Alcoa Corporation (NYSE: AA) today reported its highest ever
quarterly net income and earnings per share, capturing the benefits
of strong aluminum pricing with improved customer demand, stable
operational performance, and additional cash generation through
strategic actions.
Second Quarter Highlights
- Highest profitability since Alcoa Corporation’s 2016 inception
with record quarterly net income of $309 million and earnings per
share of $1.63
- Adjusted EBITDA excluding special items increased 19 percent
sequentially to $618 million
- Strong aluminum pricing with more than a 60 percent
year-over-year increase in realized pricing
- Used cash to significantly strengthen the balance sheet,
including actions that reduced debt and improved global pension
plan funding status to more than 90 percent
- Total debt was $2.3 billion and net debt was $642 million as of
June 30, 2021; proportional adjusted net debt improved $1.3 billion
from year end 2020, ending the quarter at $2.1 billion and meeting
the Company's target range of $2.0 billion to $2.5 billion
- Sold former Eastalco site in Maryland for $100 million
- Finished the quarter with a cash balance of $1.65 billion
Financial Results
M, except per share amounts
2Q21
1Q21
2Q20
Revenue
$2,833
$2,870
$2,148
Net income (loss) attributable to Alcoa
Corporation
$309
$175
$(197)
Earnings (loss) per share attributable to
Alcoa Corporation
$1.63
$0.93
$(1.06)
Adjusted net income (loss)
$281
$150
$(4)
Adjusted earnings (loss) per share
$1.49
$0.79
$(0.02)
Adjusted EBITDA excluding special
items
$618
$521
$185
“Alcoa had an excellent second quarter and first half of the
year, the strongest since our launch as an independent company in
2016,” said Alcoa President and Chief Executive Officer Roy Harvey.
“This record-setting performance reflects how our strategies are
working to deliver results.
“Across our Company, we have been working relentlessly to ensure
that Alcoa is successful through all market cycles, and this
steadfast resilience and consistent performance has allowed us to
capture the benefits from strong aluminum pricing and improved
customer demand,” Harvey said. “Today, we have a strengthened
balance sheet with lower debt and additional cash to continue to
pursue our strategic priorities.”
Second Quarter 2021 Results
- Shipments: In Alumina, third-party shipments remained
strong on continued high production rates. In Aluminum, total
third-party shipments were consistent with the prior quarter after
excluding the impact of the Warrick rolling mill, which was sold on
March 31, 2021, and the first quarter sales of accumulated
inventory at the San Ciprián smelter from a prior strike, now
suspended. Shipment volume for value-add aluminum products, which
includes specific shapes and alloys such as billet, slab, foundry,
and rod, increased 2 percent sequentially, posting four consecutive
quarters of volume improvement for a cumulative 40 percent
year-over-year increase.
- Production: Each of the Company’s three segments
maintained stable, daily average production with the Alumina
segment performing at near-record levels.
- Revenue: Higher aluminum prices, and improvements in
value-added product sales, drove a 7 percent sequential increase
after excluding the impact of the Warrick rolling mill sale,
partially offset by lower alumina prices.
- Net income attributable to Alcoa Corporation: Alcoa
reported net income of $309 million, or $1.63 per share, a
sequential improvement of $134 million from net income of $175
million, or $0.93 per share, in the first quarter of 2021. The
improved results are primarily due to higher aluminum prices and
the recognition of a gain on the sale of the former Eastalco site;
partially offset by lower alumina prices, higher restructuring
costs, and higher production costs.
- Adjusted net income: Excluding the benefit from net
special items of $28 million, adjusted net income was $281 million,
or $1.49 per share, an 87 percent increase from the prior quarter’s
adjusted net income of $150 million, or $0.79 per share. Notable
special items include gains from non-core asset sales of $96
million, primarily the sale of the former Eastalco site, offset by
$39 million in pension lump sum settlement charges and $32 million
in debt redemption expenses.
- Adjusted EBITDA excluding special items: Adjusted EBITDA
excluding special items was $618 million, a 19 percent sequential
increase primarily attributed to higher aluminum prices.
