Alcoa Corporation (NYSE: AA) today reported third quarter 2023
results that include increased third-party shipments in the
Company’s two segments and a sequential improvement in cash
generated from operations despite lower sequential average realized
prices for alumina and aluminum.
Financial Results and Highlights
M, except per share amounts
3Q23
2Q23
3Q22
Revenue
$2,602
$2,684
$2,851
Net loss attributable to Alcoa
Corporation
$(168)
$(102)
$(746)
Loss per share attributable to Alcoa
Corporation
$(0.94)
$(0.57)
$(4.17)
Adjusted net loss
$(202)
$(62)
$(60)
Adjusted loss per share
$(1.14)
$(0.35)
$(0.33)
Adjusted EBITDA excluding special
items
$70
$137
$210
- Increased third-party shipments of alumina by 11 percent and
aluminum by 1 percent sequentially
- Generated $69 million in cash from operations, a sequential
improvement of $82 million
- Finished the third quarter with a cash balance of $926
million
- Paid quarterly cash dividend of $0.10 per share of common
stock, totaling $18 million
- Progressed process for Western Australia mine plan
approvals
- Achieved multiple production records across the Canadian
smelting system
- Initiated cost reduction program at the Kwinana refinery in
Australia
- Gained greater market penetration for Alcoa’s Sustana™ line of
low-carbon products
“It is a true honor to take the helm at Alcoa as we further
position the Company for long-term success," said Alcoa President
and CEO William F. Oplinger, who was appointed to the role last
month. “In the third quarter, we saw positive improvements in raw
material and production costs, but lower average realized pricing
for alumina and aluminum had the biggest impact on our results,” he
said. “Moving forward, we are laser-focused on improvement, and
we’re working across our global system to increase margins through
operational productivity,” Oplinger said.
“We are already beginning to see progress with better,
year-on-year safety results, as well as production records from our
smelters in Quebec,” Oplinger said. “And we will build on that
momentum across our business as we progress, to remain well
positioned to deliver today and in the future.”
Third Quarter 2023 Results
- Revenue: The Company’s total third-party revenue of
$2.60 billion decreased from $2.68 billion in the prior quarter
with lower average realized third-party prices for alumina and
aluminum. Alumina decreased 2 percent and aluminum fell 9 percent,
although those lower prices were partially offset by higher
shipments in both the Alumina and Aluminum segments.
- Shipments: In the Alumina segment, third-party shipments
of alumina increased 11 percent sequentially, primarily due to
increased trading and shipments across the worldwide refining
system. In Aluminum, total shipments increased 1 percent
sequentially.
- Production: Alumina production increased 10 percent
sequentially to 2.8 million metric tons primarily due to higher
production at the Alumar refinery in Brazil after the conclusion of
elevated maintenance and higher output from Australian refineries
that are adapting to lower grade bauxite. In Aluminum, Alcoa
produced 532,000 metric tons, a sequential increase of 2 percent
from the second quarter’s strong output, including multiple
quarterly and year-to-date production records across the Canadian
smelters.
- Net loss attributable to Alcoa Corporation was $168
million, or $0.94 per share. Sequentially, the results reflect
lower alumina and aluminum prices and unfavorable currency impacts
of $83 million, which were not offset by the benefits of lower raw
material and production costs in both the Alumina and Aluminum
segments. Additionally, the third quarter results include the
benefit of a $58 million valuation allowance reversal on the
deferred tax assets of the Company’s subsidiaries in Iceland.
- Adjusted net loss was $202 million, or $1.14 per share,
excluding the impact from special items of $34 million of income.
Notable special items include $58 million in a net benefit for
discrete tax items primarily related to the reversal of the tax
valuation allowance described above, partially offset by a
mark-to-market loss of $21 million related to energy
contracts.
- Adjusted EBITDA excluding special items was $70 million,
a $67 million sequential decrease primarily due to lower prices for
aluminum and alumina, partially offset by lower raw material and
production costs.
- Cash: Alcoa ended the quarter with a cash balance of
$926 million. Cash provided from operations was $69 million. Cash
provided from financing activities was $35 million, primarily
related to $40 million of net contributions from noncontrolling
interest and $32 million of net short-term borrowings, partially
offset by $18 million of cash dividends on common stock. Cash used
for investing activities was $166 million, primarily related to
capital expenditures of $145 million. Free cash flow was negative
$76 million.
- Working capital: For the third quarter, Receivables from
customers of $0.7 billion, Inventories of $2.2 billion and Accounts
payable, trade of $1.5 billion comprised DWC working capital. The
Company reported 50 days working capital, a sequential improvement
of five days. Inventory days improved by four days primarily due to
lower raw material costs.
