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Novelis Inc.

05/19/2026 | Press release | Distributed by Public on 05/19/2026 11:44

Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW AND REFERENCES

Novelis is driven by its purpose of Shaping a Sustainable World Together. We consider ourselves the leading producer of innovative, sustainable aluminum solutions and the world's largest recycler of aluminum. Specifically, we believe we are the leading provider of low-carbon aluminum solutions, helping to drive a circular economy by partnering with our suppliers and customers in beverage packaging, automotive, aerospace and specialties (a diverse market including building and construction, signage, foil and packaging, commercial transportation and commercial and consumer products, among others) markets globally. Throughout North America, Europe, Asia, and South America, we have an integrated network of 29 world-class, technologically advanced facilities, including 15 recycling centers, 11 innovation centers, and 12,750 employees. Novelis is a subsidiary of Hindalco, an industry leader in aluminum and copper and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in Special Note Regarding Forward-Looking Statements and Market Data and Part I, Item 1A. Risk Factors.

Discussion and analysis of fiscal 2024 and year-over-year comparisons between fiscal 2025 and fiscal 2024 not included in this Form 10-K can be found in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the SEC on May 12, 2025. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Form 10-K.

BUSINESS AND INDUSTRY CLIMATE

Novelis has a proven track record of being able to transform and improve the profitability of our business through significant investment in new capacity and capabilities. These investments have enabled us to increase the amount of recycled content in our products in the aggregate over time and capitalize on favorable long-term market trends driving increased consumer demand for lightweight, sustainable aluminum products, and diversify and optimize our product portfolio. As a global leader in the aluminum flat-rolled products industry, we leveraged our new capacity, global footprint, scale and solid customer relationships to drive volumes and capture favorable supply and demand market dynamics across all our end-use markets. With growth in volumes combined with improved pricing, significant increase in scrap inputs, operational efficiencies and high-capacity utilization rates, we significantly improved the profitability of our beverage packaging and specialties products and maintained high margins for automotive and aerospace products.

While we believe that the underlying business performance and market conditions remain favorable, recent financial performance has been impacted by geopolitical and economic instability, including tariffs and trade disputes, that cause volatility and disruption in global and regional economies, as well as in global aluminum scrap markets and with scrap pricing. In addition, Novelis experienced two significant fire events at our Oswego, New York, plant in fiscal 2026.

On September 16, 2025, our Oswego plant was impacted by a significant fire. There were no injuries, as all employees were safely evacuated. The fire was contained to the hot mill area and did not impact the rest of the plant. A second significant fire occurred at the Oswego plant on November 20, 2025. Everyone working at the plant was safely evacuated and there were no injuries to employees, contractors or first responders. The fire was contained to the hot mills, finishing mill, and the hot mill motor room and did not impact the rest of the plant. Our current timeline suggests we can restart the Oswego hot mill by the end of the first quarter of fiscal 2027. We have incurred costs related to repairs, clean-up, idle employees, and other costs. We expect to incur additional costs related to this event until the operations are fully-restored at the facility. The plant is insured for property damage and business interruption losses related to such events, subject to deductibles and policy limits. See Note 18 - Other Expenses (Income), Net for additional information about this event.

We anticipate the September and November Oswego fires, in aggregate, will have a total negative cash flow impact of approximately $1.7 billion, which includes an anticipated Adjusted EBITDA impact of $100 to $150 million, prior to any insurance recoveries.

While tariff costs were a cost headwind in fiscal 2026, we believe these will be diminished as imports to support U.S. customers due to the Oswego outage are reduced, as well as by the access we have secured to additional U.S. cold rolling capacity, and through improved scrap prices. Since the end of fiscal 2025, certain spot scrap aluminum spreads have improved from previous historically tight levels, as competition from China has subsided. Regardless, Novelis continues to work on solutions to increase the amount and different types of scrap metal our systems are able to process, including sorting technologies and supply chain improvements, as market supply and demand dynamics can be unpredictable.

To further build resiliency in the business, at the end of fiscal 2025, the Company initiated actions to implement structural cost improvement and efficiency measures across our global operations to drive sustainable labor, operational and footprint efficiencies ("2025 Efficiency Plan"). This is a multi-year cost efficiency goal, with a target to achieve approximately $350 to $400 million in annualized savings by the end of fiscal 2028. We exited fiscal 2026 with over $200 million in run-rate cost savings. During fiscal 2026, we recognized costs of $163 million in connection with these measures consisting primarily of employee-related restructuring expenses and accelerated depreciation. See Note 2 - Restructuring and Impairment for further discussion.

Although the Company has faced a number of recent challenges, we believe we have largely mitigated the effects from those events, and the underlying business remains resilient. We have a line of sight to the Oswego hot mill restarting, have taken strategic action to largely mitigate tariff headwinds, are experiencing more favorable scrap market conditions, and have implemented sustainable cost savings to build long-term resilience in the business. We also believe that global long-term demand for aluminum rolled products remains strong, driven by anticipated economic growth, material substitution, and sustainability considerations, including increased environmental awareness around PET plastics.

Increasing customer preference for sustainable packaging options and package mix shift toward infinitely recyclable aluminum are driving higher demand for aluminum beverage packaging worldwide. To support growing demand for aluminum beverage packaging sheet in North America, we expect to commission the Bay Minette plant towards the end of this calendar year 2026. We plan to allocate approximately two-thirds of this plant's capacity to the production of beverage packaging sheet. We continue to evaluate opportunities for additional capacity expansion across regions, where local can sheet supply is insufficient to meet long-term demand growth.

We believe that long-term demand for aluminum automotive sheet will continue to grow, primarily driven by the benefits that result from using lightweight aluminum in vehicle structures and components, including lower emissions and better fuel economy, while maintaining or improving vehicle safety and performance. We are also seeing increased demand for aluminum for electric vehicles, as aluminum's lighter weight can result in extended battery range.

We expect long-term demand for building and construction and other specialty products to grow due to increased customer preference for lightweight, sustainable materials, and demand for aluminum plate in Asia to grow driven by the development and expansion of industries serving aerospace, rail, and other technically demanding applications.

Demand for aerospace aluminum plate and sheet also remains favorable due to strong OEM build rates, but their ability to produce has been constrained by OEM supply chain instability. In the longer-term, we believe significant aircraft industry order backlogs for key OEMs, including Airbus and Boeing, will translate into growth in the future and that our multi-year supply agreements have positioned us to benefit from future expected demand.

Organic Growth Investments

We believe the long-term demand trends for flat-rolled aluminum products remain strong. Through a previously announced, multi-year investment strategy to meet growing customer demand, we have recently completed several rolling debottlenecking and recycling investments. These included:

•a highly advanced automotive recycling center in Guthrie, Kentucky (U.S.) with 240 kt of casting capacity completed in fiscal 2025;

•a recycling and casting center at our UAL joint venture in South Korea, adding 100 kt of casting capacity, also completed in fiscal 2025;

•the completion in fiscal 2026 of a $50 million debottlenecking investment at our Pindamonhangaba, Brazil, plant to unlock approximately 70 kt of additional rolling capacity; and

•a $150 million debottlenecking investment to release 80 kt of finished good capacity in Logan, Kentucky, completed in fiscal 2026.

We have a few projects remaining under this investment strategy that are expected to commission in the second half of 2026. The largest of these investments is an approximately $5.0 billion greenfield, fully integrated rolling and recycling plant in Bay Minette, Alabama. We believe this new U.S. plant, expected to commission in fiscal 2027, will support strong demand for sustainable, beverage packaging and automotive aluminum sheet and advance a more circular economy.

