Third quarter 2024 results1

“Footprint upgrade starts to make a positive impact”

Luxembourg, November 8, 2024 (07:00 CET) - Aperam S.A. (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris, Brussels: APAM, NYRS: APEMY), announced today results for the three months ended September 30, 2024.
 

Highlights

Strategic initiatives

Prospects[1]a

Financial Highlights (on the basis of financial information prepared under IFRS)

Health & Safety results

Health and Safety performance based on Aperam personnel figures and contractors’ lost time injury frequency rate was 2.4x in the third quarter of 2024 compared to 2.0x in the second quarter of 2024.

Financial results analysis for the three-month period ending September 30, 2024

Sales for the third quarter of 2024 decreased by 8.6% at EUR 1,493 million compared to EUR 1,634 million for the second quarter of 2024. Shipments increased by 5.5% at 617 thousand tonnes in the third quarter of 2024 compared to 583 thousand tonnes in the second quarter of 2024, due to negative seasonality in Europe while Brazil benefited from the full capacity of the new hot rolling mill.

Adjusted EBITDA reached EUR 99 million (excluding an exceptional gain of EUR 8 million made of PIS/Cofins tax credits related to prior periods recognized in Brazil) during the third quarter 2024 compared to EUR 86 million (excluding an exceptional loss of EUR (8) million, related to a voluntary redundancy program) in the second quarter of 2024. Higher results in Stainless & Electrical Steel with a strong development in Brazil, higher prices and the positive impact from the Leadership Journey® could more than compensate for a negative inventory valuation effect and lower steel volumes.

Depreciation and amortization expense was EUR (58) million for the third quarter of 2024.

Aperam had an operating income for the third quarter of 2024 of EUR 49 million compared to an operating income of EUR 19 million for the previous quarter.

Financing costs, net, including the FX and derivatives result for the third quarter of 2024 were EUR (12) million. Cash cost of financing was EUR (8) million during the quarter.

Income tax benefit was EUR 142 million during the third quarter of 2024, due to the recognition of net deferred tax assets on tax losses carried forward for EUR 155 million.

The net result recorded by the Company was an income of EUR 179 million for the third quarter of 2024, compared to an income of EUR 59 million for the second quarter of 2024.

Cash flows from operations for the third quarter of 2024 were EUR 33 million, including a working capital increase of EUR 100 million. CAPEX for the third quarter was EUR (22) million.

Free cash flow before dividend for the third quarter of 2024 amounted to EUR 9 million, compared to EUR 111 million for the second quarter of 2024.

During the third quarter of 2024, cash returns to shareholders amounted to EUR 36 million, consisting fully of dividend.

Operating segment results analysis

Stainless & Electrical Steel (1)

(1) Amounts are shown prior to intra-group eliminations

The Stainless & Electrical Steel segment had sales of EUR 933 million for the third quarter of 2024. This represents an 11.8% decrease compared to sales of EUR 1,058 million for the second quarter of 2024. Steel shipments during the third quarter were 391 thousand tonnes, a decrease of 6.7% compared to steel shipments of 419 thousand tonnes during the previous quarter. While Brazil has full capacity available after the delayed hot rolling mill ramp-up, shipments in Europe were seasonally weak in a soft market. Average steel selling prices for the Stainless & Electrical Steel segment decreased by 5.5% compared to the previous quarter.

The segment generated an adjusted EBITDA of EUR 68 million (excluding an exceptional gain of EUR 8 million made of PIS/Cofins tax credits related to prior periods recognised in Brazil) for the third quarter of 2024 compared to an adjusted EBITDA of EUR 59 million (excluding an exceptional loss of EUR (8) million, related to a voluntary redundancy program) for the second quarter of 2024. Seasonally lower volumes and a negative inventory valuation effect was more than compensated by higher prices, Leadership Journey® cost improvements as well as the positive development in Brazil.

Depreciation and amortization expense was EUR (28) million for the third quarter of 2024.

The Stainless & Electrical Steel division had an operating income of EUR 48 million for the third quarter of 2024 compared to an operating income of EUR 23 million for the second quarter of 2024.

Services & Solutions (1)

(1) Amounts are shown prior to intra-group eliminations

The Services & Solutions segment had sales of EUR 575 million for the third quarter of 2024, representing a decrease of 9.9% compared to sales of EUR 638 million for the second quarter of 2024. For the third quarter of 2024, steel shipments were 174 thousand tonnes compared to 195 thousand tonnes during the previous quarter. Average steel selling prices for the Services & Solutions’ segment were 1.6% higher during the third quarter of 2024 compared to the second quarter of 2024.               

The segment generated an EBITDA of EUR 5 million for the third quarter of 2024 compared to an EBITDA of EUR 16 million for the second quarter of 2024. EBITDA decreased due to lower volumes, lower margins and a negative inventory valuation effect.

Depreciation and amortization expense was EUR (4) million for the third quarter of 2024.

The Services & Solutions segment had an operating income of EUR 1 million for the third quarter of 2024 compared to an operating income of EUR 13 million for the second quarter of 2024.             