Key Strategic Actions:
- Western Australia Mine Plan Approvals: During the third
quarter of 2023, the Company continued to make progress with
relevant state government agencies in support of the annual mine
approvals process for bauxite mining at the Huntly and Willowdale
mines. The Company submitted a revised Mine Management Program
(MMP) for the period 2023-2027 with enhancements meant to address
stakeholder needs and expectations. The submission to regulators
includes additional controls for the protection of drinking water,
including distances from reservoirs, and biodiversity that includes
a plan to accelerate rehabilitation. The Company is working toward
an MMP approval during the fourth quarter of 2023. Separately,
following a public comment period that concluded in August, the
Western Australian Environmental Protection Authority (WA EPA)
continues to consider a third-party request on whether to formally
assess all or part of the current and next MMPs and, if so, at what
level. The WA EPA has indicated it expects to make a decision
before the end of the year. The Company supports moving toward a
modernized approvals framework for new major mine regions. In June
2020, Alcoa proactively requested an assessment by the WA EPA on
two new mine regions (Myara North and Holyoake) for the Huntly
mine. The Company expects the bauxite quality at Myara North and
Holyoake to be more consistent with the historic higher quality at
the existing Myara Central. Alcoa continues to work to secure
approvals for these new regions, and anticipates mining in the new
regions no earlier than 2027. Until then, the Company expects
bauxite quality similar to recent grades. During the third quarter,
the Company continued to pursue cost reduction measures and
initiated productivity programs across its operations in Australia
to mitigate the financial impacts of lower bauxite grade and to
optimize current operating levels. As a first action under these
programs, Alcoa initiated a restructuring program at the Kwinana
refinery and incurred a $6 million charge in the third quarter of
2023 for employee severance costs to be paid through the first
quarter of 2024. The Company anticipates approximately $10 million
in annual savings from this action.
- Energy Contract: In August 2023, Alcoa announced a new power
agreement with AGL Energy Limited (AGL) to support future
operations at Portland Aluminium Smelter in the State of Victoria
in Australia. The nine-year agreement for 300 megawatts of power
supply is effective July 1, 2026, when current contracts with AGL
end. This volume represents approximately 50 percent of the energy
required to meet the facility’s total capacity of 358,000
mtpy.
- Commercial: The Company sold its first non-metallurgical
variety of EcoSource™ low-carbon alumina, which is now marketed in
both non-metallurgical and smelter grades. Also, Alcoa has grown
sales of EcoLum™ low-carbon aluminum, which has realized more than
a 60 percent increase in year-over-year sales, including new
purchases in North America. Both EcoSource and EcoLum are part of
Alcoa’s Sustana™ family of products.
- Sustainability: As a member of the International Council
on Mining and Metals (ICMM), Alcoa is committed to the Global
International Standard for Tailings Management (GISTM). Alcoa
disclosed before an August 2023 deadline its progress for
applicable facilities, in accordance with the ICMM Conformance
Protocol.
2023 Outlook
The following outlook does not include reconciliations of the
forward-looking non-GAAP financial measures Adjusted EBITDA and
Adjusted Net Income, including transformation, intersegment
eliminations and other corporate Adjusted EBITDA; operational tax
expense; and other expense; each excluding special items, to the
most directly comparable forward-looking GAAP financial measures
because it is impractical to forecast certain special items, such
as restructuring charges and mark-to-market contracts without
unreasonable efforts due to the variability and complexity
associated with predicting the occurrence and financial impact of
such special items. For the same reasons, the Company is unable to
address the probable significance of the unavailable information,
which could be material to future results.
The Company expects the outlook for 2023 total alumina and
aluminum shipments to remain unchanged between 12.7 and 12.9
million metric tons, and between 2.5 and 2.6 million metric tons,
respectively.
Within fourth quarter 2023 Alumina Segment Adjusted EBITDA, the
Company expects a $50 million benefit from lower raw material
prices, lower production costs and higher volumes, partially offset
by $10 million in higher energy costs. Additionally, the Company
expects impacts related to lower bauxite grade in Australia to be
consistent with the third quarter of 2023.
Within fourth quarter 2023 Aluminum Segment Adjusted EBITDA, the
Company expects $35 million in lower raw material prices to be
fully offset by unfavorable value add aluminum products sales and
higher production costs. Alumina costs in the Aluminum segment are
expected to be favorable by $5 million sequentially.
Additionally, the Company expects unfavorable energy impacts of
approximately $30 million mainly due to the carbon dioxide
compensation changes in Norway. The Norwegian government recently
proposed a budget that sets a floor for the carbon dioxide
compensation scheme to be paid in 2024 based on 2023 power
purchased. Upon approval, the Company expects to record an
adjustment of approximately $20 million in the fourth quarter to
reverse amounts accrued in cost of goods sold for 2023 credits
earned through September 30, 2023. The total impact of this budget
proposal on the Company’s full year results would be approximately
$25 million.
