Real Alloy DEUTSCHE BANK 25 TH ANNUAL LEVERAGED FINANCE CONFERENCE OCTOBER 4, Real Alloy

Transcription

1 DEUTSCHE BANK 25 TH ANNUAL LEVERAGED FINANCE CONFERENCE OCTOBER 4, 2017 Real Alloy Real Industry, Inc. 17 State Street, Suite 3811, New York, NY Real Alloy 3700 Park East Dr., Suite 300, Beachwood, OH

2 CAUTIONS ABOUT FORWARD-LOOKING STATEMENTS AND OTHER NOTICES Cautionary Statement Regarding Forward-Looking Statements. This presentation contains forward-looking statements, which are based on our current expectations, estimates, and projections about Real Industry, Inc. and its subsidiaries (the Company ) businesses and prospects, as well as management s beliefs, and certain assumptions made by management. Words such as anticipates, expects, intends, plans, believes, seeks, estimates, may, should, will and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. These statements include, but are not limited to, statements about: our financial results, including for the fiscal second quarter of 2017, as well as our expectations for future financial trends and performance of our business and our strategy in future periods including during fiscal 2017; our ability to take advantage of opportunities to acquire assets with upside potential; the expected benefits to the Company of the integration of Beck Aluminum Alloys into Real Alloy; future opportunistic investments; our evaluation of other potential M&A opportunities; our long-term outlook; our preparation for future market conditions; and any statements or assumptions underlying any of the foregoing. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such differences include, but are not limited to, changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity and scrap price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with Real Alloy s buy/sell business model; the impact of tariffs and trade regulations on our operations; the impact of any changes in U.S. or non-u.s. tax laws on our operations or the value of our net operating losses ( NOLs ); our ability to service, and the high leverage associated with, our indebtedness, and compliance with the terms of the indebtedness, including the restrictive covenants that constrain the operation of our business and the businesses of our subsidiaries; our ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in the Company s Forms 10-Q filed with the Securities and Exchange Commission ( SEC ) on May 10, 2017 and August 8, 2017 and Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC, which are available on our website at and onthe SEC website at Use of Non-GAAP Financial Measures. This presentation includes references to the non-gaap financial measures of segment earnings before interest, taxes, depreciation and amortization and, with certain additional adjustments ( Segment Adjusted EBITDA ). Management believes that Segment Adjusted EBITDA enhances the understanding of the financial performance of the operations of Real Alloy (and prior to its acquisition, the former Global Recycling and Specification Alloys business of Aleris Corporation, Aleris GRSA ) by investors and lenders. As a complement to financial measures recognized under GAAP, management believes that Segment Adjusted EBITDA assists investors who follow the practice of some investment analysts who adjust GAAP financial measures to exclude items that may obscure underlying performance and distort comparability. Because Segment Adjusted EBITDA is not a measure recognized under GAAP, it is not intended to be presented herein as a substitute for net earnings (loss) as an indicator of operating performance. Segment Adjusted EBITDA is the primary performance measurement used by our senior management and Board of Directors to evaluate segment operating results. A reconciliation to the GAAP equivalent of Segment Adjusted EBITDA, net earnings (loss), is provided herein at the Appendix, in our Forms 10-Q filed with the SEC on August 8, 2017, on our Form 10-K filed on March 13, 2017, and prior reports filed on Forms 10-Q, 10-K and 8-K. This Presentation includes trademarks, service marks and trade names owned by the Company and its affiliates, as well as other entities (used herein with or without the or TM symbols), which are the property of their respective owners. The Company has pending and registered trademark registrations for their trade names and logos in multiple jurisdictions. The use or display herein of other companies trade names, trademarks or service marks is not intended to imply a relationship with, or endorsement or sponsorship of the Company or its affiliates by, any other entity. This Presentation is not an offer to sell, nor a solicitation of an offer to buy, any securities of the Company. 2

