PNC METALS INDUSTRY UPDATE

Transcription

1 FOURTH QUARTER 2017 PNC METALS INDUSTRY UPDATE IN THIS ISSUE Mills See Substantial Improvement in Their Financial Condition 1 Most Pricing Firms Up During Quarter 5 Pricing for Public Notes and Bonds 6 Syndicated Bank Loan Financing 8 FOR MORE INFORMATION Contact the PNC Metals Group: David B. Gookin Executive Vice President Metals Group Diversified Ind. PNC Financial Services Group One North Franklin Street Suite 2500 Chicago, Illinois Phone: Cell: david.gookin@ James O Brien Vice President Metals Group Diversified Ind. PNC Financial Services Group Three PNC Plaza Floor Fifth Avenue Pittsburgh, PA Phone: Cell: james.obrien@ Welcome to Issue #18 of the PNC Metals Industry Update. Forecasts are always challenging. While our cover story comes up a bit short as a robust forecast, it does try to lay the groundwork for why we can be optimistic for The cover story makes the case that the improving financial condition of essentially every major U.S. mill creates a solid foundation for the coming year. The remainder of the update includes our regular sections on metals pricing, public notes and syndicated loans. A quick read of these sections will tell the story of flat prices and active public debt and syndicated loan markets. Thank you for being a reader of our update. We try to focus on quality over quantity and sprinkle in a few original thoughts along the way. As always, we appreciate your input as we strive to keep this a useful tool for your day-to-day business needs. MILLS SEE SUBSTANTIAL IMPROVEMENT IN THEIR FINANCIAL CONDITION It is our opinion that for metals market conditions to be healthy, it is necessary for the mills to be in good financial condition. The financial condition of the major mills is better today than it has been for many years. This article presents a snapshot of most of the publicly traded U.S. mills and then touches on a few of the foreign-owned players (article content limits prevent us from covering everyone). All these mills have taken specific strategic actions to improve their business. Despite imports having an unusually high share of the current market, almost every major domestic producer is anticipating improving performance. While predicting metals markets is always a challenge, we do believe the mills improved financial strength supports a positive outlook for AK Steel (AKS) AK Steel has reconfigured its operating profile: idling the Ashland blast furnace and reducing exposure to 300 series stainless and carbon HRC spot markets. In addition, the company has taken steps to improve the balance sheet by issuing equity and extending debt maturities. Many of AKS s initiatives have focused on achieving a leadership position in their automotive clients light-weighting solutions. These include a $36 million investment in a new Research and Innovation Center, significant capital investments in AK Dearborn, and the $360 million acquisition of Precision Partners. These strategies have helped to drive improved financial performance with reported positive net income in four of the trailing five quarters and total liquidity at 6/30/17 of $1.4 billion. Alcoa (AA) While most of this article focuses on steel, the performance of Alcoa since being separated from Arconic is certainly worthy of a few words. Alcoa has embraced its new position as a global leader in a commodity business. Profitability has returned. Free cash flow has expanded. Net debt is down to $500 million. Moody s upgraded their credit rating to Ba2. AA s post-separation share price has more than doubled.

