Taking steps to address uncertainty from
COVID-19 while executing strategic actions and existing
programs
- Net income of $80 million, or $0.43 per share
- Excluding special items, adjusted net loss of $42 million, or
$0.23 per share
- $321 million of adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) excluding special items
- Revenue of $2.4 billion
- $90 million cash used for operations; negative $181 million
free cash flow
- $829 million cash balance and $1.8 billion of debt, for net
debt of $973 million, as of March 31, 2020
- Announcing the curtailment of the remaining 230,000 metric tons
of uncompetitive smelting capacity at the Intalco smelter in
Washington State as part of continuing portfolio review
- Addressing the risks posed by the pandemic to protect our
employees, operations and communities; all of Alcoa’s bauxite
mines, alumina refineries, aluminum smelters, casthouses, energy
assets and its rolling mill remain operational
- Continuing to pursue sale of non-core assets, which generated
$200 million through sale of Gum Springs facility in January
- Planning cash initiatives to deliver $700 million in 2020
through savings or deferrals, including existing programs and new
actions to address the economic uncertainty caused by the
pandemic
Alcoa Corporation (NYSE: AA), a global leader in bauxite,
alumina, and aluminum products, today reported first quarter 2020
results.
M, except per share amounts
1Q20
4Q19
1Q19
Revenue
$2,381
$2,436
$2,719
Net income (loss) attributable to Alcoa
Corporation
$80
$(303)
$(199)
Earnings (loss) per share attributable to
Alcoa Corporation
$0.43
$(1.63)
$(1.07)
Adjusted net loss
$(42)
$(57)
$(43)
Adjusted loss per share
$(0.23)
$(0.31)
$(0.23)
Adjusted EBITDA excluding special
items
$321
$346
$467
“While we reported a solid first quarter with a strong cash
balance, the world has fundamentally shifted due to the COVID-19
global pandemic, and we are taking decisive actions to address this
crisis," said Alcoa President and Chief Executive Officer Roy
Harvey.
“Most importantly, we are focusing on the care and safety of our
workforce, our operations, and our communities. We have implemented
numerous steps for business continuity and are acting quickly to
protect financial stability.
“We took action before this crisis to drive savings by deploying
a new operating model and launching processes to sell non-core
assets, review our portfolio, lower production costs and reduce
working capital. Today, we are announcing new actions to
effectively manage cash through the economic uncertainty from the
pandemic. Taken together, these new and existing initiatives,
including the sale earlier this year of our former Gum Springs
plant, will total $900 million in cash actions for the year.
“We know how to manage through downcycles, and we’ve used our
strategic priorities to strengthen our company, creating a stronger
foundation to address these challenges.”
In the first quarter of 2020, Alcoa reported net income of $80
million, or $0.43 per share, compared with a net loss of $303
million, or $1.63 per share, in the fourth quarter of 2019. The
2020 first quarter results include the net positive impact of $122
million of special items, stemming primarily from the gain on the
previously announced sale of the waste treatment facility in Gum
Springs, Arkansas, partially offset by costs related to the restart
of the Aluminerie de Bécancour Inc. (ABI) smelter in Quebec, Canada
and interim period tax impacts.
Excluding the impact of special items, first quarter 2020
adjusted net loss was $42 million, or $0.23 per share, improved
from fourth quarter 2019 adjusted net loss of $57 million, or $0.31
per share.
Adjusted EBITDA excluding special items for the first quarter of
2020 was $321 million, a 7 percent sequential decrease. Favorable
currency and lower costs for raw materials and energy did not
completely offset lower prices, product mix, and volume, or higher
production costs.
Alcoa reported first quarter 2020 revenue of $2.4 billion, down
2 percent sequentially, primarily due to lower alumina and aluminum
prices and lower volume, partially offset by favorable
currency.
Cash used for operations in first quarter 2020 was $90 million.
Cash used for financing activities was $44 million and cash
provided from investing activities was $107 million. Free cash flow
was negative $181 million.
