Alcoa Corporation (NYSE: AA) today reported results for the
first quarter 2024, a period that included the announced
acquisition of Alumina Limited and continued action on near-term
improvements.
Financial Results and Highlights
M, except per share amounts
1Q24
4Q23
1Q23
Revenue
$2,599
$2,595
$2,670
Net loss attributable to Alcoa
Corporation
$(252)
$(150)
$(231)
Loss per share attributable to Alcoa
Corporation
$(1.41)
$(0.84)
$(1.30)
Adjusted net loss
$(145)
$(100)
$(41)
Adjusted loss per share
$(0.81)
$(0.56)
$(0.23)
Adjusted EBITDA excluding special
items
$132
$89
$240
- Entered into binding agreement to acquire Alumina Limited in
all-stock transaction
- Initiated process for the potential sale of the San Ciprián
complex
- Completed restart of one potline at Warrick Operations
- Announced curtailment of Kwinana refinery in Australia to be
completed in the second quarter 2024
- Implemented productivity and competitiveness program
- Paid quarterly cash dividend of $0.10 per share of common
stock, totaling $19 million
- Finished the first quarter 2024 with cash balance of $1.4
billion, includes $737 million in net proceeds from March 2024
green bond issuance
“In the first quarter of 2024, we finalized the terms of our
acquisition of Alumina Limited, which will bring strategic,
operational, and financial flexibility,” said Alcoa President and
CEO William F. Oplinger. “Raw material prices and markets are
improving, and we are implementing near-term improvements to
further strengthen Alcoa for the future.”
First Quarter 2024 Results
- Production: Alumina production decreased 4 percent
sequentially to 2.67 million metric tons on lower production from
the Australia refineries. In Aluminum, Alcoa produced 542,000
metric tons, consistent with the fourth quarter’s strong
output.
- Shipments: In the Alumina segment, third-party shipments
of alumina increased 6 percent sequentially primarily due to
increased trading. In Aluminum, total shipments decreased 1 percent
sequentially.
- Revenue: The Company’s total third-party revenue of $2.6
billion was consistent with the prior quarter. In the Alumina
segment, third-party revenue increased 6 percent due to the higher
average realized third-party price for alumina and higher
shipments. In the Aluminum segment, third-party revenue decreased 3
percent due to the lower average realized third-party price for
aluminum, driven by the unfavorable sequential impact of the Alumar
smelter restart hedge program which ended in December 2023 and
timing of shipments.
- Net loss attributable to Alcoa Corporation was $252
million, or $1.41 per share. Sequentially, the results reflect
lower average realized third-party prices for aluminum and higher
production costs, partially offset by lower energy and raw material
costs. Additionally, the results include a charge of $197 million
related to the curtailment of the Kwinana refinery, and reflect the
non-recurrence of a charge to tax expense of $152 million to record
a valuation allowance on Alcoa World Alumina Brasil Ltda. (AWAB)
deferred tax assets in the fourth quarter 2023.
- Adjusted net loss was $145 million, or $0.81 per share,
excluding the impact from net special items of $107 million.
Notable special items include $197 million related to the
curtailment of the Kwinana refinery discussed above, partially
offset by tax and noncontrolling interest impacts of $117
million.
- Adjusted EBITDA excluding special items was $132
million, a sequential increase of $43 million primarily due to
lower energy and raw material costs, partially offset by lower
average realized third-party price for aluminum and higher
production costs. Production costs increased primarily due to the
non-recurrence of the full year benefit of $36 million for the
credit related to Section 45X of the Inflation Reduction Act
recorded in the fourth quarter 2023.
- Cash: Alcoa ended the quarter with a cash balance of
$1.4 billion. Cash used for operations was $223 million. Cash
provided from financing activities was $754 million primarily
related to the net proceeds from the debt issuance of $737 million.
Cash used for investing activities was $117 million primarily
related to capital expenditures of $101 million.