Alloys & Specialties(1)

(1) Amounts are shown prior to intra-group eliminations

The Alloys & Specialties segment had sales of EUR 181 million for the third quarter of 2024, representing a decrease of 23.9% compared to EUR 238 million for the second quarter of 2024. Steel shipments decreased by 14.9% during the third quarter of 2024 at 8 thousand tonnes.

The Alloys & Specialties segment achieved EBITDA of EUR 11 million for the third quarter of 2024 compared to EUR 21 million for the second quarter of 2024. EBITDA decreased due to seasonally lower volumes, a softer mix and a negative inventory valuation effect.

Depreciation and amortization expense for the third quarter of 2024 was EUR (2) million.

The Alloys & Specialties segment had an operating income of EUR 9 million for the third quarter of 2024 compared to an operating income of EUR 16 million for the second quarter of 2024.

Recycling & Renewables (1)

(1) Amounts are shown prior to intra-group eliminations

The Recycling & Renewables segment had sales of EUR 507 million for the third quarter of 2024, representing a decrease of 8.8% compared to EUR 556 million sales for the second quarter of 2024. Shipments increased by 3.8% during the third quarter of 2024 to 412 thousand tonnes. Average selling prices for the Recycling & Renewables’ segment were 12.1% lower during the third quarter of 2024.

EBITDA decreased during the quarter at EUR 16 million compared to EBITDA of EUR 20 million in the second quarter of 2024 resulting from seasonally lower volumes and lower selling prices.

Depreciation and amortization expense for the third quarter of 2024 was EUR (24) million.

The Recycling & Renewables segment had an operating loss of EUR (8) million for the third quarter of 2024 compared to an operating loss of EUR (2) million for the second quarter of 2024.

Recent developments during the quarter

• On August 1, 2024, Aperam released its 2024 Half-Year Report.
• On September 30, 2024, in preparation of the upcoming quarterly results release scheduled for Friday, 8 November 2024, the Company reminded market participants of the standing guidance, earnings drivers and events that should be considered.
• On October 17, 2024 Aperam announced the signing of a definitive agreement to acquire Universal Stainless & Alloy Products, Inc. (Universal) [Nasdaq: USAP], a leading manufacturer of specialty steel products for critical Aerospace & Industrial applications in the U.S., at a price of $45.00 per share in an all-cash transaction. The transaction values Universal at an enterprise value of approximately $539 million. This acquisition is a key milestone in Aperam’s strategy to strengthen its market position, broaden its geographic presence and product range by expanding its presence in high-growth sectors such as aerospace and industrial applications. The deal is another major step in Aperam's ongoing transformation of its value chain, offering a more differentiated and resilient portfolio to reduce cyclicality and better respond to market demands, particularly in the United States. The transaction, which has been unanimously approved by the board of directors of both Aperam and Universal, is expected to close during the first half of 2025, subject to a obtaining majority vote of Universal’s shareholders, receipt of regulatory approvals and other customary closing conditions. 
• Reflecting expanding requirements through the CSRD and combined reporting, in addition to the oversight of the Board of Directors, the scope of the Audit & Risk Management Committee has been extended to directly include ESG matters. The name of the Committee has been updated to Audit, Risk & Sustainability Committee. The composition and Chair of the Committee remain unchanged.

Investor conference call / webcast

Pre-recorded management comments are available as from publication of this earnings release on our website at www.aperam.com, section Investors > Reports & Presentations > Quarterly results > Q3-2024 (Link to Q3 2024 management podcast).

Aperam management will host a conference call / webcast for members of the investment community to discuss the financial performance of the quarter under report at the following time:

Link to the webcast: https://channel.royalcast.com/landingpage/aperam/20241108_1/

The dial-in numbers for the call are: France : +33 (0) 1 7037 7166   USA: +1 786 697 3501  

UK: +44 (0) 33 0551 0200  Belgium: +32 (0) 2 789 8603  

Germany: +49 (0) 30 3001 90612    Netherlands +31 (0) 20 708 5073

The conference password is: Aperam.

Contacts

Investor Relations / Thorsten Zimmermann: IR@aperam.com
Communication / Ana Escobedo Conover Ana.Escobedo@aperam.com

About Aperam

Aperam is a global player in stainless, electrical & specialty steel and recycling, with customers in over 40 countries. The business is organized in four primary reportable segments: Stainless & Electrical Steel, Services & Solutions, Alloys & Specialties and Recycling & Renewables.

Aperam has a flat Stainless and Electrical steel capacity of 2.5 million tonnes in Brazil and Europe and is a leader in high value specialty products. In addition to its industrial network, spread over six production facilities in Brazil, Belgium and France, Aperam has a highly integrated distribution, processing and services network and a unique capability to produce low carbon footprint stainless and special steels from biomass, stainless steel scrap and high performance alloys scrap. With 5 of its main 6 facilities certified ResponsibleSteelTM, Bioenergia and its unique capability to produce charcoal made from its own FSC®-certified forestry and, with ELG, a global leader in collecting, trading, processing and recycling of stainless steel scrap and high performance alloys, Aperam’s places sustainability at the heart of its business, helping customers worldwide to excel in the circular economy.