We also are investing $90 million at our recycling center in Latchford, UK, to double its capacity to recycle used beverage cans, and $130 million at our Oswego, New York, plant to unlock 65 kt of rolling capacity. The Oswego expansion was planned to commission in fiscal 2026 but has been delayed due to recent plant fires.

Market Trends

Beverage Packaging. Beverage packaging shipments represent the largest percentage of our total rolled product shipments, and we believe demand for these products remains strong. According to management estimates, we believe demand for aluminum beverage packaging will increase at a global (excluding China) compound annual growth rate of approximately 4% from fiscal 2026 through fiscal 2031, mainly driven by sustainability trends; growth in beverage markets that increasingly use aluminum packaging; and substitution from plastic, glass, and steel.

Automotive. We believe aluminum is positioned for long-term growth driven by increased adoption of aluminum in vehicle structures and components of both traditional internal combustible engine (ICE) vehicles and electric vehicles, which utilize higher amounts of aluminum. Based on management estimates, we believe that global automotive aluminum sheet demand is set to grow at a compound annual growth rate of approximately 3-5% from fiscal 2026 to fiscal 2031.

Aerospace. Based on management estimates, we believe demand for aerospace aluminum plate and sheet is set to grow at a compound annual growth rate of approximately 4% from fiscal 2026 to fiscal 2031 driven by increased air traffic and a need for fleet modernization.

Specialties. Specialties includes diverse markets, including building and construction, commercial transportation, foil and packaging, and commercial and consumer products, and generally grow at GDP rates. These industries continue to increase aluminum adoption due to its many desirable characteristics. We believe these trends will keep demand high in the long-term, despite the near-term economic headwinds impacting demand for building and construction and some industrial products.

BUSINESS MODEL AND KEY CONCEPTS

Conversion Business Model

A significant amount of our business is conducted under a conversion model, which allows us to pass through increases or decreases in the price of aluminum to our customers. Nearly all of our flat-rolled products have a price structure with three components: (i) a base aluminum price quoted off the LME; (ii) an LMP; and (iii) a "conversion premium" to produce the rolled product that reflects, among other factors, the competitive market conditions for that product. Base aluminum prices are typically driven by macroeconomic factors and global supply and demand for aluminum. LMP tends to vary based on the supply and demand for metal in a particular region and the associated transportation and duty costs.

LME Base Aluminum Prices and Local Market Premiums

The average (based on the simple average of the monthly averages) and closing prices for aluminum set on the LME for fiscal 2026, fiscal 2025, and fiscal 2024 are as follows.


							Percent Change
	Fiscal 2026		Fiscal 2025		Fiscal 2024		Fiscal 2026 versus Fiscal 2025		Fiscal 2025 versus Fiscal 2024
Aluminum (per metric tonne, and presented in U.S. dollars):
Closing cash price as of beginning of period	$	2,519	$	2,270	$	2,337	11	%	(3)	%
Average cash price during period	2,772		2,526		2,202		10		15
Closing cash price as of end of period	3,585		2,519		2,270		42		11

For fiscal 2026, fiscal 2025, and fiscal 2024, the weighted average local market premium is as follows.


							Percent Change
	Fiscal 2026		Fiscal 2025		Fiscal 2024		Fiscal 2026 versus Fiscal 2025		Fiscal 2025 versus Fiscal 2024
Weighted average local market premium (per metric tonne, and presented in U.S. dollars)	$	895	$	367	$	304	144	%	21	%

Metal Price Lag and Related Hedging Activities

Increases or decreases in the price of aluminum based on the average LME base aluminum prices and LMPs directly impact net sales, cost of goods sold (exclusive of depreciation and amortization), and working capital. The timing of these impacts varies based on contractual arrangements with customers and metal suppliers in each region. These timing impacts are referred to as metal price lag. Metal price lag exists due to: (i) the period of time between the pricing of our purchase of metal, holding and processing the metal, and the pricing of the sale of finished inventory to our customers and (ii) certain customer contracts containing fixed forward price commitments, which result in exposure to changes in metal prices for the period of time between when our sales price fixes and the sale actually occurs.

We use LME aluminum forward contracts to preserve our conversion margins and manage the timing differences associated with the LME base metal component of net sales and cost of goods sold (exclusive of depreciation and amortization). These derivatives directly hedge the economic risk of future LME base metal price fluctuations to better match the purchase price of metal with the sales price of metal. We also use LMP forward contracts to manage our exposure to fluctuating LMP. Currently, we enter into Midwest Premium ("MWP") contracts in North America and South America and Europe Duty Premium contracts in Europe, though the derivative markets for local market premiums is not as robust or efficient enough for us to engage in a hedging program similar to the LME hedging program. From time to time, we take advantage of short-term market conditions to hedge some percentage of our exposure. As a consequence, volatility in local market premiums can have a significant impact on our results of operations and cash flows.

We elect to apply hedge accounting to better match the recognition of gains or losses on certain derivative instruments with the recognition of the underlying exposure being hedged in the statement of operations. For undesignated metal derivatives, there are timing differences between the recognition of unrealized gains or losses on the derivatives and the recognition of the underlying exposure in the statement of operations. The recognition of unrealized gains and losses on undesignated metal derivative positions typically precedes inventory cost recognition, customer delivery, and revenue recognition. The timing difference between the recognition of unrealized gains and losses on undesignated metal derivatives and cost or revenue recognition impacts income before income tax provision and net income.

Foreign Currency and Related Hedging Activities

We operate a global business and conduct business in various currencies around the world. We have exposure to foreign currency risk as fluctuations in foreign exchange rates impact our operating results as we translate the operating results from various functional currencies into our U.S. dollar reporting currency at current average rates. We also record foreign exchange remeasurement gains and losses when business transactions are denominated in currencies other than the functional currency of that operation. Global economic uncertainty is contributing to higher levels of volatility among the currency pairs in which we conduct business. The following table presents the exchange rates as of the end of each period and the average of the month-end exchange rates for fiscal 2026, fiscal 2025, and fiscal 2024.


	Exchange Rate as of March 31,			Average Exchange Rate
	2026	2025	2024	Fiscal 2026	Fiscal 2025	Fiscal 2024
Euro per U.S. dollar	0.868	0.926	0.926	0.861	0.932	0.922
Brazilian real per U.S. dollar	5.219	5.742	4.996	5.416	5.682	4.946
South Korean won per U.S. dollar	1,513	1,467	1,347	1,420	1,398	1,322
Canadian dollar per U.S. dollar	1.396	1.439	1.355	1.379	1.395	1.347
Swiss franc per euro	0.925	0.956	0.974	0.928	0.950	0.960

Exchange rate movements have an impact on our operating results. In Europe, where we have predominantly local currency selling prices and operating costs, we benefit as the euro strengthens but are adversely affected as the euro weakens. For our Swiss operations, where operating costs are incurred primarily in the Swiss franc and a large portion of revenues are denominated in the euro, we benefit as the Swiss franc weakens but are adversely affected as the franc strengthens. In South Korea, where we have local currency operating costs and U.S. dollar denominated selling prices for exports, we benefit as the South Korean won weakens but are adversely affected as the won strengthens. In Brazil, where we have predominately U.S. dollar selling prices and local currency manufacturing costs, we benefit as the Brazilian real weakens but are adversely affected as the real strengthens. We use foreign exchange forward contracts and cross-currency swaps to manage our exposure arising from recorded assets and liabilities, firm commitments, and forecasted cash flows denominated in currencies other than the functional currency of certain operations, which include capital expenditures and net investment in foreign subsidiaries.

See Segment Review below for the impact of foreign currency on each of our segments.