Other expense for the third quarter 2023 included negative
impacts of $35 million, primarily related to foreign currency
losses that may not recur.
Based on current alumina and aluminum market conditions, Alcoa
expects fourth quarter operational tax expense to approximate $10
million to $20 million, which may vary with market conditions and
jurisdictional profitability.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m.
Eastern Daylight Time (EDT) on Wednesday, October 18, 2023, to
present third quarter 2023 financial results and discuss the
business, developments, and market conditions.
The call will be webcast via the Company’s homepage on
www.alcoa.com. Presentation materials for the call will be
available for viewing on the same website at approximately 4:15
p.m. EDT on October 18, 2023. Call information and related details
are available under the “Investors” section of www.alcoa.com.
Dissemination of Company Information
Alcoa intends to make future announcements regarding company
developments and financial performance through its website,
www.alcoa.com, as well as through press releases, filings with the
Securities and Exchange Commission, conference calls and webcasts.
The Company does not incorporate the information contained on, or
accessible through, its corporate website or such other websites or
platforms referenced herein into this press release.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina
and aluminum products with a vision to reinvent the aluminum
industry for a sustainable future. Our purpose is to turn raw
potential into real progress, underpinned by Alcoa Values that
encompass integrity, operating excellence, care for people and
courageous leadership. Since developing the process that made
aluminum an affordable and vital part of modern life, our talented
Alcoans have developed breakthrough innovations and best practices
that have led to improved safety, sustainability, efficiency, and
stronger communities wherever we operate.
Discover more by visiting www.alcoa.com. Follow us on our social
media channels: Facebook, Instagram, X, YouTube and LinkedIn.
Forward-Looking Statements
This news release contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “aims,” “ambition,” “anticipates,”
“believes,” “could,” “develop,” “endeavors,” “estimates,”
“expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,”
“potential,” “plans,” “projects,” “reach,” “seeks,” “sees,”
“should,” “strive,” “targets,” “will,” “working,” “would,” or other
words of similar meaning. All statements by Alcoa that reflect
expectations, assumptions or projections about the future, other
than statements of historical fact, are forward-looking statements,
including, without limitation, forecasts concerning global demand
growth for bauxite, alumina, and aluminum, and supply/demand
balances; statements, projections or forecasts of future or
targeted financial results, or operating performance (including our
ability to execute on strategies related to environmental, social
and governance matters); statements about strategies, outlook, and
business and financial prospects; and statements about capital
allocation and return of capital. These statements reflect beliefs
and assumptions that are based on Alcoa’s perception of historical
trends, current conditions, and expected future developments, as
well as other factors that management believes are appropriate in
the circumstances. Forward-looking statements are not guarantees of
future performance and are subject to known and unknown risks,
uncertainties, and changes in circumstances that are difficult to
predict. Although Alcoa believes that the expectations reflected in
any forward-looking statements are based on reasonable assumptions,
it can give no assurance that these expectations will be attained
and it is possible that actual results may differ materially from
those indicated by these forward-looking statements due to a
variety of risks and uncertainties. Such risks and uncertainties
include, but are not limited to: (a) cyclicality of the aluminum
industry and aluminum end use markets, including due to the
influence of global economic conditions, and unfavorable changes in
the markets served by Alcoa; (b) the effects of non-market forces,
such as government policies and political instability, on global
aluminum supply and demand; (c) volatility and declines in the
aluminum industry, including global supply and demand conditions
and fluctuations in London Metal Exchange-based prices and
premiums, as applicable, for primary aluminum and other
commodities, and fluctuations in indexed-based and spot prices for
alumina; (d) legal, regulatory, economic, political, trade, public
health and safety, and reputational risks and conditions, including
