over to Eric to discuss the second quarter results in more detail. Thanks, Tim.