RESULTS OF OPERATIONS

For fiscal 2026, we reported net income attributable to our common shareholder of $15 million, a decrease of 98% compared to $683 million in fiscal 2025. Adjusted EBITDA was $1,645 million in fiscal 2026, a decrease of 9% from $1,802 million in fiscal 2025. The decrease in operational performance was primarily driven by lower shipments and unfavorable product mix related to the fires at the Oswego plant, less favorable metal benefit from lower recycled inputs compared to the prior year, and higher net tariffs. These headwinds were partially offset by higher product pricing, lower SG&A costs, and favorable foreign exchange rates. Net income attributable to our common shareholder for fiscal 2026 was further negatively impacted by recovery costs associated with the Oswego fires, net of the related insurance recoveries, restructuring charges, and Bay Minette plant start-up costs, partially offset by favorable movement in average LMP aluminum prices, and a decrease in charges associated with the Sierre flood.

Net cash used in operating activities - continuing operations was $193 million for fiscal 2026 and net cash provided by operating activities - continuing operations was $951 million for fiscal 2025, primarily driven by costs related to the September and November Oswego fires and sharply rising aluminum prices negatively impacting working capital during the current fiscal year. Adjusted free cash flow was an outflow of $2.4 billion for fiscal 2026. Refer to Non-GAAP Financial Measures for our definition of adjusted free cash flow.

Key Sales and Shipment Trends


	Three Months Ended												Fiscal Year Ended			Three Months Ended												Fiscal Year Ended
in millions, except shipments which are in kt	June 30, 2024			September 30, 2024			December 31, 2024			March 31, 2025			March 31, 2025			June 30, 2025			September 30, 2025			December 31, 2025			March 31, 2026			March 31, 2026
Net sales	$	4,187		$	4,295		$	4,080		$	4,587		$	17,149		$	4,717		$	4,744		$	4,186		$	4,787		$	18,434
Percentage change in net sales(1)	2		%	5		%	4		%	13		%	6		%	13		%	10		%	3		%	4		%	7		%
Rolled product shipments:
North America	388			396			360			375			1,519			389			369			283			302			1,343
Europe	263			233			226			265			987			262			261			262			284			1,069
Asia	194			198			186			201			779			215			222			189			230			856
South America	154			162			166			164			646			156			159			170			177			662
Eliminations	(48)			(44)			(34)			(48)			(174)			(59)			(70)			(95)			(149)			(373)
Total	951			945			904			957			3,757			963			941			809			844			3,557

The following summarizes the percentage increase (decrease) in rolled product shipments versus the comparable prior period:
North America	5		%	2		%	(1)		%	(4)		%	-		%	-		%	(7)		%	(21)		%	(19)		%	(12)		%
Europe	5			(9)			(2)			8			1			-			12			16			7			8
Asia	10			13			6			10			10			11			12			2			14			10
South America	29			13			(6)			-			7			1			(2)			2			8			2
Total	8		%	1		%	(1)		%	1		%	2		%	1		%	-		%	(11)		%	(12)		%	(5)		%

______________________

(1)The percentage (decrease) or increase in net sales versus the comparable previous year period

Fiscal 2026 Compared to Fiscal 2025

Net sales were $18.4 billion for fiscal 2026, an increase of 7% from $17.1 billion in fiscal 2025, primarily due to higher average aluminum prices driven by a 10% increase in average LME prices and a 144% increase in average LMP, partially offset by metal price hedging activities with an unfavorable period-on-period impact of $60 million.

Income before income tax provision was $16 million for fiscal 2026, a decrease of 98% from $842 million in fiscal 2025. In addition to the factors noted above, the following items affected the change in income before income tax provision.

Cost of Goods Sold (Exclusive of Depreciation and Amortization)

Cost of goods sold (exclusive of depreciation and amortization) was $15.6 billion for fiscal 2026, an increase of 8% from $14.5 billion in fiscal 2025, driven primarily by higher average aluminum prices, including both LME and LMP components. Total metal input costs included in cost of goods sold (exclusive of depreciation and amortization) increased $1.2 billion over fiscal 2025.

Selling, General and Administrative Expenses

SG&A was $697 million for fiscal 2026, which is in line with $695 million for fiscal 2025. The comparable annual expenses are primarily due to increased Bay Minette plant start-up costs, mostly offset by cost savings from the 2025 Efficiency Plan.

Depreciation and Amortization

Depreciation and amortization was $616 million for fiscal 2026, an increase of 7% compared to $575 million for fiscal 2025. The increase was primarily due to the commissioning of new capital expansion projects, most notably Bay Minette.

Interest Expense and Amortization of Debt Issuance Costs

Interest expense and amortization of debt issuance costs was $265 million for fiscal 2026 compared to $275 million for fiscal 2025. The decrease is primarily due to an increase in capitalized interest largely offset by an increase in interest expense due to a higher total debt balance.

Loss on Extinguishment of Debt, Net

Loss on extinguishment of debt, net was $3 million for fiscal 2026, compared to $7 million for fiscal 2025.

See Note 11 - Debt for further information.

Restructuring and Impairment, Net

Restructuring and impairment, net was $195 million in fiscal 2026. The increase is primarily driven by the charges of $163 million for the twelve months ended March 31, 2026 related to the 2025 Efficiency Plan.

Restructuring and impairment, net was $53 million in fiscal 2025. This is primarily due to the Company's closure of the Buckhannon, West Virginia plant in June 2024, which resulted in charges for restructuring activities of $21 million in the current period, as well as a charge of $17 million to write off previously capitalized costs.

See Note 2 - Restructuring and Impairment for further information.

Other (Income) Expenses, Net

Other expenses (income), net was an expense of $960 million for fiscal 2026 compared to an expense of $134 million for fiscal 2025. The change relates primarily to charges net of property insurance recoveries related to the September and November Oswego fires of $925 million with business interruption insurance recoveries of $12 million in the current period, property insurance recoveries net of charges related to the Sierre flood of $27 million and business interruption recoveries of $41 million in the current period compared to charges net of property insurance recoveries of $105 million and business interruption recoveries of $30 million in the prior year period. In fiscal 2026, there were unrealized losses on the change in fair value of derivative instruments, net, of $77 million in the current period compared to gains of $57 million in the prior year period, and realized losses on the change in fair value of derivative instruments, net, of $35 million in the current period compared to losses of $97 million in the prior year period.

Taxes

We recognized $1 million of income tax provision in fiscal 2026, which resulted in an effective tax rate of 6%. This rate was primarily driven by the results of operations taxed at foreign statutory rates that differ from the 25% Canadian rate, including withholding taxes; changes to the Brazilian real foreign exchange rate; change in valuation allowances; and the availability of tax credits. We recognized $159 million of income tax provision in fiscal 2025, which resulted in an effective tax rate of 19%. This rate was primarily driven by the results of operations taxed at foreign statutory tax rates that differ from the 25% Canadian tax rate, including withholding taxes; changes to the Brazilian real foreign exchange rate; changes in valuation allowances, including a $39 million benefit from the release of certain valuation allowances; and the availability of tax credits. See Note 19 - Income Taxes for further information.

Segment Review

Due in part to the regional nature of supply and demand of aluminum rolled products and in order to best serve our customers, we manage our activities on the basis of geographical regions and are organized under four operating segments: North America, Europe, Asia, and South America.

The tables below illustrate selected segment financial information (in millions, except shipments, which are in kt). For additional financial information related to our operating segments including the reconciliation of net income attributable to our common shareholder to Adjusted EBITDA, see Note 21 - Segment, Geographical Area, Major Customer and Major Supplier Information. In order to reconcile the financial information for the segments shown in the tables below to the relevant U.S. GAAP-based measures, "Eliminations and other" must adjust for proportional consolidation of each line item for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP purposes. However, we manage our Logan affiliate on a proportionately consolidated basis and eliminate intersegment shipments.


