Alcoa Corporation (NYSE: AA) today reported first quarter 2022
financial results that included quarterly records for net income,
adjusted net income and Adjusted EBITDA excluding special
items.
First Quarter Highlights
- Net income increased sequentially to $469 million, or $2.49 per
share
- Adjusted net income increased 21 percent sequentially to $577
million, or $3.06 per share
- Adjusted EBITDA excluding special items increased 20 percent
sequentially to $1,072 million
- Repurchased $75 million shares of common stock and paid $18
million in cash dividends
- Finished the quarter with a cash balance of $1.6 billion
“We had an excellent start to the year with record profitability
in the first quarter, including quarterly EBITDA that surpassed $1
billion for the first time in our history,” said Alcoa President
and CEO Roy Harvey. “We also further strengthened our portfolio,
provided capital returns to our investors, and captured the
benefits of strengthened aluminum pricing.
“In volatile markets influenced by world events, we have
effectively managed our supply chain and maintained stability
across our operations. We remain focused on the future through the
pursuit of our strategic priorities and the development of our
breakthrough technologies.” Harvey said.
Financial Results
M, except per share amounts
1Q22
4Q21
1Q21
Revenue
$3,293
$3,340
$2,870
Net income (loss) attributable to Alcoa
Corporation
$469
$(392)
$175
Earnings (loss) per share attributable to
Alcoa Corporation
$2.49
$(2.11)
$0.93
Adjusted net income
$577
$475
$150
Adjusted earnings per share
$3.06
$2.50
$0.79
Adjusted EBITDA excluding special
items
$1,072
$896
$521
First Quarter 2022 Results
- Revenue: In the Aluminum segment, revenue increased 3
percent sequentially due to strong market pricing. The average
realized price for primary aluminum increased 14 percent
sequentially to $3,861 per metric ton, up $479 per metric ton from
the prior quarter. In the Alumina segment, third-party revenue
decreased 9 percent sequentially due to lower average alumina
prices.
- Shipments: In Aluminum, shipment volume for value add
products, which includes specific shapes and alloys such as billet,
slab, foundry, and rod, increased 6 percent sequentially, including
the resumption of sales from the San Ciprián casthouse in Spain
after conclusion of the strike in late December 2021. Shipments of
commodity grade aluminum were down 19 percent sequentially, more
than half on lower trading volume, for a total Aluminum segment
decrease of 8 percent. In Alumina, third-party shipments decreased
1 percent sequentially.
- Production: Primary aluminum production decreased 10
percent sequentially on the curtailment of the San Ciprián smelter
and fewer days in the quarter. Production in the Alumina segment
was down 2 percent sequentially primarily on fewer days in the
quarter and lower production from the Australian refineries which
offset improvement from the San Ciprián refinery’s return to full
production after the strike conclusion.
- Net income attributable to Alcoa Corporation of $469
million, or $2.49 per share, improved from the prior quarter’s net
loss of $392 million, or $2.11 per share; the prior quarter had
$1.1 billion in restructuring charges primarily for pension and
portfolio actions.
- Adjusted net income increased 21 percent sequentially to
$577 million, or $3.06 per share, excluding the impact from net
special items of $108 million. Notable special items include
restructuring and other charges of $77 million related to a
potential legal settlement in Spain and $58 million for the
impairment of the Company’s investment in the Mineracao Rio Do
Norte S.A. (MRN) bauxite mine in Brazil (both discussed
below).
- Adjusted EBITDA excluding special items increased 20
percent sequentially to $1,072 million, primarily due to higher
aluminum prices.
- Cash: Alcoa ended the quarter with cash on hand of $1.6
billion. Cash provided from operations was $34 million. Cash used
for financing activities was $209 million, primarily related to $75
million in share repurchases, $18 million in cash dividends on
common stock, and $116 million in net distributions to
noncontrolling interest. Cash used for investing activities was $93
million, which includes $74 million in capital expenditures and $21
million in contributions to the ELYSISTM joint venture.