- Cash: Alcoa ended the quarter with cash on hand of $1.65
billion. Cash activity included $750 million early redemption of
the 6.75 percent senior notes, contribution of $500 million to the
U.S. pension plans and net proceeds of $94 million from the sale of
the former Eastalco site in Maryland. Cash used for operations was
$86 million, including the $500 million pension contribution. Cash
used for financing activities was $849 million, primarily related
to the early debt redemption. Cash provided from investing
activities was $34 million, primarily related to the sale of the
former Eastalco site, offset by capital expenditures. Free cash
flow was negative $165 million.
- Debt and pension actions: Total debt as of June 30, 2021
was $2.3 billion, an improvement from total debt of $3 billion in
the first quarter of 2021 with the redemption of $750 million of
6.75 percent senior notes in April 2021. The redemption, combined
with the $500 million contribution to U.S. pension plans, moves the
Company’s proportional adjusted net debt to $2.1 billion, within
the target range of $2.0 billion to $2.5 billion. The Company ended
the quarter with $642 million in net debt.
- Working capital: The Company reported 26 days working
capital, one day higher than the first quarter of 2021. On a
year-over-year quarter basis, excluding the working capital of the
Warrick rolling mill in the comparative period, days working
capital increased five days.
Non-Core Asset Sales
In June 2021, Alcoa completed the sale of the former Eastalco
site, including approximately 2,100 acres, for total consideration
of $100 million. The former smelter permanently closed in 2010, and
Alcoa successfully prepared the site to create value. Alcoa
received $94 million in net cash proceeds and recorded a gain of
$90 million. Additionally, Alcoa sold other non-core assets in the
second quarter of 2021 for total proceeds of $20 million.
Advance Sustainably
Alcoa is continuing to recognize year-over-year improvement in
customer demand for its SustanaTM line of products, which is the
most comprehensive in the industry.
In July, Alcoa announced a new sale of its low-carbon primary
aluminum product, EcoLumTM, to WKW Extrusion’s Erbsl�h Aluminium,
which produces extruded and surface-finished aluminum for a variety
of applications. The latest sale complements other supply
agreements from the Sustana family, including the first commercial
shipments in June of EcoSourceTM, the world’s first and only
low-carbon smelter grade alumina product.
The Company also continues to improve its climate strategy and
environmental performance to achieve its long-term greenhouse gas
reduction targets and sustainability goals.
In May, Alcoa announced a development project to explore use of
Mechanical Vapor Recompression (MVR) in refining, which has the
potential to further reduce carbon emissions. The Australian
Renewable Energy Agency (ARENA) granted to Alcoa of Australia $8.8
million (A$11.3 million) to test the technology.
In June, the Company’s ELYSISTM joint venture announced the
start of construction on commercial-sized prototype inert anode
cells in Saguenay-Lac-Saint-Jean, Quebec. ELYSIS aims to
revolutionize the traditional process to make primary aluminum,
eliminating all direct greenhouse gases and instead producing pure
oxygen.
In August, Alcoa will begin work on a new bauxite residue
filtration facility at its Poços de Caldas (Brazil) refinery,
reducing water usage and requiring less land to store residue.
Alcoa first adopted the technology in Western Australia. The
project is estimated to cost approximately $60 million, with
approximately half to be spent in 2021, which is included the
Company’s consolidated capital expenditure outlook for 2021.
Construction is expected to be complete in the second quarter of
2022, with commissioning by the end of that year.
2021 Outlook
Alcoa continues to expect a strong 2021 based on the continued
economic recovery and increased demand for aluminum in all end
markets. The Company’s Aluminum segment is forecasting double digit
growth on year-over-year sales of value-add products.
The Company’s 2021 shipment outlook for all segments is expected
to improve: Bauxite by 0.1 million dry metric tons to between 50.0
and 51.0 million dry metric tons; Alumina by 0.1 million metric
tons to between 14.1 to 14.2 million metric tons; and Aluminum by
0.2 million metric tons to between 2.9 and 3.0 million metric
tons.
In the third quarter of 2021, Alcoa anticipates another strong
quarter based on continuing forecasts for economic recovery and
solid global demand across key end-use sectors. The Company also
anticipates continuing inflationary pressure on raw materials and
energy.