Selected Operating Results Fiscal 2026	North America		Europe		Asia		South America		Eliminations and other		Total
Net sales	$	7,932	$	5,272	$	3,430	$	2,861	$	(1,061)	$	18,434
Shipments (in kt):
Rolled products - third party	1,343		1,003		616		595		-		3,557
Rolled products - intersegment	-		66		240		67		(373)		-
Total rolled products	1,343		1,069		856		662		(373)		3,557
Non-rolled products	37		46		10		99		(18)		174
Total shipments	1,380		1,115		866		761		(391)		3,731


Selected Operating Results Fiscal 2025	North America		Europe		Asia		South America		Eliminations and other		Total
Net sales	$	7,033	$	4,606	$	3,047	$	2,683	$	(220)	$	17,149
Shipments (in kt):
Rolled products - third party	1,518		985		626		628		-		3,757
Rolled products - intersegment	1		2		153		18		(174)		-
Total rolled products	1,519		987		779		646		(174)		3,757
Non-rolled products	15		96		17		99		(12)		215
Total shipments	1,534		1,083		796		745		(186)		3,972

The following table reconciles changes in Adjusted EBITDA for fiscal 2025 to fiscal 2026 (in millions).


Changes in Adjusted EBITDA	North America		Europe		Asia		South America		Eliminations and other(1)		Total
Adjusted EBITDA - Fiscal 2025	$	640	$	306	$	347	$	504	$	5	$	1,802
Volume	(222)		112		78		17		(229)		(244)
Conversion premium and product mix	14		11		(73)		9		36		(3)
Conversion costs	3		(75)		(49)		(46)		190		23
Foreign exchange	3		26		12		19		-		60
Selling, general & administrative and research & development costs(2)	26		14		4		15		(2)		57
Other changes	(29)		(15)		(8)		3		(1)		(50)
Adjusted EBITDA - Fiscal 2026	$	435	$	379	$	311	$	521	$	(1)	$	1,645

_________________________

(1)The recognition of Adjusted EBITDA by a region on an intersegment shipment could occur in a period prior to the recognition of Adjusted EBITDA on a consolidated basis, depending on the timing of when the inventory is sold to a third-party customer. The "Eliminations and other" column adjusts regional Adjusted EBITDA for intersegment shipments that occur in a period prior to recognition of Adjusted EBITDA on a consolidated basis. The "Eliminations and other" column also reflects adjustments for changes in regional volume, conversion premium and product mix, and conversion costs related to intersegment shipments for consolidation. "Eliminations and other" must adjust for proportional consolidation of each line item for our Logan affiliate because we consolidate 100% of the Logan joint venture for U.S. GAAP, but we manage our Logan affiliate on a proportionately consolidated basis.

(2)Selling, general & administrative and research & development costs include costs incurred directly by each segment and all corporate related costs.

North America

Net sales increased $899 million, or 13%, driven primarily by higher average LME and LMP aluminum prices, partially offset by a 12% decrease in rolled product shipments. Shipments were down in all product end markets due to the production interruptions at Oswego. Adjusted EBITDA was $435 million, a decrease of 32%, primarily driven by the impact of lower shipments and unfavorable product mix resulting from the production interruptions at Oswego, higher net tariffs, and lower metal benefit from less favorable metal input mix, partially offset by higher product pricing and lower labor costs.

Europe

Net sales increased $666 million, or 14%, driven primarily by higher average LME aluminum prices and an 8% increase in rolled product shipments driven by higher automotive shipments to support North America as a result of the production interruptions at Oswego and higher beverage packaging shipments. Adjusted EBITDA was $379 million, an increase of 24%, primarily driven by higher volume and favorable foreign exchange, partially offset by less favorable metal benefit from higher scrap pricing included in conversion costs and less favorable metal input mix.

Asia

Net sales increased $383 million, or 13%, driven primarily by higher average LME aluminum prices and a 10% increase in rolled product shipments due largely to higher beverage packaging shipments mainly to support North America demand, partially offset by lower automotive shipments. Adjusted EBITDA was $311 million, a decrease of 10%, primarily due to less favorable metal benefits from higher scrap pricing included in conversion costs and less favorable metal input mix, as well as unfavorable product mix and higher production costs, partially offset by higher volume and favorable foreign exchange.

South America

Net sales increased $178 million, or 7%, driven primarily by higher average LME aluminum prices and a 2% increase in rolled product shipments, primarily in the beverage packaging market. Adjusted EBITDA was $521 million, an increase of 3%, primarily due to higher volume, higher product pricing, and favorable foreign exchange, partially offset by less favorable product mix and less favorable metal benefit from higher scrap pricing included in conversion costs.

LIQUIDITY AND CAPITAL RESOURCES

We believe we maintain adequate liquidity levels through a combination of cash and availability under committed credit facilities. Our cash and cash equivalents and availability under committed credit facilities aggregated to $2.8 billion of liquidity as of March 31, 2026. Our primary liquidity sources are cash flows from operations, working capital management, cash, and liquidity under our debt agreements. Our recent business investments are being funded through cash flows generated by our operations and a combination of local financing, our senior secured credit facilities, equity contributions from our common shareholder, and senior notes. We expect to be able to fund both our short-term and long-term liquidity needs, such as our continued expansions, servicing our debt obligations, and providing sufficient liquidity to operate our business, through one or more of the following: the generation of operating cash flows, working capital management, our existing debt facilities (including refinancing), and new debt issuances, as necessary. There can be no assurances that similar funding from equity contributions from our common shareholder will be made available in the future.

Our capital expenditures expectation for fiscal 2027 is approximately $2.1 to $2.4 billion. This includes approximately $350 million for expected maintenance spend.

Available Liquidity

Our available liquidity as of March 31, 2026 and 2025 is as follows.


	March 31,
in millions	2026		2025
Cash and cash equivalents	$	1,254	$	1,036
Availability under committed credit facilities	1,502		1,739
Total available liquidity	$	2,756	$	2,775

The decrease in total available liquidity is primarily due to a decrease in the availability under committed credit facilities, which is primarily driven by a higher outstanding balance on the ABL Revolver compared to the prior year, partially offset by an increase in our cash and cash equivalents. See Note 11 - Debt for more details on our availability under committed credit facilities.

Cash and cash equivalents includes cash held in foreign countries in which we operate. As of March 31, 2026, we held $4 million of cash and cash equivalents in Canada, in which we are incorporated, with the rest held in other countries in which we operate. As of March 31, 2026, we held $471 million of cash in jurisdictions for which we have asserted that earnings are permanently reinvested, and we plan to continue to fund operations and local expansions with cash held in those jurisdictions. Cash held outside of Canada is free from significant restrictions that would prevent the cash from being accessed to meet the Company's liquidity needs including, if necessary, to fund operations and service debt obligations in Canada. Upon the repatriation of any earnings to Canada, in the form of dividends or otherwise, we could be subject to Canadian income taxes (subject to adjustment for foreign taxes paid and the utilization of the large cumulative net operating losses we have in Canada) and withholding taxes payable to the various foreign jurisdictions. As of March 31, 2026, we do not believe adverse tax consequences exist that restrict our use of cash and cash equivalents in a material manner.

We use derivative contracts to manage risk as well as liquidity. Under our terms of credit with counterparties to our derivative contracts, we do not have any material margin call exposure. No material amounts have been posted by Novelis nor do we hold any material amounts of margin posted by our counterparties. We settle derivative contracts in advance of billing on the underlying physical inventory and collecting payment from our customers, which temporarily impacts our liquidity position. The lag between derivative settlement and customer collection typically ranges from 30 to 90 days.

