Elah Holdings Inc fka RELYQ (ELLH)

[Enterprising Investor]

Real Industry Reports Fiscal 2015 Fourth Quarter and Year-End Results

SHERMAN OAKS, Calif.--(BUSINESS WIRE)--Real Industry, Inc. (NASDAQ:RELY) (“Real Industry” or the “Company”) today reported financial results for its fiscal fourth quarter and year ended December 31, 2015.

FY 2015 Highlights

• Segment Adjusted EBITDA of $70.3 million on $1.1 billion in revenues (ten months’ performance)

• Real Alloy exceeded annual productivity target of $13.4 million in cost reductions/margin enhancement (full year)

• Strong free cash flow at Real Alloy provided for $50 million in debt reduction since acquisition date

• Ended the year with more than $100 million in consolidated liquidity

FY 2015 Fourth Quarter Highlights

• Segment Adjusted EBITDA of $17.1 million on $300.5 million in revenues, down from fiscal 2015 third quarter as a result of seasonality due to automotive factory shutdowns during the holidays and tighter scrap spreads

• $30 million in debt reduction during the quarter

Management Commentary

Craig Bouchard, Real Industry’s Chairman and CEO, stated, “Fiscal 2015 was a year of transformation and achievement for our Company. I would like to recognize the phenomenal work of our employees during the year, particularly our team at Real Alloy who worked tirelessly on the Six Sigma-led transition effort. Despite a progressively challenging macroeconomic environment throughout 2015, Real Alloy surpassed its operating margin and cash flow targets, producing one of the best years in its history. Real Alloy outperformed nearly every public aluminum company with its unique risk-mitigating model.

“In the ten months since the closing of the acquisition, our strong focus on cash flow, productivity and working capital management enabled us to reduce our total debt by over $50 million while maintaining liquidity in excess of $100 million at year end.

“The turbulence in the marketplace, combined with our Company’s strengthened position, created an ideal setting of increased opportunity as we work toward our next acquisition. We are actively pursuing targets that we believe will benefit from our tax-advantaged growth platform, and ultimately increase our stockholder value.”

Availability of Annual CEO Letter to Stockholders

The Company also announced the availability of its Annual CEO Letter to Stockholders at the Company’s website www.realindustryinc.com. The CEO Letter to Stockholders can also be accessed directly at http://www.realindustryinc.com/#ceo-insights.

FY 2015 Results

Real Industry reported revenues of $1.1 billion in the year ended December 31, 2015, driven by the Company’s Real Alloy business, which invoiced over 1 million metric tons of aluminum since it was acquired on February 27, 2015. As a result of this acquisition and the NABCO divestiture during the fiscal 2015 first quarter, comparisons to 2014 are not meaningful for Real Industry this year. On a full-year basis for Real Alloy, which has not been audited, management estimates that the invoiced volume was largely flat with 2014 when the business was owned by Aleris Corporation. During the second half of the year, Real Alloy consistently delivered 55% of its sales volume to customers via tolling arrangements, with its buy/sell business representing the remainder.

Despite falling aluminum prices throughout the year, Real Alloy generated segment Adjusted EBITDA of $70.3 million for fiscal 2015, which represents approximately ten months of performance. Adjusted EBITDA per ton over this period was nearly $70. Gross profit was $74.9 million, and gross margin was 6.5%. Adjusting for the impact of purchase accounting, which increased cost of sales, gross margin would have been 7.3%.

During fiscal 2015, the Company incurred a number of one-time expenses that impacted its financial results, including $14.8 million in transaction and financing-related costs and expenses associated with the Real Alloy acquisition, $9.2 million in noncash costs related to the amortization of the fair value adjustment of inventories and prepaid supplies under purchase accounting; as well as, reported in discontinued operations, a $39.7 million pretax gain on sale of our former subsidiary North American Breaker Company; and $4.8 million of recovery on allowance for repurchase reserve.

Real Industry reported net loss attributable to the Company of $6.9 million in fiscal 2015.

FY 2015 Fourth Quarter Results

Real Industry reported revenues of $300.5 million in the fiscal 2015 fourth quarter driven primarily by Real Alloy, which invoiced an aggregate 291,000 metric tons of aluminum during the period. Compared to the fiscal 2015 third quarter, volumes were down 3%, which was in line with expectations due to fourth quarter seasonality caused by slowdowns in the automotive industry, as a result of plant shutdowns for maintenance and vacations timed to take place during the holiday season. This fourth quarter seasonal reduction, on a percentage basis, was in line with the prior-year reduction under Aleris.

Adjusted EBITDA at Real Alloy was $17.1 million in the fiscal 2015 fourth quarter. Gross profit was $23.4 million, and gross margin was 7.8%, which compares to 7.5% in the fiscal 2015 third quarter and 5.8% in the fiscal 2015 second quarter. Adjusting for the impact of purchase accounting, which increased cost of sales, gross margin would have been 8.0%, compared to 7.9% in the fiscal 2015 third quarter and 6.7% in the fiscal 2015 second quarter, similarly adjusted.

Operating costs in corporate and other were $3.4 million during the quarter, a slight increase compared to the fiscal 2015 third quarter.

Real Industry reported net loss attributable to the Company of $3.9 million in the fiscal 2015 fourth quarter.

Balance Sheet and Liquidity

At December 31, 2015, Real Industry’s cash and cash equivalents were $35.7 million, total debt was $314.4 million, and stockholders’ equity was $151.8 million. The Company’s total liquidity was $103.7 million at December 31, 2015, of which, $83.1 million relates to Real Alloy.

Conference Call and Webcast Information

The Company will host a conference call at 1:00 p.m. EDT on Tuesday, March 15, 2016, during which management will discuss the results of the fourth quarter and year ended December 31, 2015.

The dial-in numbers are:
[phone] (Toll-free U.S. & Canada)
[phone] (International)

Participants may also access the live call via webcast at http://realindustryinc.equisolvewebcast.com/q4-2015. The webcast will be archived and accessible for approximately 30 days.

A replay will be available shortly after the call on the investor relations section of the Company’s website, www.realindustryinc.com, and will remain available for 90 days.

About Real Industry, Inc.

Real Industry is a North America-based holding company seeking to take significant ownership stakes in large, well-managed and consistently profitable businesses concentrated primarily in the United States industrial and commercial marketplace. Real Industry has significant capital resources, and federal net operating loss tax carryforwards of more than $870 million. For more information about Real Industry, visit its corporate website at www.realindustryinc.com.

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