Based on current alumina and aluminum market conditions, the
Company expects third quarter tax expense to exceed $100 million,
which may vary with market conditions and jurisdictional
profitability.
The COVID-19 pandemic is ongoing, and its magnitude and duration
continue to be unknown. The Company continues to take appropriate
measures to protect its employees and business from the risks of
the pandemic by following all appropriate health-based protocols.
Uncertainty around the pandemic’s impact on the Company’s business,
financial condition, operating results, and cash flows could cause
actual results to differ from this outlook.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m.
Eastern Daylight Time (EDT) on Thursday, July 15, 2021, to present
second quarter 2021 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 July 15, 2021. 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 into this press
release.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite,
alumina, and aluminum products, and is built on a foundation of
strong values and operating excellence dating back 135 years to the
world-changing discovery that made aluminum an affordable and vital
part of modern life. Since developing the aluminum industry, and
throughout our history, our talented Alcoans have followed on with
breakthrough innovations and best practices that have led to
efficiency, safety, sustainability, and stronger communities
wherever we operate.
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 “anticipates,” “believes,” “could,”
“estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,”
“outlook,” “plans,” “projects,” “seeks,” “sees,” “should,”
“targets,” “will,” “would,” or other words of similar meaning. All
statements by Alcoa Corporation 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 or sustainability performance;
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 Corporation’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 Corporation 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) current and
potential future impacts of the coronavirus (COVID-19) pandemic on
the global economy and our business, financial condition, results
of operations, or cash flows and judgments and assumptions used in
our estimates; (b) material adverse changes in aluminum industry
conditions, including global supply and demand conditions and
fluctuations in London Metal Exchange-based prices and premiums, as
applicable, for primary aluminum and other products, and
fluctuations in indexed-based and spot prices for alumina; (c)
deterioration in global economic and financial market conditions
generally and which may also affect Alcoa Corporation’s ability to
obtain credit or financing upon acceptable terms or at all; (d)
unfavorable changes in the markets served by Alcoa Corporation; (e)
the impact of changes in foreign currency exchange and tax rates on
costs and results; (f) increases in energy or raw material costs or
uncertainty of energy supply or raw materials; (g) 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; (h) the inability to achieve
improvement in profitability and margins, cost savings, cash
generation, revenue growth, fiscal discipline, sustainability
targets, or strengthening of competitiveness and operations
anticipated from portfolio actions, operational and productivity
improvements, technology advancements, and other initiatives; (i)
the inability to realize expected benefits, in each case as planned
and by targeted completion dates, from acquisitions, divestitures,
restructuring activities, facility closures, curtailments,
restarts, expansions, or joint ventures; (j) political, economic,
trade, legal, public health and safety, and regulatory risks in the
countries in which Alcoa Corporation operates or sells products;
(k) labor disputes and/or work stoppages; (l) the outcome of
contingencies, including legal and tax proceedings, government or
regulatory investigations, and environmental remediation; (m) the
impact of cyberattacks and potential information technology or data
security breaches; (n) risks associated with long-term debt
obligations; and (o) the other risk factors discussed in Part I
Item 1A of Alcoa Corporation’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2020 and other reports filed by
Alcoa Corporation with the U.S. Securities and Exchange Commission.
Alcoa Corporation 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
Some of the information included in this release is derived from
Alcoa Corporation’s consolidated financial information but is not
presented in Alcoa Corporation’s financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America (GAAP). Certain of these data are
considered “non-GAAP financial measures” under SEC regulations.
Alcoa Corporation believes that the presentation of 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.