3 COMPANY OVERVIEW

4 REAL INDUSTRY ORGANIZATION (NASDAQ: RELY) Holding company structure U.S. Federal NOLs of $916MM (as of 12/31/16) OPERATING SUBSIDIARY Global leader in third-party aluminum recycling LTM 6/30/17 Revenues $1.3BN and Segment Adjusted EBITDA (1) $59MM with $17MM in Q Drives business and growth strategy, and provides the following corporate services CEO/CFO services & Board governance SEC Reporting, Legal, Tax and Investor Relations Oversight of operating segments, including continuous improvement initiatives Management of legacy and discontinued operations Acquired in 2015 Independently financed with 10% $305MM Senior Secured Notes, Asset-Based Lending Facility and European Factoring Facility Led by autonomous management team Key Objectives Create a sustainably profitable enterprise by allocating capital to improve the value of existing businesses and execute accretive acquisitions with a disciplined approach to value and structure Drive stockholder value by diversifying cash flow from operations and focusing on earnings per share growth over time Assess risk-adjusted returns for all opportunities Corporate History Fremont files for Chapter 11 and is reorganized as Signature Group Holdings with NOLs retained Prepared for growth with $300MM shelf registration, reverse split and reincorporation Sold NABCO for $78MM (2.6x MoM); acquired Real Alloy for $525MM from Aleris Changed name to Real Industry; uplisted to NASDAQ; $700MM shelf registration (1) For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. New leadership team of Kyle Ross (CEO) and Mike Hobey (CFO) introduced Real Alloy acquires Beck Aluminum for $24MM 4

5 REAL ALLOY OVERVIEW Global leader in independent aluminum recycling with operations in North America and Europe Operates 21 aluminum-processing facilities in North America and 6 facilities in Europe Converts aluminum scrap and dross into reusable aluminum and specification alloys Customers are automotive OEMs and suppliers, rolling mills and extruders manufacturing products for automotive, food and beverage can, steel, aerospace, and other end-uses Post Falls Goodyear Monclova Mount Pleasant Saginaw Coldwater Mississauga Chicago Heights Rock Creek Elyria Macedonia Lebanon Wabash Friendly Morgantown Sapulpa Houston Geographic Footprint Loudon Steele Swansea Eidsväg Raudsand Deizisau (Stuttgart) Grevenbroich 2016A Volume by End Use (1) 2016A Volume by Region (1) Töging 30+ year operating history 300+ customers worldwide Management team with 180 years of combined industry experience Extrusions 3% Transportation 3% Other 9% Steel 7% Can Sheet/ Packaging 24% Automotive 54% Europe 32% North America 68% (1) All tonnage information is presented in metric tonnes. 2016A Volume: 1,157 tonnes 5

6 KEY REAL ALLOY HIGHLIGHTS 1 Business Model that Manages and Mitigates Commodity Risk 2 Full Suite of Aluminum Recycling Capabilities 3 Integrated Into Customer Supply Chains 4 High-Quality and Diversified Customer Base 5 Well Positioned to Benefit from Favorable Secular Trends 6 Proven Management with Significant Industry Experience 6

7 REAL ALLOY BUSINESS MODEL MANAGES AND MITIGATES COMMODITY RISK Two types of business models to serve customers Tolling Buy/Sell Processes aluminum scrap and by-product owned by customers No inventory ownership insulates from metal price risk and reduces working capital needs Charges a tolling or processing fee on a per pound or tonne volume basis Pass-through arrangements on energy and other costs Purchases aluminum scrap in the open market and sells the converted metal Rapid inventory turns (~12x/year) ensures minimal commodity price exposure Profitability driven by the scrap spread, i.e. the spread between finished alloy prices and scrap prices Europe buy/sell volume partially hedged LTM (1) 49% 51% 55% 53% 52% 51% Five-Year Average: 52% / 48% 51% 49% 45% 47% 48% 49% Greater than 60% of total annual volume protected against metal price fluctuations (1) As of 6/30/17. 7