Alcoa ended the quarter with cash on hand of $829 million and
debt of $1.8 billion, for net debt of $973 million. The Company
reported 31 days working capital, a 4-day decrease year-over-year,
primarily due to less days sales outstanding and lower inventory
days on hand.
COVID-19 Update
Alcoa is taking strong measures to protect its workforce and its
locations from the threat caused by COVID-19.
All of Alcoa’s bauxite mines, alumina refineries, aluminum
smelters, casthouses, energy assets and rolling operations remain
operational. The Company continues to prioritize health and safety
in accordance with public health and governmental regulations,
including adjusting patterns to socially distance, increasing
hygiene protocols, and encouraging remote work where practical.
The Company is implementing new actions in 2020 to effectively
manage cash during the economic downcycle caused by the pandemic:
Those actions include:
- Reducing $100 million of non-critical capital expenditures
- Delaying non-regulated environmental and Asset Retirement
Obligations (ARO) spending of $25 million
- Deferring $220 million in pension contributions in the United
States under provisions of the Coronavirus Aid, Relief and Economic
Security (CARES) Act. The Company also continues to evaluate other
governmental support programs.
- Implementing hiring, travel and other spending restrictions
targeted to save or defer approximately $35 million
In addition to these immediate cash improvement actions, Alcoa
amended its Revolving Credit Facility agreement in April 2020 to
temporarily increase borrowing base availability for the next four
quarters and provide improved flexibility.
Strategic Actions and 2020 Programs Update
Alcoa has fully deployed its new operating model announced in
September 2019 that will reduce annual overhead expense by $60
million beginning in the second quarter of 2020.
The Company is also continuing the review of its asset portfolio
to drive lower costs and sustainable profitability. The asset
review includes two components: Potential sales of non-core assets
to generate between $500 million and $1 billion in cash by early
2021, and an evaluation of the competitiveness of existing
production capacities, focusing on 1.5 million metric tons of
global smelting capacity and 4 million metric tons of global
alumina refining capacity.
Non-Core Asset Sales
As previously announced, on January 31, 2020, the Company closed
the sale of its waste treatment facility in Gum Springs, Arkansas,
in a transaction valued at $250 million. Alcoa received $200
million in cash upon closing. The remaining $50 million will be
paid to Alcoa if certain post-closing conditions are satisfied. The
Company recorded a gain in the first quarter of 2020 of $180
million (pre- and after-tax).
Portfolio Actions
Alcoa today announced that it will curtail the remaining 230,000
metric tons of uncompetitive smelting capacity at its Intalco
smelter in Ferndale, Washington amid declining market conditions.
The full curtailment, which includes 49,000 metric tons of
earlier-curtailed capacity, is expected to be complete by the end
of July 2020. The smelter recorded a net loss of $24 million in the
first quarter of 2020.
“While our employees have worked diligently to improve the
facility, the smelter is uncompetitive, and current market
conditions have exacerbated the facility’s challenges,” Harvey
said. “This is difficult because of the impact on our employees,
and we will ensure appropriate support as we work to safely curtail
the facility.”
The action will bring Alcoa’s total curtailed smelting capacity
to 880,000 metric tons, or approximately 30 percent of its total
global smelting capacity.
The Company will record estimated restructuring charges of
approximately $25 million (pre- and after-tax), or $0.13 per share,
in the second quarter of 2020 associated with the curtailment, for
employee-related costs and contract termination costs, which are
all cash-based charges expected be paid primarily in the third
quarter of 2020.
Intalco employs approximately 700 people, and the workforce will
be significantly reduced due to the curtailment.
2020 Programs
In February 2020, Alcoa announced 2020 programs to drive leaner
working capital and improved productivity. Alcoa intends to improve
working capital by $75 to $100 million through reduced inventories
and optimized contract terms. Greater productivity and lower costs
are expected to result in approximately $100 million of
improvements.
