Alcoa Corporation (NYSE: AA) today reported fourth quarter and
full year 2023 results that demonstrate progress on key
priorities.
Financial Results and Highlights
M, except per share amounts
4Q23
3Q23
FY23
FY22
Revenue
$2,595
$2,602
$10,551
$12,451
Net loss attributable to Alcoa
Corporation
$(150)
$(168)
$(651)
$(123)
Loss per share attributable to Alcoa
Corporation
$(0.84)
$(0.94)
$(3.65)
$(0.68)
Adjusted net (loss) income
$(100)
$(202)
$(405)
$869
Adjusted (loss) earnings per share
$(0.56)
$(1.14)
$(2.27)
$4.71
Adjusted EBITDA excluding special
items
$89
$70
$536
$2,224
Fourth Quarter 2023
- Received approval to continue bauxite mining in Western
Australia
- Received clarification on qualification for Section 45X of the
Inflation Reduction Act (IRA)
- Began restart of additional smelting capacity at Warrick
Operations in Indiana
- Initiated engagement with Spanish stakeholders regarding path
forward for the San Ciprián complex
Full Year 2023
- Increased aluminum production by 5 percent sequentially; set
annual production records across the Canadian smelter system and at
the Mosjøen smelter in Norway
- Returned cash to stockholders through $72 million in quarterly
dividend payments
“In the fourth quarter of 2023, we made progress on key
challenges, including gaining approval on our Western Australia
bauxite mine plans, and we’re continuing to advance operational
stability while we work to improve our global asset portfolio,”
said Alcoa President and CEO William F. Oplinger. “We are building
on our positive momentum and implementing actions to drive improved
profitability.”
Fourth Quarter 2023 Results
- Production: Alumina production decreased 1 percent
sequentially to 2.79 million metric tons on lower production from
the Australia refineries. In Aluminum, Alcoa produced 541,000
metric tons, a 2 percent increase from the third-quarter’s strong
output.
- Shipments: In the Alumina segment, third-party shipments
of alumina decreased 5 percent sequentially primarily due to
decreased trading. In Aluminum, total shipments increased 1 percent
sequentially.
- Revenue: The Company’s total third-party revenue was
flat sequentially at $2.60 billion. In the Alumina segment, revenue
decreased 5 percent on an average realized third-party price
decrease of 3 percent and lower shipments. In the Aluminum segment,
revenue increased 2 percent on an average realized third-party
price increase of 1 percent and higher shipments.
- Net loss attributable to Alcoa Corporation was $150
million, or $0.84 per share. Sequentially, the results include
lower raw material and production costs and favorable currency
impacts, partially offset by higher energy costs mainly due to
carbon dioxide compensation changes in Norway. Additionally, the
results include a $152 million charge to tax expense to record a
valuation allowance on Alcoa World Alumina Brasil Ltda. (AWAB)
deferred tax assets, and reflect the non-recurrence of a tax
benefit of $58 million recognized for the full reversal of the
valuation allowance recorded against the deferred tax assets of the
Company’s subsidiaries in Iceland in the third quarter 2023. The
Norwegian government recently approved an updated budget proposal
that limits carbon dioxide compensation to be paid in 2024 based on
2023 power purchased and used in production. The unfavorable
sequential impact is $24 million, which includes amounts previously
accrued through September 30, 2023 and the absence of related
accruals for the fourth quarter 2023.
- Adjusted net loss was $100 million, or $0.56 per share,
excluding the impact from net special items of $50 million. Notable
special items include $102 million in discrete and other tax items
primarily related to the recognition of the AWAB tax valuation
allowance discussed above, a gain on the sale of carbon credits
related to a closed site of $19 million, mark-to-market gains on
energy contracts of $7 million, and noncontrolling interest impacts
on above items of $40 million.