8 FULL SUITE OF ALUMINUM RECYCLING CAPABILITIES Raw Materials / Scrap Types Requires Pre-Processing Turnings The excess from machine-cut aluminum, free of oil or steel Operations Pre-Processing Molten Just-in-time delivery of liquid metal Products Old and New Cast Used castings such as an engine block Twitch Dross Furnace Ready Post shredder scrap, generally automotive By-Products By-product of aluminum manufacturing and processing Shredding, drying and milling of aluminum scrap and byproducts Melting and Casting Rotary and reverberatory furnaces Sow Large ingots of aluminum ( lbs) Ingot Small ingots of aluminum (~30 lbs) Other Offerings Deox cones for steel manufacturing Fabricated products Magnesium recycling 8

9 INTEGRATED INTO CUSTOMER SUPPLY CHAINS Illustrative Operations Flow Aluminum Fabrication Chain Casting Rolling / Extrusion End-Products Ingot Scrap Scrap Casting Real Alloy s Integrated Recycling Value Chain Melting Pre- Processing Scrap Molten Competitive Advantage Value Proposition for Customers Impact to Real Alloy Close proximity to customers Just-in-time delivery Multiple facilities to support customers across broad geographies Operational expertise and scale bring higher efficiency and quality Maximize recovery of customers metal units in our tolling business (which is usually their lowest cost alternative) Blue-chip customer base of leading automotive OEMs, rolling mills, extruders and other manufacturers Average customer relationship spans more than 20 years 9

10 HIGH-QUALITY AND DIVERSIFIED CUSTOMER BASE Long-standing relationships with diverse customer base, including many blue-chip multinational companies No single customer accounted for >12% of total revenues in 2016 Close proximity to key customers and breadth of capabilities allow for closed-loop arrangements, maximizing utilization of customers metal Ability to deliver just-in-time molten metal for direct use in customers operations further integrates Real Alloy into customer supply chain Representative End Customers Chrysler 10

11 REAL ALLOY WELL POSITIONED TO BENEFIT FROM FAVORABLE SECULAR TRENDS In recent years, volume losses were driven by unfavorable market pricing dynamics, particularly for used beverage cans ( UBC ) vs. primary aluminum Now experiencing a reversal of this trend and restarting UBC processing operations Real Alloy expects to benefit from favorable secular trends that will drive increasing demand for secondary aluminum and increasing usage of aluminum in the automotive market Real Alloy participates directly or indirectly in the production of all key types of auto components that will see increased aluminum content Despite potential for declining auto builds in North America, overall aluminum use expected to increase given growth in aluminum content per vehicle Real Alloy Volume Over Time (thousands of tonnes) Strong Secondary Aluminum Demand (1) (Consumption CAGR from ) 3.4% Primary Aluminum Deliberate reduction in volume to improve profitability Rationalized unprofitable business, while increasing EBITDA 1,253 1,221 1,204 1, % Secondary Aluminum Aluminum Content per Vehicle (2) (pounds) Secular Change in Aluminum Auto Usage UBC tolling impacted by market pricing dynamics Now experiencing reversal of historical trend and restarting UBC processing operations (e.g. Morgantown facility) 1,157 1, LTM 6/30/17 Real Alloy North America Real Alloy Europe Changes in Aluminum per Car (3) (increase in pounds) Closure Sheet Body Sheet Body Vacuum Die Castings Body & Bumper Extrusions Chassis & Suspension Wheels, Steering & Brakes Engine & Transmission (11) Source: Company materials, industry research. (1) Per AME Group Q Aluminum Strategic Market Study. (2) Per Ducker Worldwide as of July Represents North American light vehicles. (3) Per WardsAuto. Compares 2015 to 2020E. 11