- Working capital: The Company reported 49 days working
capital, a 20 day sequential increase. The majority of the
increase, 14 days, relates to additional inventory. The Company has
higher value in raw materials and finished goods primarily on
higher pricing, as well as higher amounts on hand due to lack of
availability of outbound rail cars and vessels, most predominantly
in North America, additional metal purchases to serve annual
contracts related to the Alumar smelter, and lower shipments from
the Alumina segment. Higher sales prices in accounts receivable
resulted in an additional 5 days.
Key Actions
In the first quarter, Alcoa signed an agreement to sell its
entire stake in MRN in Brazil to South32 for $10 million with the
potential for future contingent payments up to $30 million. The
transaction is expected to close in the second quarter of 2022.
Alcoa’s decision to divest its ownership interest is based on
sufficient bauxite supplies across its global system, including
from the Juruti mine in Brazil.
In Spain, Alcoa safely curtailed in the first quarter the
228,000 metric tons per year of aluminum smelting capacity at the
San Ciprián smelter, per a December 29, 2021 agreement with
workers’ representatives. The successful curtailment enabled the
Company to avoid significant exposure to high power costs in
Spain.
Also in Spain, the Company’s former employees at Avilés and La
Coruña have unanimously agreed to the terms of a settlement which
will, upon satisfaction of all agreed conditions, resolve various
ongoing legal disputes related to the 2019 sale of those two
smelters.
2022 Outlook
On March 2, Alcoa announced it would cease buying raw materials
from, or selling products to, Russian businesses. The Company has
made alternate plans for securing the limited number of materials
purchased from Russian suppliers for the remainder of 2022 and into
the future, without material financial impact.
The Company has decreased its projection for bauxite shipments
in 2022 by 2 million dry metric tons to range between 46.0 and 47.0
million dry metric tons. Due to Alcoa’s cessation of bauxite sales
to Russian businesses, the Company expects to slow production in
its Juruti mine in Brazil by approximately 1.1 million dry metric
tons. The Company is also observing Russia-related changes in the
Atlantic bauxite market, which may impact shipments by
approximately 1 million dry metric tons.
The Company expects total alumina and aluminum shipments to
remain unchanged between 14.2 and 14.4 million metric tons, and
between 2.5 and 2.6 million metric tons, respectively.
For the second quarter 2022, based on current prices, Alcoa
expects both alumina and aluminum realized third-party prices to be
higher than the first quarter, with that benefit partly offset by
approximately $115 million of higher energy and raw materials
costs. Higher shipments sequentially are expected to more than
offset remaining cost pressures and other factors.
Based on current alumina and aluminum market conditions, the
Company expects second quarter tax expense to approximate $220
million to $230 million, which may vary with market conditions and
jurisdictional profitability.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m.
Eastern Daylight Time (EDT) on Wednesday, April 20, 2022, to
present first quarter 2022 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 20, 2022. Call information and related details
are available under the “Investors” section of www.alcoa.com.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina
and aluminum products with a vision to reinvent the aluminum
industry for a sustainable future. Our purpose is to turn raw
potential into real progress, underpinned by Alcoa Values that
encompass integrity, operating excellence, care for people and
courageous leadership. Since developing the process that made
aluminum an affordable and vital part of modern life, our talented
Alcoans have developed breakthrough innovations and best practices
that have led to improved safety, sustainability, efficiency, and
stronger communities wherever we operate.
Discover more by visiting www.alcoa.com. Follow us on our social
media channels: Facebook, Instagram, Twitter, YouTube and
LinkedIn.
The Company does not incorporate the information contained on,
or accessible through, such websites into this press release.
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.
