Aluminum segment drives profit growth,cash reaches
$1.1 billion
PITTSBURGH--(BUSINESS WIRE)--
Alcoa Corporation (NYSE: AA):
3Q 2017 Results1
-
Net income of $113 million, or $0.60 per share
-
Excluding special items, adjusted net income of $135 million, or $0.72
per share
- $561 million of adjusted earnings before interest, tax, depreciation
and amortization (EBITDA) excluding special items, up 16 percent
sequentially, on improved aluminum pricing and higher aluminum and
bauxite shipments
-
Revenue of $3.0 billion, up 4 percent sequentially, driven primarily
by improved aluminum pricing, higher aluminum shipments and increased
energy sales
- $1.1 billion cash balance and $1.4 billion of debt, for net debt of
$0.3 billion, as of September 30, 2017
-
Company raised its 2017 outlook for adjusted EBITDA excluding special
items to approximately $2.4 billion2
___________________________________________________________________
M, except per share amounts |
| 3Q16 |
| 2Q17 |
| 3Q17 |
|
Revenue
|
| $2,329 |
| $2,859 |
| $2,964 |
|
Net (loss) income attributable to Alcoa Corporation
| | $(10) | | $75 | | $113 |
|
Earnings per share attributable to Alcoa Corporation
|
| $(0.06) |
| $0.40 |
| $0.60 |
|
Adjusted net (loss) income
| | $(95) | | $116 | | $135 |
|
Adjusted earnings (loss) per share
|
| $(0.52) |
| $0.62 |
| $0.72 |
|
Adjusted EBITDA excluding special items
|
| $284 |
| $483 |
| $561 |
___________________________________________________________________
1 Alcoa Corporation became an independent,
publicly-traded company on November 1, 2016. Prior to November 1, 2016,
Alcoa Corporation’s financial statements were prepared on a carve-out
basis, as the underlying operations of the Company were previously
consolidated as part of Alcoa Corporation’s former parent company’s
financial statements. Accordingly, the financial results of Alcoa
Corporation for the first ten months of 2016 (including the first month
of fourth quarter 2016) were prepared on such basis. The carve-out
financial statements of Alcoa Corporation are not necessarily indicative
of Alcoa Corporation’s consolidated results of operations, financial
position, and cash flows had it been a standalone company during the
referenced period. See the Consolidated Financial Statements included in
the Company’s Annual Report on Form 10-K for the period ended December
31, 2016 filed with the United States Securities and Exchange Commission
on March 15, 2017 for additional information.
2 Based on actual results for 2017 YTD; outlook for
unpriced sales for 4Q17 at $2,100 LME, $470 API, and updated regional
premiums and foreign currencies.
___________________________________________________________________
Alcoa Corporation (NYSE: AA), a global leader in bauxite, alumina and
aluminum products, today reported a sequential increase in third quarter
2017 revenue and earnings, driven primarily by improved pricing in the
aluminum business segment and higher shipments of aluminum and bauxite.
In addition, the Company’s cash balance as of September 30, 2017 reached
$1.1 billion.
Based on stronger alumina and aluminum prices, Alcoa has increased its
projection for full-year adjusted EBITDA to approximately $2.4 billion2.
This adjusted EBITDA forecast, up from the second quarter projected
range of $2.1 billion to $2.2 billion, includes higher input costs to be
reflected in net performance reported with fourth quarter 2017 results.
“Alcoa continues to benefit from favorable commodity markets, and we’ve
raised our projections for profitability in 2017 and global aluminum
demand growth for the balance of the year,” said Roy Harvey, President
and Chief Executive Officer. “We continued to execute on our three
strategic priorities—our strong cash generation aligns with our priority
to strengthen the balance sheet, while our recent Rockdale announcement
advances our priorities to reduce complexity and drive returns.”
Mr. Harvey continued: “As we approach our first anniversary as an
independent, publicly-traded company, we’ll continue to be guided by our
three strategic priorities to further strengthen our Company and Alcoa’s
foundation for the future.”
In third quarter 2017, Alcoa reported net income of $113 million, or
$0.60 per share, up 51 percent, mostly due to an improvement in the
combined results of the Company’s business segments. This compares to
second quarter 2017 net income of $75 million, or $0.40 per share. The
third and second quarters of 2017 include a negative impact for special
items of $22 million and $41 million, respectively.
Third quarter 2017 special items were largely related to restructuring
charges associated with previous actions, a legacy tax settlement in
Brazil, unfavorable mark-to-market impact on certain energy contracts,
and a net benefit related to the partial restart of the Warrick smelter
in Indiana (reversal of previous closure costs partially offset by
restart costs).
Excluding the impact of special items, third quarter 2017 adjusted net
income was $135 million, or $0.72 per share, up 16 percent sequentially
from $116 million, or $0.62 per share.
In the third quarter 2017, Alcoa reported $561 million of adjusted
EBITDA excluding special items, up 16 percent from $483 million in
second quarter 2017. The improvement was driven by several positive
factors, including higher energy sales in Brazil, improved aluminum
pricing and increased shipments for both aluminum and bauxite, partially
offset by unfavorable currency exchange rates and raw material price
inflation.
Alcoa reported third quarter 2017 revenue of $3.0 billion, up 4 percent
sequentially, with higher energy sales in Brazil, higher shipments in
the Company’s aluminum and bauxite segments and increased aluminum
prices, somewhat offset by a decline in alumina volume.
Cash from operations in third quarter 2017 was $384 million and free
cash flow was $288 million. Cash used for financing activities and
investing activities was $115 million and $100 million, respectively, in
the third quarter of 2017. Cash used for financing in third quarter 2017
included the early repayment of a $41 million loan from Brazil’s
National Bank for Economic and Social Development (BNDES).
Alcoa ended third quarter 2017 with cash on hand of $1.1 billion with
$1.4 billion of debt, for net debt of $0.3 billion. The Company reported
17 days working capital, a one-day improvement from second quarter 2017.
Earlier this month, Alcoa
announced the October 1 termination of a power contract tied to the
curtailed Rockdale Operations in Texas. The termination, which included
a lump sum cash payment of $237.5 million, is expected to result in an
annual improvement to net income and adjusted EBITDA of $60 million to
$70 million, beginning in the fourth quarter of 2017.