2 PNC METALS INDUSTRY UPDATE 2 MILLS SEE SUBSTANTIAL IMPROVEMENT (Continued) Allegheny Technologies (ATI) Following a period of extensive capital investment including more than $1 billion in Brackenridge, ATI spent much of 2015 and 2016 adjusting its operating footprint. This includes permanent idling of Midland (commodity stainless sheet) and Bagdad (grain-oriented electrical steels) and the temporary idling of Rowley (TI sponge). At the same time, ATI has made great strides in commissioning its new stateof-the-art hot-rolling facility in Brackenridge. Finally, the High Performance Materials & Components (HPMC) segment is wellpositioned with significant content growth on the latest generation of commercial jet engines. These actions have translated into six consecutive quarters of improving operating earnings at HPMC and positive operating profit for Flat-Rolled Products in Q1 and Q2. Equity investors have recognized this progress, as the company s share price has almost doubled ($25.16 on October 4) from the low of one year ago. Carpenter Technology (CRS) During fiscal year 2012, CRS made two very significant strategic decisions. One was the construction of a new plant in Athens, Alabama, which included the largest rotary forge press in North America and 27,000 tons of premium alloy production capacity. The cost of the plant was estimated at $500 million. The other decision was the acquisition of Latrobe Specialty Metals for $427 million. This acquisition significantly expanded and enriched CRS s product capability. In the medium term, neither of these investments has helped to deliver sustained earnings growth. Earnings did expand in FY 2013 to $146 million, but then declined each subsequent year until bottoming in FY 2016 at $11.3 million. Since then, new management and improved market conditions have put earnings back on a growth trajectory. FY 2017 reported earnings of $47 million. Analysts consensus estimates are looking for earnings to grow to $99 million in FY The continued expansion in demand from commercial aerospace (aero-engine in particular) could prove to be the silver lining for the investments in Latrobe and Athens. Commercial Metals Company (CMC) For the past several years, CMC has been repositioning the company to focus on its core steel-making assets in the United States and Poland. Some non-core businesses have already been divested, including Howell Metal and the Australian marketing and distribution assets. More recently, CMC completed the sale of Cometals International. Still available for sale is Cometals Steel. All these businesses have had volatile earnings and have been working capital hogs that dilute the overall business s return on invested capital. During the same time, CMC has invested in its core business with a complete upgrade of Poland s melt shop and tuck-in acquisitions to improve recycling and fabrication, and the new micro-mill in Oklahoma is strengthening CMC position in the rebar market. While taking these strategic actions, CMC made progress on improving the balance sheet reducing $342 million in trade LCs and long-term debt over the past three years and extending the remaining debt maturities. CMC s businesses are well-positioned to expand overall returns in the coming years. Nucor Nucor has a long history of enjoying the strongest credit rating of any steel producer in North America. This financial strength has allowed Nucor to reinvest in their business at levels not approached by any of its competitors. Since 2012, Nucor has made $2.34 billion in acquisitions and has spent $837 million in Low Risk & High Return capital projects. Over that same investment horizon, Nucor has increased balance sheet cash and short-term investments by more than $1 billion to $2.19 billion.

3 PNC METALS INDUSTRY UPDATE 3 MILLS SEE SUBSTANTIAL IMPROVEMENT (Continued) These factors have Nucor extremely wellpositioned (perhaps better than any other market participant) to capitalize on the market opportunities that will be available in 2018 and beyond. Steel Dynamics (SDI) SDI, over the past several years, has effectively executed a growth strategy with a long list of strategic acquisitions and well-executed capital investments. Heading the list is the acquisition of Severstal Columbus. This acquisition has been a real game changer. Following the acquisition, SDI has expanded the capabilities of that facility to align with the diversified product and customer base enjoyed at the Butler Flat Roll mill. Since the acquisition, EBITDA for SDI has more than doubled to more than $1.3 billion on an LTM basis at 6/30/2017. This growth in cash-generation capability has occurred while simultaneously improving the company s credit profile as evidenced by the recent upgrade from Moody s to Ba1. This combination of strong free cash flow and credit strength provides SDI maximum flexibility as the company considers strategic actions to continue their growth trajectory into TimkenSteel (TMST) On June 30, 2014, TMST became a new standalone publicly traded company, armed with the pending completion of the world s largest jumbo bloom vertical caster. TMST s future was shining bright. However, just beyond the horizon was the precipitous decline in the energy markets. Because of their product and customer mix, this decline hit TMST harder than many of the other mills. This resulted in eight straight quarters of losses, followed by a return to modest profitability in Q This return to profitability was possible in part due to OCTG billet sales produced on the new caster. Melt utilization percentage has increased from below 50, at the bottom, to the low 70s. This volume increase has helped to support a $40 per ton price increase. Better volume and higher prices are the right formula for improving results in the remainder of this year and into United States Steel (USS) Under the umbrella of the Carnegie Way, USS has taken multiple steps to adjust its operating footprint and improve the cashgenerating capability of the business. The blast furnace/bof at the Fairfield Works has been permanently idled. USS has downsized both seamless and welded tube capacity in the face of lower demand for OCTG. Billets are now being purchased from third parties to support the seamless tube business. The blast furnace at Granite City has been idled until market conditions support the reopening of that operation. At the same time, USS stayed focused on improving the balance sheet. New equity has been issued and long-term debt has been restructured. Today, there are no material debt repayments before All these activities (and many others not mentioned) have contributed significantly to USS returning to profitability. In Q2, USS reported net income of $261 million. The company shared an outlook for full-year net earnings of $300 million, which would make 2017 the first full year of positive net income since Liquidity at the end of Q was $3.3 billion, the highest level since the separation from Marathon Oil in This provides an important foundation as USS begins a period of elevated capital spending needed to execute its asset revitalization plan and prepares for the next step in the Carnegie Way, earning the right to grow. Universal Stainless & Alloy Products (USAP) In 2011, USAP acquired a new facility in North Jackson, Ohio. North Jackson gave USAP access to a 24-inch radial forge, more VAR capacity and a VIM furnace. This dramatically changed the profile of USAP s capabilities and opened up a new range of premium alloy products that were not previously part of their portfolio.