- Working capital: For the first quarter, Receivables from
customers of $0.9 billion, Inventories of $2.0 billion and Accounts
payable, trade of $1.6 billion comprised DWC working capital. Alcoa
reported 47 days working capital, a sequential increase of eight
days. The increase is primarily due to typical first quarter
increase in accounts receivable and a decrease in accounts
payable.
Key Actions
Strategic
- Alumina Limited: On March 11, 2024, Alcoa announced that
it entered into a binding Scheme Implementation Deed with Alumina
Limited (ASX: AWC), under which Alcoa will acquire Alumina Limited
in an all-scrip, or all-stock, transaction. The acquisition of
Alumina Limited will enhance Alcoa’s position as a leading pure
play, upstream aluminum company globally, while simplifying the
Company’s corporate structure and governance, resulting in greater
operational flexibility and strategic optionality.
Operational
- San Ciprián complex: During the first quarter of 2024,
Alcoa completed the restart of approximately 6 percent of pots at
the smelter in compliance with the February 2023 updated viability
agreement. Although both energy and API prices improved during the
quarter, the improvements are insufficient for the long-term
viability of the complex for Alcoa. Additionally, near-term
government support remains unlikely. While continuing to optimize
the smelter and refinery operations and preserve cash, and as part
of Alcoa's efforts to find a long-term solution for the complex,
Alcoa initiated a process for the potential sale of the complex
during the first quarter of 2024 and anticipates completing the bid
process by June 2024.
- Warrick Operations: During the first quarter 2024, the
Company completed the restart of one potline (54,000 mtpy) that was
curtailed in July 2022.
- Kwinana refinery: On January 8, 2024, the Company
announced the decision to curtail the Kwinana refinery in Australia
to be completed in the second quarter of 2024.
Financial
- Green bond issuance: On March 21, 2024, the Company
closed an offering of $750 million aggregate principal amount of
7.125 percent senior notes due in 2031. This was the Company’s
first notes issuance under its new Green Finance Framework, which
prioritizes climate change mitigation expenditures related to
circular or low carbon products, pollution prevention technologies,
renewable energy, and water management. Net proceeds from the
issuance, which can be allocated to qualifying expenditures on a
two year look back and three year look forward, are expected to
cover expenses associated with both new and existing
decarbonization and water management projects, research and
development, renewable energy, and the production of low carbon
alumina and aluminum products. The Company does not expect to
allocate part of the net proceeds to significant capital
investments in breakthrough technologies as those are not expected
to occur in the remainder of this decade.
- Productivity and competitiveness program: In January
2024, the Company initiated a productivity and competitiveness
program across its global operations and functions. The program is
part of the Company’s objective to improve overall competitiveness
and profitability 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.
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.
Alcoa expects 2024 total Alumina segment production and
shipments to remain unchanged from the prior projection, ranging
between 9.8 and 10.0 million metric tons, and between 12.7 and 12.9
million metric tons, respectively. 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.
Alcoa expects 2024 total Aluminum segment production and
shipments to remain unchanged from the prior projection, ranging
between 2.2 and 2.3 million metric tons, and between 2.5 and 2.6
million metric tons, respectively.
Within second quarter 2024 Alumina Segment Adjusted EBITDA, the
Company expects sequential unfavorable impacts of $20 million
related to higher seasonal maintenance and other mining costs for
the Australia operations.
Within second quarter 2024 Aluminum Segment Adjusted EBITDA, the
Company expects favorable raw material prices and production costs
to be fully offset by higher energy costs. Alumina costs in the
Aluminum segment are expected to be unfavorable by $15 million
sequentially.
Alcoa expects Interest expense to approximate $145 million for
the year, an increase from the prior projection as a result of the
green bond issuance.
Other expenses for the first quarter of 2024 included
unfavorable impacts of approximately $20 million related to foreign
currency losses that may not recur.