- Adjusted EBITDA excluding special items was $89 million,
a sequential increase of $19 million primarily due to lower raw
material and production costs, partially offset by higher energy
costs primarily in Europe. In December 2023, the U.S. Treasury
Department clarified that commercial grade aluminum can qualify for
the Advanced Manufacturing Tax Credit on Section 45X (IRA 45X
credit), enacted as part of the IRA. In the fourth quarter 2023,
the Company recorded the full year benefit totaling $36 million in
Cost of goods sold at the Massena smelter in New York and the
Warrick smelter in Indiana.
- Cash: Alcoa ended the quarter with a cash balance of
$944 million. Cash provided from operations was $198 million. Cash
provided from financing activities was $6 million, primarily
related to $18 million of net contributions from noncontrolling
interest and $14 million of net short-term borrowings, partially
offset by $18 million of cash dividends on common stock. Cash used
for investing activities was $197 million, primarily related to
capital expenditures of $188 million and $19 million in
contributions to the ELYSISTM partnership. Free cash flow was $10
million.
- Working capital: For the fourth quarter, Receivables
from customers of $0.7 billion, Inventories of $2.2 billion and
Accounts payable, trade of $1.7 billion comprised DWC working
capital. The Company reported 39 days working capital, a sequential
improvement of eleven days. Accounts payable days increased by nine
days primarily due to timing of energy and raw materials payables
and increased capital expenditures.
Full Year 2023 Results
- Production: Alumina production decreased 13 percent
annually primarily due to lower grade bauxite at the Australia
refineries and partial curtailments at the San Ciprián refinery in
Spain and the Kwinana refinery in Australia. Aluminum production
increased 5 percent annually, primarily due to the restart of the
Alumar smelter in Brazil.
- Shipments: In the Alumina segment, third-party shipments
of alumina decreased 5 percent primarily due to reduced production
at the Australia refineries and the San Ciprián refinery, partially
offset by increased trading opportunities. In Aluminum, total
shipments decreased 3 percent annually primarily due to reduced
production at the San Ciprián and Lista smelters and decreased
trading opportunities, partially offset by higher shipments due to
the Alumar smelter restart.
- Revenue: The Company’s total third-party revenue
decreased 15 percent to $10.6 billion, driven primarily by lower
average realized third-party prices for aluminum and alumina.
Annually, the average realized third-party price of alumina
decreased 7 percent to $358 per metric ton and the average realized
third-party price of aluminum decreased 18 percent to $2,828 per
metric ton.
- Net loss attributable to Alcoa Corporation was $651
million, or $3.65 per share, compared with the prior year’s net
loss of $123 million, or $0.68 per share. The results reflect lower
aluminum and alumina prices and higher production costs. In
addition to the restructuring charges noted below, the 2023 results
include a net charge to tax expense of $94 million discussed
above.
- Adjusted net loss was $405 million, or $2.27 per share,
excluding the impact from net special items of $246 million.
Notable special items include charges of $117 million related to
the permanent closure of the Intalco smelter, $53 million for
certain employee obligations related to the February 2023 viability
agreement for the San Ciprián smelter, $33 million related to the
restart costs at the Alumar smelter, $45 million in discrete and
other tax items primarily related to tax valuation allowance
adjustments discussed above, partially offset by the noncontrolling
interest impacts on above items of $42 million.
- Adjusted EBITDA excluding special items decreased 76
percent sequentially to $536 million, mainly attributable to
year-over-year lower average realized prices for aluminum and
alumina, as well as higher production costs primarily in the
Alumina segment.
- Cash: Alcoa ended 2023 with a cash balance of $944
million. Cash provided from operations was $91 million. Cash
provided from financing activities was $57 million, primarily
related to $158 million of net contributions from noncontrolling
interest and $55 million of net short-term borrowings, partially
offset by $72 million in cash dividends on common stock, $52
million for site separation expenditures related to the 2021 sale
of the Warrick Rolling Mill in Indiana and $34 million for payments
related to tax withholding on stock-based compensation awards. Cash
used for investing activities was $585 million primarily due to
$531 million in capital expenditures and $70 million in
contributions to the ELYSISTM partnership. Free cash flow was
negative $440 million.