Obligations

Our material cash requirements include future contractual and other obligations arising in the normal course of business. These obligations primarily include debt and related interest payments, finance and operating lease obligations, postretirement benefit plan obligations, and purchase obligations.

Debt

As of March 31, 2026, we had an aggregate principal amount of debt, excluding finance leases, of $7.9 billion, with $1.4 billion due within 12 months. In addition, we are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements. Based on applicable interest rates and scheduled debt maturities as of March 31, 2026, our total interest obligation on long-term debt totaled an estimated $2.5 billion, with $339 million payable within 12 months. Actual future interest payments may differ from these amounts based on changes in floating interest rates or other factors or events. Excluded from these amounts are interest related to finance lease obligations, the amortization of debt issuance costs, and other costs related to indebtedness. See Note 11 - Debt to our accompanying consolidated financial statements for more information about our debt arrangements.

Leases

We lease certain land, buildings, and equipment under non-cancelable operating lease arrangements and certain office space under finance lease arrangements. As of March 31, 2026, we had aggregate finance lease obligations of $35 million, with $9 million due within 12 months. This includes both principal and interest components of future minimum finance lease payments. Excluded from these amounts are insurance, taxes, and maintenance associated with the property. As of March 31, 2026, we had aggregate operating lease obligations of $138 million, with $27 million due within 12 months. This includes the minimum lease payments for non-cancelable leases for property and equipment used in our operations. Excluded from these amounts are insurance, taxes, and maintenance associated with the properties and equipment as well as future minimum lease payments related to operating leases signed but not yet commenced. We do not have any operating leases with contingent rents. See Note 9 - Leases to our accompanying consolidated financial statements for further discussion of our operating and finance leases.

Postretirement Benefit Plans

Obligations for postretirement benefit plans are estimated based on actuarial estimates using benefit assumptions for, among other factors, discount rates, rates of compensation increases, and health care cost trends. As of March 31, 2026, payments for pension plan benefits and other post-employment benefits estimated through 2036 were $1.2 billion, with $114 million due within 12 months. See Note 13 - Postretirement Benefit Plans to our accompanying consolidated financial statements for further discussion.

Purchase Obligations and Other

Purchase obligations include agreements to purchase goods (including raw materials and capital expenditures) and services that are enforceable and legally binding on us and that specify all significant terms. Some of our raw material purchase contracts have minimum annual volume requirements. In these cases, we estimate our future purchase obligations using annual minimum volumes and costs per unit that are in effect as of March 31, 2026. As of March 31, 2026, we had aggregate purchase obligations of $17.2 billion, with $7.6 billion due within 12 months.

Due to volatility in the cost of our raw materials, actual amounts paid in the future may differ from these amounts. Excluded from these amounts are the impact of any derivative instruments and any early contract termination fees, such as those typically present in energy contracts. Purchase obligations do not include contracts that can be cancelled without significant penalty.

The future cash flow commitments we may have related to derivative contracts are excluded from the figures above as these are fair value measurements determined at an interim date within the contractual term of the arrangement and, accordingly, do not represent the ultimate contractual obligation (which could ultimately become a receivable). As a result, the timing and amount of the ultimate future cash flows related to our derivative contracts, including the $830 million of derivative liabilities recorded on our balance sheet as of March 31, 2026, are uncertain. In addition, stock compensation is excluded from the above figures as it is a fair value measurement determined at an interim date and is not considered a contractual obligation. Furthermore, due to the difficulty in determining the timing of settlements, the above figures also exclude $74 million of uncertain tax positions. See Note 19 - Income Taxes to our accompanying consolidated financial statements for more information.

There are no additional material off-balance sheet arrangements.

Cash Flow Summary


							Change
in millions	Fiscal 2026		Fiscal 2025		Fiscal 2024		Fiscal 2026 versus Fiscal 2025		Fiscal 2025 versus Fiscal 2024
Net cash (used in) provided by operating activities	$	(193)	$	951	$	1,315	$	(1,144)	$	(364)
Net cash used in investing activities	(2,164)		(1,690)		(1,388)		(474)		(302)
Net cash provided by (used in) financing activities	2,566		472		(98)		2,094		570

Operating Activities

The decrease in net cash (used in) provided by operating activities is primarily driven by the September and November Oswego fires, and sharply rising aluminum prices during the current fiscal year impacting working capital.

Net Cash Provided by Operating Activities - Continuing Operations and Adjusted Free Cash Flow

Refer to Non-GAAP Financial Measures for our definition of adjusted free cash flow.

The following table shows adjusted free cash flow for fiscal 2026, fiscal 2025, and fiscal 2024, and the change between periods, as well as the ending balances of cash and cash equivalents.


							Change
in millions	Fiscal 2026		Fiscal 2025		Fiscal 2024		Fiscal 2026 versus Fiscal 2025		Fiscal 2025 versus Fiscal 2024
Net cash (used in) provided by operating activities - continuing operations	$	(193)	$	951	$	1,315	$	(1,144)	$	(364)
Net cash used in investing activities - continuing operations	(2,164)		(1,690)		(1,388)		(474)		(302)
Plus: Cash used in the acquisition of business and other investments	-		2		-		(2)		2
Less: Proceeds from sales of assets and business, net of transactions fees, cash income taxes	(20)		-		(2)		(20)		2
Adjusted free cash flow	$	(2,377)	$	(737)	$	(75)	$	(1,640)	$	(662)
Cash and cash equivalents	$	1,254	$	1,036	$	1,309	$	218	$	(273)

Investing Activities

The change in net cash used in investing activities over the prior fiscal year primarily relates to higher capital expenditures of $2,343 million in fiscal 2026 compared to $1,689 million in fiscal 2025.

Financing Activities

The following represents proceeds from the issuance of long-term and short-term borrowings during fiscal 2026 and 2025.


in millions	Fiscal 2026
Short-term borrowings in Brazil	$	200
Short-term borrowings in China	13
China Loan, due January 2029	26
Series 2025A Bonds, due June 2032	400
Series 2025B Bonds, due June 2032	100
Series 2026A Bonds, due June 2033	225
6.375% Senior Notes, due August 2033	750
Floating rate Term Loans, due March 2032	65
Proceeds from issuance of long-term and short-term borrowings	$	1,779


in millions	Fiscal 2025
6.875% Senior Notes, due January 2030	$	750
Sierre Loan, due October 2027	112
Short-term borrowings in Brazil	100
Floating rate Term Loans, due March 2032	1,250
China Loan, due September 2027	14
China Loan, due November 2027	21
China loan, due December 2027	21
Proceeds from issuance of long-term and short-term borrowings	$	2,268

The following represents principal payments of long-term and short-term borrowings during fiscal 2026 and 2025.


in millions	Fiscal 2026
Floating rate Term Loans, due March 2032	$	(78)
China Bank Loans, due August 2027	(15)
3.25% Senior Notes, due November 2026	(738)
Finance leases and other repayments	(5)
Principal payments of long-term and short-term borrowings	$	(836)


in millions	Fiscal 2025
Short-term borrowings in Brazil	$	(150)
Floating rate Term Loans, due September 2026	(746)
Floating rate Term Loans, due March 2028	(485)
China Bank Loans, due August 2027	(11)
Finance leases and other repayments	(9)
Principal payments of long-term and short-term borrowings	$	(1,401)

The following represents inflows (outflows) from revolving credit facilities and other, net during fiscal 2026 and 2025.


in millions	Fiscal 2026
ABL Revolver	$	752
China credit facility	(14)
Korea credit facility	(1)
Revolving credit facilities and other, net	$	737


in millions	Fiscal 2025
ABL Revolver	$	(328)
China credit facility	(33)
Revolving credit facilities and other, net	$	(361)

In addition to the activities shown in the tables above, we paid $29 million during fiscal 2026 in debt issuance costs, primarily related to the issuance of the 6.375% Senior Notes due August 2033, the Series 2025A and Series 2025B due June 2032, and the Series 2026A Bonds, due June 2033. We paid $34 million in debt issuance costs during fiscal 2025, primarily related to the issuance of the 6.875% Senior Notes due 2030 and the Term Loan Facility due March 2032. We paid a return of capital to our common shareholder in the amount of $35 million during fiscal 2026. Further, to help fund our ongoing capital projects, we received equity contributions from our common shareholder in the amounts of $750 million and $200 million, in December 2025 and February 2026, respectively.