changes in conditions beyond our control as a result of our
participation in increasingly competitive and complex global
markets; (e) our ability to obtain, maintain, or renew permits or
approvals necessary for our mining operations; (f) unfavorable
changes in cost, quality, or availability of key inputs, including
energy and raw materials, or uncertainty of or disruption to the
supply chain including logistics; (g) our ability to realize
expected benefits or achieve intended results, including as planned
and by targeted completion dates, from announced strategies, plans,
programs, or initiatives relating to our portfolio, profitability,
capital investments, and developing technologies, and from joint
ventures or other strategic alliances or business transactions; (h)
fluctuations in foreign currency exchange and tax rates on costs
and results; (i) changes in tax laws or exposure to additional tax
liabilities; (j) changes in global economic and financial market
conditions generally, such as inflation, recessionary conditions,
and interest rate increases, which may also affect Alcoa’s ability
to obtain credit or financing upon acceptable terms or at all; (k)
current and potential future impacts to the global economy and our
industry, business and financial condition caused by various
worldwide or macroeconomic events, such as the ongoing conflict
between Russia and Ukraine; (l) global competition within and
beyond the aluminum industry; (m) our ability to obtain or maintain
adequate insurance coverage; (n) the outcomes of contingencies,
including legal and tax proceedings, government or regulatory
investigations, and environmental remediation, or changes in
foreign and/or U.S. federal, state, or local laws, regulations, or
policies; (o) the impacts of climate change, related legislation or
regulations, and efforts to reduce greenhouse gas emissions and our
ability to achieve strategies and expectations related to climate
change and other environmental matters; (p) claims, costs and
liabilities resulting from the impact of our operations, including
impoundments, or from health, safety, and environmental laws,
regulations, and requirements, in the areas where we operate; (q)
the impact of cyberattacks and potential information technology or
data security breaches, including disruptions to our operations,
liability, and reputational harm; (r) our ability to fund capital
expenditures; (s) risks associated with long-term debt obligations
including restrictions on our current and future operations as a
result of our indebtedness; (t) our ability to continue to return
capital to stockholders through cash dividends and/or share
repurchases; (u) the impact of labor disputes, work stoppages and
strikes, or other employee relations issues, as well as labor
market conditions; (v) declines in the discount rates used to
measure pension and other postretirement benefit liabilities or
lower-than-expected investment returns on pension assets, or
unfavorable changes in laws or regulations that govern pension plan
funding; and (w) the other risk factors discussed in Alcoa’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022 and
other reports filed by Alcoa with the SEC. Alcoa disclaims any
obligation to update publicly any forward-looking statements,
whether in response to new information, future events or otherwise,
except as required by applicable law. Market projections are
subject to the risks described above and other risks in the
market.
Non-GAAP Financial Measures
This release contains reference to certain financial measures
that are not calculated and presented in accordance with generally
accepted accounting principles in the United States (GAAP). Alcoa
Corporation believes that the presentation of these non-GAAP
financial measures is useful to investors because such measures
provide both additional information about the operating performance
of Alcoa Corporation and insight on the ability of Alcoa
Corporation to meet its financial obligations by adjusting the most
directly comparable GAAP financial measure for the impact of, among
others, “special items” as defined by the Company, non-cash items
in nature, and/or nonoperating expense or income items. The
presentation of non-GAAP financial measures is not intended to be a
substitute for, and should not be considered in isolation from, the
financial measures reported in accordance with GAAP. Certain
definitions, reconciliations to the most directly comparable GAAP
financial measures and additional details regarding management’s
rationale for the use of the non-GAAP financial measures can be
found in the schedules to this release.
Alcoa Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Quarter Ended
September 30, 2023
June 30, 2023