- Working capital: The Company reported 39 days working
capital, a year-over-year improvement of eleven days. The change
primarily relates to a decrease of seven days in inventory
primarily due to lower volumes and prices for raw materials and a
decrease of four days in accounts receivable primarily due to lower
pricing for aluminum and favorable receivables collection
terms.
Key Strategic Actions
Operational
- WA mine approvals: In December 2023, the Western
Australian (WA) Government approved Alcoa’s latest five-year mine
plan – known as the 2023-2027 Mining and Management Program (MMP) –
for its Huntly and Willowdale bauxite mines. The approvals include
operating enhancements to meet evolving requirements and
expectations. In addition, the WA Government granted an exemption
that allows Alcoa to continue its mining operations while the WA
Environmental Protection Authority (EPA) assesses the environmental
impact on parts of the MMP.
- Kwinana refinery: On January 8, 2024, the Company
announced the decision to curtail the Kwinana refinery in Australia
beginning in the second quarter of 2024.
- San Ciprián complex: In December 2023, the Company
initiated engagement with Spanish stakeholders at the San Ciprián
complex regarding financial losses and to find a long-term solution
for the combined complex. Since the smelter curtailed in January
2022, the Company has honored its commitments under the viability
agreements signed in December 2021 and February 2023, including
paying all employees, making capital investments, and preparing for
restart. However, current market conditions, including the cost for
energy, do not support an economically viable restart. Further,
permitting and development of renewable energy projects, which were
a critical component of the restart, have been delayed. The
refinery and smelter incurred significant losses in 2023 and prior
years which have been funded with internal credit lines that are
now nearing their limits, and which the operations have no ability
to repay.
- Warrick Operations: During the fourth quarter 2023, the
Company took actions to improve the competitiveness of its Warrick
Operations site in Indiana. Alcoa began the restart of one line
(54,000 mtpy) that was curtailed in July 2022, and also began the
closure of a line (54,000 mtpy) that had not operated since 2016 to
allow for future capital investments to improve casting
capabilities. Restructuring charges related to the closure totaled
$1 million in the fourth quarter 2023 to establish reserves related
to demolition obligations. Additionally, Alcoa recorded $1 million
in Cost of goods sold to write-off the remaining net book value of
related inventory.
Financial
- Productivity and competitiveness programs: In January
2024, the Company initiated a productivity and competitiveness
program across its global operations and functions. The program is
a first step in the Company’s objective to improve competitiveness
and includes a target to save approximately 5 percent of operating
costs, exclusive of raw materials, energy and transportation costs
which are already under active management and cost control
programs. Total savings are expected to approximate $100 million on
a run rate basis and to be achieved by the first quarter of
2025.
- Revolving Credit Facility: On January 17, 2024, Alcoa
amended its Revolving Credit Facility to provide the Company
flexibility to implement its portfolio actions during 2024; terms
include a temporary reduction of the minimum interest coverage
ratio required thereunder from 4.00 to 1.00 to 3.00 to 1.00, and an
increase to the maximum addback for cash restructuring charges to
Consolidated EBITDA (as defined in the Revolving Credit Facility),
in each case for the 2024 fiscal year. In connection with the
amendment, Alcoa also agreed to provide collateral for its
obligations under the Revolving Credit Facility, with a
ratings-based release mechanism that would apply starting in
2025.
2024 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.
For 2024, the Company is providing an outlook for both
production and shipments for both segments. Alcoa expects alumina
production to range between 9.8 and 10.0 million metric tons and
alumina shipments to range between 12.7 and 12.9 million metric
tons in 2024. The difference between production and shipments
reflects trading volumes and externally sourced alumina to fulfill
customer contracts due to the curtailment of the Kwinana refinery.