In 2023, Aperam had sales of EUR 6,592 million and shipments of 2.20 million tonnes.

For further information, please refer to our website at www.aperam.com.  

Forward-looking statements

This document may contain forward-looking information and statements about Aperam and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target” or similar expressions. Although Aperam’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Aperam’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Aperam, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in Aperam’s filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier). Aperam undertakes no obligation to publicly update its forward-looking statements or information, whether as a result of new information, future events, or otherwise.

APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 Appendix 1a – Health & Safety statistics

Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.

 Appendix 1b - Key operational and financial information

Appendix 2 – Adjusted Net Income and Adjusted Basic Earnings per Share

Appendix 3 – Terms and definitions

Unless indicated otherwise, or the context otherwise requires, references in this earnings release report to the following terms have the meanings set out next to them below:

Adjusted EBITDA: operating income before depreciation and amortization expenses, impairment losses and exceptional items.

Adjusted EBITDA/tonne: calculated as Adjusted EBITDA divided by total shipments.

Adjusted Net Income: refers to reported net income / (loss) less exceptional items, recognition of deferred tax assets on tax losses carried forward and deferred tax effect on exceptional items.

Adjusted Basic Earnings per Share: refers to Adjusted Net Income divided by Weighted average common shares outstanding.

Average selling prices: calculated as sales divided by shipments.

Average steel selling prices: calculated as steel sales divided by steel shipments.

Cash and cash equivalents: represents cash and cash equivalents, restricted cash and short-term investments.

CAPEX: relates to capital expenditures and is defined as purchase of property, plant and equipment and intangible assets.

EBITDA: operating income before depreciation and amortization expenses and impairment losses.

EBITDA/tonne: calculated as EBITDA divided by total shipments.

Exceptional items: consists of (i) inventory write-downs equal to or exceeding 10% of total related inventories values before write-down at the considered quarter end (ii) restructuring (charges)/gains equal to or exceeding EUR 10 million for the considered quarter, (iii) capital (loss)/gain on asset disposals equal to or exceeding EUR 10 million for the considered quarter or (iv) other non-recurring items equal to or exceeding EUR 10 million for the considered quarter.

Financing costs, (net): Net interest expense, other net financing costs and foreign exchange and derivative results.

Free cash flow before dividend: net cash provided by operating activities less net cash used in investing activities.

Gross financial debt: long-term debt plus short-term debt.

Liquidity: Cash and cash equivalent and undrawn credit lines.

LTI frequency rate: Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.

Net financial debt: long-term debt, plus short-term debt less cash and cash equivalents.

Net financial debt/EBITDA or Gearing: Refers to Net financial debt divided by last twelve months EBITDA calculation.

Shipments: information at segment and group level eliminates inter-segment shipments (which are primarily between (i) Recycling & Renewables and Stainless & Electrical Steel (ii) Stainless & Electrical Steel and Services & Solutions) and intra-segment shipments, respectively.

Working capital: trade accounts receivable plus inventories less trade accounts payable.

1 The financial information in this press release and Appendix 1 has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards (“IFRS”) as adopted in the European Union. While the interim financial information included in this announcement has been prepared in accordance with IFRS applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standard 34, “Interim Financial Reporting”. Unless otherwise noted the numbers and information in the press release have not been audited. The financial information and certain other information presented in a number of tables in this press release have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this press release reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.

2 The Leadership Journey® is an initiative launched on December 16, 2010, and subsequently accelerated and increased, to target management gains and profit enhancement. The fourth phase of the Leadership Journey® targeted EUR 150 million gains for the period 2021 - 2023 via a combination of cost, growth and mix improvement measures. Some additional investments, as announced in 2021 as part of the Strategy 2025 program, have been accelerated to achieve earnings growth already in 2022 contributing to the Leadership Journey® Phase 4. We concluded Phase 4 of the Leadership Journey® above target with EUR 186 million gains. We announced targeted gains of EUR 200 million for Phase 5 to be realized over the period 2024 - 2026. Gains will come from a combination of variable and fixed cost savings, as well as purchasing and mix improvements. Phase 5 includes a structural cost reduction plan of EUR 50 million. To the extent that this plan would affect employment we will consult with our social partners on the social impact.

3 This press release also includes Alternative Performance Measures (“APM” hereafter). The Company believes that these APMs are relevant to enhance the understanding of its financial position and provides additional information to investors and management with respect to the Company’s financial performance, capital structure and credit assessment. These non-GAAP financial measures should be read in conjunction with and not as an alternative for, Aperam’s financial information prepared in accordance with IFRS. Such non-GAAP measures may not be comparable to similarly titled measures applied by other companies. The APM’s used are defined under Appendix 3 “Terms & definitions”.

[1]a The outlook for the quarter depends on the future development of metal and product prices. Both are assumed as constant at their current level.