Improved pricing and strong shipments drive
highest quarterly results since 2018
Alcoa Corporation (NYSE: AA) today reported first quarter 2021
results that reflect improvements in pricing for alumina and
aluminum, strong operational performance, and continued discipline
in executing the Company’s long-term strategy.
First Quarter Highlights
- Maintained reliable production and shipments while prioritizing
safety, including COVID-19 protocols
- Revenue and income highest since 2018, which was a
record-setting year
- Realized 20 percent sequential increase in revenue on higher
prices and strong shipments
- Generated net income of $175 million; sequentially, adjusted
net income increased 206 percent to $150 million
- Adjusted EBITDA excluding special items increased 44 percent to
$521 million
- Completed sale of the Warrick rolling mill for $670 million;
met target for non-core asset sales
- Strengthened the balance sheet and increased flexibility for
use of excess cash: In March, issued debt with lowest-ever coupon
rate; in April, debt proceeds and cash on hand used to fund U.S.
pension plans and pay off higher-interest rate notes
- Signed agreements to repower Portland Aluminium smelter in the
State of Victoria in Australia
- Increased shipments of aluminum value-add products by
approximately 10 percent sequentially
- Cash balance $2.5 billion as of March 31, 2021
Financial Results
M, except per share amounts
1Q21
4Q20
1Q20
Revenue
$2,870
$2,392
$2,381
Net income (loss) attributable to Alcoa
Corporation
$175
$(4)
$80
Earnings (loss) per share attributable to
Alcoa Corporation
$0.93
$(0.02)
$0.43
Adjusted net income (loss)
$150
$49
$(42)
Adjusted earnings (loss) per share
$0.79
$0.26
$(0.23)
Adjusted EBITDA excluding special
items
$521
$361
$321
“We had an excellent first quarter with our best quarterly
result since a record-setting year in 2018,” said Alcoa President
and CEO Roy Harvey. “We excelled from the top line to the bottom
line, controlling production costs and capturing the benefits of
improved demand and stronger prices for alumina and aluminum.
“In addition to exceptional operating performance, we made the
Company even stronger this quarter by improving the balance sheet,”
Harvey said. “Using cash on hand and the proceeds from our debt
issuance with our lowest-ever coupon rate, we paid off
higher-interest rate notes in April and funded more of our pension
obligations. This provides even greater flexibility to execute on
our long-term strategy in the years ahead.
“Our teams have demonstrated relentless discipline to ensure we
are ready for whatever the markets may bring. We’ve proven we can
operate during uncertain times, and we’re well positioned for the
future with excellent environmental, social and governance
practices and a low-carbon product portfolio that is the industry’s
most comprehensive.”
First Quarter 2021 Results
- Shipments: In Alumina, third-party shipments increased
approximately 7 percent sequentially, primarily due to timing of
shipments as well as continued high production rates. In Aluminum,
third-party shipments increased approximately 13 percent
sequentially, primarily related to resuming shipments at San
Ciprián in Spain.
- Revenue: Higher aluminum and alumina prices, combined
with increased shipments, drove a 20 percent sequential increase in
revenue.
- Net income attributable to Alcoa Corporation: Alcoa
reported net income of $175 million, or $0.93 per share, in the
first quarter 2021, an improvement of $179 million from the net
loss of $4 million, or $0.02 per share, in the fourth quarter 2020.
The improved sequential results are primarily due to higher
aluminum and alumina prices, lower restructuring-related charges,
and the recognition of a gain on the sale of the Warrick rolling
mill.
- Adjusted net income: Excluding the benefit from net
special items of $25 million, adjusted net income was $150 million,
or $0.79 per share, triple the prior quarter’s adjusted net income
of $49 million, or $0.26 per share. Notable special items include a
$27 million gain on the sale of the Warrick rolling mill.
- Adjusted EBITDA excluding special items: Adjusted EBITDA
excluding special items was $521 million, a 44 percent sequential
increase primarily attributed to higher aluminum and alumina
prices.
- Cash: Alcoa ended the quarter with cash on hand of $2.5
billion, which included $583 million in initial net proceeds from
the sale of Warrick rolling mill and $493 million in net proceeds
from the March 2021 debt issuance. Cash provided from operations
was $6 million. Cash provided from financing activities was $428
million, primarily related to the debt issuance, and cash provided
from investing activities was $514 million, primarily related to
the sale of the Warrick rolling mill. Free cash flow was negative
$69 million.