Market Update
Alcoa continues to see strong global aluminum demand growth and
increased its full-year 2017 estimate to a range of 5.0 to 5.5 percent,
from 4.75 to 5.25 percent in the second quarter.
The Company expects the global aluminum market to be in relative balance
for full year 2017, a change from the second quarter projection of a
slight surplus. The improvement is mostly due to planned and actual
curtailments in Chinese smelting capacity as well as increased Chinese
demand.
Global markets for both bauxite and alumina are expected to remain in
relative balance for the year.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern
Daylight Time (EDT) on Wednesday, October 18, 2017 to present third
quarter 2017 financial results, discuss the business, and review market
fundamentals.
The call will be webcast via the Company’s homepage on www.alcoa.com.
Presentation materials for the call will be available for viewing at
approximately 4:15 p.m. EDT on October 18th on the same
website. 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.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina and
aluminum products built on a foundation of strong values and operating
excellence dating back nearly 130 years to the world-changing discovery
that made aluminum an affordable and vital part of modern life. Since
inventing 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 press 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; and statements about strategies, outlook,
business and financial prospects. 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) 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, alumina, and other products, and fluctuations in indexed-based
and spot prices for alumina; (b) deterioration in global economic and
financial market conditions generally; (c) unfavorable changes in the
markets served by Alcoa Corporation; (d) the impact of changes in
foreign currency exchange rates on costs and results; (e) increases in
energy costs; (f) 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; (g) the inability to achieve the level of revenue growth, cash
generation, cost savings, improvement in profitability and margins,
fiscal discipline, or strengthening of competitiveness and operations
anticipated from restructuring programs and productivity improvement,
cash sustainability, 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, facility
closures, curtailments, restarts, expansions, or joint ventures; (i)
political, economic, and regulatory risks in the countries in which
Alcoa Corporation operates or sells products; (j) the outcome of
contingencies, including legal proceedings, government or regulatory
investigations, and environmental remediation; (k) the impact of
cyberattacks and potential information technology or data security
breaches; and (l) the other risk factors discussed in Item 1A of Alcoa
Corporation’s Form 10-K for the fiscal year ended December 31, 2016 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 discussed
above and other risks in the market.
Non-GAAP Financial Measures
Some of the information included in this release is derived from Alcoa’s
consolidated financial information but is not presented in Alcoa’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 rules.
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 has not provided a reconciliation of any forward-looking
non-GAAP financial measures to the most directly comparable GAAP
financial measures due primarily to the variability and complexity in
making accurate forecasts and projections, as not all of the information
for a quantitative reconciliation is available to the company without
unreasonable effort.
|
| |
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Operations (unaudited) |
| (dollars in millions, except per-share amounts) |
| |
|
| | Quarter ended |
| | September 30, |
| June 30, |
| September 30, |
| | 2016(2),(3) | | 2017 | | 2017 |
|
Sales
| |
$
|
2,329
| | |
$
|
2,859
| |
$
|
2,964
| |
| | | | | |
|
|
Cost of goods sold (exclusive of expenses below)
| | |
1,968
| | | |
2,309
| | |
2,361
| |
|
Selling, general administrative, and other expenses
| | |
92
| | | |
72
| | |
70
| |
|
Research and development expenses
| | |
8
| | | |
8
| | |
8
| |
|
Provision for depreciation, depletion, and amortization
| | |
181
| | | |
190
| | |
194
| |
|
Restructuring and other charges
| | |
17
| | | |
12
| | |
(10
|
)
|
|
Interest expense
| | |
67
| | | |
25
| | |
26
| |
|
Other (income) expenses, net
| |
| (106 |
)
| |
| 6 | |
| 27 |
|
|
Total costs and expenses
| | |
2,227
| | | |
2,622
| | |
2,676
| |
| | | | | |
|
|
Income before income taxes
| | |
102
| | | |
237
| | |
288
| |
|
Provision for income taxes
| |
| 92 |
| |
| 99 | |
| 119 |
|
| | | | | |
|
|
Net income
| | |
10
| | | |
138
| | |
169
| |
| | | | | |
|
|
Less: Net income attributable to noncontrolling interest
| |
| 20 |
| |
| 63 | |
| 56 |
|
| | | | | |
|
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION
| | $ | (10 |
)
| | $ | 75 | | $ | 113 |
|
| | | | | |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS(1):
| | | | | | |
|
Basic:
| | | | | | |
|
Net (loss) income
| |
$
|
(0.06
|
)
| |
$
|
0.41
| |
$
|
0.61
| |
|
Average number of shares
| | |
182,471,195
| | | |
184,240,686
| | |
184,594,233
| |
| | | | | |
|
|
Diluted:
| | | | | | |
|
Net (loss) income
| |
$
|
(0.06
|
)
| |
$
|
0.40
| |
$
|
0.60
| |
|
Average number of shares
| | |
182,471,195
| | | |
186,385,250
| | |
187,155,231
| |
| (1) |
|
The basic and diluted earnings per share for the quarter ended
September 30, 2016 were calculated based on the 182,471,195 shares
of Alcoa Corporation common stock distributed on November 1, 2016 in
conjunction with the completion of Alcoa Corporation’s separation
from its former parent company and are considered pro forma in
nature. Prior to November 1, 2016, Alcoa Corporation did not have
any issued and outstanding publicly-traded common stock.
|
| |
|
| (2) | |
Prior to November 1, 2016, Alcoa Corporation’s financial statements
were prepared on a carve-out basis, as the underlying operations of
the Company were previously consolidated as part of Alcoa
Corporation’s former parent company’s financial statements.
Accordingly, the results of operations of Alcoa Corporation for the
quarter ended September 30, 2016 were prepared on such basis. The
carve-out financial statements of Alcoa Corporation are not
necessarily indicative of Alcoa Corporation’s consolidated results
of operations had it been a standalone company during the referenced
period. See the Combined Financial Statements included in Exhibit
99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2016 filed
with the United States Securities and Exchange Commission on October
11, 2016 and March 15, 2017, respectively, for additional
information.
|
| |
|
| (3) | |
In preparing the Statement of Consolidated Operations for the year
ended December 31, 2016, management discovered that the amount of
Cost of goods sold previously reported for the quarter ended
September 30, 2016 included an immaterial error due to an
under-allocation of LIFO expense of $4. As a result, management has
revised Cost of goods sold from the $1,964 previously reported to
$1,968 for the quarter ended September 30, 2016.