September 30, 2022
Sales
$
2,602
$
2,684
$
2,851
Cost of goods sold (exclusive of expenses
below)
2,469
2,515
2,668
Selling, general administrative, and other
expenses
56
52
44
Research and development expenses
9
6
7
Provision for depreciation, depletion, and
amortization
163
153
149
Restructuring and other charges, net
22
24
652
Interest expense
26
27
25
Other expenses, net
85
6
35
Total costs and expenses
2,830
2,783
3,580
Loss before income taxes
(228
)
(99
)
(729
)
(Benefit from) provision for income
taxes
(35
)
22
40
Net loss
(193
)
(121
)
(769
)
Less: Net loss attributable to
noncontrolling interest
(25
)
(19
)
(23
)
NET LOSS ATTRIBUTABLE TO ALCOA
CORPORATION
$
(168
)
$
(102
)
$
(746
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net loss
$
(0.94
)
$
(0.57
)
$
(4.17
)
Average number of shares
178,443,311
178,404,252
178,778,774
Diluted:
Net loss
$
(0.94
)
$
(0.57
)
$
(4.17
)
Average number of shares
178,443,311
178,404,252
178,778,774
Alcoa Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Nine Months Ended
September 30, 2023
September 30, 2022
Sales
$
7,956
$
9,788
Cost of goods sold (exclusive of expenses
below)
7,388
7,616
Selling, general administrative, and other
expenses
162
140
Research and development expenses
25
23
Provision for depreciation, depletion, and
amortization
469
470
Restructuring and other charges, net
195
702
Interest expense
79
80
Other expenses (income), net
145
(185
)
Total costs and expenses
8,463
8,846
(Loss) income before income taxes
(507
)
942
Provision for income taxes
39
484
Net (loss) income
(546
)
458
Less: Net (loss) income attributable to
noncontrolling interest
(45
)
186
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA
CORPORATION
$
(501
)
$
272
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net (loss) income
$
(2.81
)
$
1.50
Average number of shares
178,262,741
181,893,140
Diluted:
Net (loss) income
$
(2.81
)
$
1.47
Average number of shares
178,262,741
185,586,493
Alcoa Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
926
$
1,363
Receivables from customers
691
778
Other receivables
105
131
Inventories
2,190
2,427
Fair value of derivative instruments
33
134
Prepaid expenses and other current
assets(1)
420
417
Total current assets
4,365
5,250
Properties, plants, and equipment
19,836
19,605
Less: accumulated depreciation, depletion,
and amortization
13,304
13,112
Properties, plants, and equipment, net
6,532
6,493
Investments
1,004
1,122
Deferred income taxes
395
296
Fair value of derivative instruments
3
2
Other noncurrent assets(2)
1,618
1,593
Total assets
$
13,917
$
14,756
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,472
$
1,757
Accrued compensation and retirement
costs
337
335
Taxes, including income taxes
110
230
Fair value of derivative instruments
204
200
Other current liabilities
500
481
Long-term debt due within one year
1
1
Total current liabilities
2,624
3,004
Long-term debt, less amount due within one
year
1,809
1,806
Accrued pension benefits
225
213
Accrued other postretirement benefits
440
480
Asset retirement obligations
830
711
Environmental remediation
225
226
Fair value of derivative instruments
927
1,026
Noncurrent income taxes
207
215
Other noncurrent liabilities and deferred
credits
538
486
Total liabilities
7,825
8,167
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,179
9,183
Accumulated deficit
(1,125
)
(570
)
Accumulated other comprehensive loss
(3,547
)
(3,539
)
Total Alcoa Corporation shareholders’
equity
4,509
5,076
Noncontrolling interest
1,583
1,513
Total equity
6,092
6,589
Total liabilities and equity
$
13,917
$
14,756
(1)
This line item includes $50 and $55 of
restricted cash at September 30, 2023 and December 31, 2022,
respectively.
(2)
This line item includes $54 and $56 of
noncurrent restricted cash at September 30, 2023 and December 31,
2022, respectively.
Alcoa Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Nine Months Ended September
30,
2023
2022
CASH FROM OPERATIONS
Net (loss) income
$
(546
)
$
458
Adjustments to reconcile net (loss) income
to cash from operations:
Depreciation, depletion, and
amortization
469
470
Deferred income taxes
(156
)
93
Equity loss (income), net of dividends
161
(35
)
Restructuring and other charges, net
195
702
Net loss from investing activities – asset
sales
18
7
Net periodic pension benefit cost
4
39
Stock-based compensation
27
28
Loss (gain) on mark-to-market derivative
financial contracts
31
(84
)
Other
67
30
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
Decrease in receivables
108
23
Decrease (increase) in inventories
166
(580
)
Decrease (increase) in prepaid expenses
and other current assets
53
(10
)
Decrease in accounts payable, trade
(275
)
(10
)
Decrease in accrued expenses
(119
)
(122
)
Decrease in taxes, including income