The Aluminum segment is expected to produce 2.2 to 2.3 million
metric tons, an increase from 2023 due to smelter restarts.
Aluminum shipments are expected to be between 2.5 million and 2.6
million metric tons, consistent with 2023, as increased shipments
from smelter restarts are offset by lower trading volumes.
Within first quarter 2024 Alumina Segment Adjusted EBITDA, the
Company expects approximately $15 million of unfavorable impacts
related to higher maintenance costs and lower shipments in
Australia. In addition, the Company expects sequential benefits
from lower raw material and energy costs to be fully offset by
other factors.
Within first quarter 2024 Aluminum Segment Adjusted EBITDA, the
Company expects sequential favorable energy costs, primarily due to
lower prices in Brazil and Norway, to be fully offset by lower
product premiums and an unfavorable net impact due to the
non-recurrence of fourth quarter 2023 items related to the IRA 45X
credit and carbon dioxide compensation changes in Norway. Alumina
costs in the Aluminum segment are expected to be unfavorable by $5
million sequentially. Additionally, the Company expects an
unfavorable sequential impact of approximately $20 million from
hedge programs for the Alumar smelter restart, which ended in
December 2023.
Other income for the fourth quarter of 2023 included favorable
impacts of $51 million related to foreign currency gains that may
not recur.
Based on current alumina and aluminum market conditions, Alcoa
expects negligible first quarter operational tax expense, which may
vary with market conditions and jurisdictional profitability.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m.
Eastern Standard Time (EST) on Wednesday, January 17, 2024, to
present fourth quarter and full year 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. EST on January 17, 2024. 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
December 31, 2023
September 30, 2023
December 31, 2022
Sales
$
2,595
$
2,602
$
2,663
Cost of goods sold (exclusive of expenses
below)
2,425
2,469
2,596
Selling, general administrative, and other
expenses
64
56
64
Research and development expenses
14
9
9
Provision for depreciation, depletion, and
amortization
163
163
147
Restructuring and other charges, net
(11
)
22
(6
)
Interest expense
28
26
26
Other (income) expenses, net
(11
)
85
67
Total costs and expenses
2,672
2,830
2,903
Loss before income taxes
(77
)
(228
)
(240
)
Provision for (benefit from) income
taxes
150
(35
)
180
Net loss
(227
)
(193
)
(420
)
Less: Net loss attributable to
noncontrolling interest
(77
)
(25
)
(25
)
NET LOSS ATTRIBUTABLE TO ALCOA
CORPORATION
$
(150
)
$
(168
)
$
(395
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net loss
$
(0.84
)
$
(0.94
)
$
(2.24
)
Average number of shares
178,466,610
178,443,311
176,952,812
Diluted:
Net loss
$
(0.84
)
$
(0.94
)
$
(2.24
)
Average number of shares
178,466,610
178,443,311
176,952,812
Alcoa Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Year ended
December 31, 2023
December 31, 2022
Sales
$
10,551
$
12,451
Cost of goods sold (exclusive of expenses
below)
9,813
10,212
Selling, general administrative, and other
expenses
226
204
Research and development expenses
39
32
Provision for depreciation, depletion, and
amortization
632
617
Restructuring and other charges, net
184
696
Interest expense
107
106
Other expenses (income), net
134
(118
)
Total costs and expenses
11,135
11,749
(Loss) income before income taxes
(584
)
702
Provision for income taxes
189
664
Net (loss) income
(773
)
38
Less: Net (loss) income attributable to