Based on current alumina and aluminum market conditions, Alcoa
expects second quarter operational tax expense to approximate $40
million to $50 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, April 17, 2024, to
present first quarter 2024 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 April 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 Corporation
("Alcoa") that reflect expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements, including, without limitation,
statements regarding the proposed transaction; the ability of the
parties to complete the proposed transaction; the expected benefits
of the proposed transaction, the competitive ability and position
following completion of the proposed transaction; 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: (1) the non-satisfaction or non-waiver, on a
timely basis or otherwise, of one or more closing conditions to the
proposed transaction; (2) the prohibition or delay of the
consummation of the proposed transaction by a governmental entity;
(3) the risk that the proposed transaction may not be completed in
the expected time frame or at all; (4) unexpected costs, charges or
expenses resulting from the proposed transaction; (5) uncertainty
of the expected financial performance following completion of the
proposed transaction; (6) failure to realize the anticipated
benefits of the proposed transaction; (7) the occurrence of any
event that could give rise to termination of the proposed
transaction; (8) potential litigation in connection with the
proposed transaction or other settlements or investigations that
may affect the timing or occurrence of the contemplated transaction
or result in significant costs of defense, indemnification and
liability; (9) the impact of global economic conditions on the
aluminum industry and aluminum end-use markets; (10) volatility and
declines in aluminum and alumina demand and pricing, including
global, regional, and product-specific prices, or significant
changes in production costs which are linked to LME or other
commodities; (11) the disruption of market-driven balancing of
global aluminum supply and demand by non-market forces; (12)
competitive and complex conditions in global markets; (13) our
ability to obtain, maintain, or renew permits or approvals
necessary for our mining operations; (14) rising energy costs and
interruptions or uncertainty in energy supplies; (15) unfavorable
changes in the cost, quality, or availability of raw materials or
other key inputs, or by disruptions in the supply chain; (16) our
ability to execute on our strategy to be a lower cost, competitive,
and integrated aluminum production business and to realize the
anticipated benefits from announced plans, programs, initiatives
relating to our portfolio, capital investments, and developing
technologies; (17) our ability to integrate and achieve intended
results from joint ventures, other strategic alliances, and
strategic business transactions; (18) economic, political, and
social conditions, including the impact of trade policies and
adverse industry publicity; (19) fluctuations in foreign currency
exchange rates and interest rates, inflation and other economic
factors in the countries in which we operate; (20) changes in tax
laws or exposure to additional tax liabilities; (21) global
competition within and beyond the aluminum industry; (22) our
ability to obtain or maintain adequate insurance coverage; (23)
disruptions in the global economy caused by ongoing regional
conflicts; (24) legal proceedings, investigations, or changes in
foreign and/or U.S. federal, state, or local laws, regulations, or
policies; (25) climate change, climate change legislation or
regulations, and efforts to reduce emissions and build operational
resilience to extreme weather conditions; (26) our ability to
achieve our strategies or expectations relating to environmental,
social, and governance considerations; (27) claims, costs and
liabilities related to health, safety, and environmental laws,
regulations, and other requirements, in the jurisdictions in which
we operate; (28) liabilities resulting from impoundment structures,
which could impact the environment or cause exposure to hazardous
substances or other damage; (29) our ability to fund capital
expenditures; (30) deterioration in our credit profile or increases
in interest rates; (31) restrictions on our current and future
operations due to our indebtedness; (32) our ability to continue to
return capital to our stockholders through the payment of cash
dividends and/or the repurchase of our common stock; (33) cyber
attacks, security breaches, system failures, software or
application vulnerabilities, or other cyber incidents; (34) labor
market conditions, union disputes and other employee relations
issues; (35) a decline in the liability discount rate or
lower-than-expected investment returns on pension assets; and (36)
the other risk factors discussed in Part I Item 1A of Alcoa's
Annual Report on Form 10-K for the fiscal year ended December 31,
2023 and other reports filed by Alcoa with the SEC. These risks, as
well as other risks associated with the proposed transaction, will
be more fully discussed in the proxy statement. Alcoa cautions
readers not to place undue reliance upon any such forward-looking
statements, which speak only as of the date they are made. 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. Neither Alcoa nor any other person assumes
responsibility for the accuracy and completeness of any of these
forward-looking statements and none of the information contained
herein should be regarded as a representation that the
forward-looking statements contained herein will be achieved.