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Operations (unaudited), continued |
| (dollars in millions, except per-share amounts) |
| |
|
| | Nine months ended |
| | September 30, |
| | 2016(2),(3) |
| 2017 |
|
Sales
| |
$
|
6,781
| | |
$
|
8,478
| |
| | | |
|
|
Cost of goods sold (exclusive of expenses below)
| | |
5,775
| | | |
6,713
| |
|
Selling, general administrative, and other expenses
| | |
267
| | | |
214
| |
|
Research and development expenses
| | |
26
| | | |
23
| |
|
Provision for depreciation, depletion, and amortization
| | |
536
| | | |
563
| |
|
Restructuring and other charges
| | |
109
| | | |
12
| |
|
Interest expense
| | |
197
| | | |
77
| |
|
Other income, net
| |
| (90 |
)
| |
| (67 |
)
|
|
Total costs and expenses
| | |
6,820
| | | |
7,535
| |
| | | |
|
|
(Loss) income before income taxes
| | |
(39
|
)
| | |
943
| |
|
Provision for income taxes
| |
| 178 |
| |
| 328 |
|
| | | |
|
|
Net (loss) income
| | |
(217
|
)
| | |
615
| |
| | | |
|
|
Less: Net income attributable to noncontrolling interest
| |
| 58 |
| |
| 202 |
|
| | | |
|
|
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION
| | $ | (275 |
)
| | $ | 413 |
|
| | | |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS(1):
| | | | |
|
Basic:
| | | | |
|
Net (loss) income
| |
$
|
(1.51
|
)
| |
$
|
2.24
| |
|
Average number of shares
| | |
182,471,195
| | | |
184,212,161
| |
| | | |
|
|
Diluted:
| | | | |
|
Net (loss) income
| |
$
|
(1.51
|
)
| |
$
|
2.21
| |
|
Average number of shares
| | |
182,471,195
| | | |
186,656,542
| |
| | | |
|
|
Common stock outstanding at the end of the period
| | |
–
| | | |
184,969,328
| |
| (1) |
|
The basic and diluted earnings per share for the nine months ended
September 30, 2016 were calculated based on the 182,471,195 shares
of Alcoa Corporation common stock distributed on November 1, 2016 in
conjunction with the completion of Alcoa Corporation’s separation
from its former parent company and are considered pro forma in
nature. Prior to November 1, 2016, Alcoa Corporation did not have
any issued and outstanding publicly-traded common stock.
|
| |
|
| (2) | |
Prior to November 1, 2016, Alcoa Corporation’s financial statements
were prepared on a carve-out basis, as the underlying operations of
the Company were previously consolidated as part of Alcoa
Corporation’s former parent company’s financial statements.
Accordingly, the results of operations of Alcoa Corporation for the
nine months ended September 30, 2016 were prepared on such basis.
The carve-out financial statements of Alcoa Corporation are not
necessarily indicative of Alcoa Corporation’s consolidated results
of operations had it been a standalone company during the referenced
period. See the Combined Financial Statements included in Exhibit
99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2016 filed
with the United States Securities and Exchange Commission on October
11, 2016 and March 15, 2017, respectively, for additional
information.
|
| |
|
| (3) | |
In preparing the Statement of Consolidated Operations for the year
ended December 31, 2016, management discovered that the amount of
Cost of goods sold previously reported for the nine months ended
September 30, 2016 included an immaterial error due to an
under-allocation of LIFO expense of $14. As a result, management has
revised Cost of goods sold from the $5,761 previously reported to
$5,775 for the nine months ended September 30, 2016.
|
| |
|
|
| |
|
| |
| Alcoa Corporation and subsidiaries |
| Consolidated Balance Sheet (unaudited) |
| (in millions) |
| | | | |
|
| | December 31, | | | September 30, |
| | 2016 | | | 2017 |
|
ASSETS
| | | | | |
|
Current assets:
| | | | | |
|
Cash and cash equivalents
| |
$
|
853
| | | |
$
|
1,119
| |
|
Receivables from customers
| | |
668
| | | | |
840
| |
|
Other receivables
| | |
166
| | | | |
193
| |
|
Inventories
| | |
1,160
| | | | |
1,323
| |
|
Fair value of derivative contracts
| | |
51
| | | | |
112
| |
|
Prepaid expenses and other current assets
| |
| 283 |
| | |
| 217 |
|
|
Total current assets
| |
| 3,181 |
| | |
| 3,804 |
|
| | | | |
|
|
Properties, plants, and equipment
| | |
22,550
| | | | |
23,253
| |
|
Less: accumulated depreciation, depletion, and amortization
| |
| 13,225 |
| | |
| 13,971 |
|
|
Properties, plants, and equipment, net
| |
| 9,325 |
| | |
| 9,282 |
|
|
Investments
| | |
1,358
| | | | |
1,408
| |
|
Deferred income taxes
| | |
741
| | | | |
862
| |
|
Fair value of derivative contracts
| | |
468
| | | | |
153
| |
|
Other noncurrent assets
| |
| 1,668 |
| | |
| 1,745 |
|
|
Total assets
| | $ | 16,741 |
| | | $ | 17,254 |
|
| | | | |
|
|
LIABILITIES
| | | | | |
|
Current liabilities:
| | | | | |
|
Accounts payable, trade
| |
$
|
1,455
| | | |
$
|
1,618
| |
|
Accrued compensation and retirement costs
| | |
456
| | | | |
450
| |
|
Taxes, including income taxes
| | |
147
| | | | |
166
| |
|
Fair value of derivative contracts
| | |