noncontrolling interest
(122
)
161
NET LOSS ATTRIBUTABLE TO ALCOA
CORPORATION
$
(651
)
$
(123
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net loss
$
(3.65
)
$
(0.68
)
Average number of shares
178,311,096
180,645,163
Diluted:
Net loss
$
(3.65
)
$
(0.68
)
Average number of shares
178,311,096
180,645,163
Alcoa Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
944
$
1,363
Receivables from customers
656
778
Other receivables
152
131
Inventories
2,158
2,427
Fair value of derivative instruments
29
134
Prepaid expenses and other current
assets(1)
466
417
Total current assets
4,405
5,250
Properties, plants, and equipment
20,381
19,605
Less: accumulated depreciation, depletion,
and amortization
13,596
13,112
Properties, plants, and equipment, net
6,785
6,493
Investments
979
1,122
Deferred income taxes
333
296
Fair value of derivative instruments
3
2
Other noncurrent assets(2)
1,653
1,593
Total assets
$
14,158
$
14,756
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,714
$
1,757
Accrued compensation and retirement
costs
357
335
Taxes, including income taxes
88
230
Fair value of derivative instruments
214
200
Other current liabilities
578
481
Long-term debt due within one year
79
1
Total current liabilities
3,030
3,004
Long-term debt, less amount due within one
year
1,732
1,806
Accrued pension benefits
279
213
Accrued other postretirement benefits
443
480
Asset retirement obligations
772
711
Environmental remediation
202
226
Fair value of derivative instruments
1,092
1,026
Noncurrent income taxes
194
215
Other noncurrent liabilities and deferred
credits
568
486
Total liabilities
8,312
8,167
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,187
9,183
Accumulated deficit
(1,293
)
(570
)
Accumulated other comprehensive loss
(3,645
)
(3,539
)
Total Alcoa Corporation shareholders’
equity
4,251
5,076
Noncontrolling interest
1,595
1,513
Total equity
5,846
6,589
Total liabilities and equity
$
14,158
$
14,756
(1)
This line item includes $32 and $55 of
restricted cash at December 31, 2023 and December 31, 2022,
respectively.
(2)
This line item includes $71 and $56 of
noncurrent restricted cash at December 31, 2023 and December 31,
2022, respectively.
Alcoa Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Year Ended December
31,
2023
2022
CASH FROM OPERATIONS
Net (loss) income
$
(773
)
$
38
Adjustments to reconcile net (loss) income
to cash from operations:
Depreciation, depletion, and
amortization
632
617
Deferred income taxes
(54
)
219
Equity loss, net of dividends
201
4
Restructuring and other charges, net
184
696
Net loss from investing activities – asset
sales
18
10
Net periodic pension benefit cost
6
54
Stock-based compensation
35
40
Loss (gain) on mark-to-market derivative
financial contracts
26
(44
)
Other
78
53
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
Decrease (increase) in receivables
52
(59
)
Decrease (increase) in inventories
243
(547
)
Decrease in prepaid expenses and other
current assets
39
44
(Decrease) increase in accounts payable,
trade
(74
)
189
Decrease in accrued expenses
(133
)
(173
)
Decrease in taxes, including income
taxes
(114
)
(152
)
Pension contributions
(24
)
(17
)
Increase in noncurrent assets
(158
)
(87
)
Decrease in noncurrent liabilities
(93
)
(63
)
CASH PROVIDED FROM OPERATIONS
91
822
FINANCING ACTIVITIES
Additions to debt
127
4
Payments on debt
(72
)
(1
)
Proceeds from the exercise of employee
stock options
1
22
Repurchase of common stock
—
(500
)
Dividends paid on Alcoa common stock
(72
)
(72
)
Payments related to tax withholding on
stock-based compensation awards
(34
)
