Arconic Corporation

Good day and welcome to the Arconic Corporation Q4 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Shane Roark, Investor Relations. Please go ahead.

Thank you, Shuri. Good morning, and welcome to the Arconic Corporation fourth 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 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, and good morning, everyone. When I reflect on 2022, we accomplished a lot. In the first half of the year, we were delivering record earnings and we were well on our way to completing our phase one ramp up. In the second half of the year, we ran into some challenges in both our North American operations and the economic conditions in Europe, but that did not stop us from continuing to improve our business. In fact, we closed the sale of our Russian operations and extracted significant cash in the midst of a very difficult situation. We completed our reentry into the North American packaging market as we ramped up the can sheet to full production rates. We did extensive work to develop sustainability targets across key areas of our business, which I'll share shortly, and we took actions to address the operational issues that started in the middle of the year, which are now in our rearview mirror. Additionally, we did not waver in our commitment to return capital to shareholders as we completed our first share repurchase program and announced the second program of $200 million. In total, we've bought back approximately 10% of our original shares outstanding. We remain confident in our strategy, and going forward, we will continue to execute on high return, low risk, under the rooftop organic investments. However, given some of the challenges we had in the second half of last year, the more uncertain economic environment, and the announcements of additional capacity in our industry, we are re-sequencing those projects to prioritize casting and recycling projects first. This will improve our cost profile prior to bringing any additional capacity to market. Finally, the great work we've done since our inception has us in position to deliver the highest free cash flow in our brief history in 2023. Now moving to slide five, I'll provide some detail on how we performed across our key markets. So what should you take away here? With the divestiture of our Russian operations, our exposure to packaging has decreased to 11% of sales. That increases our relative exposure to higher margin ground transportation, aerospace, building and construction, and industrial segments. Next, the aerospace, packaging, and building construction markets continue to show strength with double-digit year-on-year growth in the fourth quarter. Our industrial sales were adversely impacted by the operational challenges in North America and weak European market conditions we've previously discussed. Now let's go down the list on the bottom right corner of the slide. In total, our context organic revenue was up 2% over last year. Ground transportation sales increased 1% organically from the fourth quarter of 2021, after growing 11% year-on-year in the third quarter. In general, automotive demand was higher and more stable in the second half than the first, as our customer supply chain stability continues to improve. Sales in the packaging market were up 16% organically year-on-year, as our Tennessee facility reached planned packaging production levels. As a reminder, packaging organic revenue excludes the impact of Russian sales in both the 2021 and 2022 periods. Following a 17% organic increase in the third quarter, fourth quarter building construction sales increased 12% organically year on year. This is especially strong considering the weakness in our European building construction sales, which make up about 30% of our sales in this segment. Our fourth quarter sales in the industrial market declined 33% year on year. The key drivers were the production challenges in key North American facilities and weak sales in Europe, down 40% year on year. Demand and pricing in the North American market remain attractive. Finally, fourth quarter aerospace sales were up 56% year on year on an organic basis. The post-pandemic ramp in aerospace continues, and we expect momentum to carry through 2023. I'll now hand it over to Eric to discuss fourth quarter results in more detail.