35
| | | | |
139
| |
|
Other current liabilities
| | |
707
| | | | |
376
| |
|
Long-term debt due within one year
| |
| 21 |
| | |
| 17 |
|
|
Total current liabilities
| |
| 2,821 |
| | |
| 2,766 |
|
|
Long-term debt, less amount due within one year
| | |
1,424
| | | | |
1,384
| |
|
Accrued pension benefits
| | |
1,851
| | | | |
1,703
| |
|
Accrued other postretirement benefits
| | |
1,166
| | | | |
1,076
| |
|
Asset retirement obligations
| | |
604
| | | | |
627
| |
|
Environmental remediation
| | |
264
| | | | |
270
| |
|
Fair value of derivative contracts
| | |
234
| | | | |
689
| |
|
Noncurrent income taxes
| | |
310
| | | | |
318
| |
|
Other noncurrent liabilities and deferred credits
| |
| 370 |
| | |
| 303 |
|
|
Total liabilities
| |
| 9,044 |
| | |
| 9,136 |
|
| | | | |
|
|
EQUITY
| | | | | |
|
Alcoa Corporation shareholders’ equity:
| | | | | |
|
Common stock
| | |
2
| | | | |
2
| |
|
Additional capital
| | |
9,531
| | | | |
9,584
| |
|
Retained (deficit) earnings
| | |
(104
|
)
| | | |
309
| |
|
Accumulated other comprehensive loss
| |
| (3,775 |
)
| | |
| (4,033 |
)
|
|
Total Alcoa Corporation shareholders' equity
| |
| 5,654 |
| | |
| 5,862 |
|
|
Noncontrolling interest
| |
| 2,043 |
| | |
| 2,256 |
|
|
Total equity
| |
| 7,697 |
| | |
| 8,118 |
|
|
Total liabilities and equity
| | $ | 16,741 |
| | | $ | 17,254 |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Cash Flows (unaudited) |
| (in millions) |
| |
|
| | Nine months ended |
| | September 30, |
| | 2016(5) |
|
| 2017 |
|
CASH FROM OPERATIONS
| | | | | |
|
Net (loss) income
| |
$
|
(217
|
)
| | |
$
|
615
| |
|
Adjustments to reconcile net (loss) income to cash from operations:
| | | | | |
|
Depreciation, depletion, and amortization
| | |
536
| | | | |
564
| |
|
Deferred income taxes
| | |
6
| | | | |
64
| |
|
Equity income, net of dividends
| | |
34
| | | | |
1
| |
|
Restructuring and other charges
| | |
109
| | | | |
12
| |
|
Net gain from investing activities – asset sales
| | |
(164
|
)
| | | |
(115
|
)
|
|
Net periodic pension benefit cost
| | |
43
| | | | |
83
| |
|
Stock-based compensation
| | |
24
| | | | |
21
| |
|
Other
| | |
12
| | | | |
31
| |
|
Changes in assets and liabilities, excluding effects of
acquisitions, divestitures, and foreign currency translation
adjustments:
| | | | | |
|
(Increase) in receivables
| | |
(126
|
)
| | | |
(112
|
)
|
|
Decrease (Increase) in inventories
| | |
39
| | | | |
(102
|
)
|
|
(Increase) Decrease in prepaid expenses and other current assets
| | |
(22
|
)
| | | |
62
| |
|
(Decrease) Increase in accounts payable, trade
| | |
(175
|
)
| | | |
109
| |
|
(Decrease) in accrued expenses
| | |
(338
|
)
| | | |
(320
|
)
|
|
(Decrease) Increase in taxes, including income taxes
| | |
(103
|
)
| | | |
15
| |
|
Pension contributions
| | |
(45
|
)
| | | |
(82
|
)
|
|
(Increase) in noncurrent assets(1) | | |
(188
|
)
| | | |
(88
|
)
|
|
Increase in noncurrent liabilities
| |
| 25 |
| | |
| 11 |
|
|
CASH (USED FOR) PROVIDED FROM OPERATIONS
| |
| (550 |
)
| | |
| 769 |
|
| | | | |
|
|
FINANCING ACTIVITIES
| | | | | |
|
Net transfers from Parent Company
| | |
407
| | | | |
–
| |
|
Cash paid to Arconic related to separation(2) | | |
–
| | | | |
(247
|
)
|
|
Net change in short-term borrowings (original maturities of three
months or less)
| | |
–
| | | | |
2
| |
|
Additions to debt (original maturities greater than three months)(3) | | |
–
| | | | |
3
| |
|
Payments on debt (original maturities greater than three months)
| | |
(16
|
)
| | | |
(55
|
)
|
|
Proceeds from the exercise of employee stock options
| | |
–
| | | | |
38
| |
|
Contributions from noncontrolling interest
| | |
–
| | | | |
56
| |
|
Distributions to noncontrolling interest
| | |
(176
|
)
| | | |
(244
|
)
|
|
Other
| |
| – |
| | |
| (6 |
)
|
|
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES
| |
| 215 |
| | |
| (453 |
)
|
| | | | |
|
|
INVESTING ACTIVITIES
| | | | | |
|
Capital expenditures
| | |
(258
|
)
| | | |
(255
|
)
|
|
Proceeds from the sale of assets and businesses(4) | | |
112
| | | | |
243
| |
|
Additions to investments
| | |
(3
|
)
| | | |
(44
|
)
|
|
Sales of investments
| | |
146
| | | | |
–
| |
|
Net change in restricted cash(3) | |
| (2 |
)
| | |
| – |
|
|
CASH USED FOR INVESTING ACTIVITIES
| |
| (5 |
)
| | |
| (56 |
)
|
| | | | |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
| |
| 24 |
| | |
| 6 |
|
|
Net change in cash and cash equivalents
| | |
(316
|
)
| | | |
266
| |
|
Cash and cash equivalents at beginning of year
| |
| 557 |
| | |
| 853 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
| | $ | 241 |
| | | $ | 1,119 |
|
(1) |
|
The (Increase) in noncurrent assets line item for the nine months
ended September 30, 2016 includes a $200 prepayment related to a
natural gas supply agreement for three alumina refineries in Western
Australia, which are owned by Alcoa Corporation’s majority-owned
subsidiary, Alcoa of Australia Limited.