taxes
(52
)
(103
)
Pension contributions
(20
)
(12
)
Increase in noncurrent assets
(179
)
(94
)
Decrease in noncurrent liabilities
(59
)
(96
)
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(107
)
704
FINANCING ACTIVITIES
Additions to debt
80
—
Payments on debt
(39
)
—
Proceeds from the exercise of employee
stock options
1
22
Repurchase of common stock
—
(500
)
Dividends paid on Alcoa common stock
(54
)
(55
)
Payments related to tax withholding on
stock-based compensation awards
(34
)
(19
)
Financial contributions for the
divestiture of businesses
(44
)
(19
)
Contributions from noncontrolling
interest
164
150
Distributions to noncontrolling
interest
(24
)
(319
)
Other
1
(3
)
CASH PROVIDED FROM (USED FOR) FINANCING
ACTIVITIES
51
(743
)
INVESTING ACTIVITIES
Capital expenditures
(343
)
(309
)
Proceeds from the sale of assets
2
5
Additions to investments
(51
)
(32
)
Sale of investments
—
10
Other
4
2
CASH USED FOR INVESTING ACTIVITIES
(388
)
(324
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
—
(20
)
Net change in cash and cash equivalents
and restricted cash
(444
)
(383
)
Cash and cash equivalents and restricted
cash at beginning of year
1,474
1,924
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
1,030
$
1,541
Alcoa Corporation and
subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
1Q22
2Q22
3Q22
4Q22
2022
1Q23
2Q23
3Q23
Alumina(5):
Bauxite production (mdmt)
11.0
10.2
10.3
10.6
42.1
9.9
10.0
10.7
Third-party bauxite shipments (mdmt)
0.8
0.6
1.0
1.1
3.5
1.9
1.8
1.9
Alumina production (kmt)
3,209
3,226
3,092
3,017
12,544
2,755
2,559
2,805
Third-party alumina shipments (kmt)
2,277
2,438
2,244
2,210
9,169
1,929
2,136
2,374
Intersegment alumina shipments (kmt)
940
984
1,005
1,029
3,958
1,039
944
966
Average realized third-party price per
metric ton of alumina
$
375
$
442
$
371
$
342
$
384
$
371
$
363
$
354
Third-party bauxite sales
$
43
$
34
$
59
$
68
$
204
$
136
$
113
$
111
Third-party alumina sales
$
855
$
1,077
$
832
$
756
$
3,520
$
721
$
781
$
846
Intersegment alumina sales
$
413
$
483
$
412
$
400
$
1,708
$
421
$
397
$
381
Segment Adjusted EBITDA(1)
$
302
$
358
$
78
$
50
$
788
$
103
$
33
$
53
Depreciation and amortization
$
85
$
84
$
74
$
69
$
312
$
77
$
80
$
89
Equity income (loss)
$
1
$
(5
)
$
(18
)
$
(17
)
$
(39
)
$
(17
)
$
(11
)
$
(9
)
Aluminum:
Aluminum production (kmt)
498
499
497
516
2,010
518
523
532
Total aluminum shipments (kmt)
634
674
621
641
2,570
600
623
630
Average realized third-party price per
metric ton of aluminum
$
3,861
$
3,864
$
3,204
$
2,889
$
3,457
$
3,079
$
2,924
$
2,647
Third-party sales
$
2,388
$
2,539
$
1,976
$
1,832
$
8,735
$
1,810
$
1,788
$
1,644
Intersegment sales
$
7
$
8
$
10
$
2
$
27
$
3
$
4
$
4
Segment Adjusted EBITDA(1)
$
713
$
596
$
152
$
31
$
1,492
$
184
$
110
$
79
Depreciation and amortization
$
69
$
71
$
70
$
73
$
283
$
70
$
68
$
69
Equity income (loss)
$
39
$
40
$
(5
)
$
(26
)
$
48
$
(57
)
$
(16
)
$
(15
)
Reconciliation of total segment
Adjusted EBITDA to consolidated net income (loss) attributable to
Alcoa Corporation:
Total Segment Adjusted EBITDA(1)
$
1,015
$
954
$
230
$
81
$
2,280
$
287
$
143
$
132
Unallocated amounts:
Transformation(2)
(14
)
(11
)
(19
)
(22
)
(66
)
(8
)
(17
)
(29
)
Intersegment eliminations
100
10
23
5
138
(8
)
31
(4
)
Corporate expenses(3)
(29
)
(35
)
(27
)
(37
)
(128
)
(30
)
(24
)
(33
)
Provision for depreciation, depletion, and
amortization
(160
)
(161
)
(149
)
(147
)
(617
)
(153
)
(153
)
(163
)
Restructuring and other charges, net
(125
)
75
(652
)
6
(696
)
(149
)
(24
)
(22
)
Interest expense
(25
)
(30
)
(25
)
(26
)
(106
)
(26
)
(27
)
(26
)
Other income (expenses), net
14
206
(35
)
(67
)
118
(54
)
(6
)
(85
)
Other(4)
(13
)
(100
)
(75
)
(33
)
(221
)
(39
)
(22
)
2
Consolidated income (loss) before income
taxes
763
908
(729
)
(240
)
702
(180
)
(99
)
(228
)
(Provision for) benefit from income
taxes
(210
)
(234
)
(40
)
(180
)
(664
)
(52
)
(22
)
35
Net (income) loss attributable to
noncontrolling interest
(84
)
(125
)
23
25
(161
)
1
19
25
Consolidated net income (loss)
attributable to Alcoa Corporation
$
469
$
549
$
(746
)
$
(395
)
$
(123
)
$
(231
)
$
(102
)
$
(168
)
The difference between segment totals and
consolidated amounts is in Corporate.
(1)
Alcoa Corporation’s definition of Adjusted
EBITDA (Earnings before interest, taxes, depreciation, and
amortization) is net margin plus an add-back for depreciation,
depletion, and amortization. Net margin is equivalent to Sales
minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development
expenses; and Provision for depreciation, depletion, and
amortization. The Adjusted EBITDA presented may not be comparable
to similarly titled measures of other companies.
(2)
Transformation includes, among other
items, the Adjusted EBITDA of previously closed operations.