Reconciliations to the most directly comparable GAAP financial
measures and 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
June 30, 2021
March 31, 2021
June 30, 2020
Sales
$
2,833
$
2,870
$
2,148
Cost of goods sold (exclusive of expenses
below)
2,156
2,292
1,932
Selling, general administrative, and other
expenses
54
52
44
Research and development expenses
6
7
5
Provision for depreciation, depletion, and
amortization
161
182
152
Restructuring and other charges, net
33
7
37
Interest expense
67
42
32
Other (income) expenses, net
(105
)
(24
)
51
Total costs and expenses
2,372
2,558
2,253
Income (loss) before income taxes
461
312
(105
)
Provision for income taxes
111
93
45
Net income (loss)
350
219
(150
)
Less: Net income attributable to
noncontrolling interest
41
44
47
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
309
$
175
$
(197
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
1.66
$
0.94
$
(1.06
)
Average number of shares
186,705,311
186,226,070
185,917,932
Diluted:
Net income (loss)
$
1.63
$
0.93
$
(1.06
)
Average number of shares
190,195,453
188,820,184
185,917,932
Alcoa Corporation and
subsidiaries
Statement of Consolidated Operations
(unaudited), continued
(dollars in millions, except per-share
amounts)
Six months ended
June 30, 2021
June 30, 2020
Sales
$
5,703
$
4,529
Cost of goods sold (exclusive of expenses
below)
4,448
3,957
Selling, general administrative, and other
expenses
106
104
Research and development expenses
13
12
Provision for depreciation, depletion, and
amortization
343
322
Restructuring and other charges, net
40
39
Interest expense
109
62
Other income, net
(129
)
(81
)
Total costs and expenses
4,930
4,415
Income before income taxes
773
114
Provision for income taxes
204
125
Net income (loss)
569
(11
)
Less: Net income attributable to
noncontrolling interest
85
106
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
484
$
(117
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
2.60
$
(0.63
)
Average number of shares
186,473,781
185,822,220
Diluted:
Net income (loss)
$
2.56
$
(0.63
)
Average number of shares
189,497,440
185,822,220
Common stock outstanding at the end of the
period
186,855,060
185,918,829
Alcoa Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
June 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,652
$
1,607
Receivables from customers
644
471
Other receivables
100
85
Inventories
1,547
1,398
Fair value of derivative instruments
25
21
Assets held for sale
—
648
Prepaid expenses and other current
assets(1)
233
290
Total current assets
4,201
4,520
Properties, plants, and equipment
20,551
20,522
Less: accumulated depreciation, depletion,
and amortization
13,575
13,332
Properties, plants, and equipment, net
6,976
7,190
Investments
1,113
1,051
Deferred income taxes
729
655
Fair value of derivative instruments
3
—
Other noncurrent assets
1,416
1,444
Total assets
$
14,438
$
14,860
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,392
$
1,403
Accrued compensation and retirement
costs
378
395
Taxes, including income taxes
126
91
Fair value of derivative instruments
236
103
Liabilities held for sale
—
242
Other current liabilities
538
525
Long-term debt due within one year
1
2
Total current liabilities
2,671
2,761
Long-term debt, less amount due within one
year
2,216
2,463
Accrued pension benefits
682
1,492
Accrued other postretirement benefits
661
744
Asset retirement obligations
584
625
Environmental remediation
262
293
Fair value of derivative instruments
1,203
742
Noncurrent income taxes
191
209
Other noncurrent liabilities and deferred
credits
550
515
Total liabilities
9,020
9,844
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,695
9,663
Accumulated deficit
(241
)
(725
)
Accumulated other comprehensive loss
(5,687
)
(5,629
)
Total Alcoa Corporation shareholders’
equity
3,769
3,311
Noncontrolling interest
1,649
1,705
Total equity
5,418
5,016
Total liabilities and equity
$
14,438
$
14,860
(1)
This line item includes $3 of restricted
cash as of both June 30, 2021 and December 31, 2020.