|
| |
|
(2) | |
On November 1, 2016, Alcoa Corporation separated from its former
parent company (now named Arconic Inc.) into a standalone,
publicly-traded company. In accordance with the terms of the related
Separation and Distribution Agreement, Alcoa Corporation paid to
Arconic Inc. the net after-tax proceeds of $243 from the sale of the
Yadkin Hydroelectric Project.
|
| |
|
(3) | |
In September 2016, Alcoa Nederland Holding B.V., a wholly-owned
subsidiary of Alcoa Corporation, issued $1,250 in new senior notes
in preparation for the separation of the Company from its former
parent company (completed on November 1, 2016). The net proceeds of
$1,228 from the debt issuance, along with $81 of cash on hand from
the former parent company, were required to be placed in escrow
contingent on completion of the separation transaction. As a result,
the $1,228 of escrowed cash was recorded as restricted cash on Alcoa
Corporation’s Combined Balance Sheet as of September 30, 2016. The
issuance of the debt and the increase in restricted cash both in the
amount of $1,228 were not reflected in the Statement of Consolidated
Cash Flows for the nine months ended September 30, 2016 as these
represent noncash financing and investing activities, respectively.
|
| |
|
(4) | |
Proceeds from the sale of assets and businesses for the nine months
ended September 30, 2016 includes a cash outflow for cash paid as a
result of a post-closing adjustment associated with the December
2014 divestiture of an ownership stake in a smelter in the United
States.
|
| |
|
(5) | |
Prior to November 1, 2016, Alcoa Corporation’s financial
statements were prepared on a carve-out basis, as the underlying
operations of the Company were previously consolidated as part of
Alcoa Corporation’s former parent company’s financial statements.
Accordingly, the cash flows of Alcoa Corporation for the nine
months ended September 30, 2016 were prepared on such basis. The
carve-out financial statements of Alcoa Corporation are not
necessarily indicative of Alcoa Corporation’s consolidated cash
flows had it been a standalone company during the referenced
period. See the Combined Financial Statements included in Exhibit
99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2016 filed
with the United States Securities and Exchange Commission on
October 11, 2016 and March 15, 2017, respectively, for additional
information.
|
| |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| Alcoa Corporation and subsidiaries |
Segment Information(1),(2) (unaudited) |
(dollars in millions; bauxite production and shipments in
millions of dry metric tons (mdmt); |
alumina and aluminum production and shipments in thousands of
metric tons (kmt)) |
| | | | | | | | | | | | | | | |
|
| | 1Q16 | | 2Q16 | | 3Q16 | | 4Q16 | | 2016 | | 1Q17 | | 2Q17 | | 3Q17 |
| Bauxite: | | | | | | | | | | | | | | | | |
|
Production(3),(4) (mdmt)
| | |
10.7
| | | |
11.1
| | | |
11.4
| | | |
11.8
| | | |
45.0
| | | |
11.1
| | | |
11.0
| | | |
11.6
| |
|
Total shipments (mdmt)
| | |
11.2
| | | |
11.8
| | | |
11.7
| | | |
12.2
| | | |
46.9
| | | |
11.6
| | | |
11.5
| | | |
12.3
| |
|
Third-party sales
| |
$
|
44
| | |
$
|
87
| | |
$
|
93
| | |
$
|
91
| | |
$
|
315
| | |
$
|
70
| | |
$
|
80
| | |
$
|
104
| |
|
Intersegment sales
| |
$
|
175
| | |
$
|
182
| | |
$
|
192
| | |
$
|
202
| | |
$
|
751
| | |
$
|
219
| | |
$
|
208
| | |
$
|
221
| |
|
Adjusted EBITDA
| |
$
|
77
| | |
$
|
99
| | |
$
|
97
| | |
$
|
102
| | |
$
|
375
| | |
$
|
110
| | |
$
|
98
| | |
$
|
113
| |
|
Depreciation, depletion, and amortization
|
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
21
|
|
|
$
|
20
|
|
|
$
|
77
|
|
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
24
|
|
| | | | | | | | | | | | | | | |
|
| Alumina: | | | | | | | | | | | | | | | | |
|
Production (kmt)
| | |
3,330
| | | |
3,316
| | | |
3,310
| | | |
3,295
| | | |
13,251
| | | |
3,211
| | | |
3,249
| | | |
3,305
| |
|
Third-party shipments (kmt)
| | |
2,168
| | | |
2,266
| | | |
2,361
| | | |
2,276
| | | |
9,071
| | | |
2,255
| | | |
2,388
| | | |
2,271
| |
|
Intersegment shipments (kmt)
| | |
1,257
| | | |
1,137
| | | |
1,140
| | | |
1,169
| | | |
4,703
| | | |
947
| | | |
1,152
| | | |
1,153
| |
|
Third-party sales
| |
$
|
496
| | |
$
|
601
| | |
$
|
585
| | |
$
|
618
| | |
$
|
2,300
| | |
$
|
734
| | |
$
|
749
| | |
$
|
713
| |
|
Intersegment sales
| |
$
|
292
| | |
$
|
321
| | |
$
|
317
| | |
$
|
377
| | |
$
|
1,307
| | |
$
|
361
| | |
$
|
384
| | |
$
|
398
| |
|
Adjusted EBITDA
| |
$
|
15
| | |
$
|
114
| | |
$
|
78
| | |
$
|
171
| | |
$
|
378
| | |
$
|
297
| | |
$
|
227
| | |
$
|
203
| |
|
Depreciation and amortization
| |
$
|
45
| | |
$
|
47
| | |
$
|
47
| | |
$
|
47
| | |
$
|
186
| | |
$
|
49
| | |
$
|
53
| | |
$
|
53
| |
|
Equity (loss) income
|
|
$
|
(14
|
)
|
|
$
|
(7
|
)
|
|
$
|
(9
|
)
|
|
$
|
(10
|
)
|
|
$
|
(40
|
)
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
$
|
(5
|
)
|
| | | | | | | | | | | | | | | |
|
| Aluminum: | | | | | | | | | | | | | | | | |
|
Primary aluminum production (kmt)
| | |
600
| | | |
595
| | | |
586
| | | |
587
| | | |
2,368
| | | |