In September 2025, Novelis amended the Term Loan Facility and the amendment was accounted for as a partial extinguishment of the Term Loan Facility, whereby $65 million was deemed an extinguishment and $1.18 billion was deemed a modification of debt.

In February 2026, Novelis amended the ABL Revolver to increase the maximum revolving amount by $500 million to $2.5 billion. All other material terms of the ABL Revolver remained unchanged as a result of this amendment.

Non-Guarantor Information

As of March 31, 2026, the Company's subsidiaries that are not guarantors represented the following approximate percentages of (a) net sales, (b) Adjusted EBITDA, and (c) total assets of the Company, on a consolidated basis (including intercompany balances). Refer to Non-GAAP Financial Measures for our definition of Adjusted EBITDA.


Item Description	Ratio
Consolidated net sales represented by net sales to third parties by non-guarantor subsidiaries (for fiscal 2026)	21	%
Consolidated Adjusted EBITDA represented by the non-guarantor subsidiaries (for fiscal 2026)	14
Consolidated assets are owned by non-guarantor subsidiaries (as of March 31, 2026)	11

In addition, for fiscal 2026 and fiscal 2025, the Company's subsidiaries that are not guarantors had net sales of $4.4 billion and $4.0 billion, respectively, and, as of March 31, 2026, those subsidiaries had assets of $3.0 billion and debt and other liabilities of $1.8 billion (including intercompany balances).

CAPITAL ALLOCATION FRAMEWORK

Novelis has in place a capital allocation framework that lays out the general guidelines for use of post-maintenance capital expenditure Adjusted Free Cash Flow. We expect annual maintenance capital expenditures to be between $300 million to $350 million. We believe the long-term trends for flat-rolled aluminum products remain strong. To capture this demand, in fiscal 2023 we began a multi-billion dollar strategic capital investment period to increase rolling and recycling capacity and capabilities across regions. The largest of these projects is the approximately $5 billion greenfield rolling and recycling plant in Bay Minette, Alabama, that is expected to begin commissioning in the second half of calendar year 2026. Our goal has been to keep our net leverage ratio at or around 3.5x during our strategic capital investment cycle underway, but tariff cost pressures and Oswego fire-related impacts in Adjusted EBITDA will cause net leverage to go above this target in the near-term. In fiscal 2026, we received approximately $950 million of equity contributions from our common shareholder to help fund our capital projects. Our framework also guides approximately 8%-10% of post-maintenance capital expenditure Adjusted Free Cash Flow to be returned to our common shareholder. Payments to our common shareholder are at the discretion of our Board of Directors and were $35 million and $100 million in fiscal 2026 and 2024, respectively, with no such payments made in fiscal 2025. Any such payments depend on, among other things, our financial resources, cash flows generated by our business, our cash requirements, restrictions under the instruments governing our indebtedness, being in compliance with the appropriate indentures and covenants under the instruments that govern our indebtedness, and other relevant factors. Past payments of return of capital should not be construed as a guarantee of future returns of capital in the same amounts or at all.

ENVIRONMENT, HEALTH AND SAFETY

We strive to be a leader in environment, health and safety standards. Our environment, health and safety system is aligned with ISO 14001, an international environmental management standard, and ISO 45001, international occupational health and safety management standards. As of March 31, 2026 and 2025, 24 and 25 of our facilities were ISO 45001 certified, respectively. As of March 31, 2026 and 2025, 28 and 29 of our facilities were ISO14001 certified, respectively. In addition as of March 31, 2026 and 2025, 28 and 29 of our facilities were certified to one of the following quality standards: ISO 9001, TS 16949, IATF 16949, respectively.

Our expenditures for environmental protection (including estimated and probable environmental remediation costs as well as general environmental protection costs at our facilities) and the betterment of working conditions in our facilities were $22 million during fiscal 2026, of which $20 million was expensed and $2 million was capitalized. We expect that these expenditures will be approximately $21 million in fiscal 2027, of which we estimate $19 million will be expensed and $2 million will be capitalized. Generally, expenses for environmental protection are recorded in cost of goods sold (exclusive of depreciation and amortization). However, significant remediation costs that are not associated with on-going operations are recorded in restructuring and impairment, net.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our results of operations, liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends and other factors we believe to be relevant at the time we prepare our consolidated financial statements. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 1 - Business and Summary of Significant Accounting Policies to our accompanying consolidated financial statements. We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, as they require management to make difficult, subjective, or complex judgments, and to make estimates about the effect of matters that are inherently uncertain. Although management believes that the estimates and judgments discussed herein are reasonable, actual results could differ, which could result in gains or losses that could be material. We have reviewed these critical accounting policies and related disclosures with the Audit Committee of our Board of Directors.

Derivative Financial Instruments

We hold derivatives for risk management purposes and not for trading. We use derivatives to mitigate uncertainty and volatility caused by underlying exposures to metal prices, foreign exchange rates, interest rates, and energy prices. The fair values of all derivative instruments are recognized as assets or liabilities at the balance sheet date and are reported gross.

The majority of our derivative contracts are valued using industry-standard models that use observable market inputs as their basis, such as time value, forward interest rates, volatility factors, and current (spot) and forward market prices for commodity and foreign exchange rates. See Note 15 - Financial Instruments and Commodity Contracts and Note 17 - Fair Value Measurements to our accompanying consolidated financial statements for discussion on fair value of derivative instruments.

We may be exposed to losses in the future if the counterparties to our derivative contracts fail to perform. We are satisfied that the risk of such non-performance is remote due to our monitoring of credit exposures. Additionally, we enter into master netting agreements with contractual provisions that allow for netting of counterparty positions in case of default, and we do not face credit contingent provisions that would result in the posting of collateral.

For derivatives designated as fair value hedges, we assess hedge effectiveness by formally evaluating the high correlation of changes in the fair value of the hedged item and the derivative hedging instrument. The changes in the fair values of the underlying hedged items are reported in other current and noncurrent assets and liabilities in the consolidated balance sheets. Changes in the fair values of these derivatives and underlying hedged items generally offset, and the entire change in the fair value of derivatives is recorded in the statement of operations line item consistent with the underlying hedged item.

For derivatives designated as cash flow hedges or net investment hedges, we assess hedge effectiveness by formally evaluating the high correlation of the expected future cash flows of the hedged item and the derivative hedging instrument. The entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is included in other comprehensive (loss) income and reclassified to earnings in the period in which earnings are impacted by the hedged items or in the period that the transaction becomes probable of not occurring. Gains or losses representing reclassifications of other comprehensive (loss) income to earnings are recognized in the same line item that is impacted by the underlying exposure. We exclude the time value component of foreign currency and aluminum price risk hedges when measuring and assessing effectiveness to align our accounting policy with risk management objectives when it is necessary. If at any time during the life of a cash flow hedge relationship we determine that the relationship is no longer effective, the derivative will no longer be designated as a cash flow hedge and future gains or losses on the derivative will be recognized in other expenses (income), net.