Alcoa Corporation and subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Six Months Ended June
30,
2021
2020
CASH FROM OPERATIONS
Net income (loss)
$
569
$
(11
)
Adjustments to reconcile net income to
cash from operations:
Depreciation, depletion, and
amortization
343
322
Deferred income taxes
48
(6
)
Equity earnings, net of dividends
(46
)
15
Restructuring and other charges, net
40
39
Net gain from investing activities – asset
sales
(124
)
(176
)
Net periodic pension benefit cost
24
67
Stock-based compensation
18
17
Provision for bad debt expense
1
2
Premium paid on early redemption of
debt
25
—
Other
28
5
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) Decrease in receivables
(270
)
124
(Increase) Decrease in inventories
(184
)
184
Decrease in prepaid expenses and other
current assets
58
13
Increase (Decrease) in accounts payable,
trade
32
(183
)
(Decrease) in accrued expenses
(8
)
(120
)
Increase in taxes, including income
taxes
40
7
Pension contributions
(570
)
(59
)
(Increase) Decrease in noncurrent
assets
(46
)
19
(Decrease) in noncurrent liabilities
(58
)
(61
)
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(80
)
198
FINANCING ACTIVITIES
Additions to debt (original maturities
greater than three months)
495
—
Payments on debt (original maturities
greater than three months)
(776
)
—
Proceeds from the exercise of employee
stock options
14
—
Financial contributions for the
divestiture of businesses
(13
)
(24
)
Contributions from noncontrolling
interest
—
16
Distributions to noncontrolling
interest
(137
)
(106
)
Other
(4
)
(1
)
CASH USED FOR FINANCING ACTIVITIES
(421
)
(115
)
INVESTING ACTIVITIES
Capital expenditures
(154
)
(168
)
Proceeds from the sale of assets
705
199
Additions to investments
(3
)
(3
)
CASH PROVIDED FROM INVESTING
ACTIVITIES
548
28
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
(2
)
(26
)
Net change in cash and cash equivalents
and restricted cash
45
85
Cash and cash equivalents and restricted
cash at beginning of year
1,610
883
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
1,655
$
968
Alcoa Corporation and
subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
1Q20
2Q20
3Q20
4Q20
2020
1Q21
2Q21
Bauxite:
Production(1) (mdmt)
11.6
12.2
12.0
12.2
48.0
11.9
12.2
Third-party shipments (mdmt)
1.4
1.6
1.6
1.9
6.5
1.5
1.1
Intersegment shipments (mdmt)
10.5
10.8
10.5
10.4
42.2
10.5
10.8
Third-party sales
$
71
$
66
$
56
$
79
$
272
$
58
$
39
Intersegment sales
$
235
$
245
$
236
$
225
$
941
$
185
$
179
Segment Adjusted EBITDA(2)
$
120
$
131
$
124
$
120
$
495
$
59
$
41
Depreciation, depletion, and
amortization
$
34
$
30
$
33
$
38
$
135
$
57
$
32
Alumina:
Production (kmt)
3,298
3,371
3,435
3,371
13,475
3,327
3,388
Third-party shipments (kmt)
2,365
2,415
2,549
2,312
9,641
2,472
2,437
Intersegment shipments (kmt)
1,075
987
1,135
1,046
4,243
1,101
1,054
Average realized third-party price per
metric ton of alumina
$
299
$
250
$
274
$
268
$
273
$
308
$
282
Third-party sales
$
707
$
603
$
697
$
620
$
2,627
$
760
$
688
Intersegment sales
$
336
$
289
$
329
$
314
$
1,268
$
364
$
343
Segment Adjusted EBITDA(2)
$
193
$
88
$
119
$
97
$
497
$
227
$
124
Depreciation and amortization
$
49
$
37
$
41
$
45
$
172
$
46
$
50
Equity loss
$
(9
)
$
(8
)
$
(4
)
$
(2
)
$
(23
)
$
(5
)
$
(1
)
Aluminum:
Primary aluminum production (kmt)
564
581
559
559
2,263
548
546
Third-party aluminum shipments(3)
(kmt)
725
789
767
735
3,016
831
767
Average realized third-party price per
metric ton of primary aluminum
$
1,988
$
1,694
$
1,904
$
2,094
$
1,915
$
2,308
$
2,753
Third-party sales
$
1,598
$
1,475
$
1,607
$
1,685
$
6,365
$
2,047
$
2,102
Intersegment sales
$
3
$
2
$
2
$
5
$
12
$
2
$
3
Segment Adjusted EBITDA(2)
$
62
$
(34
)
$
116
$
181
$
325
$
283
$
460
Depreciation and amortization
$
81
$
79
$
80
$
82
$
322
$
73
$
73
Equity income (loss)
$
5
$
(12