12 REAL ALLOY PROVEN MANAGEMENT WITH SIGNIFICANT INDUSTRY EXPERIENCE Exceptional management team with combined 180+ years of industry experience Successfully weathered 2009 recession with positive EBITDA Improved operational flexibility through targeted capex programs High-graded European business by introducing new high margin products (i.e. Piston Alloys) Right-sized footprint to lower fixed cost structure and improve utilization rates Qualified customers at multiple facilities to better manage utilization levels Terry Hogan President Randy Collins Vice President, Commercial, North America Russell Barr Executive Vice President & General Manager, Europe Chris Garisek Director, Treasury and FP&A North America Cathryn Griffin Vice President, Legal Gaylord Seemann Vice President, Information Technology Director, Operations & Manufacturing, North America Director, Operations & Manufacturing, North America Director, Human Resources, North America Director, Operations & Technology, Europe Director, Commercial Europe Director, Human Resources, Europe Director, Finance, Europe Director, Global Business Transformation Leader Corporate Controller North America # = Years of aluminum industry experience # = Company tenure 12

13 REAL ALLOY MARKET DYNAMICS

14 BUY/SELL BUSINESS MARGIN DRIVERS Buy/sell margins are impacted by scrap spreads the difference between the price of metal sold and cost of the scrap to produce it Wrought Alloy & High Purity Cast Alloy Prices Real Alloy North America London Metal Exchange cash official price of primary aluminum ( LME ), plus Midwest Premium approximates the cost of freight and handling to ship aluminum from LME warehouses to the mid-western US ( MWP ) LME, plus Real Alloy Europe Duty paid Rotterdam premium, European equivalent of MWP ( Rotterdam ) Automotive Casters - Standard Casting Alloy Prices Platts Metals Week 380 index, which tracks common aluminum alloy used in casting automotive parts in the US ( MW380 ) Metal Bulletin 226, which tracks common aluminum alloy used in casting automotive parts in Europe ( MB226 ) Scrap Prices Platts tracks pricing for high-volume scrap materials No relevant market pricing published Scrap Spread Difference between the price of the metal sold and the cost of the raw material to make it Difference between LME + Rotterdam / MB226 and average scrap price Note: Metal indices are only meant to serve as a directional indication of Real Alloy s cost of scrap and realized prices. 14

15 ALUMINUM SCRAP DYNAMICS North American scrap spreads have significantly rebounded since reaching cycle lows in 2016 and are approaching the five-year average Given pricing structure of customer agreements, there is generally a lag between changes in scrap spreads and the financial impact; anticipate the improved scrap margin environment to continue to be felt in the second half of 2017 In Europe, the market environment has been favorable, leading to higher scrap spreads year-over-year North American and European scrap spreads are not generally correlated and can provide for more stable performance $850 North American Scrap Spreads ($/tonne) (1) $750 $650 $550 $637 $622 $450 Jun-12 Apr-13 Feb-14 Dec-14 Oct-15 Aug-16 Jun-17 Scrap Spread 5-Year Average Source: Platts. (1) Scrap spread is the difference between the Platts MW380 price less the arithmetic average of the Platts price for three types of scrap (twitch, cast and turnings) that are a component of Real Alloy North America s scrap input mix ( Average Scrap Price ). The Average Scrap Price is only meant to serve as a direction indication of scrap prices and does not represent Real Alloy s actual scrap mix or margins. 15

16 RECENT ALUMINUM MARKET PERFORMANCE North America Market Prices ($/tonne) Europe Market Prices ( /tonne) $2,700 2,200 $2,275 1,900 $1,850 1,600 $1,425 1,300 $1,000 1,000 LME MW380 LME + MWP Average Scrap Price As of June 30, 2017 YTD Avg. LTM Avg. 5-Year Avg. LME $1,880 $1,773 $1,781 LME + MWP 2,087 1,953 2,055 MW380 1,975 1,900 2,135 Avg. Scrap Price 1,392 1,344 1,498 Source: Platts (North America), MetalPrices (Europe). LME LME + Rotterdam MB226 As of June 30, 2017 YTD Avg. LTM Avg. 5-Year Avg. LME 1,736 1,628 1,490 LME + Rotterdam 1,877 1,757 1,701 MB226 1,775 1,692 1,762 16