559
| | | |
575
| | | |
596
| |
|
Third-party aluminum shipments (kmt)
| | |
764
| | | |
770
| | | |
761
| | | |
852
| | | |
3,147
| | | |
801
| | | |
833
| | | |
868
| |
|
Third-party sales
| |
$
|
1,552
| | |
$
|
1,597
| | |
$
|
1,600
| | |
$
|
1,782
| | |
$
|
6,531
| | |
$
|
1,806
| | |
$
|
1,988
| | |
$
|
2,090
| |
|
Intersegment sales
| |
$
|
34
| | |
$
|
2
| | |
$
|
2
| | |
$
|
4
| | |
$
|
42
| | |
$
|
4
| | |
$
|
3
| | |
$
|
9
| |
|
Adjusted EBITDA
| |
$
|
165
| | |
$
|
180
| | |
$
|
183
| | |
$
|
152
| | |
$
|
680
| | |
$
|
206
| | |
$
|
221
| | |
$
|
303
| |
|
Depreciation and amortization
| |
$
|
103
| | |
$
|
104
| | |
$
|
103
| | |
$
|
104
| | |
$
|
414
| | |
$
|
101
| | |
$
|
108
| | |
$
|
106
| |
|
Equity (loss) income
|
|
$
|
(7
|
)
|
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
|
$
|
–
|
|
|
$
|
(24
|
)
|
|
$
|
(7
|
)
|
|
$
|
3
|
|
|
$
|
(7
|
)
|
| | | | | | | | | | | | | | | |
|
| Reconciliation of total segment Adjusted EBITDA to consolidated
net (loss) income attributable to Alcoa Corporation: | | | | | | | | | | | | | | | | |
|
Total segment Adjusted EBITDA
| |
$
|
257
| | |
$
|
393
| | |
$
|
358
| | |
$
|
425
| | |
$
|
1,433
| | |
$
|
613
| | |
$
|
546
| | |
$
|
619
| |
|
Unallocated amounts:
| | | | | | | | | | | | | | | | |
|
Impact of LIFO
| | |
18
| | | |
(1
|
)
| | |
1
| | | |
(28
|
)
| | |
(10
|
)
| | |
(14
|
)
| | |
(8
|
)
| | |
(14
|
)
|
|
Metal price lag(5) | | |
2
| | | |
2
| | | |
1
| | | |
4
| | | |
9
| | | |
6
| | | |
11
| | | |
5
| |
|
Corporate expense(6) | | |
(36
|
)
| | |
(50
|
)
| | |
(47
|
)
| | |
(44
|
)
| | |
(177
|
)
| | |
(34
|
)
| | |
(36
|
)
| | |
(34
|
)
|
|
Provision for depreciation, depletion, and amortization
| | |
(177
|
)
| | |
(178
|
)
| | |
(181
|
)
| | |
(182
|
)
| | |
(718
|
)
| | |
(179
|
)
| | |
(190
|
)
| | |
(194
|
)
|
|
Restructuring and other charges
| | |
(84
|
)
| | |
(8
|
)
| | |
(17
|
)
| | |
(209
|
)
| | |
(318
|
)
| | |
(10
|
)
| | |
(12
|
)
| | |
10
| |
|
Interest expense
| | |
(64
|
)
| | |
(66
|
)
| | |
(67
|
)
| | |
(46
|
)
| | |
(243
|
)
| | |
(26
|
)
| | |
(25
|
)
| | |
(26
|
)
|
|
Other (expenses) income, net
| | |
(39
|
)
| | |
23
| | | |
106
| | | |
(1
|
)
| | |
89
| | | |
100
| | | |
(6
|
)
| | |
(27
|
)
|
|
Other(7) |
|
|
(74
|
)
|
|
|
(59
|
)
|
|
|
(52
|
)
|
|
|
(42
|
)
|
|
|
(227
|
)
|
|
|
(38
|
)
|
|
|
(43
|
)
|
|
|
(51
|
)
|
|
Consolidated (loss) income before income taxes
| | |
(197
|
)
| | |
56
| | | |
102
| | | |
(123
|
)
| | |
(162
|
)
| | |
418
| | | |
237
| | | |
288
| |
|
Provision for income taxes
| | |
(18
|
)
| | |
(68
|
)
| | |
(92
|
)
| | |
(6
|
)
| | |
(184
|
)
| | |
(110
|
)
| | |
(99
|
)
| | |
(119
|
)
|
|
Net loss (income) attributable to noncontrolling interest
|
|
|
5
|
|
|
|
(43
|
)
|
|
|
(20
|
)
|
|
|
4
|
|
|
|
(54
|
)
|
|
|
(83
|
)
|
|
|
(63
|
)
|
|
|
(56
|
)
|
|
Consolidated net (loss) income attributable to Alcoa Corporation
|
|
$
|
(210
|
)
|
|
$
|
(55
|
)
|
|
$
|
(10
|
)
|
|
$
|
(125
|
)
|
|
$
|
(400
|
)
|
|
$
|
225
|
|
|
$
|
75
|
|
|
$
|
113
|
|
|
The difference between certain segment totals and consolidated
amounts is in Corporate.
|
|
|
(1) |
|
Effective in the first quarter of 2017, management elected to change
the profit and loss measure of Alcoa Corporation’s reportable
segments from After-tax operating income (ATOI) to Adjusted EBITDA
(Earnings before interest, taxes, depreciation, and amortization)
for internal reporting and performance measurement purposes. This
change was made to enhance the transparency and visibility of the
underlying operating performance of each segment. Alcoa Corporation
calculates Adjusted EBITDA as Total sales (third-party and
intersegment) minus the following items: Cost of goods sold;
Selling, general administrative, and other expenses; and Research
and development expenses. Previously, Alcoa Corporation calculated
ATOI as Adjusted EBITDA minus (plus) the following items: Provision
for depreciation, depletion, and amortization; Equity loss (income);
Loss (gain) on certain asset sales; and Income taxes. Alcoa
Corporation’s Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.
|
| |
|
| |
Also effective in the first quarter of 2017, management combined
Alcoa Corporation’s aluminum smelting, casting, and rolling
businesses, along with the majority of the energy business, into a
new Aluminum business unit. This new business unit is managed as a
single operating segment. Prior to this change, each of these
businesses were managed as individual operating segments and
comprised the Aluminum, Cast Products, Energy, and Rolled Products
segments. As a result, Alcoa Corporation’s operating and reportable
segments are Bauxite, Alumina, and Aluminum.
|
| |
|
| |
Segment information for all prior periods presented was revised to
reflect the new segment structure, as well as the new measure of
profit and loss.
|
| |
|
| (2) | |
Prior to November 1, 2016, Alcoa Corporation’s financial statements
were prepared on a carve-out basis, as the underlying operations of
the Company were previously consolidated as part of Alcoa
Corporation’s former parent company’s financial statements.