(3)
Corporate expenses are composed of general
administrative and other expenses of operating the corporate
headquarters and other global administrative facilities, as well as
research and development expenses of the corporate technical
center.
(4)
Other includes certain items that are not
included in the Adjusted EBITDA of the reportable segments.
(5)
Beginning in January 2023, the Company
changed its operating segments by combining the Bauxite and Alumina
segments, and reported its financial results in the following two
segments: (i) Alumina and (ii) Aluminum. Segment information for
all prior periods presented has been updated to reflect the new
segment structure.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited)
(in millions, except per-share
amounts)
Adjusted Income
(Loss) Income
Diluted EPS(4)
Quarter ended
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
September 30, 2023
June 30, 2023
September 30, 2022
Net loss attributable to Alcoa
Corporation
$
(168
)
$
(102
)
$
(746
)
$
(0.94
)
$
(0.57
)
$
(4.17
)
Special items:
Restructuring and other charges, net
22
24
652
Other special items(1)
13
35
72
Discrete and other tax items
impacts(2)
(60
)
1
(1
)
Tax impact on special items(3)
(6
)
(13
)
(21
)
Noncontrolling interest impact(3)
(3
)
(7
)
(16
)
Subtotal
(34
)
40
686
Net loss attributable to Alcoa Corporation
– as adjusted
$
(202
)
$
(62
)
$
(60
)
$
(1.14
)
$
(0.35
)
$
(0.33
)
Net loss attributable to Alcoa Corporation
– as adjusted and Diluted EPS – as adjusted are non-GAAP financial
measures. Management believes these measures are meaningful to
investors because management reviews the operating results of Alcoa
Corporation excluding the impacts of restructuring and other
charges, various tax items, and other special items (collectively,
“special items”). There can be no assurances that additional
special items will not occur in future periods. To compensate for
this limitation, management believes it is appropriate to consider
Net loss attributable to Alcoa Corporation and Diluted EPS
determined under GAAP as well as Net loss attributable to Alcoa
Corporation – as adjusted and Diluted EPS – as adjusted.
(1)
Other special items include the
following:
- for the quarter ended September 30, 2023, a net unfavorable
change in mark-to-market energy derivative instruments ($21), gain
on sale of non-core rights ($9), and charges for other special
items ($1);
- for the quarter ended June 30, 2023, a net unfavorable change
in mark-to-market energy derivative instruments ($22) and costs
related to the restart process at the Alumar, Brazil smelter ($13);
and,
- for the quarter ended September 30, 2022, a net unfavorable
change in mark-to-market energy derivative instruments ($49), costs
related to the restart process at the Alumar, Brazil smelter ($14),
costs related to the restart process of the Portland, Australia
smelter ($6), and charges for other special items ($3).
(2)
Discrete and other tax items are generally
unusual or infrequently occurring items, changes in law, items
associated with uncertain tax positions, or the effect of
measurement-period adjustments and include the following:
- for the quarter ended September 30, 2023, a benefit related to
the reversal of a valuation allowance on deferred tax assets of the
Company's subsidiaries in Iceland ($58) and a net benefit for other
discrete tax items ($2);
- for the quarter ended June 30, 2023, net charge for discrete
tax items ($1); and,
- for the quarter ended September 30, 2022, net benefit for
discrete tax items ($1).
(3)
The tax impact on special items is based
on the applicable statutory rates in the jurisdictions where the
special items occurred. The noncontrolling interest impact on
special items represents Alcoa’s partner’s share of certain special
items.
(4)
In any period with a Net loss attributable
to Alcoa Corporation (GAAP or as adjusted), the average number of
shares applicable to diluted earnings per share exclude certain
share equivalents as their effect is anti-dilutive.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted EBITDA
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
Net loss attributable to Alcoa
Corporation
$
(168
)
$
(102
)
$
(746
)
Add:
Net loss attributable to noncontrolling
interest
(25
)
(19
)
(23
)
(Benefit from) provision for income
taxes
(35
)
22
40
Other expenses, net
85
6
35
Interest expense
26
27
25
Restructuring and other charges, net
22
24
652
Provision for depreciation, depletion, and
amortization
163
153
149
Adjusted EBITDA
68
111
132
Special items(1)
2
26
78
Adjusted EBITDA, excluding special
items
$
70
$
137
$
210
Alcoa Corporation’s definition of Adjusted
EBITDA (Earnings before interest, taxes, depreciation, and
amortization) is net margin plus an add-back for depreciation,
depletion, and amortization. Net margin is equivalent to Sales
minus the following items: Cost of goods sold; Selling, general
administrative, and other expenses; Research and development
expenses; and Provision for depreciation, depletion, and
amortization. Adjusted EBITDA is a non-GAAP financial measure.