17 REAL ALLOY FINANCIAL UPDATE

18 REAL ALLOY Q OVERVIEW Real Alloy overall performance reflected the improved North America scrap spread that had commenced in 1Q17 Volume decreased 1% from the prior quarter and from YOY Segment Adjusted EBITDA increased 40% from the prior quarter and decreased 18% YOY Solid liquidity position of $67 million Volume Invoiced (metric tonnes in thousands) Q16 2Q16 3Q16 4Q16 1Q17 2Q17 RANA RAEU Segment Adjusted EBITDA (1) ($ millions) $18.3 $20.9 $16.9 $17.2 $11.8 $12.3 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Segment Adjusted EBITDA per tonne ($/tonne) $63 $71 $58 $42 $42 $59 (1) For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. 18

19 REAL ALLOY NORTH AMERICA Increased sales in buy/sell business, driven by the Beck Acquisition and commercial efforts, offset reduced tolling volume, similar to 1Q17 Segment Adjusted EBITDA higher sequentially primarily due to scrap spreads and reduced SG&A; lower YOY due to volume, mix between tolling and buy/sell, and scrap spreads Capex spending continuing to be geared toward improving efficiency of facilities to benefit both employees and customers Capital Expenditures ($ millions) Volume Invoiced (metric tonnes in thousands) % 56% 56% 49% 44% 44% 2Q16 1Q17 2Q17 Tolling Segment Adjusted EBITDA (1) ($ millions) (2.3%) (0.9%) Buy/Sell (39.2%) $3.5 $2.4 $2.9 $14.3 $ % $8.7 2Q16 1Q17 2Q17 2Q16 1Q17 2Q17 Segment Adjusted EBITDA per tonne ($/tonne) $72 $32 $45 (1) For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. 19

20 REAL ALLOY EUROPE Volume and mix between tolling and buy/sell business remained similar YOY Delivered highest Segment Adjusted EBITDA in gross USD since fiscal year 2011 Performance driven by strong scrap spread environment in Europe and favorable product mix Volume Invoiced (metric tonnes in thousands) 0.5% (0.1%) % 47% 44% 56% 53% 56% 2Q16 1Q17 2Q17 Tolling Buy/Sell Capital Expenditures ($ millions) Segment Adjusted EBITDA (1) ($ millions) 28.8% 41.7% $8.5 $2.3 $3.2 $2.0 $6.6 $6.0 2Q16 1Q17 2Q17 2Q16 1Q17 2Q17 Segment Adjusted EBITDA per tonne ($/tonne) $70 $63 $89 (1) For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. 20

21 REAL ALLOY (1) HISTORICAL FINANCIAL SUMMARY Volume Invoiced (metric tonnes in thousands) 1,253 1,221 1,204 1,203 1,157 1, $1,549 $1,499 $1, Segment Revenue (2) ($ millions) 2,019 1,846 1,866 1,651 1,604 1,773 $1, $1,250 $1, LTM 6/30/17 Real Alloy North America Real Alloy Europe Segment Capital Expenditures (2) ($ millions) LTM 6/30/17 Real Alloy North America Real Alloy Europe Average LME Al Price (3) Segment Adjusted EBITDA (4) ($ millions) $56 $37 $35 $32 $31 $30 Maintenance Capex Range of $22-27MM $69 $ $88 73 $82 68 $68 59 $ LTM 6/30/ LTM 6/30/17 Segment Adj. EBITDA Segment Adj. EBITDA per Tonne Note: Numbers may not add due to rounding. (1) Financial data prior to 2015 is of Aleris GRSA. (2) Differences between segment totals and consolidated totals are included in Corporate and Other. (3) LME pricing presented on a per metric tonne basis. (4) Financial data prior to 2015 is before any estimated standalone impact. For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. 21

22 CURRENT CAPITALIZATION AND LIQUIDITY New $110 million Asset-Based Facility closed March 14, 2017; improved pricing, terms and flexibility ($ millions) As of June 30, 2017 Real Alloy Cash $ 14.0 Availability under Revolving Credit Facility 31.1 Availability under Factoring Facility 21.8 Liquidity $ 66.9 Revolving Credit Facility $ 76.0 Senior Secured Notes due Capital Leases 7.4 Total Debt $ Segment Adjusted LTM EBITDA (1) $ 58.2 Segment Adjusted Average EBITDA from 2013 to 2016 (1,2) $ 76.7 Total Debt / Segment Adjusted LTM EBITDA 6.7x Total Debt / Segment Adjusted Average EBITDA from 2013 to x (1) For the reconciliation of Segment Adjusted EBITDA to net income (loss), the nearest GAAP measure, please see Appendix. (2) Represents the arithmetic average of Segment Adjusted EBITDA from fiscal years 2013 to