Accordingly, the financial results of Alcoa Corporation for all
periods prior to fourth quarter 2016 were prepared on such basis.
Additionally, the financial results of Alcoa Corporation for the
first month of fourth quarter 2016 were also prepared on a carve-out
basis. The carve-out financial statements of Alcoa Corporation are
not necessarily indicative of Alcoa Corporation’s consolidated
results of operations, financial position, and cash flows had it
been a standalone company during the referenced periods. See the
Combined Financial Statements included in Exhibit 99.1 to Alcoa
Corporation’s Form 10 Registration Statement and the Consolidated
Financial Statements included in the Company’s Annual Report on Form
10-K for the period ended December 31, 2016 filed with the United
States Securities and Exchange Commission on October 11, 2016 and
March 15, 2017, respectively, for additional information.
|
| |
|
| (3) | |
The production amounts do not include additional bauxite
(approximately 3 million metric tons per annum) that Alcoa
Corporation is entitled to receive (i.e. an amount in excess of its
equity ownership interest) from certain other partners at the mine
in Guinea.
|
| |
|
| (4) | |
In the second quarter of 2017, Alcoa Corporation revised the
respective production amount for the 2016 first, second, and third
quarters to reflect refinements to individual mine data. As a
result, the production reflected in this table for the referenced
quarters were revised from prior period reports. Total bauxite
production for annual 2016 remains unchanged at 45.0 mdmt.
|
| |
|
| (5) | |
Metal price lag describes the timing difference created when the
average price of metal sold differs from the average cost of the
metal when purchased by Alcoa Corporation’s rolled aluminum
operations. In general, when the price of metal increases, metal
price lag is favorable, and when the price of metal decreases, metal
price lag is unfavorable.
|
| |
|
| (6) | |
Corporate expense is primarily composed of general administrative
and other expenses of operating the corporate headquarters and other
global administrative facilities.
|
| |
|
| (7) | |
Other includes, among other items, the Adjusted EBITDA of previously
closed operations as applicable, pension and other postretirement
benefit expenses associated with closed and sold operations, and
intersegment profit elimination.
|
| |
|
|
| |
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited) |
| (in millions, except per-share amounts) |
| | | |
|
| Adjusted (Loss) Income | | (Loss) Income | | Diluted EPS |
| Quarter ended | | Quarter ended |
| September 30,
2016(1) |
| June 30,
2017 |
| September 30,
2017 | | September 30,
2016(1),(2) |
| June 30,
2017 |
| September 30,
2017 |
| | | | | | | | | | | |
|
|
Net (loss) income attributable to Alcoa Corporation
| |
$
|
(10
|
)
| |
$
|
75
| | |
$
|
113
| | |
$
|
(0.06
|
)
| |
$
|
0.40
| |
$
|
0.60
|
| | | | | | | | | | | |
|
|
Special items:
| | | | | | | | | | | | |
|
Restructuring and other charges
| | |
17
| | | |
12
| | | |
(10
|
)
| | | | | | |
|
Discrete tax items(3) | | |
6
| | | |
–
| | | |
13
| | | | | | | |
|
Other special items(4) | | |
(97
|
)
| | |
48
| | | |
36
| | | | | | | |
|
Tax impact(5) | | |
(6
|
)
| | |
(11
|
)
| | |
(11
|
)
| | | | | | |
|
Noncontrolling interest impact(5) | |
| (5 |
)
| |
| (8 |
)
| |
| (6 |
)
| | | | | | |
|
Subtotal
| |
| (85 |
)
| |
| 41 |
| |
| 22 |
| | | | | | |
| | | | | | | | | | | |
|
Net (loss) income attributable to Alcoa Corporation – as adjusted
| | $ | (95 |
)
| | $ | 116 |
| | $ | 135 |
| | |
(0.52
|
)
| | |
0.62
| | |
0.72
|
|
Net (loss) income attributable to Alcoa Corporation – as adjusted is
a non-GAAP financial measure. Management believes that this measure
is meaningful to investors because management reviews the operating
results of Alcoa Corporation excluding the impacts of restructuring
and other charges, discrete 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 that it is
appropriate to consider both Net (loss) income attributable to Alcoa
Corporation determined under GAAP as well as Net (loss) income
attributable to Alcoa Corporation – as adjusted.
|
|
|
| (1) |
|
Prior to November 1, 2016, Alcoa Corporation’s financial statements
were prepared on a carve-out basis, as the underlying operations of
the Company were previously consolidated as part of Alcoa
Corporation’s former parent company’s financial statements.