- Debt and pension actions: Total debt as of March 31,
2021 was $3 billion, and net debt was $492 million, a 47 percent
improvement from net debt of $935 million in the fourth quarter
2020. In March 2021, debt increased $500 million from the 4.125
percent debt issuance. In April, the Company used the proceeds of
the debt issuance and cash on hand to contribute $500 million to
U.S. pension plans and redeem in full $750 million of 6.75 percent
senior notes. The actions provide further flexibility, strengthen
the balance sheet, and move the Company closer to its net debt
target.
- Working capital: The Company reported 25 days working
capital. Excluding the working capital of the Warrick rolling mill
from fourth quarter 2020, the Company has five days additional
working capital at the end of the first quarter 2021 primarily due
to higher accounts receivable reflecting improved pricing and lower
accounts payable. On a year-over-year quarter basis, also excluding
the working capital of the Warrick rolling mill in the comparative
period, days working capital improved by four days, primarily due
to lower days of inventory on hand.
Strategic Actions
The Company is continuing the review of its asset portfolio and
is increasing low-carbon product sales to drive lower costs and
sustainable profitability.
Non-Core Asset Sales
- Warrick Rolling Mill: On March 31, 2021, Alcoa completed the
sale of the Warrick rolling mill, held by Alcoa Warrick LLC, to
Kaiser Aluminum Corporation for total consideration of
approximately $670 million, which included the assumption of $72
million in OPEB liabilities (as adjusted post-closing). Alcoa
recorded a gain on the sale of approximately $27 million in the
first quarter 2021, subject to working capital and other purchase
price adjustments. The assets and liabilities of the Warrick
rolling mill were classified as held for sale on the Company’s
balance sheet as of December 31, 2020. Alcoa retains ownership of
the 269,000 metric tons per year aluminum smelter and its
electricity generating units at Warrick Operations. In connection
with the sale, Alcoa entered into a market-based metal supply
agreement with Kaiser. With the Warrick rolling mill sale and the
2020 sale of the Gum Springs, Arkansas waste treatment facility,
the Company reached its target to generate between $500 million and
$1 billion from non-core asset sales.
Portfolio Review
In October 2019, the Company announced a five-year review of
existing production assets that includes evaluations for
significant improvement or potential curtailments, closures or
divestitures. The review included 1.5 million metric tons of global
smelting capacity and 4 million tons of global alumina refining
capacity. Since the announcement, 230,000 metric tons of
uncompetitive smelting capacity has been curtailed with the 2020
idling of the Intalco smelter. In refining, the December 2019
closure of Point Comfort permanently removed 2.3 million metric
tons of alumina capacity.
- Portland Aluminium: On March 18, 2021, Alcoa announced new
agreements with multiple power generators and financial commitments
from the Australian federal government and the State of Victoria to
repower the Portland Aluminium smelter. New energy agreements are
effective August 1, replacing one agreement with AGL that expires
on July 31, 2021.
- San Ciprián Smelter: In January 2021, the Company reached an
agreement with the workers’ representatives to suspend the labor
strike at its San Ciprián alumina refinery and aluminum smelter in
Spain to negotiate an exclusive sales process with Sociedad Estatal
de Participaciones Industriales (SEPI), a Spanish government-owned
entity. The Company has complied with the terms of the agreement to
pursue a sale, has delivered a term sheet to SEPI, and is
continuing to evaluate potential solutions.
Low-Carbon, Sustainable Products
Alcoa is recognizing increased year-over-year demand for its
SustanaTM line of products, which is the most comprehensive in the
industry, and metal certified by the Aluminium Stewardship
Initiative (ASI).
In March 2021, Alcoa announced that its low-carbon primary
aluminum product, EcoLumTM, is being used for the wheels on the
Audi e-tron GT, the auto manufacturer’s first fully electric
sportscar. The wheels also include an allocation of metal from
ELYSISTM, which is working to commercialize a smelting technology
that eliminates all greenhouse gas emissions from the traditional
smelting process.
In addition, Alcoa expects to ship in May its first commercial
sale of EcoSourceTM, its low-carbon alumina product. EcoSource is
the world’s first low-carbon smelter grade alumina and can help
aluminum producers reduce their carbon footprint.