Additional Information and Where to Find It
This news release does not constitute an offer to buy or sell or
the solicitation of an offer to buy or sell any securities. This
communication relates to the proposed transaction. In connection
with the proposed transaction, Alcoa plans to file with the SEC a
proxy statement on Schedule 14A (the “Proxy Statement”). This
communication is not a substitute for the Proxy Statement or any
other document that Alcoa may file with the SEC and send to its
stockholders in connection with the proposed transaction. The
issuance of the stock consideration in the proposed transaction
will be submitted to Alcoa’s stockholders for their consideration.
The Proxy Statement will contain important information about Alcoa,
the proposed transaction and related matters. Before making any
voting decision, Alcoa’s stockholders should read all relevant
documents filed or to be filed with the SEC completely and in their
entirety, including the Proxy Statement, as well as any amendments
or supplements to those documents, when they become available,
because they will contain important information about Alcoa and the
proposed transaction. Alcoa’s stockholders will be able to obtain a
free copy of the Proxy Statement, as well as other filings
containing information about Alcoa, free of charge, at the SEC’s
website (www.sec.gov). Copies of the Proxy Statement and other
documents filed by Alcoa with the SEC may be obtained, without
charge, by contacting Alcoa through its website at
https://investors.alcoa.com/.
Participants in the Solicitation
Alcoa, its directors, executive officers and other persons
related to Alcoa may be deemed to be participants in the
solicitation of proxies from Alcoa’s stockholders in connection
with the proposed transaction. Information about the directors and
executive officers of Alcoa and their ownership of common stock of
Alcoa is set forth in the section entitled “Information about our
Executive Officers” included in Alcoa’s annual report on Form 10-K
for the fiscal year ended December 31, 2023, which was filed with
the SEC on February 21, 2024 (and which is available at
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1675149/000095017024018069/aa-20231231.htm),
and in the sections entitled “Director Nominees” and “Stock
Ownership of Directors and Executive Officers” included in its
proxy statement for its 2024 annual meeting of stockholders, which
was filed with the SEC on March 19, 2024 (and which is available at
https://www.sec.gov/ix?doc=/Archives/edgar/data/1675149/000119312524071354/d207257ddef14a.htm).
Additional information regarding the persons who may, under the
rules of the SEC, be deemed participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be included in the Proxy
Statement and other relevant materials to be filed with the SEC in
connection with the proposed transaction when they become
available. Free copies of these documents may be obtained as
described in the preceding paragraph.
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
March 31, 2024
December 31, 2023
March 31, 2023
Sales
$
2,599
$
2,595
$
2,670
Cost of goods sold (exclusive of expenses
below)
2,404
2,425
2,404
Selling, general administrative, and other
expenses
60
64
54
Research and development expenses
11
14
10
Provision for depreciation, depletion, and
amortization
161
163
153
Restructuring and other charges, net
202
(11
)
149
Interest expense
27
28
26
Other expenses (income), net
59
(11
)
54
Total costs and expenses