2020 Outlook
The Company has updated annual Aluminum segment shipments to
between 2.9 and 3.0 million metric tons from its earlier outlook of
between 3.0 and 3.1 million metric tons, due to the impact of the
Intalco curtailment on the second half of 2020. The Company’s 2020
shipment outlook for Bauxite and Alumina remain unchanged from the
prior full-year estimates. Total annual bauxite shipments are
expected to range between 48.0 and 49.0 million dry metric tons.
Total alumina shipments are projected between 13.6 and 13.7 million
metric tons.
In the second quarter of 2020, Alcoa expects lower quarterly
results in the Bauxite segment primarily due to the non-recurrence
of an annual sales contract true up. In the Alumina segment, the
Company expects benefits from lower costs for raw materials. In the
Aluminum segment, the Company expects performance to be nearly
flat, as improvements from lower alumina costs, smelter power costs
and production costs are expected to be offset by lower Brazil
Hydro sales prices and lower value add pricing and volumes.
The Company recognized significant currency benefits related to
the strengthening of the U.S. dollar in the first quarter 2020, and
it continues to be exposed to impacts of currency rate fluctuations
in the second quarter.
The Company expects its annual operational tax rate will vary
with market conditions and jurisdictional profitability and is
withdrawing its prior outlook of 70 to 80 percent.
The extent and duration of the coronavirus COVID-19 pandemic is
unknown. The uncertainty around the future impact on the Company’s
business, financial condition, operating results, and cash flows
could cause actual results to differ from this outlook.
Market Update
Due to the uncertainty regarding the COVID-19 pandemic and its
effect on the global economy, Alcoa has suspended its quarterly
projections on global supply/demand balances for bauxite, alumina,
and aluminum.
Conference Call
Alcoa will hold its quarterly conference call at 5 p.m. Eastern
Daylight Time (EDT) on Wednesday, April 22, 2020, to present first
quarter financial results and discuss the business 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 22, 2020. 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.
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 more than 130
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 presentation 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 performance; statements about
strategies, outlook, and business and financial prospects; and
statements about 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; (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 costs or uncertainty of
energy supply; (g) declines in the discount rates used to measure
pension 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, or strengthening of
competitiveness and operations anticipated from portfolio actions,
operational and productivity improvements, cash sustainability,
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,
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
and work stoppages; (l) the outcome of contingencies, including
legal proceedings, government or regulatory investigations, and
environmental remediation; (m) the impact of cyberattacks and
potential information technology or data security breaches; and (n)
the other risk factors discussed in Item 1A of Alcoa Corporation’s
Form 10-K for the fiscal year ended December 31, 2019 and other
reports filed by Alcoa Corporation with the U.S. Securities and
Exchange Commission (SEC). 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
March 31,
2020
December 31,
2019
March 31,
2019
Sales
$
2,381
$
2,436
$
2,719
Cost of goods sold (exclusive of expenses
below)
2,025
2,048
2,180
Selling, general administrative, and other
expenses
60
62
84
Research and development expenses
7
6
7
Provision for depreciation, depletion, and
amortization
170
183