(19
)
Financial contributions for the
divestiture of businesses
(52
)
(33
)
Contributions from noncontrolling
interest
188
214
Distributions to noncontrolling
interest
(30
)
(379
)
Other
1
(4
)
CASH PROVIDED FROM (USED FOR) FINANCING
ACTIVITIES
57
(768
)
INVESTING ACTIVITIES
Capital expenditures
(531
)
(480
)
Proceeds from the sale of assets
4
5
Additions to investments
(70
)
(32
)
Sale of investments
—
10
Other
12
2
CASH USED FOR INVESTING ACTIVITIES
(585
)
(495
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
10
(9
)
Net change in cash and cash equivalents
and restricted cash
(427
)
(450
)
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
$
1,047
$
1,474
Alcoa Corporation and
subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
4Q22
2022
1Q23
2Q23
3Q23
4Q23
2023
Alumina(5):
Bauxite production (mdmt)
10.6
42.1
9.9
10.0
10.7
10.4
41.0
Third-party bauxite shipments (mdmt)
1.1
3.5
1.9
1.8
1.9
2.0
7.6
Alumina production (kmt)
3,017
12,544
2,755
2,559
2,805
2,789
10,908
Third-party alumina shipments (kmt)
2,210
9,169
1,929
2,136
2,374
2,259
8,698
Intersegment alumina shipments (kmt)
1,029
3,958
1,039
944
966
1,176
4,125
Average realized third-party price per
metric ton of alumina
$
342
$
384
$
371
$
363
$
354
$
344
$
358
Third-party bauxite sales
$
68
$
204
$
136
$
113
$
111
$
124
$
484
Third-party alumina sales
$
756
$
3,520
$
721
$
781
$
846
$
781
$
3,129
Intersegment alumina sales
$
400
$
1,708
$
421
$
397
$
381
$
449
$
1,648
Segment Adjusted EBITDA(1)
$
50
$
788
$
103
$
33
$
53
$
84
$
273
Depreciation and amortization
$
69
$
312
$
77
$
80
$
89
$
87
$
333
Equity loss
$
(17
)
$
(39
)
$
(17
)
$
(11
)
$
(9
)
$
(11
)
$
(48
)
Aluminum:
Aluminum production (kmt)
516
2,010
518
523
532
541
2,114
Total aluminum shipments (kmt)
641
2,570
600
623
630
638
2,491
Average realized third-party price per
metric ton of aluminum
$
2,889
$
3,457
$
3,079
$
2,924
$
2,647
$
2,678
$
2,828
Third-party sales
$
1,832
$
8,735
$
1,810
$
1,788
$
1,644
$
1,683
$
6,925
Intersegment sales
$
2
$
27
$
3
$
4
$
4
$
4
$
15
Segment Adjusted EBITDA(1)
$
31
$
1,492
$
184
$
110
$
79
$
88
$
461
Depreciation and amortization
$
73
$
283
$
70
$
68
$
69
$
70
$
277
Equity (loss) income
$
(26
)
$
48
$
(57
)
$
(16
)
$
(15
)
$
(18
)
$
(106
)
Reconciliation of total segment
Adjusted EBITDA to consolidated net loss attributable to Alcoa
Corporation:
Total Segment Adjusted EBITDA(1)
$
81
$
2,280
$
287
$
143
$
132
$
172
$
734
Unallocated amounts:
Transformation(2)
(22
)
(66
)
(8
)
(17
)
(29
)
(26
)
(80
)
Intersegment eliminations
5
138
(8
)
31
(4
)
(12
)
7
Corporate expenses(3)
(37
)
(128
)
(30
)
(24
)
(33
)
(46
)
(133
)
Provision for depreciation, depletion, and
amortization
(147
)
(617
)
(153
)
(153
)
(163
)
(163
)
(632
)
Restructuring and other charges, net
6
(696
)
(149
)
(24
)
(22
)
11
(184
)
Interest expense
(26
)
(106
)
(26
)
(27
)
(26
)
(28
)
(107
)
Other (expenses) income, net
(67
)
118
(54
)
(6
)
(85
)
11
(134
)
Other(4)
(33
)
(221
)
(39
)
(22
)
2
4
(55
)
Consolidated (loss) income before income
taxes
(240
)
702
(180
)
(99
)
(228
)
(77
)
(584
)
(Provision for) benefit from income
taxes
(180
)
(664
)
(52
)
(22
)
35
(150
)
(189
)
Net loss (income) attributable to
noncontrolling interest
25
(161
)
1
19
25
77
122
Consolidated net loss attributable to
Alcoa Corporation
$
(395
)
$
(123
)
$
(231
)
$
(102
)
$
(168
)
$
(150
)
$
(651
)
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
(Loss) Income
Quarter ended
Year ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net loss attributable to Alcoa
Corporation
$
(150
)
$
(168
)
$
(395
)
$
(651
)
$
(123
)