4 PNC METALS INDUSTRY UPDATE 4 MILLS SEE SUBSTANTIAL IMPROVEMENT (Continued) While the North Jackson facility did not prevent the company from feeling the impact of the drop in energy demand, the softness in demand for gas-fired turbines, the weakness in heavy equipment, the destocking activities of their distribution customers or the volatility in nickel prices, it did open new end markets within aerospace. So, as USAP prepares for 2018, it does so after posting net income in Q (its first since Q3 2014) and with premium products representing a record $6.8 million or 12% of Q2 sales. Liquidity is at the highest point since becoming an asset-based borrower. With plenty of capacity to support growing demand in the commercial aerospace end market, expectations are positive for Some Major Foreign-Owned U.S. Mills Public information is less clear on how the foreign-owned mills are performing, but their impact on the market is meaningful, so we will try to offer some insight here as well. The information tracks very closely to the publicly traded U.S. businesses. ArcelorMittal continues to transform its NA footprint. Long product operations have either been shuttered or sold. Investment continues in the most important operations, including the Calvert JV, Dofasco and Indiana Harbor. On a global basis, Action 2020 is taking hold. Profits are up and leverage as measured by net debt to LTM EBITDA at 6/30/2017 is down to 1.5X, the lowest level since In commodity stainless steel sheet, it has long been said that the market performs well when there are three or fewer domestic producers. Today, the market is primarily being supplied by North American Stainless (NAS) and Outokumpu. There has never been doubt about the ability of NAS to operate profitably, but now Outokumpo appears to have turned the corner in financial performance at the Culvert City Mill. The parent s Q2 earnings report reported the Americas six months Adjusted EBITDA of EUR 56 million. NLMK USA announced in late 2016 an $80 million investment for a new walking beam reheat furnace in Farrell, providing significant quality improvements and energy savings. The same press release forecasted a $29 million annual savings, which is significant when compared to the nine months 2016 EBITDA of $144 million. Further, the parent reported Q2 NLMK USA EBITDA margins of a very healthy 14%, providing evidence that the large spread for CRC and coated products is helping the financial results. NorthStar BlueScope has been owned 100% by BlueScope for just over two years. Not sure how performance can improve here since production is running at 100% of capacity and fiscal 2017 produced a record $348 million in EBITDA. The performance of Gerdau is a little less clear. It is widely understood that the company s U.S. assets are available for sale. Assets with this scale and market position (including SBQ, long products, fabrication and recycling) are not frequently available. Certainly how to maximize value from these assets will be a complex matter. Timing may be good because many industry players have the capacity to make a competitive offer. Predictions in metals are difficult. Regular Update readers may recall our guardedly optimistic prediction for the second half of 2015 that underestimated the breadth and depth of the decline in energy markets. Still, the relatively solid financial foundation that has been put in place by the U.S. mills should play an important role in producing healthy market conditions for 2018.