2,924
2,672
2,850
Loss before income taxes
(325
)
(77
)
(180
)
(Benefit from) provision for income
taxes
(18
)
150
52
Net loss
(307
)
(227
)
(232
)
Less: Net loss attributable to
noncontrolling interest
(55
)
(77
)
(1
)
NET LOSS ATTRIBUTABLE TO ALCOA
CORPORATION
$
(252
)
$
(150
)
$
(231
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net loss
$
(1.41
)
$
(0.84
)
$
(1.30
)
Average number of shares
179,285,359
178,466,610
178,012,784
Diluted:
Net loss
$
(1.41
)
$
(0.84
)
$
(1.30
)
Average number of shares
179,285,359
178,466,610
178,012,784
Alcoa Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
March 31, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,358
$
944
Receivables from customers
869
656
Other receivables
132
152
Inventories
2,048
2,158
Fair value of derivative instruments
22
29
Prepaid expenses and other current
assets(1)
452
466
Total current assets
4,881
4,405
Properties, plants, and equipment
19,959
20,381
Less: accumulated depreciation, depletion,
and amortization
13,382
13,596
Properties, plants, and equipment, net
6,577
6,785
Investments
969
979
Deferred income taxes
295
333
Fair value of derivative instruments
1
3
Other noncurrent assets(2)
1,605
1,650
Total assets
$
14,328
$
14,155
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,586
$
1,714
Accrued compensation and retirement
costs
331
357
Taxes, including income taxes
94
88
Fair value of derivative instruments
205
214
Other current liabilities
746
578
Long-term debt due within one year
79
79
Total current liabilities
3,041
3,030
Long-term debt, less amount due within one
year
2,469
1,732
Accrued pension benefits
267
278
Accrued other postretirement benefits
437
443
Asset retirement obligations
718
772
Environmental remediation
197
202
Fair value of derivative instruments
925
1,092
Noncurrent income taxes
134
193
Other noncurrent liabilities and deferred
credits
606
568
Total liabilities
8,794
8,310
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,184
9,187
Accumulated deficit
(1,564
)
(1,293
)
Accumulated other comprehensive loss
(3,628
)
(3,645
)
Total Alcoa Corporation shareholders’
equity
3,994
4,251
Noncontrolling interest
1,540
1,594
Total equity
5,534
5,845
Total liabilities and equity
$
14,328
$
14,155
(1)
This line item includes $31 and $32 of
current restricted cash at March 31, 2024 and December 31, 2023,
respectively.
(2)
This line item includes $66 and $71 of
noncurrent restricted cash at March 31, 2024 and December 31, 2023,
respectively.
Alcoa Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Three Months Ended March
31,
2024
2023
CASH FROM OPERATIONS
Net loss
$
(307
)
$
(232
)
Adjustments to reconcile net loss to cash
from operations:
Depreciation, depletion, and
amortization
161
153
Deferred income taxes
(63
)
(24
)
Equity loss, net of dividends
23
93
Restructuring and other charges, net
202
149
Net loss from investing activities – asset
sales
11
18
Net periodic pension benefit cost
3
1
Stock-based compensation
10
10
Loss (gain) on mark-to-market derivative
financial contracts
2
(18
)
Other
20
48
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) decrease in receivables
(212
)
40
Decrease in inventories
71
17
(Increase) decrease in prepaid expenses
and other current assets
(6
)
4
Decrease in accounts payable, trade
(98
)
(273
)
Decrease in accrued expenses
(22
)
(45
)
Increase (decrease) in taxes, including
income taxes
18
(13
)
Pension contributions
(6
)
(4
)
Decrease (increase) in noncurrent
assets
9
(29
)
Decrease in noncurrent liabilities