Special items:
Restructuring and other charges, net
(11
)
22
(6
)
184
696
Other special items(1)
(2
)
13
64
71
58
Discrete and other tax items
impacts(2)
102
(60
)
215
45
216
Tax impact on special items(3)
1
(6
)
(19
)
(12
)
4
Noncontrolling interest impact(3)
(40
)
(3
)
(3
)
(42
)
18
Subtotal
50
(34
)
251
246
992
Net (loss) income attributable to Alcoa
Corporation – as adjusted
$
(100
)
$
(202
)
$
(144
)
$
(405
)
$
869
Diluted EPS(4):
Net loss attributable to Alcoa Corporation
common shareholders
$
(0.84
)
$
(0.94
)
$
(2.24
)
$
(3.65
)
$
(0.68
)
Net (loss) income attributable to Alcoa
Corporation common shareholders - as adjusted
$
(0.56
)
$
(1.14
)
$
(0.82
)
$
(2.27
)
$
4.71
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 December 31, 2023, a net favorable change
in mark-to-market energy derivative instruments ($7), costs related
to the restart process of the Warrick Operations site in Indiana
($3), and net charges for other special items ($2);
- 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 December 31, 2022, a net unfavorable
change in mark-to-market energy derivative instruments ($31), costs
related to the restart process at the Alumar, Brazil smelter ($27),
costs related to the restart process of the Portland, Australia
smelter ($3), and charges for other special items ($3);
- for the year ended December 31, 2023, costs related to the
restart process at the Alumar, Brazil smelter ($33), an adjustment
to the gain on sale of the Warrick Rolling Mill in Evansville,
Indiana for additional site separation costs ($17), costs related
to the closure of the Intalco, Washington aluminum smelter ($16), a
net unfavorable change in mark-to-market energy derivative
instruments ($13), a gain on sale of non-core rights ($9), and
charges for other special items ($1); and,
- for the year ended December 31, 2022, costs related to the
restart process at the Alumar, Brazil smelter ($75), a net
favorable change in mark-to-market energy derivative instruments
($41), costs related to the restart process of the Portland,
Australia smelter ($12), an adjustment to the gain on sale of the
Warrick Rolling Mill in Evansville, Indiana for additional site
separation costs ($10), and charges for other special items
($2).
(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 December 31, 2023, a charge to record a
valuation allowance on AWAB's deferred tax assets due to cumulative
losses ($104) and a net benefit for other discrete tax items
($2);
- 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 December 31, 2022, a charge to record a
valuation allowance on Alcoa Alumínio’s deferred tax assets due to
cumulative losses ($217), a credit to increase AWAB's deferred tax
assets related to changes in utilization of the lower holiday tax
rate ($33), a net charge primarily to write off Alcoa Norway’s
deferred tax assets due to a legal entity restructuring ($30), and
a net charge for several other items ($1);
- for the year ended December 31, 2023, a charge to record a
valuation allowance on AWAB’s deferred tax assets due to cumulative
losses ($104), 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 ($1);
and,
- for the year ended December 31, 2022, a charge to record a
valuation allowance on Alcoa Alumínio’s deferred tax assets due to
cumulative losses ($217), a credit to increase AWAB’s deferred tax
assets related to changes in utilization of the lower holiday tax
rate ($33), a net charge primarily to write off Alcoa Norway’s
deferred tax assets due to a legal entity restructuring ($30), and
a net charge for several other items ($2).