172
Restructuring and other charges, net
2
363
113
Interest expense
30
31
30
Other (income) expenses, net
(132
)
44
41
Total costs and expenses
2,162
2,737
2,627
Income (loss) before income taxes
219
(301
)
92
Provision for income taxes
80
54
150
Net income (loss)
139
(355
)
(58
)
Less: Net income (loss) attributable to
noncontrolling interest
59
(52
)
141
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
80
$
(303
)
$
(199
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
0.43
$
(1.63
)
$
(1.07
)
Average number of shares
185,749,763
185,575,479
185,325,040
Diluted:
Net income (loss)
$
0.43
$
(1.63
)
$
(1.07
)
Average number of shares
186,609,231
185,575,479
185,325,040
Common stock outstanding at the end of the
period
185,915,242
185,580,166
185,519,564
Alcoa Corporation and
Subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
March 31,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents
$
829
$
879
Receivables from customers
570
546
Other receivables
95
114
Inventories
1,509
1,644
Fair value of derivative instruments
53
59
Prepaid expenses and other current
assets(1)
277
288
Total current assets
3,333
3,530
Properties, plants, and equipment
20,181
21,715
Less: accumulated depreciation, depletion,
and amortization
13,021
13,799
Properties, plants, and equipment, net
7,160
7,916
Investments
1,059
1,113
Deferred income taxes
425
642
Fair value of derivative instruments
446
18
Other noncurrent assets
1,228
1,412
Total assets
$
13,651
$
14,631
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,276
$
1,484
Accrued compensation and retirement
costs
353
413
Taxes, including income taxes
78
104
Fair value of derivative instruments
80
67
Other current liabilities
435
494
Long-term debt due within one year
1
1
Total current liabilities
2,223
2,563
Long-term debt, less amount due within one
year
1,801
1,799
Accrued pension benefits
1,455
1,505
Accrued other postretirement benefits
729
749
Asset retirement obligations
548
606
Environmental remediation
289
296
Fair value of derivative instruments
164
581
Noncurrent income taxes
299
276
Other noncurrent liabilities and deferred
credits
332
370
Total liabilities
7,840
8,745
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,647
9,639
Accumulated deficit
(476
)
(555
)
Accumulated other comprehensive loss
(4,898
)
(4,974
)
Total Alcoa Corporation shareholders’
equity
4,275
4,112
Noncontrolling interest
1,536
1,774
Total equity
5,811
5,886
Total liabilities and equity
$
13,651
$
14,631
(1)
This line item includes $3 and $4
of restricted cash as of March 31, 2020 and December 31, 2019,
respectively.
Alcoa Corporation and
Subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Three Months Ended March
31,
2020
2019
CASH FROM OPERATIONS
Net income (loss)
$
139
$
(58
)
Adjustments to reconcile net income (loss)
to cash from operations:
Depreciation, depletion, and
amortization
170
172
Deferred income taxes
23
33
Equity earnings, net of dividends
—
(3
)
Restructuring and other charges, net
2
113
Net gain from investing activities – asset
sales
(177
)
(8
)
Net periodic pension benefit cost
33
30
Stock-based compensation
8
10
Provision for bad debt expense
2
20
Other
4
23
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) Decrease in receivables
(70
)
42
Decrease in inventories
41
17
Decrease in prepaid expenses and other
current assets
11
13
(Decrease) in accounts payable, trade
(121
)
(159
)
(Decrease) in accrued expenses
(85
)
(18
)
(Decrease) in taxes, including income
taxes
(11
)
(43
)
Pension contributions
(48
)
(7
)
Decrease (Increase) in noncurrent
assets
32
(10
)
(Decrease) Increase in noncurrent
liabilities
(43
)
1
CASH (USED FOR) PROVIDED FROM
OPERATIONS
(90
)
168
FINANCING ACTIVITIES
Proceeds from the exercise of employee
stock options
—
1
Financial contributions for the
divestiture of businesses
(12
)
—
Contributions from noncontrolling
interest
—
20
Distributions to noncontrolling