23 CONCLUSION

24 SUMMARY Ongoing focus on executable investment opportunities at Real Industry and Real Alloy that maximize stockholder value Scrap spreads in North America expected to remain stable Third quarter typically impacted by seasonal customer shutdowns Continuing to explore options to refinance the Senior Secured Notes due

25 APPENDIX

26 2Q 2017 FINANCIAL STATEMENTS Unaudited Condensed Consolidated Balance Sheets June 30, December 31, (In millions, except share and per share amounts) ASSETS Current assets: Cash and cash equivalents $ 18.4 $ 27.2 Trade accounts receivable, net Financing receivable Inventories Prepaid expenses, supplies and other current assets Total current assets Property, plant and equipment, net Equity method investment Identifiable intangible assets, net Goodwill Other noncurrent assets TOTAL ASSETS $ $ LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Trade payables $ $ Accrued liabilities Long-term debt due within one year Total current liabilities Accrued pension benefits Environmental liabilities Long-term debt, net Common stock warrant liability Deferred income taxes, net Other noncurrent liabilities TOTAL LIABILITIES Redeemable Preferred Stock Stockholders' equity: Preferred stock Additional paid-in capital Accumulated deficit (524.0) (506.2) Treasury stock Accumulated other comprehensive loss (1.4) (7.1) Total stockholders' equity Real Industry, Inc Noncontrolling interest TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY $ $

27 2Q 2017 FINANCIAL STATEMENTS CONT D Unaudited Condensed Consolidated Statements of Operations Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share amounts) Revenues $ $ $ $ Cost of sales Gross profit Selling, general and administrative expenses Losses (gains) on derivative financial instruments, net 0.6 (1.5) 1.7 (0.3) Amortization of identifiable intangible assets Other operating expense, net Operating profit Nonoperating expense (income): Interest expense, net Change in fair value of common stock warrant liability 0.2 (1.3) (2.3) (0.7) Loss (income) from equity method investment 0.5 (0.6) Foreign exchange losses (gains) on intercompany loans (1.4) 1.6 (2.2) (1.0) Other, net (0.2) 0.3 (0.2) Total nonoperating expense, net Loss from continuing operations before income taxes (5.1) (1.1) (15.6) (10.4) Income tax expense Loss from continuing operations (6.2) (1.3) (17.5) (11.3) Earnings from discontinued operations, net of income taxes Net loss (6.2) (1.2) (17.5) (11.2) Earnings from continuing operations attributable to noncontrolling interest Net loss attributable to Real Industry, Inc. $ (6.5) $ (1.5) $ (17.9) $ (11.6) LOSS PER SHARE Net loss attributable to Real Industry, Inc. $ (6.5) $ (1.5) $ (17.9) $ (11.6) Dividends on Redeemable Preferred Stock, in-kind (0.5) (0.9) Dividends on Redeemable Preferred Stock, in cash or accrued (0.5) (1.1) Accretion of fair value adjustment to Redeemable Preferred Stock (0.3) (0.2) (0.5) (0.5) Net loss available to common stockholders $ (7.3) $ (2.2) $ (19.5) $ (13.0) Basic and diluted loss per share: Continuing operations $ (0.25) $ (0.08) $ (0.67) $ (0.43) Discontinued operations 0.01 Basic and diluted loss per share $ (0.25) $ (0.07) $ (0.67) $ (0.43) 27