Forward-Looking Statements
This news release contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “aims,” “ambition,” “anticipates,”
“believes,” “could,” “develop,” “endeavors,” “estimates,”
“expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,”
“potential,” “plans,” “projects,” “reach,” “seeks,” “sees,”
“should,” “strive”, “targets,” “will,” “working,” “would,” or other
words of similar meaning. All statements by Alcoa Corporation 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 to the global
economy and our industry, business and financial condition caused
by various worldwide or macroeconomic events, such as the COVID-19
pandemic and the ongoing aggression by Russia against Ukraine, and
related regulatory developments; (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) changes in global economic and financial market
conditions generally, such as inflation and interest rate
increases, 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 or disruption to energy or raw materials supply,
and to the supply chain including logistics; (g) the inability to
execute on strategies related to or achieve improvement in
profitability and margins, cost savings, cash generation, revenue
growth, fiscal discipline, environmental- and social-related goals
and targets, or strengthening of competitiveness and operations
anticipated from portfolio actions, operational and productivity
improvements, technology advancements, and other initiatives; (h)
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; (i) political, economic,
trade, legal, public health and safety, and regulatory risks in the
countries in which Alcoa Corporation operates or sells products;
(j) labor disputes and/or work stoppages and strikes; (k) the
outcome of contingencies, including legal and tax proceedings,
government or regulatory investigations, and environmental
remediation; (l) the impact of cyberattacks and potential
information technology or data security breaches; (m) risks
associated with long-term debt obligations; (n) the timing and
amount of future cash dividends and share repurchases; (o) declines
in the discount rates used to measure pension and other
postretirement benefit liabilities or lower-than-expected
investment returns on pension assets, or unfavorable changes in
laws or regulations that govern pension plan funding; and, (p) 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, 2021 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
March 31,
2022
December 31,
2021
March 31,
2021
Sales
$
3,293
$
3,340
$
2,870
Cost of goods sold (exclusive of expenses
below)
2,181
2,383
2,292
Selling, general administrative, and other
expenses
44
68
52
Research and development expenses
9
10
7
Provision for depreciation, depletion, and
amortization
160
165
182
Restructuring and other charges, net
125
1,055
7
Interest expense
25
28
42
Other income, net
(14
)
(298
)
(24
)
Total costs and expenses
2,530
3,411
2,558
Income (loss) before income taxes
763
(71
)
312
Provision for income taxes
210
298
93
Net income (loss)
553
(369
)
219
Less: Net income attributable to
noncontrolling interest
84
23
44
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
469
$
(392
)
$
175
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
2.54
$
(2.11
)
$
0.94
Average number of shares
184,550,123
185,663,439
186,226,070
Diluted:
Net income (loss)
$
2.49
$
(2.11
)
$
0.93
Average number of shares
188,536,773
185,663,439
188,820,184
Alcoa Corporation and subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
March 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,554
$
1,814
Receivables from customers
952
757
Other receivables
98
127
Inventories
2,495
1,956
Fair value of derivative instruments
64
14
Prepaid expenses and other current
assets(1)
435
358
Total current assets
5,598
5,026
Properties, plants, and equipment
20,445
19,753
Less: accumulated depreciation, depletion,
and amortization
13,621
13,130
Properties, plants, and equipment, net
6,824
6,623
Investments
1,224
1,199
Deferred income taxes
667
506
Fair value of derivative instruments
20
7
Other noncurrent assets(2)
1,655
1,664
Total assets
$
15,988
$
15,025
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,645
$
1,674
Accrued compensation and retirement
costs
357
383
Taxes, including income taxes
358
374
Fair value of derivative instruments
514
274
Other current liabilities
591
517
Long-term debt due within one year
1
1
Total current liabilities
3,466
3,223
Long-term debt, less amount due within one
year
1,727
1,726
Accrued pension benefits
407
417
Accrued other postretirement benefits
642
650
Asset retirement obligations
637
622
Environmental remediation
264
265
Fair value of derivative instruments
1,795
1,048
Noncurrent income taxes
192
191
Other noncurrent liabilities and deferred
credits
601
599
Total liabilities
9,731
8,741
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,537
9,577
Retained earnings (deficit)
114
(315
)
Accumulated other comprehensive loss
(5,074
)
(4,592
)
Total Alcoa Corporation shareholders’
equity
4,579
4,672
Noncontrolling interest
1,678
1,612
Total equity
6,257
6,284
Total liabilities and equity
$
15,988
$
15,025
(1)
This line item includes $29 and $4 of
restricted cash at March 31, 2022 and December 31, 2021,
respectively.
(2)
This line item includes $82 and $106 of
noncurrent restricted cash at March 31, 2022 and December 31, 2021,
respectively.