interest
(31
)
(214
)
Other
(1
)
(6
)
CASH USED FOR FINANCING ACTIVITIES
(44
)
(199
)
INVESTING ACTIVITIES
Capital expenditures
(91
)
(69
)
Proceeds from the sale of assets
199
11
Additions to investments
(1
)
(1
)
CASH PROVIDED FROM (USED FOR) FOR
INVESTING ACTIVITIES
107
(59
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
(24
)
(6
)
Net change in cash and cash equivalents
and restricted cash
(51
)
(96
)
Cash and cash equivalents and restricted
cash at beginning of year
883
1,116
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
832
$
1,020
Alcoa Corporation and
Subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
1Q19
2Q19
3Q19
4Q19
2019
1Q20
Bauxite:
Production(1) (mdmt)
11.9
11.3
12.1
12.1
47.4
11.6
Third-party shipments (mdmt)
1.2
1.5
2.0
1.5
6.2
1.4
Intersegment shipments (mdmt)
10.2
10.3
10.6
10.3
41.4
10.5
Third-party sales
$
65
$
67
$
100
$
65
$
297
$
71
Intersegment sales
$
236
$
246
$
251
$
246
$
979
$
235
Segment Adjusted EBITDA(2)
$
126
$
112
$
134
$
132
$
504
$
120
Depreciation, depletion, and
amortization
$
28
$
27
$
35
$
30
$
120
$
34
Alumina:
Production (kmt)
3,240
3,309
3,380
3,373
13,302
3,298
Third-party shipments (kmt)
2,329
2,299
2,381
2,464
9,473
2,365
Intersegment shipments (kmt)
972
1,070
1,049
981
4,072
1,075
Average realized third-party price per
metric ton of alumina
$
385
$
376
$
324
$
291
$
343
$
299
Third-party sales
$
897
$
864
$
771
$
718
$
3,250
$
707
Intersegment sales
$
417
$
445
$
369
$
330
$
1,561
$
336
Segment Adjusted EBITDA(2)
$
372
$
369
$
223
$
133
$
1,097
$
193
Depreciation and amortization
$
48
$
55
$
54
$
57
$
214
$
49
Equity income (loss)
$
12
$
3
$
—
$
(9
)
$
6
$
(9
)
Aluminum:
Primary aluminum production (kmt)
537
533
530
535
2,135
564
Third-party aluminum shipments(3)
(kmt)
709
724
708
718
2,859
725
Average realized third-party price per
metric ton of primary aluminum
$
2,219
$
2,167
$
2,138
$
2,042
$
2,141
$
1,988
Third-party sales
$
1,735
$
1,757
$
1,677
$
1,634
$
6,803
$
1,598
Intersegment sales
$
3
$
4
$
4
$
6
$
17
$
3
Segment Adjusted EBITDA(2)
$
(96
)
$
3
$
43
$
75
$
25
$
62
Depreciation and amortization
$
89
$
85
$
88
$
84
$
346
$
81
Equity (loss) income
$
(22
)
$
(17
)
$
(5
)
$
(5
)
$
(49
)
$
5
Reconciliation of total segment
Adjusted EBITDA to consolidated net (loss) income attributable to
Alcoa Corporation:
Total Segment Adjusted EBITDA(2)
$
402
$
484
$
400
$
340
$
1,626
$
375
Unallocated amounts:
Transformation(4)
2
3
(6
)
(6
)
(7
)
(16
)
Intersegment eliminations
86
(1
)
25
40
150
(8
)
Corporate expenses(5)
(24
)
(28
)
(27
)
(22
)
(101
)
(27
)
Provision for depreciation, depletion, and
amortization
(172
)
(174
)
(184
)
(183
)
(713
)
(170
)
Restructuring and other charges, net
(113
)
(370
)
(185
)
(363
)
(1,031
)
(2
)
Interest expense
(30
)
(30
)
(30
)
(31
)
(121
)
(30
)
Other (expenses) income, net
(41
)
(50
)
(27
)
(44
)
(162
)
132
Other(6)
(18
)
(11
)
(18
)
(32
)
(79
)
(35
)
Consolidated income (loss) before income
taxes
92
(177
)
(52
)
(301
)
(438
)
219
Provision for income taxes
(150
)
(116
)
(95
)
(54
)
(415
)
(80
)
Net (income) loss attributable to
noncontrolling interest
(141
)
(109
)
(74
)
52
(272
)
(59
)
Consolidated net (loss) income
attributable to Alcoa Corporation
$
(199
)
$
(402
)
$
(221
)
$
(303
)
$
(1,125
)
$
80
The difference between segment totals and consolidated amounts is
in Corporate.
(1)
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)
The Aluminum segment’s
third-party aluminum shipments are composed of both primary
aluminum and flat-rolled 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 Selling, general administrative, and
other expenses on Alcoa Corporation’s Statement of Consolidated
Operations that are not included in the Adjusted EBITDA of the
reportable segments, including those described as “Other special
items” (see footnote 1 to the reconciliation of Adjusted Income
within Calculation of Financial Measures included in this
release).