For all derivatives designated as hedging relationships, gains or losses representing amounts excluded from effectiveness testing are recognized in other expenses (income), net in our current period earnings. If no hedging relationship is designated, gains or losses are recognized in other expenses (income), net in our current period earnings.

Consistent with the cash flows from the underlying risk exposure, we classify cash settlement amounts associated with designated derivatives as part of either operating or investing activities in the consolidated statements of cash flows. If no hedging relationship is designated, we classify cash settlement amounts as part of investing activities in the consolidated statement of cash flows.

Impairment of Goodwill

Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets of acquired companies. We estimated fair value of the identifiable net assets using a number of factors, including the application of multiples and discounted cash flow estimates. The carrying value of goodwill for each of our reporting units, which is tested for impairment annually, follows.


in millions	As of March 31, 2026
North America	$	660
Europe	237
Asia	41
South America	141
Goodwill	$	1,079

Goodwill is not amortized; instead, it is tested for impairment annually or more frequently if indicators of impairment exist. On an ongoing basis, absent any impairment indicators, we perform our goodwill impairment testing as of March 31 of each fiscal year. We do not aggregate components of operating segments to arrive at our reporting units, and as such our reporting units are the same as our operating segments.

ASC 350, Intangibles - Goodwill provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the one-step quantitative impairment test, otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the one-step quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the one-step quantitative impairment test.

During the second quarter of fiscal 2026, we identified a triggering event that indicated it was more likely than not that the carrying value of the North America reporting unit exceeded its fair value. The triggering event was due to revised estimated total project capital costs associated with the commissioning of the Bay Minette plant. Management also assessed whether the impacts of the Oswego fires were a triggering event during the year and determined that they were not. An impairment test was performed as of September 30, 2025. For the interim impairment test, as well as the annual impairment test, we performed the one-step quantitative impairment test, where we compared the fair value of each reporting unit to its carrying amount, and if the quantitative test indicates that the carrying value of a reporting unit exceeds the fair value, such excess is to be recorded as an impairment. For purposes of our quantitative analysis, our estimate of fair value for each reporting unit as of the testing date is based on a weighted average of the value indication from income and market approaches. The approach to determining fair value for all reporting units is consistent given the similarity of our operations in each region.

Under the income approach, the fair value of each reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including sales volumes, conversion premiums, discount rate, and Adjusted EBITDA per tonne. We estimate future cash flows for each of our reporting units based on our projections for the respective reporting unit. These projected cash flows are discounted to the present value using a weighted average cost of capital (discount rate). The discount rate is commensurate with the risk inherent in the projected cash flows and reflects the rate of return required by an investor in the current economic conditions. For our annual impairment test, we used a discount rate of 9.79% for all reporting units. An increase or decrease of 0.25% in the discount rate would have impacted the estimated fair value of each reporting unit by approximately $95 million-$442 million, depending on the relative size of the reporting unit. The projections are based on both past performance and the expectations of future performance and assumptions used in our current operating plan. We use specific sales volume and conversion premium assumptions for each reporting unit based on history and economic conditions.

Under the market approach, the fair value of each reporting unit is determined based upon comparisons to public companies engaged in similar businesses and is dependent on the significant management assumption for the selection of multiples.

As a result of our interim and annual goodwill impairment test for fiscal 2026, no goodwill impairment was identified. The fair values of the reporting units exceeded their respective carrying amounts as of September 30, 2025, by 26% for North America, and as of March 31, 2026 by 17% for North America, by 104% for Europe, by 196% for Asia, and by 356% for South America.

Pension and Other Postretirement Plans

We account for our pensions and other postretirement benefits in accordance with ASC 715, Compensation - Retirement Benefits. Liabilities and expense for pension plans and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the rate used to discount the future estimated liability, the long-term rate of return on plan assets, and several assumptions related to the employee workforce (compensation increases, health care cost trend rates, expected service period, retirement age, and mortality). These assumptions bear the risk of change as they require significant judgment and they have inherent uncertainties that management may not be able to control.

The actuarial models use an attribution approach that generally spreads the financial impact of changes to the plan and actuarial assumptions over the average remaining service lives of the employees in the plan or average life expectancy. The principle underlying the required attribution approach is that employees render service over their average remaining service lives on a relatively smooth basis and, therefore, the accounting for benefits earned under the pension or non-pension postretirement benefits plans should follow the same relatively smooth pattern. Changes in the liability due to changes in actuarial assumptions such as discount rate, rate of compensation increases and mortality, as well as annual deviations between what was assumed and what was experienced by the plan are treated as actuarial gains or losses. The actuarial gains and losses are initially recorded to other comprehensive (loss) income and subsequently amortized over periods of 15 years or less.

The most significant assumption used to calculate pension and other postretirement obligations is the discount rate used to determine the present value of benefits. The discount rate is based on spot rate yield curves and individual bond matching models for pension and other postretirement plans in Canada, the U.S., the U.K., and other eurozone countries, and on published long-term high quality corporate bond indices in other countries with adjustments made to the index rates based on the duration of the plans' obligations for each country, at the end of each fiscal year. This bond matching approach matches the bond yields with the year-to-year cash flow projections from the actuarial valuation to determine a discount rate that more accurately reflects the timing of the expected payments. The weighted average discount rate used to determine the pension benefit obligation was 4.6%, 4.5%, and 4.4% and other postretirement benefit obligation was 6.0%, 5.8% and 5.7% as of March 31, 2026, 2025, and 2024, respectively. The weighted average discount rate used to determine the net periodic benefit cost is the rate used to determine the benefit obligation at the end of the previous fiscal year.

As of March 31, 2026, an increase in the discount rate of 0.5%, assuming inflation remains unchanged, would result in a decrease of $89 million in the pension and other postretirement obligations and in a pre-tax decrease of $6 million in the net periodic benefit cost in the following year. A decrease in the discount rate of 0.5% as of March 31, 2026, assuming inflation remains unchanged, would result in an increase of $98 million in the pension and other postretirement obligations and in a pre-tax increase of $3 million in the net periodic benefit cost in the following year.

The long term expected return on plan assets is based upon historical experience, expected future performance as well as current and projected investment portfolio diversification. The weighted average expected return on plan assets was 6.5% for 2026, 6.3% for 2025, and 6.1% for 2024. The expected return on assets is a long-term assumption whose accuracy can only be measured over a long period based on past experience. A variation in the expected return on assets of 0.5% as of March 31, 2026 would result in a pre-tax variation of approximately $6 million in the net periodic benefit cost in the following year.

Income Taxes

We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We considered all available evidence, both positive and negative, in determining the appropriate amount of the valuation allowance against our deferred tax assets as of March 31, 2026. In evaluating the need for a valuation allowance, we consider all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as well as any other available and relevant information. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period and potential income from prudent and feasible tax planning strategies. Negative evidence includes items such as cumulative losses, projections of future losses, and carryforward periods that are not long enough to allow for the utilization of the deferred tax asset based on existing projections of income. In certain jurisdictions, deferred tax assets related to loss carryforwards and other temporary differences exist without a valuation allowance where in our judgment the weight of the positive evidence more than offsets the negative evidence.

Upon changes in facts and circumstances, we may conclude that certain deferred tax assets for which no valuation allowance is currently recorded may not be realizable in future periods, resulting in a charge to income. Existing valuation allowances are re-examined under the same standards of positive and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released, in the period this determination is made.