Alcoa Corporation and subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Three Months Ended March
31,
2022
2021
CASH FROM OPERATIONS
Net income
$
553
$
219
Adjustments to reconcile net income to
cash from operations:
Depreciation, depletion, and
amortization
160
182
Deferred income taxes
(4
)
18
Equity earnings, net of dividends
(25
)
(11
)
Restructuring and other charges, net
125
7
Net loss (gain) from investing activities
– asset sales
1
(27
)
Net periodic pension benefit cost
14
12
Stock-based compensation
9
8
Other
22
(1
)
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) in receivables
(120
)
(212
)
(Increase) in inventories
(479
)
(68
)
(Increase) Decrease in prepaid expenses
and other current assets
(15
)
57
(Decrease) in accounts payable, trade
(81
)
(64
)
(Decrease) Increase in accrued
expenses
(72
)
3
(Decrease) in taxes, including income
taxes
(42
)
(1
)
Pension contributions
(4
)
(63
)
Decrease (Increase) in noncurrent
assets
29
(22
)
(Decrease) in noncurrent liabilities
(37
)
(31
)
CASH PROVIDED FROM OPERATIONS
34
6
FINANCING ACTIVITIES
Additions to debt (original maturities
greater than three months)
—
495
Proceeds from the exercise of employee
stock options
21
4
Repurchase of common stock
(75
)
—
Dividends paid on Alcoa common stock
(18
)
—
Payments related to tax withholding on
stock-based compensation awards
(19
)
(1
)
Financial contributions for the
divestiture of businesses
(3
)
(6
)
Contributions from noncontrolling
interest
46
—
Distributions to noncontrolling
interest
(162
)
(62
)
Other
1
(2
)
CASH (USED FOR) PROVIDED FROM FINANCING
ACTIVITIES
(209
)
428
INVESTING ACTIVITIES
Capital expenditures
(74
)
(75
)
Proceeds from the sale of assets
2
591
Additions to investments
(21
)
(2
)
CASH (USED FOR) PROVIDED FROM INVESTING
ACTIVITIES
(93
)
514
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
9
(11
)
Net change in cash and cash equivalents
and restricted cash
(259
)
937
Cash and cash equivalents and restricted
cash at beginning of year
1,924
1,610
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
1,665
$
2,547
Alcoa Corporation and subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
1Q21
2Q21
3Q21
4Q21
2021
1Q22
Bauxite:
Production(1) (mdmt)
11.9
12.2
11.7
11.8
47.6
11.0
Third-party shipments (mdmt)
1.5
1.1
1.5
1.6
5.7
0.8
Intersegment shipments (mdmt)
10.5
10.8
10.5
10.6
42.4
10.1
Third-party sales
$
58
$
39
$
56
$
83
$
236
$
43
Intersegment sales
$
185
$
179
$
172
$
175
$
711
$
170
Segment Adjusted EBITDA(2)
$
59
$
41
$
23
$
49
$
172
$
38
Depreciation, depletion, and
amortization
$
57
$
32
$
30
$
34
$
153
$
35
Alumina:
Production (kmt)
3,327
3,388
3,253
3,291
13,259
3,209
Third-party shipments (kmt)
2,472
2,437
2,426
2,294
9,629
2,277
Intersegment shipments (kmt)
1,101
1,054
1,011
1,121
4,287
940
Average realized third-party price per
metric ton of
Alumina
$
308
$
282
$
312
$
407
$
326
$
375
Third-party sales
$
760
$
688
$
756
$
935
$
3,139
$
855
Intersegment sales
$
364
$
343
$
349
$
530
$
1,586
$
418
Segment Adjusted EBITDA(2)
$
227
$
124
$
148
$
503
$
1,002
$
262
Depreciation and amortization
$
46
$
50
$
47
$
55
$
198
$
50
Equity (loss) income
$
(5
)
$
(1
)
$
(1
)
$
11
$
4
$
1
Aluminum:
Primary aluminum production (kmt)
548
546
545
554
2,193
498
Third-party aluminum shipments(3)
(kmt)
831
767
722
687
3,007
634
Average realized third-party price per
metric ton of primary aluminum
$
2,308
$
2,753
$
3,124
$
3,382
$
2,879
$
3,861
Third-party sales
$
2,047
$
2,102
$
2,295
$
2,322
$
8,766
$