)
$
(6
)
$
6
$
(7
)
$
13
$
28
Reconciliation of total segment
Adjusted
EBITDA to consolidated net income
(loss)
attributable to Alcoa
Corporation:
Total Segment Adjusted EBITDA(2)
$
375
$
185
$
359
$
398
$
1,317
$
569
$
625
Unallocated amounts:
Transformation(4)
(16
)
(10
)
(11
)
(8
)
(45
)
(11
)
(13
)
Intersegment eliminations
(8
)
30
(35
)
5
(8
)
(7
)
35
Corporate expenses(5)
(27
)
(21
)
(24
)
(30
)
(102
)
(26
)
(28
)
Provision for depreciation, depletion, and
amortization
(170
)
(152
)
(161
)
(170
)
(653
)
(182
)
(161
)
Restructuring and other charges, net
(2
)
(37
)
(5
)
(60
)
(104
)
(7
)
(33
)
Interest expense
(30
)
(32
)
(41
)
(43
)
(146
)
(42
)
(67
)
Other income (expenses), net
132
(51
)
(45
)
(44
)
(8
)
24
105
Other(6)
(35
)
(17
)
(15
)
(11
)
(78
)
(6
)
(2
)
Consolidated income (loss) before income
taxes
219
(105
)
22
37
173
312
461
Provision for income taxes
(80
)
(45
)
(42
)
(20
)
(187
)
(93
)
(111
)
Net income attributable to noncontrolling
interest
(59
)
(47
)
(29
)
(21
)
(156
)
(44
)
(41
)
Consolidated net income (loss)
attributable to Alcoa Corporation
$
80
$
(197
)
$
(49
)
$
(4
)
$
(170
)
$
175
$
309
The difference between segment totals and consolidated amounts is
in Corporate.
(1)
The production amounts can vary from total
shipments due primarily to differences between the equity
allocation of production and off-take agreements with the
respective equity investment.
(2)
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.
(3)
Until the sale of the Warrick Rolling Mill
on March 31, 2021, the Aluminum segment’s third-party aluminum
shipments were composed of both primary aluminum and flat-rolled
aluminum. Beginning April 1, 2021, the segment’s third-party
aluminum shipments include only primary aluminum.
(4)
Transformation includes, among other
items, the Adjusted EBITDA of previously closed operations.
(5)
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.
(6)
Other includes certain items that impact
Cost of goods sold and other expenses on Alcoa Corporation’s
Statement of Consolidated Operations 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
Income (Loss)
Diluted EPS(4)
Quarter ended
Quarter ended
June 30, 2021
March 31, 2021
June 30, 2020
June 30, 2021
March 31, 2021
June 30, 2020
Net income (loss) attributable to Alcoa
Corporation
$
309
$
175
$
(197
)
$
1.63
$
0.93
$
(1.06
)
Special items:
Restructuring and other charges, net
33
7
37
Other special items(1)
(65
)
(30
)
15
Discrete tax items and interim tax
impacts(2)
—
(2
)
142
Tax impact on special items(3)
3
—
(1
)
Noncontrolling interest impact(3)
1
—
—
Subtotal
(28
)
(25
)
193
Net income (loss) attributable to Alcoa
Corporation – as adjusted
$
281
$
150
$
(4
)
$
1.49
$
0.79
$
(0.02
)
Net income (loss) attributable to Alcoa
Corporation – as adjusted is a non-GAAP financial measure.
Management believes this measure is 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 both Net income
(loss) attributable to Alcoa Corporation determined under GAAP as
well as Net income (loss) attributable to Alcoa Corporation – as
adjusted.
(1)
Other special items include the
following:
- for the quarter ended June 30, 2021, gains on asset sales
($96), primarily related to the former Eastalco site sale, a charge
for debt redemption expenses ($32), and a net benefit from other
special items ($1);
- for the quarter ended March 31, 2021, a gain on the sale of the
Warrick Rolling Mill in Evansville, Indiana ($27), a net favorable
change in certain mark-to-market energy derivative instruments
($5), and charges for other special items ($2); and,
- for the quarter ended June 30, 2020, costs related to the
restart process at the Bécancour, Canada smelter ($17), external
costs related to portfolio actions ($1), and a net favorable change
in certain mark-to-market energy derivative instruments ($3).