5 PNC METALS INDUSTRY UPDATE 5 MOST PRICING FIRMS UP DURING QUARTER During the quarter, most pricing generally moved up across the 18 products tracked by our metals product section. The exception was plate, which fell across all three products we track. Others stayed level: WFB, MBQ and P&T. As we enter the fourth quarter, there is quite a bit of uncertainty around scrap and carbon flat roll. Those prices have definitely moved down during October. Most other products seem to be continuing an upward-moving bias. METALS PRICING Carbon Flat-Rolled Steel $/NT Product July August September Hot-Rolled Cold-Rolled Galvanized Discrete Plate $/NT Product July August September A A514 1, AR400 1, Wide Flange Beam $/cwt. Size July August September 24"x12¾" "x6" MBQ $/cwt. Shape July August September 1" 1018 round Rebar $/cwt. Grade 60 Size July August September 16 mm - # SBQ $/cwt. 1 round Grade July August September HR 4140 Q&T Pipe & Tube $/NT Product July August September OCTG J55 1,050 1,050 1,050 Linepipe, ERW Aluminum $/lb Alloy July August September Stainless $/lb Cold-Rolled Coil Grade July August September Copper $/lb July August September Comex Avg Ferrous Scrap Prices $/GT Midwest Grade July August September No. 1 HMS Shredded Nickel $/lb July August September LME Avg The metals market price guide is courtesy of Sector3 Appraisals, Inc., provider of asset valuation and advisory services for ABL lenders, specializing in metals, chemicals and commodities. For more information, contact: Michael Dawson Editor, Market Research mdawson@sector3appraisals.com

6 PNC METALS INDUSTRY UPDATE 6 PRICING FOR PUBLIC NOTES AND BONDS Refinancing was the dominant theme during Q3. There were seven transactions completed during the quarter for $3 billion. Five of the deals involved tenders for near-term maturities and replaced that debt with 2025 maturities, all with lower coupons. Worthington was unique for the quarter and opportunistically put 15-year money on the balance at 4.3%. The other interesting deal was Big River Steel (BRS). BRS also hit the eight-year window, with investors getting 7.25% for this first-time issuer. Since then, this issue has appreciated nicely and last traded at $ on very little volume. For those who have refinancing opportunities remaining, you need to consider the rising rate environment and the uncertainty of the future deductibility of those higher rates. This may make this quarter s deals (which are listed below) look even more attractive. NEW ISSUE PRICING Issuer Amount Coupon Maturity Tendered Coupons Spread over UST Worthington Indus. $200,000, % 2032 N/A yr Cleveland Cliffs $575,000, % % 410 United States Steel $750,000, % %/6.875%/7.50% 471 AK Steel $280,000, % % 419 TMS International $250,000, % % 512 Big River Steel $600,000, % 2025 N/A 507 Steel Dynamics $350,000, % % 211 During the past quarter, yields have fallen for both the PNC IG and HY Metals Bond Indexes. This seems to be consistent with our views in the cover story. As you might expect, yields and spreads have moved more for HY than for IG. Both are at very attractive levels. METALS BOND INDEX* PNC IG Metals Bond Index PNC HY Metals Bond Index As of Date 10/13/2017 7/14/2017 Change 10/13/2017 7/14/2017 Change Members Effective Maturity (Years) Composite Rating BBB+ BBB+ none BB- B+ 1 Weighted Avg. Coupon 4.62% 4.62% 0.01% 6.67% 6.82% -0.15% Yield to Worst 3.09% 3.26% -0.17% 5.05% 5.51% -0.45% Option Adjusted Spread to Treasuries (bps) *Index members are market-value weighted. Source: Bloomberg