2,388
Intersegment sales
$
2
$
3
$
8
$
5
$
18
$
7
Segment Adjusted EBITDA(2)
$
283
$
460
$
613
$
523
$
1,879
$
713
Depreciation and amortization
$
73
$
73
$
72
$
71
$
289
$
69
Equity income
$
13
$
28
$
38
$
37
$
116
$
39
Reconciliation of total segment
Adjusted EBITDA to consolidated net income (loss) attributable to
Alcoa Corporation:
Total Segment Adjusted EBITDA(2)
$
569
$
625
$
784
$
1,075
$
3,053
$
1,013
Unallocated amounts:
Transformation(4)
(11
)
(13
)
(10
)
(10
)
(44
)
(14
)
Intersegment eliminations
(7
)
35
(8
)
(121
)
(101
)
102
Corporate expenses(5)
(26
)
(28
)
(30
)
(45
)
(129
)
(29
)
Provision for depreciation, depletion, and
amortization
(182
)
(161
)
(156
)
(165
)
(664
)
(160
)
Restructuring and other charges, net
(7
)
(33
)
(33
)
(1,055
)
(1,128
)
(125
)
Interest expense
(42
)
(67
)
(58
)
(28
)
(195
)
(25
)
Other income, net
24
105
18
298
445
14
Other(6)
(6
)
(2
)
(10
)
(20
)
(38
)
(13
)
Consolidated income (loss) before income
taxes
312
461
497
(71
)
1,199
763
Provision for income taxes
(93
)
(111
)
(127
)
(298
)
(629
)
(210
)
Net income attributable to noncontrolling
interest
(44
)
(41
)
(33
)
(23
)
(141
)
(84
)
Consolidated net income (loss)
attributable to Alcoa Corporation
$
175
$
309
$
337
$
(392
)
$
429
$
469
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
Quarter ended
Quarter ended
March 31,
2022
December 31,
2021
March 31,
2021
March 31,
2022
December 31,
2021
March 31,
2021
Net income (loss) attributable to Alcoa
Corporation
$
469
$
(392
)
$
175
$
2.49
$
(2.11
)
$
0.93
Special items:
Restructuring and other charges, net
125
1,055
7
Other special items(1)
(2
)
(232
)
(30
)
Discrete tax items (2)
2
102
(2
)
Tax impact on special items(3)
(8
)
5
—
Noncontrolling interest impact(3)
(9
)
(63
)
—
Subtotal
108
867
(25
)
Net income attributable to Alcoa
Corporation – as adjusted
$
577
$
475
$
150
$
3.06
$
2.50
$
0.79
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 (loss)
income 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, 2022, a
net favorable change in certain mark-to-market energy derivative
instruments ($15), costs related to the restart process at the
Alumar, Brazil smelter ($12), and charges for other special items
($1);
•
for the quarter ended December 31, 2021,
net gains on asset sales ($222), primarily related to the Rockdale
site sale, a net favorable change in certain mark-to-market energy
derivative instruments ($27), costs related to the closure of the
Wenatchee, Washington smelter ($10), costs related to the restart
process at the Alumar, Brazil smelter ($6), and a charge for other
special items ($1); and,
•
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).
(2)
Discrete tax items are generally unusual or infrequently occurring
items, changes in law, items associated with uncertain tax
positions, or the effect of measurement-period adjustments and
include the following:
•
for the quarter ended March 31, 2022, net
charge for discrete tax items ($2);
•
for the quarter ended December 31, 2021, a
charge to record a valuation allowance on the Company’s Spanish
alumina subsidiary’s deferred tax assets ($97), and a net charge
for several other items ($5); and,
•
for the quarter ended March 31, 2021, net
charge for discrete tax items ($2).
(3)
The tax impact on special items is based on the applicable
statutory rates in the jurisdictions where the special items
occurred. The noncontrolling interest impact on special items
represents Alcoa’s partner’s share of certain special items.