As of March 31, 2026, the Company concluded that valuation allowances totaling $581 million were still required against its deferred tax assets comprised of the following:

•$359 million of the valuation allowance relates to loss carryforwards in Canada and certain foreign jurisdictions, including $73 million related to loss carryforwards in U.S. states;

•$91 million relates to New York tax credit carryforwards;

•$7 million relates to tax credit carryforwards in Canada; and

•$123 million of the valuation allowance relates to other deferred tax assets originating from temporary differences in Canada and certain foreign jurisdictions.

In determining these amounts, the Company considered the reversal of existing temporary differences as a source of taxable income. The ultimate realization of the remaining deferred tax assets is contingent on the Company's ability to generate future taxable income within the carryforward period and within the period in which the temporary differences become deductible. Due to the history of negative earnings in these jurisdictions and future projections of losses, the Company believes it is more likely than not the deferred tax assets will not be realized prior to expiration.

Through March 31, 2026, the Company recognized deferred tax assets related to loss carryforwards and other temporary items of approximately $948 million. The Company determined that existing taxable temporary differences will reverse within the same period and jurisdiction and are of the same character as the deductible temporary items generating sufficient taxable income to support realization of $453 million of these deferred tax assets. Realization of the remaining $495 million of deferred tax assets is dependent on our ability to earn pre-tax income aggregating approximately $2.0 billion in those jurisdictions to realize those deferred tax assets. The realization of our deferred tax assets is not dependent on tax planning strategies.

By their nature, tax laws are often subject to interpretation. Further complicating matters is that in those cases where a tax position is open to interpretation, differences of opinion can result in differing conclusions as to the amount of tax benefits to be recognized under ASC 740, Income Taxes. We utilize a two-step approach for evaluating tax positions. Recognition (Step 1) occurs when we conclude that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (Step 2) is only addressed if Step 1 has been satisfied. Under Step 2, we measure the tax benefit as the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement. Consequently, the level of evidence and documentation necessary to support a position prior to being given recognition and measurement within the financial statements is a matter of judgment that depends on all available evidence.

Assessment of Loss Contingencies

We have legal and other contingencies, including environmental liabilities, which could result in significant losses upon the ultimate resolution of such contingencies. Environmental liabilities that are not legal asset retirement obligations are accrued on an undiscounted basis when it is probable that a liability exists for past events.

We have provided for losses in situations where we have concluded that it is probable that a loss has been or will be incurred and the amount of the loss is reasonably estimable. A significant amount of judgment is involved in determining whether a loss is probable and reasonably estimable due to the uncertainty involved in determining the likelihood of future events and estimating the financial statement impact of such events. If further developments or resolution of a contingent matter are not consistent with our assumptions and judgments, we may need to recognize a significant charge in a future period related to an existing contingency.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 - Business and Summary of Significant Accounting Policies to our accompanying consolidated financial statements for a full description of recent accounting pronouncements, if applicable, including the respective expected dates of adoption and expected effects on results of operations and financial condition.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

Total Adjusted EBITDA presents the sum of the results of our four operating segments on a consolidated basis. We believe that total Adjusted EBITDA is an operating performance measure that measures operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. In reviewing our corporate operating results, we also believe it is important to review the aggregate consolidated performance of all of our segments on the same basis we review the performance of each of our regions and to draw comparisons between periods based on the same measure of consolidated performance.

Management believes investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing total Adjusted EBITDA, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

However, total Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP, and our total Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Total Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. For example, total Adjusted EBITDA:

•does not reflect the Company's cash expenditures or requirements for capital expenditures or capital commitments;

•does not reflect changes in, or cash requirements for, the Company's working capital needs; and

•does not reflect any costs related to the current or future replacement of assets being depreciated and amortized.

We also use total Adjusted EBITDA:

•as a measure of operating performance to assist us in comparing our operating performance on a consistent basis because it removes the impact of items not directly resulting from our core operations;

•for planning purposes, including the preparation of our internal annual operating budgets and financial projections;

•to evaluate the performance and effectiveness of our operational strategies; and

•as a basis to calculate incentive compensation payments for our key employees.

Beginning in the first quarter of fiscal 2026, the Company excludes non-capitalizable start-up costs associated with the commissioning, pre-production, and production ramp-up at the Bay Minette plant. The Bay Minette plant is the first fully integrated aluminum mill built in the U.S. in over 40 years and is expected to have an annual rolled aluminum production capacity of 600 kt once completed and at normal production capacity. As a result, non-capitalizable start-up costs will have a significant impact on the comparability of reported Adjusted EBITDA during the period of commissioning, pre-production, and production ramp-up. Given the nature of the related costs and activities, management does not view these as normal, recurring operating expenses, but rather as non-recurring investments to commission and ramp up production at the new plant. Excluding such start-up costs maintains comparability of Adjusted EBITDA among periods, which is useful to investors and reflects how management evaluates the Company's operating performance. The Company will cease excluding such start-up costs from its Adjusted EBITDA once normal production capacity is achieved at the Bay Minette plant.

Adjusted EBITDA per tonne is calculated by dividing Adjusted EBITDA by aluminum rolled product shipments (in tonnes) for the corresponding period, both on a consolidated basis and at a segment level. Adjusted EBITDA per tonne recalculations may be impacted by rounding. The term "aluminum rolled products" is synonymous with the terms "flat-rolled products" and "FRP," which are commonly used by manufacturers and third-party analysts in our industry. Shipment amounts also include tolling shipments. All tonnages are stated in metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. One kt is 1,000 metric tonnes.

Management believes Adjusted EBITDA per tonne is relevant to investors as it provides a measure of aluminum rolled product shipments to third parties rather than aluminum rolled product shipments as well as certain other non-rolled product shipments, primarily scrap, UBCs, ingots, billets, and primary remelt. This is useful to investors because the incremental impact of non-rolled products shipments on our Adjusted EBITDA is marginal since the price of these products is generally set to cover the costs of raw materials not utilized in manufacturing products sold to beverage packaging customers, specialties and aerospace customers in our regions, and these non-rolled products are not part of our core operating business.

Please see Note 21 - Segment, Geographical Area, Major Customer and Major Supplier Information for our definition of Adjusted EBITDA. Under ASC 280, Adjusted EBITDA is our measure of segment profitability and financial performance of our operating segments, and when used in this context, the term Adjusted EBITDA is a financial measure prepared in accordance with U.S. GAAP. Adjusted EBITDA reported for the Company on a consolidated basis is a non-U.S. GAAP financial measure.

Adjusted Free Cash Flow

Adjusted free cash flow consists of: (a) net cash provided by (used in) operating activities - continuing operations, (b) plus net cash provided by (used in) investing activities - continuing operations, (c) plus net cash provided by (used in) operating activities - discontinued operations, (d) plus net cash provided by (used in) investing activities - discontinued operations, (e) plus cash used in the acquisition of assets under a finance lease, (f) plus cash used in the acquisition of business and other investments, net of cash acquired, (g) plus accrued merger consideration, (h) less proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging, and (i) less proceeds from sales of assets and business, net of transaction fees, cash income taxes and hedging - discontinued operations. Management believes adjusted free cash flow is relevant to investors as it provides a measure of the cash generated internally that is available for debt service and other value creation opportunities. In addition, this measure is a key consideration in determining the amounts to be paid as returns to our common shareholder. However, adjusted free cash flow does not necessarily represent cash available for discretionary activities, as certain debt service obligations must be funded out of adjusted free cash flow. Our method of calculating adjusted free cash flow may not be consistent with that of other companies.

Novelis Inc. published this content on May 19, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 19, 2026 at 17:45 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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