7 PNC METALS INDUSTRY UPDATE 7 METALS BOND UPDATE 10/13/2017 Issuance Date Issuer Amount Outstanding ($MM) Structure Moody's Rating S&P Rating Maturity Coupon Rate Price at Issuance Issuance Spread over Treasury Yield to Worst Interp. Spread (G-Spread) 7/14 Interp. Spread Δ in Spread (bps) %Δ in Spread Steel Mills 9/16/2014 AK Steel Corp $406.2 Sr Unsecured B3 B- 10/1/ % bps 2.976% 340 bps 362 bps -22 bps -6.1% 6/20/2016 AK Steel Corp $ st lien B1 BB- 7/15/ % bps 4.231% 288 bps 275 bps 13 bps 4.6% 6/1/2015 ArcelorMittal $324.2 Sr Unsecured Ba1 BB+ 6/1/ % bps 2.464% 91 bps 146 bps -55 bps -37.4% 2/28/2012 ArcelorMittal $659.2 Sr Unsecured Ba1 BB+ 2/25/ % bps 3.112% 131 bps 203 bps -71 bps -35.2% 6/1/2015 ArcelorMittal $500.0 Sr Unsecured Ba1 BB+ 6/1/ % bps 3.786% 163 bps 210 bps -47 bps -22.6% 3/7/2011 ArcelorMittal $629.0 Sr Unsecured Ba1 BB+ 3/1/ % bps 5.794% 315 bps 380 bps -65 bps -17.2% 5/20/2013 Commercial Metals Co $330.0 Sr Unsecured Ba2 BB+ 5/15/ % bps 3.837% 190 bps 256 bps -66 bps -25.9% 4/29/2014 GTL Trade Finance Inc $1,165.6 Sr Unsecured Ba3 BBB- 4/29/ % n/a 4.469% 241 bps 336 bps -95 bps -28.3% 4/16/2014 GTL Trade Finance Inc $500.0 Sr Unsecured Ba3 BBB- 4/16/ % bps 6.507% 378 bps 464 bps -87 bps -18.7% 12/3/2007 Nucor Corp $600.0 Sr Unsecured Baa1 A- 12/1/ % bps 1.705% 73 bps 70 bps 3 bps 4.3% 6/2/2008 Nucor Corp $500.0 Sr Unsecured Baa1 A- 6/1/ % bps 1.933% 74 bps 62 bps 12 bps 19.0% 9/21/2010 Nucor Corp $600.0 Sr Unsecured Baa1 A- 9/15/ % bps 2.500% 65 bps 73 bps -9 bps -12.1% 7/29/2013 Nucor Corp $500.0 Sr Unsecured Baa1 A- 8/1/ % bps 2.756% 80 bps 82 bps -2 bps -3.0% 12/3/2007 Nucor Corp $650.0 Sr Unsecured Baa1 A- 12/1/ % bps 4.097% 155 bps 165 bps -10 bps -5.9% 7/29/2013 Nucor Corp $500.0 Sr Unsecured Baa1 A- 8/1/ % bps 4.047% 135 bps 141 bps -6 bps -4.0% 9/9/2014 Steel Dynamics Inc $500.0 Sr Unsecured Ba1 BB+ 10/1/ % bps 3.018% 159 bps 161 bps -2 bps -1.4% 3/19/2010 United States Steel Corp $431.8 Sr Unsecured Caa1 B 4/1/ % bps 3.376% 184 bps 273 bps -88 bps -32.3% 5/10/2016 United States Steel Corp $ st lien B1 BB- 7/1/ % bps 2.732% 168 bps 252 bps -84 bps -33.4% 5/21/2007 United States Steel Corp $350.0 Sr Unsecured Caa1 B 6/1/ % bps 6.936% 437 bps 500 bps -62 bps -12.5% Distribution 4/12/2013 Reliance Steel & Aluminum Co $500.0 Sr Unsecured Baa3 BBB 4/15/ % bps 3.085% 117 bps 132 bps -15 bps -11.5% 11/20/2006 Reliance Steel & Aluminum Co $250.0 Sr Unsecured Baa3 BBB 11/15/ % bps 5.184% 266 bps 277 bps -11 bps -4.1% 5/24/2016 Joseph T Ryerson & Son Inc $ st lien Caa1 B 5/15/ % bps 6.076% 489 bps 469 bps 20 bps 4.3% 4/13/2010 Worthington Industries Inc $150.0 Sr Unsecured Baa3 BBB 4/15/ % bps 2.510% 99 bps 111 bps -11 bps -10.4% 4/15/2014 Worthington Industries Inc $250.0 Sr Unsecured Baa3 BBB 4/15/ % bps 3.897% 169 bps 189 bps -20 bps -10.7% Specialty 2/23/2007 Arconic Inc $500.0 Sr Unsecured Ba2 BBB- 2/23/ % n/a n/a 2.107% 82 bps 130 bps -49 bps -37.5% 4/21/2011 Arconic Inc $1,250.0 Sr Unsecured Ba2 BBB- 4/15/ % bps 3.007% 134 bps 196 bps -63 bps -31.9% 2/23/2007 Arconic Inc $627.2 Sr Unsecured Ba2 BBB- 2/23/ % n/a n/a 3.472% 168 bps 198 bps -31 bps -15.4% 1/25/2007 Arconic Inc $625.0 Sr Unsecured Ba2 BBB- 2/1/ % bps 5.377% 282 bps 338 bps -56 bps -16.6% 9/27/2016 Alcoa Nederland Holding BV $750.0 Sr Unsecured Ba2 BB- 9/30/ % bps 3.417% 200 bps 259 bps -59 bps -22.9% 9/22/2014 Arconic Inc $1,250.0 Sr Unsecured Ba2 BBB- 10/1/ % bps 3.934% 183 bps 221 bps -37 bps -16.9% 9/27/2016 Alcoa Nederland Holding BV $500.0 Sr Unsecured Ba2 BB- 9/30/ % bps 4.040% 235 bps 293 bps -58 bps -19.7% 6/1/2009 Allegheny Technologies Inc $350.0 Sr Unsecured B3 B 6/1/ % bps 3.262% 199 bps 