(39
)
(58
)
CASH USED FOR OPERATIONS
(223
)
(163
)
FINANCING ACTIVITIES
Additions to debt
965
25
Payments on debt
(221
)
(1
)
Proceeds from the exercise of employee
stock options
—
1
Dividends paid on Alcoa common stock
(19
)
(18
)
Payments related to tax withholding on
stock-based compensation awards
(15
)
(34
)
Financial contributions for the
divestiture of businesses
(7
)
(14
)
Contributions from noncontrolling
interest
61
86
Distributions to noncontrolling
interest
(6
)
(6
)
Other
(4
)
1
CASH PROVIDED FROM FINANCING
ACTIVITIES
754
40
INVESTING ACTIVITIES
Capital expenditures
(101
)
(83
)
Proceeds from the sale of assets
1
1
Additions to investments
(17
)
(20
)
CASH USED FOR INVESTING ACTIVITIES
(117
)
(102
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
(6
)
2
Net change in cash and cash equivalents
and restricted cash
408
(223
)
Cash and cash equivalents and restricted
cash at beginning of year
1,047
1,474
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
1,455
$
1,251
Alcoa Corporation and
subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
1Q23
2Q23
3Q23
4Q23
2023
1Q24
Alumina:
Bauxite production (mdmt)
9.9
10.0
10.7
10.4
41.0
10.1
Third-party bauxite shipments (mdmt)
1.9
1.8
1.9
2.0
7.6
1.0
Alumina production (kmt)
2,755
2,559
2,805
2,789
10,908
2,670
Third-party alumina shipments (kmt)
1,929
2,136
2,374
2,259
8,698
2,397
Intersegment alumina shipments (kmt)
1,039
944
966
1,176
4,125
943
Average realized third-party price per
metric ton of alumina
$
371
$
363
$
354
$
344
$
358
$
372
Third-party bauxite sales
$
136
$
113
$
111
$
124
$
484
$
64
Third-party alumina sales
$
721
$
781
$
846
$
781
$
3,129
$
897
Intersegment alumina sales
$
421
$
397
$
381
$
449
$
1,648
$
395
Segment Adjusted EBITDA(1)
$
103
$
33
$
53
$
84
$
273
$
139
Depreciation and amortization
$
77
$
80
$
89
$
87
$
333
$
87
Equity loss
$
(17
)
$
(11
)
$
(9
)
$
(11
)
$
(48
)
$
(11
)
Aluminum:
Aluminum production (kmt)
518
523
532
541
2,114
542
Total aluminum shipments (kmt)
600
623
630
638
2,491
634
Average realized third-party price per
metric ton of aluminum
$
3,079
$
2,924
$
2,647
$
2,678
$
2,828
$
2,620
Third-party sales
$
1,810
$
1,788
$
1,644
$
1,683
$
6,925
$
1,638
Intersegment sales
$
3
$
4
$
4
$
4
$
15
$
4
Segment Adjusted EBITDA(1)
$
184
$
110
$
79
$
88
$
461
$
50
Depreciation and amortization
$
70
$
68
$
69
$
70
$
277
$
68
Equity (loss) income
$
(57
)
$
(16
)
$
(15
)
$
(18
)
$
(106
)
$
2
Reconciliation of total segment
Adjusted EBITDA to consolidated net loss attributable to Alcoa
Corporation:
Total Segment Adjusted EBITDA(1)
$
287
$
143
$
132
$
172
$
734
$
189
Unallocated amounts:
Transformation(2)
(8
)
(17
)
(29
)
(26
)
(80
)
(14
)
Intersegment eliminations
(8
)
31
(4
)
(12
)
7
(8
)
Corporate expenses(3)
(30
)
(24
)
(33
)
(46
)
(133
)
(34
)
Provision for depreciation, depletion, and
amortization
(153
)
(153
)
(163
)
(163
)
(632
)
(161
)
Restructuring and other charges, net
(149
)
(24
)
(22
)
11
(184
)
(202
)
Interest expense
(26
)
(27
)
(26
)
(28
)
(107
)
(27
)
Other (expenses) income, net
(54
)
(6
)
(85
)
11
(134
)
(59
)
Other(4)
(39
)
(22
)
2
4
(55
)
(9
)
Consolidated loss before income taxes
(180
)
(99
)
(228
)
(77
)
(584
)
(325
)
(Provision for) benefit from income
taxes
(52
)
(22
)
35
(150
)
(189
)
18
Net loss attributable to noncontrolling
interest
1
19
25
77
122
55
Consolidated net loss attributable to
Alcoa Corporation
$
(231
)
$
(102
)
$
(168
)
$
(150
)
$
(651
)
$
(252
)
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.