Management believes this measure is meaningful to investors because
Adjusted EBITDA provides additional information with respect to
Alcoa Corporation’s operating performance and the Company’s ability
to meet its financial obligations. The Adjusted EBITDA presented
may not be comparable to similarly titled measures of other
companies.
(1)
Special items include the following (see
reconciliation of Adjusted Income above for additional
information):
- for the quarter ended September 30, 2023, costs related to the
restart process at the Alumar, Brazil smelter ($1) and costs
related to the restart process at the San Ciprián, Spain smelter
($1);
- for the quarter ended June 30, 2023, costs related to the
restart process at the Alumar, Brazil smelter ($13). Additionally,
due to changes in price in the Australian power market, the
mark-to-market contracts associated with the Portland smelter have
generated gains ($13) in Other expenses, net which economically
offset a portion of the cost of power recorded in Cost of goods
sold. This non-GAAP reclass presents the net cost of power within
Cost of goods sold; and,
- for the quarter ended September 30, 2022, net cost of power
associated with the Portland smelter ($57), costs related to the
restart process at the Alumar, Brazil smelter ($14), costs related
to the restart process of the Portland, Australia smelter ($6), and
charges for other special items ($1).
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
Cash provided from (used for)
operations
$
69
$
(13
)
$
134
Capital expenditures
(145
)
(115
)
(128
)
Free cash flow
$
(76
)
$
(128
)
$
6
Free Cash Flow is a non-GAAP financial
measure. Management believes this measure is meaningful to
investors because management reviews cash flows generated from
operations after taking into consideration capital expenditures,
which are necessary to maintain and expand Alcoa Corporation’s
asset base and are expected to generate future cash flows from
operations. It is important to note that Free Cash Flow does not
represent the residual cash flow available for discretionary
expenditures since other non-discretionary expenditures, such as
mandatory debt service requirements, are not deducted from the
measure.
Net Debt
September 30, 2023
December 31, 2022
Short-term borrowings
$
42
$
—
Long-term debt due within one year
1
1
Long-term debt, less amount due within one
year
1,809
1,806
Total debt
1,852
1,807
Less: Cash and cash equivalents
926
1,363
Net debt
$
926
$
444
Net debt is a non-GAAP financial measure.
Management believes this measure is meaningful to investors because
management assesses Alcoa Corporation’s leverage position after
considering available cash that could be used to repay outstanding
debt. When cash exceeds total debt, the measure is expressed as net
cash.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted Net Debt and Proportional
Adjusted Net Debt
September 30, 2023
December 31, 2022
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
42
$
—
$
42
$
—
$
—
$
—
Long-term debt due within one year
1
—
1
1
—
1
Long-term debt, less amount due within one
year
1,809
32
1,777
1,806
32
1,774
Total debt
1,852
32
1,820
1,807
32
1,775
Less: Cash and cash equivalents
926
106
820
1,363
94
1,269
Net debt (net cash)
926
(74
)
1,000
444
(62
)
506
Plus: Net pension / OPEB liability
572
9
563
614
9
605
Adjusted net debt (net cash)
$
1,498
$
(65
)
$
1,563
$
1,058
$
(53
)
$
1,111
Net debt is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because management assesses Alcoa Corporation’s leverage position
after considering available cash that could be used to repay
outstanding debt. When cash exceeds total debt, the measure is
expressed as net cash.
Adjusted net debt and proportional
adjusted net debt are also non-GAAP financial measures. Management
believes that these additional measures are meaningful to investors
because management also assesses Alcoa Corporation’s leverage
position after considering available cash that could be used to
repay outstanding debt and net pension/OPEB liability, net of the
portion of those items attributable to noncontrolling interest
(NCI).
DWC Working Capital and Days Working
Capital
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
Receivables from customers
$
691
$
702
$
749
Add: Inventories
2,190
2,400
2,400
Less: Accounts payable, trade
(1,472
)
(1,491
)
(1,590
)
DWC working capital
$
1,409
$
1,611
$
1,559
Sales
$
2,602
$
2,684
$
2,851
Number of days in the quarter
92
91
92
Days working capital(1)
50
55
50
DWC working capital and Days working
capital are non-GAAP financial measures. Management believes that
these measures are meaningful to investors because management uses
its working capital position to assess Alcoa Corporation’s
efficiency in liquidity management.
(1)
Days working capital is calculated as DWC
working capital divided by the quotient of Sales and number of days
in the quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231011565037/en/
Investor Contact: James Dwyer +1 412 992 5450
James.Dwyer@alcoa.com Media Contact: Jim Beck +1 412 315
2909 Jim.Beck@alcoa.com
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