28 SEGMENT ADJUSTED EBITDA RECONCILIATION TO REAL INDUSTRY NET LOSS Three Months Ended (In millions) Jun-17 Mar-17 Dec-16 Sep-16 Jun-16 Segment Adjusted EBITDA $ 17.2 $ 12.3 $ 11.8 $ 16.9 $ 20.9 Unrealized gains (losses) on derivative financial instruments (0.1) (0.2) 0.1 (0.6) 1.9 Segment depreciation and amortization (10.1) (11.5) (11.9) (11.3) (10.6) Amortization of inventories and supplies purchase accounting adjustments (0.2) (0.3) Corporate and Other selling, general and administrative expenses (2.5) (3.2) (3.1) (7.5) (3.6) Goodwill impairment (61.8) Other, net (0.7) (1.0) (2.1) (1.0) (0.2) Operating profit (loss) 3.8 (3.6) (67.2) (3.5) 8.1 Interest expense, net (9.6) (11.0) (9.8) (9.2) (9.1) Change in fair value of common stock warrant liability (0.2) 2.5 (0.2) Acquisition-related costs and expenses (1.0) Foreign exchange gains (losses) on intercompany loans (3.4) (1.6) Income (loss) from equity method investment (0.5) 1.1 (1.1) Other nonoperating expense, net (0.3) 0.6 (0.5) 0.2 Income tax benefit (expense) (1.1) (0.8) (0.2) Earnings (loss) from discontinued operations, net of income taxes Net loss $ (6.2) $ (11.3) $ (80.6) $ (10.8) $ (1.2) 28

29 RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO NET EARNINGS (LOSS) ($ millions) Note: Financial data from 2012 through 2014 is of the former Global Recycling and Specification Alloys business of Aleris Corporation ("GRSA"), is before any estimated standalone impact, and reconciles GRSA Adjusted EBITDA to Net income attributable to Aleris. Financial data from 2015 is of GRSA through the approximate two months period ended February 26, 2015 and the data of Real Alloy through the approximate 10 months period ended December 31, 2015, and Segment Adjusted EBITDA reconciles to each entities' respective Net income (loss). Financial data from 2016 onward is of Real Alloy and Segment Adjusted EBITDA reconciles to Real Industry Net income (loss). For relevant footnotes, see our Form 10-Q filed with the Securities and Exchange Commission ("SEC") on August 8, 2017 and Form 10-K filed with the SEC on March 13, 2017 for the fiscal year ended December 31, 2016 and six months ended June 30, 2017 and June 30, 2016, our standalone audited financial statements for the fiscal year ended December 31, 2015 filed with the SEC on form 8-K dated August 9, 2016, for fiscal years ended December 31, 2014, 2013 and 2012 our Form 8-K filed with the SEC on dated June 29, Mo Mo LTM 6/30/17 Net earnings (loss) $26.4 $19.0 $29.3 ($27.2) ($102.6) ($11.2) ($17.5) ($108.9) Interest expense, net Provision for income taxes (0.6) Depreciation and amortization EBITDA $ 54.1 $44.9 $56.0 $53.4 ($17.4) $33.3 $26.5 ($24.2) Goodwill impairment Real Industry Corporate and Other selling, general and administrative expenses Change in fair value of common stock warrant liability (2.4) (0.7) (2.3) (4.0) Loss from equity method investment (0.6) 0.5 Earnings (loss) from discontinued operations, net of income taxes (0.6) (0.1) - (0.5) Other nonoperating income, net (0.3) (0.2) Acquisition-related costs and expenses Amortization of purchase accounting adjustments Foreign exchange (gains) losses on intercompany loans (1.0) (2.2) 1.2 Unrealized losses (gains) on derivatives (1.5) (0.8) 2.6 (0.6) (1.0) (1.5) Earnings attributable to non-controlling interest Loss on disposal of assets Share-based compensation expense SG&A allocated from Aleris not directly associated with GRSA Management Fees from Real Industry Restructuring charges Excluded entities/facilities (3.6) (3.3) Medical expense adjustment Extreme winter weather Other (0.8) Segment Adjusted EBITDA $68.9 $69.5 $87.6 $81.8 $67.9 $39.2 $29.5 $