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
March 31, 2024
December 31, 2023
March 31, 2023
March 31, 2024
December 31, 2023
March 31, 2023
Net loss attributable to Alcoa
Corporation
$
(252
)
$
(150
)
$
(231
)
$
(1.41
)
$
(0.84
)
$
(1.30
)
Special items:
Restructuring and other charges, net
202
(11
)
149
Other special items(1)
22
(2
)
25
Discrete and other tax items
impacts(2)
—
102
2
Tax impact on special items(3)
(60
)
1
6
Noncontrolling interest impact(3)
(57
)
(40
)
8
Subtotal
107
50
190
Net loss attributable to Alcoa Corporation
– as adjusted
$
(145
)
$
(100
)
$
(41
)
$
(0.81
)
$
(0.56
)
$
(0.23
)
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 March 31, 2024, an adjustment to the gain
on sale of the Warrick Rolling Mill in Evansville, Indiana for
additional site separation costs ($11), a net unfavorable change in
mark-to-market energy derivative instruments ($4), external costs
related to portfolio actions ($4), costs related to the restart
process at the Warrick Operations site in Indiana ($3), costs
related to the restart process at the San Ciprián, Spain smelter
($2), and a net benefit for other special items ($2);
- 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 at the Warrick Operations site ($3), and net
charges for other special items ($2); and,
- for the quarter ended March 31, 2023, a net favorable change in
mark-to-market energy derivative instruments ($23), costs related
to the restart process at the Alumar, Brazil smelter ($19), an
adjustment to the gain on sale of the Warrick Rolling Mill for
additional site separation costs ($17), costs related to the
closure of the Intalco, Washington smelter ($16), and a net benefit
for other special items ($4).
(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);
and,
- for the quarter ended March 31, 2023, net charge for discrete
tax 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
March 31, 2024
December 31, 2023
March 31, 2023
Net loss attributable to Alcoa
Corporation
$
(252
)
$
(150
)
$
(231
)
Add:
Net loss attributable to noncontrolling
interest
(55
)
(77
)
(1
)
(Benefit from) provision for income
taxes
(18
)
150
52
Other expenses (income), net
59
(11
)
54
Interest expense
27
28
26
Restructuring and other charges, net
202
(11
)
149
Provision for depreciation, depletion, and
amortization
161
163
153
Adjusted EBITDA
124
92
202
Special items(1)
8
(3
)
38
Adjusted EBITDA, excluding special
items
$
132
$
89
$
240
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 March 31, 2024, external costs related to
portfolio actions ($4), costs related to the restart process at the
Warrick Operations site in Indiana ($3), costs related to the
restart process at the San Ciprián, Spain smelter ($2), and a
benefit for other special items ($1);
- for the quarter ended December 31, 2023, the mark-to-market
contracts associated with the Portland smelter generated losses
($9) in Other expenses (income), 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 ($3) and net charges for other
special items ($3); and,
- for the quarter ended March 31, 2023, costs related to the
restart process at the Alumar, Brazil smelter ($19), costs related
to the closure of the Intalco, Washington smelter ($16), and net
cost of power associated with the Portland smelter ($3).
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
March 31, 2024
December 31, 2023
March 31, 2023
Cash (used for) provided from
operations
$
(223
)
$
198
$
(163
)
Capital expenditures
(101
)
(188
)
(83
)
Free cash flow
$
(324
)
$
10
$
(246
)
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
March 31, 2024
December 31, 2023
Short-term borrowings
$
52
$
56
Long-term debt due within one year
79
79
Long-term debt, less amount due within one
year
2,469
1,732
Total debt
2,600
1,867
Less: Cash and cash equivalents
1,358
944
Net debt
$
1,242
$
923
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
March 31, 2024
December 31, 2023
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
52
$
—
$
52
$
56
$
—
$
56
Long-term debt due within one year
79
31
48
79
31
48
Long-term debt, less amount due within one
year
2,469
—
2,469
1,732
—
1,732
Total debt
2,600
31
2,569
1,867
31
1,836
Less: Cash and cash equivalents
1,358
142
1,216
944
141
803
Net debt (net cash)
1,242
(111
)
1,353
923
(110
)
1,033
Plus: Net pension / OPEB liability
637
17
620
657
17
640
Adjusted net debt (net cash)
$
1,879
$
(94
)
$
1,973
$
1,580
$
(93
)
$
1,673
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
March 31, 2024
December 31, 2023
March 31, 2023
Receivables from customers
$
869
$
656
$
753
Add: Inventories
2,048
2,158
2,395
Less: Accounts payable, trade
(1,586
)
(1,714
)
(1,489
)
DWC working capital
$
1,331
$
1,100
$
1,659
Sales
$
2,599
$
2,595
$
2,670
Number of days in the quarter
91
92
90
Days working capital(1)
47
39
56
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/20240412060300/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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