2021 Outlook
Alcoa is expecting a strong 2021 based on 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. In the first
quarter of 2021, shipments for value-add products, which includes
specific shapes and alloys such as billet, slab, foundry and rod,
increased 10 percent sequentially, posting three consecutive
quarters of improvement.
The Company’s 2021 shipment outlook for Bauxite and Aluminum
remains unchanged from the prior full-year estimates. Total alumina
shipments are expected to increase 100 thousand metric tons to
between 14.0 and 14.1 million metric tons. Total annual bauxite
shipments are expected to range between 49.0 and 50.0 million dry
metric tons. The Aluminum segment is expected to ship between 2.7
and 2.8 million metric tons.
In the second quarter of 2021, Alcoa expects another strong
quarter despite the absence of the Warrick rolling mill results,
current energy market conditions, and seasonal maintenance
typically higher in the second quarter than other quarters.
Based on current alumina and aluminum market conditions, the
Company expects second quarter tax expense to approximate $90
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 uncertainty around its future 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, April 15, 2021, to present
first 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 April 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 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
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.
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,
2021
December 31,
2020
March 31,
2020
Sales
$
2,870
$
2,392
$
2,381
Cost of goods sold (exclusive of expenses
below)
2,292
1,974
2,025
Selling, general administrative, and other
expenses
52
55
60
Research and development expenses
7
9
7
Provision for depreciation, depletion, and
amortization
182
170
170
Restructuring and other charges, net
7
60
2
Interest expense
42
43
30
Other (income) expenses, net
(24
)
44
(132
)
Total costs and expenses
2,558
2,355
2,162
Income before income taxes
312
37
219
Provision for income taxes
93
20
80
Net income
219
17
139
Less: Net income attributable to
noncontrolling interest
44
21
59
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
175
$
(4
)
$
80
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
0.94
$
(0.02
)
$
0.43
Average number of shares
186,226,070
185,945,762
185,749,763
Diluted:
Net income (loss)
$
0.93
$
(0.02
)
$
0.43
Average number of shares
188,820,184
185,945,762
186,609,231
Common stock outstanding at the end of the
period
186,409,053
185,978,069
185,915,242
Alcoa Corporation and
subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
March 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
2,544
$
1,607
Receivables from customers
587
471
Other receivables
90
85
Inventories
1,417
1,398
Fair value of derivative instruments
15
21
Assets held for sale
—
648
Prepaid expenses and other current
assets(1)
238
290
Total current assets
4,891
4,520
Properties, plants, and equipment
20,199
20,522
Less: accumulated depreciation, depletion,
and amortization
13,269
13,332
Properties, plants, and equipment, net
6,930
7,190
Investments
1,055
1,051
Deferred income taxes
653
655
Other noncurrent assets
1,402
1,444
Total assets
$
14,931
$
14,860
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,284
$
1,403
Accrued compensation and retirement
costs
365
395
Taxes, including income taxes
92
91
Fair value of derivative instruments
181
103
Liabilities held for sale
—
242
Other current liabilities
554
525
Long-term debt due within one year
745
2
Total current liabilities
3,221
2,761
Long-term debt, less amount due within one
year
2,214
2,463
Accrued pension benefits
1,393
1,492
Accrued other postretirement benefits
671
744
Asset retirement obligations
596
625
Environmental remediation
278
293
Fair value of derivative instruments
923
742
Noncurrent income taxes
204
209
Other noncurrent liabilities and deferred
credits
558
515
Total liabilities
10,058
9,844
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,674
9,663
Accumulated deficit
(550
)
(725
)
Accumulated other comprehensive loss
(5,878
)
(5,629
)
Total Alcoa Corporation shareholders’
equity
3,248
3,311
Noncontrolling interest
1,625
1,705
Total equity
4,873
5,016
Total liabilities and equity
$
14,931
$
14,860
(1)
This line item includes $3 of restricted
cash as of both March 31, 2021 and December 31, 2020.