(2)
Discrete tax items and interim tax impacts
are the result of discrete transactions and interim period tax
impacts based on full-year assumptions and include the
following:
- for the quarter ended March 31, 2021, a net benefit for
discrete tax items ($2); and,
- for the quarter ended June 30, 2020, a net charge of interim
tax impacts ($142).
(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 given period, the average number of
shares applicable to diluted EPS for Net income (loss) attributable
to Alcoa Corporation common shareholders may exclude certain share
equivalents as their effect is anti-dilutive. For the quarter ended
June 30, 2020, all share equivalents had an anti-dilutive effect,
and therefore, are excluded from the diluted EPS calculation.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted EBITDA
Quarter ended
June 30, 2021
March 31, 2021
June 30, 2020
Net income (loss) attributable to Alcoa
Corporation
$
309
$
175
$
(197
)
Add:
Net income attributable to noncontrolling
interest
41
44
47
Provision for income taxes
111
93
45
Other (income) expenses, net
(105
)
(24
)
51
Interest expense
67
42
32
Restructuring and other charges, net
33
7
37
Provision for depreciation, depletion, and
amortization
161
182
152
Adjusted EBITDA
617
519
167
Special items(1)
1
2
18
Adjusted EBITDA, excluding special
items
$
618
$
521
$
185
Alcoa’s 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 June 30, 2021, external costs related to
portfolio actions ($1);
- for the quarter ended March 31, 2021, external costs related to
portfolio actions ($1) and charges for other special items ($1);
and,
- for the quarter ended June 30, 2020, costs related to the
restart process at the Bécancour, Canada smelter ($17) and external
costs related to portfolio actions ($1).
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
June 30, 2021
March 31, 2021
June 30, 2020
Cash (used for) provided from
operations(1)
$
(86
)
$
6
$
288
Capital expenditures
(79
)
(75
)
(77
)
Free cash flow
$
(165
)
$
(69
)
$
211
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 both necessary to maintain and expand Alcoa Corporation’s
asset base and 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.
(1)
Cash (used for) provided from operations
for the quarter ended June 30, 2021 includes a $500 cash outflow
for unscheduled contributions to certain U.S. defined benefit
pension plans. The $500 was funded with the net proceeds of 4.125%
senior notes due 2029, together with cash on hand.
Net Debt
June 30, 2021
December 31, 2020
Short-term borrowings
$
77
$
77
Long-term debt due within one year
1
2
Long-term debt, less amount due within one
year
2,216
2,463
Total debt
2,294
2,542
Less: Cash and cash equivalents
1,652
1,607
Net debt
$
642
$
935
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.
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted Net Debt and Proportional
Adjusted Net Debt
June 30, 2021
December 31, 2020
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
77
$
31
$
46
$
77
$
31
$
46
Long-term debt due within one year
1
—
1
2
—
2
Long-term debt, less amount due
within one year
2,216
—
2,216
2,463
—
2,463
Total debt
2,294
31
2,263
2,542
31
2,511
Less: Cash and cash equivalents
1,652
128
1,524
1,607
176
1,431
Net debt
642
(97
)
739
935
(145
)
1,080
Plus: Net pension / OPEB liability
1,417
46
1,371
2,395
(1)
52
2,343
Adjusted net debt
$
2,059
$
(51
)
$
2,110
$
3,330
$
(93
)
$
3,423
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.
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).
(1)
Includes OPEB liabilities of approximately
$83 million related to the Warrick rolling mill sale. Recorded in
Liabilities held for sale at December 31, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210715005946/en/
Investor Contact: James Dwyer +1 412 992 5450
James.Dwyer@alcoa.com Media Contact: Jim Beck +1 412 315
2909 Jim.Beck@alcoa.com
Grafico Azioni Alcoa (NYSE:AA)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Alcoa (NYSE:AA)
Storico
Da Apr 2023 a Apr 2024