(4)
In any period with a Net loss attributable to Alcoa Corporation
(GAAP or as adjusted), the average number of shares applicable to
diluted earnings per share exclude certain share equivalents as
their effect is anti-dilutive.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted EBITDA
Quarter ended
March 31,
2022
December 31,
2021
March 31,
2021
Net income (loss) attributable to Alcoa
Corporation
$
469
$
(392
)
$
175
Add:
Net income attributable to noncontrolling
interest
84
23
44
Provision for income taxes
210
298
93
Other income, net
(14
)
(298
)
(24
)
Interest expense
25
28
42
Restructuring and other charges, net
125
1,055
7
Provision for depreciation, depletion, and
amortization
160
165
182
Adjusted EBITDA
1,059
879
519
Special items(1)
13
17
2
Adjusted EBITDA, excluding special
items
$
1,072
$
896
$
521
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, 2022,
costs related to the restart process at the Alumar, Brazil smelter
($12), and charges for other special items ($1);
•
for the quarter ended December 31, 2021,
costs related to the closure of the Wenatchee, Washington smelter
($10), costs related to the restart process at the Alumar, Brazil
smelter ($6), and a charge for other special items ($1); and,
•
for the quarter ended March 31, 2021,
external costs related to portfolio actions ($1) and charges for
other special items ($1).
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
March 31,
2022
December 31,
2021
March 31,
2021
Cash provided from operations
$
34
$
565
$
6
Capital expenditures
(74
)
(153
)
(75
)
Free cash flow
$
(40
)
$
412
$
(69
)
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,
2022
December 31,
2021
Short-term borrowings
$
75
$
75
Long-term debt due within one year
1
1
Long-term debt, less amount due within one
year
1,727
1,726
Total debt
1,803
1,802
Less: Cash and cash equivalents
1,554
1,814
Net debt
$
249
$
(12
)
Net debt is a non-GAAP financial measure.
Management believes this measure is meaningful to investors because
management assesses Alcoa Corporation’s leverage position after
considering available cash that could be used to repay outstanding
debt. When cash exceeds total debt, the measure is expressed as net
cash.
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted Net Debt and Proportional
Adjusted Net Debt
March 31, 2022
December 31, 2021
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
75
$
30
$
45
$
75
$
30
$
45
Long-term debt due within one year
1
—
1
1
—
1
Long-term debt, less amount due within one
year
1,727
—
1,727
1,726
—
1,726
Total debt
1,803
30
1,773
1,802
30
1,772
Less: Cash and cash equivalents
1,554
152
1,402
1,814
177
1,637
(Net cash) net debt
249
(122
)
371
(12
)
(147
)
135
Plus: Net pension / OPEB liability
950
15
935
973
15
958
Adjusted net debt
$
1,199
$
(107
)
$
1,306
$
961
$
(132
)
$
1,093
Net debt is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because management assesses Alcoa Corporation’s leverage position
after considering available cash that could be used to repay
outstanding debt. When cash exceeds total debt, the measure is
expressed as net cash.
Adjusted net debt and proportional
adjusted net debt are also non-GAAP financial measures. Management
believes that these additional measures are meaningful to investors
because management also assesses Alcoa Corporation’s leverage
position after considering available cash that could be used to
repay outstanding debt and net pension/OPEB liability, net of the
portion of those items attributable to noncontrolling interest
(NCI).
Days Working Capital
Quarter ended
March 31,
2022
December 31,
2021
March 31,
2021
Accounts receivable
$
952
$
757
$
587
Add: Inventory
2,495
1,956
1,417
Less: Accounts Payable
(1,645
)
(1,674
)
(1,284
)
DWC working capital
$
1,802
$
1,039
$
720
Sales
$
3,293
$
3,340
$
2,870
Number of days in the quarter
90
92
90
Days working capital(1)
49
29
23
Days working capital is a non-GAAP
financial measure. Management believes that this measure is
meaningful to investors because management uses its working capital
position to assess Alcoa Corporation’s efficiency in liquidity
management.
(1) Days working capital is calculated as
DWC working capital divided by the quotient of Sales and number of
days in the quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220414005636/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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