Accordingly, the results of operations of Alcoa Corporation for the
quarter ended September 30, 2016 were prepared on such basis. The
carve-out financial statements of Alcoa Corporation are not
necessarily indicative of Alcoa Corporation’s consolidated results
of operations had it been a standalone company during the referenced
period. See the Combined Financial Statements included in Exhibit
99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2016 filed
with the United States Securities and Exchange Commission on October
11, 2016 and March 15, 2017, respectively, for additional
information.
|
| |
|
| (2) | |
Prior to November 1, 2016, Alcoa Corporation did not have any issued
and outstanding publicly-traded common stock. As such, the
respective basic and diluted EPS related to both Net loss
attributable to Alcoa Corporation and Net loss attributable to Alcoa
Corporation – as adjusted for the quarter ended September 30, 2016
were calculated based on the 182,471,195 shares of Alcoa Corporation
common stock distributed on November 1, 2016 in conjunction with the
completion of Alcoa Corporation’s separation from its former parent
company and are considered pro forma in nature.
|
| |
|
| (3) | |
Discrete tax items for the quarters ended September 30, 2016 and
2017 each represent a net charge for several small items.
|
| |
|
| (4) | |
Other special items include the following:
|
•
| |
for the quarter ended September 30, 2016, a gain on the sale of
wharf property near the Intalco, Washington smelter ($118), costs
associated with the then-planned separation of Alcoa Corporation
from its former parent company ($23), and a net favorable change in
certain mark-to-market energy derivative contracts ($2);
|
•
| |
for the quarter ended June 30, 2017, an unfavorable tax impact
related to the interim period treatment of operational losses in
certain jurisdictions for which no tax benefit was recognized ($28),
a net unfavorable change in certain mark-to-market energy derivative
contracts ($17), an unfavorable impact due to the near-term power
market exposure as a result of renegotiating a hedging contract
related to forecasted future spot market power purchases for the
Portland smelter ($13), and a favorable tax impact resulting from
the difference between Alcoa’s consolidated estimated annual
effective tax rate and the statutory rates applicable to special
items ($10); and
|
•
| |
for the quarter ended September 30, 2017, costs related to the
restart of the Warrick (Indiana) smelter ($17), settlement of legacy
tax matters in Brazil ($11), a net unfavorable change in certain
mark-to-market energy derivative contracts ($11), a favorable tax
impact related to the interim period treatment of operational losses
in certain jurisdictions for which no tax benefit was recognized
($8), an unfavorable impact due to the near-term power market
exposure as a result of renegotiating a hedging contract related to
forecasted future spot market power purchases for the Portland
smelter ($8), and a favorable tax impact resulting from the
difference between Alcoa’s consolidated estimated annual effective
tax rate and the statutory rates applicable to special items ($3).
|
| |
|
| (5) | |
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.
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
| |
|
| Adjusted EBITDA | | Quarter ended |
| September 30,
2016(1) |
| June 30,
2017 |
| September 30,
2017 |
| | | | | |
|
|
Net (loss) income attributable to Alcoa Corporation
| |
$
|
(10
|
)
| |
$
|
75
| |
$
|
113
| |
| | | | | |
|
|
Add:
| | | | | | |
|
Net income attributable to noncontrolling interest
| | |
20
| | | |
63
| | |
56
| |
|
Provision for income taxes
| | |
92
| | | |
99
| | |
119
| |
|
Other (income) expenses, net
| | |
(106
|
)
| | |
6
| | |
27
| |
|
Interest expense
| | |
67
| | | |
25
| | |
26
| |
|
Restructuring and other charges
| | |
17
| | | |
12
| | |
(10
|
)
|
|
Provision for depreciation, depletion, and amortization
| |
| 181 |
| |
| 190 | |
| 194 |
|
| | | | | |
|
|
Adjusted EBITDA
| | $ | 261 |
| | $ | 470 | | $ | 525 |
|
| | | | | |
|
|
Special items(2) | |
| 23 |
| |
| 13 | |
| 36 |
|
| | | | | |
|
|
Adjusted EBITDA, excluding special items
| | $ | 284 |
| | $ | 483 | | $ | 561 |
|
|
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 that 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) |
|
Prior to November 1, 2016, Alcoa Corporation’s financial statements
were prepared on a carve-out basis, as the underlying operations of
the Company were previously consolidated as part of Alcoa
Corporation’s former parent company’s financial statements.
Accordingly, the results of operations of Alcoa Corporation for the
quarter ended September 30, 2016 were prepared on such basis. The
carve-out financial statements of Alcoa Corporation are not
necessarily indicative of Alcoa Corporation’s consolidated results
of operations had it been a standalone company during the referenced
period. See the Combined Financial Statements included in Exhibit
99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2016 filed
with the United States Securities and Exchange Commission on October
11, 2016 and March 15, 2017, respectively, for additional
information.
|
| |
|
| (2) | |
Special items include the following (see reconciliation of Adjusted
(Loss) Income above for additional information):
|
•
| |
for the quarter ended September 30, 2016, costs associated with the
then-planned separation of Alcoa Corporation from its former parent
company;
|
•
| |
for the quarter ended June 30, 2017, an unfavorable impact due to
the near-term power market exposure as a result of renegotiating a
hedging contract related to forecasted future spot market power
purchases for the Portland smelter; and
|
•
| |
for the quarter ended September 30, 2017, costs related to the
restart of the Warrick (Indiana) smelter ($17), settlement of legacy
tax matters in Brazil ($11), and an unfavorable impact due to the
near-term power market exposure as a result of renegotiating a
hedging contract related to forecasted future spot market power
purchases for the Portland smelter ($8).
|
|
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
| |
|
| Free Cash Flow | | Quarter ended |
| June 30,
2017 |
|
| September 30,
2017 |
| | | | |
|
|
Cash from operations
| |
$
|
311
| | | |
$
|
384
| |
| | | | |
|
|
Capital expenditures
| |
| (88 |
)
| | |
| (96 |
)
|
| | | | |
|
| | | | |
|
|
Free cash flow
| | $ | 223 |
| | | $ | 288 |
|
Free Cash Flow is a non-GAAP financial measure. Management believes that
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 | | June 30,
2017 | | | September 30,
2017 |
| | | | |
|
|
Short-term borrowings
| |
$
|
4
| | |
$
|
3
|
|
Long-term debt due within one year
| | |
19
| | | |
17
|
|
Long-term debt, less amount due within one year
| |
| 1,418 | | |
| 1,384 |
|
Total debt
| |
$
|
1,441
| | |
$
|
1,404
|
| | | | |
|
|
Less: Cash and cash equivalents
| |
| 954 | | |
| 1,119 |
| | | | |
|
|
Net debt
| | $ | 487 | | | $ | 285 |
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171018006389/en/
Alcoa Corporation
Investor Contact:
James Dwyer, +1
412-315-2891
James.Dwyer@alcoa.com
or
Media
Contact:
Monica Orbe, +1 412-315-2896
Monica.Orbe@alcoa.com
Source: Alcoa Corporation