Alcoa Corporation and
subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Three Months Ended March
31,
2021
2020
CASH FROM OPERATIONS
Net income
$
219
$
139
Adjustments to reconcile net income to
cash from operations:
Depreciation, depletion, and
amortization
182
170
Deferred income taxes
18
23
Equity earnings, net of dividends
(11
)
—
Restructuring and other charges, net
7
2
Net gain from investing activities – asset
sales
(27
)
(177
)
Net periodic pension benefit cost
12
33
Stock-based compensation
8
8
Provision for bad debt expense
—
2
Other
(1
)
4
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) in receivables
(212
)
(70
)
(Increase) Decrease in inventories
(68
)
41
Decrease in prepaid expenses and other
current assets
57
11
(Decrease) in accounts payable, trade
(64
)
(121
)
Increase (Decrease) in accrued
expenses
3
(85
)
(Decrease) in taxes, including income
taxes
(1
)
(11
)
Pension contributions
(63
)
(48
)
(Increase) Decrease in noncurrent
assets
(22
)
32
(Decrease) in noncurrent liabilities
(31
)
(43
)
CASH PROVIDED FROM (USED FOR)
OPERATIONS
6
(90
)
FINANCING ACTIVITIES
Additions to debt (original maturities
greater than three months)
495
—
Proceeds from the exercise of employee
stock options
4
—
Financial contributions for the
divestiture of businesses
(6
)
(12
)
Distributions to noncontrolling
interest
(62
)
(31
)
Other
(3
)
(1
)
CASH PROVIDED FROM (USED FOR) FINANCING
ACTIVITIES
428
(44
)
INVESTING ACTIVITIES
Capital expenditures
(75
)
(91
)
Proceeds from the sale of assets
591
199
Additions to investments
(2
)
(1
)
CASH PROVIDED FROM INVESTING
ACTIVITIES
514
107
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
(11
)
(24
)
Net change in cash and cash equivalents
and restricted cash
937
(51
)
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
$
2,547
$
832
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
Bauxite:
Production(1) (mdmt)
11.6
12.2
12.0
12.2
48.0
11.9
Third-party shipments (mdmt)
1.4
1.6
1.6
1.9
6.5
1.5
Intersegment shipments (mdmt)
10.5
10.8
10.5
10.4
42.2
10.5
Third-party sales
$
71
$
66
$
56
$
79
$
272
$
58
Intersegment sales
$
235
$
245
$
236
$
225
$
941
$
185
Segment Adjusted EBITDA(2)
$
120
$
131
$
124
$
120
$
495
$
59
Depreciation, depletion, and
amortization
$
34
$
30
$
33
$
38
$
135
$
57
Alumina:
Production (kmt)
3,298
3,371
3,435
3,371
13,475
3,327
Third-party shipments (kmt)
2,365
2,415
2,549
2,312
9,641
2,472
Intersegment shipments (kmt)
1,075
987
1,135
1,046
4,243
1,101
Average realized third-party price per
metric ton of alumina
$
299
$
250
$
274
$
268
$
273
$
308
Third-party sales
$
707
$
603
$
697
$
620
$
2,627
$
760
Intersegment sales
$
336
$
289
$
329
$
314
$
1,268
$
364
Segment Adjusted EBITDA(2)
$
193
$
88
$
119
$
97
$
497
$
227
Depreciation and amortization
$
49
$
37
$
41
$
45
$
172
$
46
Equity loss
$
(9
)
$
(8
)
$
(4
)
$
(2
)
$
(23
)
$
(5
)
Aluminum:
Primary aluminum production (kmt)
564
581
559
559
2,263
548
Third-party aluminum shipments(3)
(kmt)
725
789
767
735
3,016
831
Average realized third-party price per
metric ton of primary aluminum
$
1,988
$
1,694
$
1,904
$
2,094
$
1,915
$
2,308
Third-party sales
$
1,598
$
1,475
$
1,607
$
1,685
$
6,365
$
2,047
Intersegment sales
$
3
$
2
$
2
$
5
$
12
$
2
Segment Adjusted EBITDA(2)
$
62
$
(34
)
$
116
$
181
$
325
$
283
Depreciation and amortization
$
81
$
79
$
80
$
82
$
322
$
73
Equity income (loss)
$
5
$
(12
)
$
(6
)
$
6
$
(7
)
$
13
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
Unallocated amounts:
Transformation(4)
(16
)
(10
)
(11
)
(8
)
(45
)
(11
)
Intersegment eliminations
(8
)
30
(35
)
5
(8
)
(7
)
Corporate expenses(5)
(27
)
(21
)
(24
)
(30
)
(102
)
(26
)
Provision for depreciation, depletion, and
amortization
(170
)
(152
)
(161
)
(170
)
(653
)
(182
)
Restructuring and other charges, net
(2
)
(37
)
(5
)
(60
)
(104
)
(7
)
Interest expense
(30
)
(32
)
(41
)
(43
)
(146
)
(42
)
Other income (expenses), net
132
(51
)
(45
)
(44
)
(8
)
24
Other(6)
(35
)
(17
)
(15
)
(11
)
(78
)
(6
)
Consolidated income (loss) before income
taxes
219
(105
)
22
37
173
312
Provision for income taxes