377 bps -178 bps -47.2% 7/12/2013 Allegheny Technologies Inc $500.0 Sr Unsecured B3 B 8/15/ % bps 5.778% 380 bps 504 bps -125 bps -24.7% 6/30/2011 Carpenter Technology Corp $250.0 Sr Unsecured Ba2 BBB- 7/15/ % bps 3.632% 205 bps 241 bps -37 bps -15.3% 2/26/2013 Carpenter Technology Corp $300.0 Sr Unsecured Ba2 BBB- 3/1/ % bps 3.767% 186 bps 214 bps -28 bps -13.2% 12/20/2012 Precision Castparts Corp $1,000.0 Sr Unsecured A2 AA- 1/15/ % bps 1.501% 45 bps 33 bps 12 bps 36.6% 6/10/2015 Precision Castparts Corp $550.0 Sr Unsecured A2 AA- 6/15/ % bps 1.838% 28 bps 27 bps 1 bps 2.1% 12/20/2012 Precision Castparts Corp $1,000.0 Sr Unsecured A2 AA- 1/15/ % bps 2.367% 44 bps 56 bps -12 bps -22.1% 6/10/2015 Precision Castparts Corp $850.0 Sr Unsecured A2 AA- 6/15/ % bps 2.793% 64 bps 71 bps -7 bps -10.2% 6/10/2015 Precision Castparts Corp $275.0 Sr Unsecured A2 AA- 6/15/ % bps 3.720% 124 bps 132 bps -8 bps -5.9% 12/20/2012 Precision Castparts Corp $500.0 Sr Unsecured A2 AA- 1/15/ % bps 3.727% 104 bps 115 bps -11 bps -9.4% 6/10/2015 Precision Castparts Corp $325.0 Sr Unsecured A2 AA- 6/15/ % bps 3.723% 98 bps 112 bps -14 bps -12.4% 6/3/2014 Triumph Group Inc $300.0 Sr Unsecured B3 B- 6/1/ % bps 5.521% 373 bps 350 bps 23 bps 6.6% Pipe & Tube 8/29/2016 Novelis Corp $1,150.0 Sr Unsecured B2 B 8/15/ % bps 4.919% 303 bps 294 bps 9 bps 3.1% 9/14/2016 Novelis Corp $1,500.0 Sr Unsecured B2 B 9/30/ % bps 5.372% 323 bps 298 bps 25 bps 8.5% 6/14/2016 Zekelman Industries Inc $375.0 Secured Caa1 B 6/15/ % bps 4.482% 326 bps 404 bps -79 bps -19.5% Suppliers 11/20/2012 GrafTech International Ltd $300.0 Sr Unsecured Caa2 CCC+ 11/15/ % bps 7.333% 586 bps 914 bps -328 bps -35.9% 10/16/2013 TMS International Corp $32.2 Sr Unsecured Caa1 B 10/15/ % bps 7.088% 601 bps 499 bps 102 bps 20.4% *+/*- Indicates ratings currently on review for upgrade/downgrade Source: Bloomberg

8 PNC METALS INDUSTRY UPDATE 8 SYNDICATED BANK LOAN FINANCING Syndicated bank loan activity remained consistent with the prior quarter. There was a total of 13 deals for $6.16 billion in Q3 compared to 13 deals for $6.45 billion in Q2. ABL Revolvers dominated the financing with seven deals for a total of $3.7 billion (AK Steel - $1.35 billion and Novelis - $1 billion were the largest). B Loans was the next largest category with four deals totaling $2 billion (Zekelman - $916 million, Big River Steel - $400 million, Global Brass & Copper - $318 million, MRC Global - $400 million). Highlighted below are details from a few of the past quarter s more interesting deals. This newsletter was prepared for general information purposes only and is not intended as legal, tax or accounting advice or as recommendations to engage in any specific transaction, including with respect to any securities of PNC, and does not purport to be comprehensive. Under no circumstances should any information contained in this newsletter be used or considered as an offer or commitment, or a solicitation of an offer or commitment, to participate in any particular transaction or strategy. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Neither PNC Bank nor any other subsidiary of The PNC Financial Services Group, Inc. will be responsible for any consequences of reliance upon any opinion or statement contained here, or any omission. The opinions expressed in this newsletter are not necessarily the opinions of PNC Bank or any of its affiliates, directors, officers or employees. PNC is a registered mark of The PNC Financial Services Group, Inc. ( PNC ) 2017 The PNC Financial Services Group, Inc. All rights reserved. CIB ENT PDF