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
March 31,
2020
December 31,
2019
March 31,
2019
March 31,
2020
December 31,
2019
March 31,
2019
Net income (loss) attributable to Alcoa
Corporation
$
80
$
(303
)
$
(199
)
$
0.43
$
(1.63
)
$
(1.07
)
Special items:
Restructuring and other charges, net
2
363
113
Other special items(1)
(137
)
25
10
Discrete tax items and interim tax
impacts(2)
22
(23
)
34
Tax impact on special items(3)
(8
)
(9
)
(1
)
Noncontrolling interest impact(3)
(1
)
(110
)
—
Subtotal
(122
)
246
156
Net loss attributable to Alcoa Corporation
– as adjusted
$
(42
)
$
(57
)
$
(43
)
$
(0.23
)
$
(0.31
)
$
(0.23
)
Net 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 loss
attributable to Alcoa Corporation – as adjusted.
(1)
Other special items include the
following:
•
for the quarter ended March 31,
2020, a gain on the sale of a waste treatment facility in Gum
Springs, Arkansas ($180), costs related to the restart process at
the Bécancour, Canada smelter ($32), and a net unfavorable change
in certain mark-to-market energy derivative instruments ($11);
•
for the quarter ended December
31, 2019, costs related to the restart process at the Bécancour,
Canada smelter ($23) and a net charge for other special items ($2);
and,
•
for the quarter ended March 31,
2019, costs related to a collective employee dismissal process in
Spain at the Avilés and La Coruña smelters ($17, primarily
inventory write downs), a gain on the sale of excess land ($9), and
costs related to a work stoppage at the Bécancour, Canada smelter
($2, primarily contractor services).
(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,
2020, a net charge of interim tax impacts ($21) and a net charge of
several other items ($1);
•
for the quarter ended December
31, 2019, a net benefit of interim tax impacts ($25) and a net
charge of several other items ($2); and,
•
for the quarter ended March 31,
2019, a net charge of interim tax impacts ($34).
(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.
However, certain of these share equivalents may become dilutive in
the EPS calculation applicable to Net loss attributable to Alcoa
Corporation common shareholders – as adjusted due to a larger
and/or positive numerator. Specifically:
•
for all periods presented, the
average number of share equivalents applicable to diluted EPS 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
March 31,
2020
December 31,
2019
March 31,
2019
Net income (loss) attributable to Alcoa
Corporation
$
80
$
(303
)
$
(199
)
Add:
Net income (loss) attributable to
noncontrolling interest
59
(52
)
141
Provision for income taxes
80
54
150
Other (income) expenses, net
(132
)
44
41
Interest expense
30
31
30
Restructuring and other charges, net
2
363
113
Provision for depreciation, depletion, and
amortization
170
183
172
Adjusted EBITDA
289
320
448
Special items(1)
32
26
19
Adjusted EBITDA, excluding special
items
$
321
$
346
$
467
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,
2020, costs related to the restart process at the Bécancour, Canada
smelter ($32);
•
for the quarter ended December
31, 2019, costs related to the restart process at the Bécancour,
Canada smelter ($23) and charges for other special items ($3);
and,
•
for the quarter ended March 31,
2019, costs related to a collective employee dismissal process in
Spain at the Avilés and La Coruña facilities ($17, primarily
inventory write downs), and costs related to a work stoppage at the
Bécancour, Canada smelter ($2, primarily contractor services).
Alcoa Corporation and
Subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
March 31,
2020
December 31,
2019
March 31,
2019
Cash (used for) provided from
operations
$
(90
)
$
262
$
168
Capital expenditures
(91
)
(134
)
(69
)
Free cash flow
$
(181
)
$
128
$
99
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.
Net Debt
March 31,
2020
December 31,
2019
Short-term borrowings
$
—
$
—
Long-term debt due within one year
1
1
Long-term debt, less amount due within one
year
1,801
1,799
Total debt
1,802
1,800
Less: Cash and cash equivalents
829
879
Net debt
$
973
$
921
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200422005893/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
Alcoa (NYSE:AA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alcoa (NYSE:AA)
Historical Stock Chart
From Apr 2023 to Apr 2024