(80
)
(45
)
(42
)
(20
)
(187
)
(93
)
Net income attributable to noncontrolling
interest
(59
)
(47
)
(29
)
(21
)
(156
)
(44
)
Consolidated net income (loss)
attributable to Alcoa Corporation
$
80
$
(197
)
$
(49
)
$
(4
)
$
(170
)
$
175
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)
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 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
March 31,
2021
December 31,
2020
March 31,
2020
March 31,
2021
December 31,
2020
March 31,
2020
Net income (loss) attributable to Alcoa
Corporation
$
175
$
(4
)
$
80
$
0.93
$
(0.02
)
$
0.43
Special items:
Restructuring and other charges, net
7
60
2
Other special items(1)
(30
)
5
(137
)
Discrete tax items and interim tax
impacts(2)
(2
)
(6
)
22
Tax impact on special items(3)
—
(1
)
(8
)
Noncontrolling interest impact(3)
—
(5
)
(1
)
Subtotal
(25
)
53
(122
)
Net income (loss) attributable to Alcoa
Corporation – as adjusted
$
150
$
49
$
(42
)
$
0.79
$
0.26
$
(0.23
)
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 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);
- for the quarter ended December 31, 2020, external costs related
to portfolio actions ($4), a net favorable change in certain
mark-to-market energy derivative instruments ($2), and charges for
other special items ($3); and,
- 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).
(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, net charge for discrete
tax items ($2);
- for the quarter ended December 31, 2020, a net charge for
interim tax impacts ($19), a benefit related to the favorable
ruling of a Spanish tax matter ($32), and a net charge of several
other items ($7); and,
- for the quarter ended March 31, 2020, a net charge of interim
tax impacts ($21) and a net charge of several other items
($1).
(3)
The tax impact on special items is based
on the applicable statutory rates in the jurisdictions where the
special items occurred. The noncontrolling interest impact on
special items represents Alcoa’s partner’s share of certain special
items.
(4)
In any 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
December 31, 2020, share equivalents were dilutive based on Net
income attributable to Alcoa Corporation common shareholders – as
adjusted, resulting in a diluted average number of shares of
187,677,215.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted EBITDA
Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
Net income (loss) attributable to Alcoa
Corporation
$
175
$
(4
)
$
80
Add:
Net income attributable to noncontrolling
interest
44
21
59
Provision for income taxes
93
20
80
Other (income) expenses, net
(24
)
44
(132
)
Interest expense
42
43
30
Restructuring and other charges, net
7
60
2
Provision for depreciation, depletion, and
amortization
182
170
170
Adjusted EBITDA
519
354
289
Special items(1)
2
7
32
Adjusted EBITDA, excluding special
items
$
521
$
361
$
321
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 March 31, 2021, external costs related to
portfolio actions ($1) and charges for other special items
($1);
- for the quarter ended December 31, 2020, external costs related
to portfolio actions ($4) and charges for other special items ($3);
and,
- for the quarter ended March 31, 2020, costs related to the
restart process at the Bécancour, Canada smelter ($32).
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
Cash provided from (used for)
operations
$
6
$
38
$
(90
)
Capital expenditures
(75
)
(111
)
(91
)
Free cash flow
$
(69
)
$
(73
)
$
(181
)
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,
2021
December 31,
2020
Short-term borrowings
$
77
$
77
Long-term debt due within one year
745
2
Long-term debt, less amount due within one
year
2,214
2,463
Total debt
3,036
2,542
Less: Cash and cash equivalents
2,544
1,607
Net debt
$
492
$
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210415005911/en/
Investor Contact: James Dwyer +1 412 992 5450
James.Dwyer@alcoa.com Media Contact: Jim Beck +1 412 315
2909 Jim.Beck@alcoa.com
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