(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
Year ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net loss attributable to Alcoa
Corporation
$
(150
)
$
(168
)
$
(395
)
$
(651
)
$
(123
)
Add:
Net (loss) income attributable to
noncontrolling interest
(77
)
(25
)
(25
)
(122
)
161
Provision for (benefit from) income
taxes
150
(35
)
180
189
664
Other (income) expenses, net
(11
)
85
67
134
(118
)
Interest expense
28
26
26
107
106
Restructuring and other charges, net
(11
)
22
(6
)
184
696
Provision for depreciation, depletion, and
amortization
163
163
147
632
617
Adjusted EBITDA
92
68
(6
)
473
2,003
Special items(1)
(3
)
2
35
63
221
Adjusted EBITDA, excluding special
items
$
89
$
70
$
29
$
536
$
2,224
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 December 31, 2023, the mark-to-market
contracts associated with the Portland smelter generated losses
($9) in Other (income) expenses, net which economically increase
the cost of power recorded in Cost of goods sold. This non-GAAP
reclass presents the total cost of power within Cost of goods sold.
This was partially offset by costs related to the restart process
at the Warrick Operations site in Indiana ($3) and net charges for
other special items ($3);
- 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 December 31, 2022, costs related to the
restart process at the Alumar, Brazil smelter ($27), net cost of
power associated with the Portland smelter ($5), and costs related
to the restart process of the Portland, Australia smelter
($3);
- for the year ended December 31, 2023, costs related to the
restart process at the Alumar, Brazil smelter ($33), costs related
to the closure of the Intalco, Washington aluminum smelter ($16),
net cost of power associated with the Portland smelter ($7), and
net charges for other special items ($7); and,
- for the year ended December 31, 2022, net cost of power
associated with the Portland smelter ($132), costs related to the
restart process at the Alumar, Brazil smelter ($75), costs related
to the restart process of the Portland, Australia smelter ($12),
and net charges for other special items ($2).
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
Year ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Cash provided from operations
$
198
$
69
$
118
$
91
$
822
Capital expenditures
(188
)
(145
)
(171
)
(531
)
(480
)
Free cash flow
$
10
$
(76
)
$
(53
)
$
(440
)
$
342
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
December 31, 2023
December 31, 2022
Short-term borrowings
$
56
$
—
Long-term debt due within one year
79
1
Long-term debt, less amount due within one
year
1,732
1,806
Total debt
1,867
1,807
Less: Cash and cash equivalents
944
1,363
Net debt
$
923
$
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
December 31, 2023
December 31, 2022
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
56
$
—
$
56
$
—
$
—
$
—
Long-term debt due within one year
79
31
48
1
—
1
Long-term debt, less amount due within one
year
1,732
—
1,732
1,806
32
1,774
Total debt
1,867
31
1,836
1,807
32
1,775
Less: Cash and cash equivalents
944
141
803
1,363
94
1,269
Net debt (net cash)
923
(110
)
1,033
444
(62
)
506
Plus: Net pension / OPEB liability
656
17
639
614
9
605
Adjusted net debt (net cash)
$
1,579
$
(93
)
$
1,672
$
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
December 31, 2023
September 30, 2023
December 31, 2022
Receivables from customers
$
656
$
691
$
778
Add: Inventories
2,158
2,190
2,427
Less: Accounts payable, trade
(1,714
)
(1,472
)
(1,757
)
DWC working capital
$
1,100
$
1,409
$
1,448
Sales
$
2,595
$
2,602
$
2,663
Number of days in the quarter
92
92
92
Days working capital(1)
39
50
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/20240111176492/en/
Investor Contact: James Dwyer +1 412 992 5450
James.Dwyer@alcoa.com
Media Contact: Jim Beck +1 412 315 2909
James.Beck@alcoa.com
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