PITTSBURGH--(BUSINESS WIRE)--
Alcoa Corporation (NYSE: AA):
-
Net income of $75 million, or $0.39 per share
-
Excluding special items, adjusted net income of $286 million, or $1.52
per share
- $904 million of adjusted earnings before interest, tax, depreciation,
and amortization (EBITDA) excluding special items
-
Revenue of $3.6 billion
- $1.1 billion cash balance and $1.9 billion of debt, for net debt of
$0.8 billion, as of June 30, 2018
-
Alcoa updated its 2018 projection for adjusted EBITDA excluding
special items to between $3.0 billion to $3.2 billion, down from $3.5
billion to $3.7 billion1 due to current market prices and
other factors
-
Projecting full-year global deficits for both alumina and aluminum in
2018; surplus for bauxite
-
Continuing progress on strategic priorities to reduce complexity,
drive returns, and strengthen the balance sheet; used debt proceeds
and available cash to reduce net pension liability by $605 million
|
|
|
|
|
|
|
|
|
|
|
M, except per share amounts |
|
| 2Q17 |
|
| 1Q18 |
|
| 2Q18 |
|
Revenue
|
|
|
$
|
2,859
|
|
|
$
|
3,090
|
|
| $ | 3,579 |
|
Net income attributable to Alcoa Corporation
| | |
$
|
75
| | |
$
|
150
| | | $ | 75 |
|
Earnings per share attributable to Alcoa Corporation
|
|
|
$
|
0.40
|
|
|
$
|
0.80
|
|
| $ | 0.39 |
|
Adjusted net income
| | |
$
|
116
| | |
$
|
145
| | | $ | 286 |
|
Adjusted earnings per share
|
|
|
$
|
0.62
|
|
|
$
|
0.77
|
|
| $ | 1.52 |
|
Adjusted EBITDA excluding special items2 |
|
|
$
|
505
|
|
|
$
|
653
|
|
| $ | 904 |
| | | | | | | | | | | |
|
| 1 |
| Based on actual YTD 2018 results; outlook for unpriced sales at
$2,100 LME, $465 API, $0.20 Midwest premium and updated regional
premiums, and currencies. |
| |
|
| 2 | | On January 1, 2018, Alcoa Corporation adopted guidance issued
by the Financial Accounting Standards Board to the presentation of
net periodic benefit cost related to pension and other
postretirement benefit plans. This guidance requires the
non-service cost components of net periodic benefit cost to be
reported separately from the service cost component in an entity’s
income statement. Additionally, this guidance is required to be
applied retrospectively. Accordingly, previously reported amounts
for Cost of goods sold, Selling, general administrative, and other
expenses, and Other expenses (income), net on Alcoa Corporation’s
consolidated income statement have been recast to reflect these
changes. As a result, previously reported amounts for Adjusted
EBITDA on both a consolidated basis and for each of the Company’s
three segments have been updated to reflect these changes. See the
financial schedules to this release for additional information. |
| |
|
Alcoa Corporation (NYSE: AA), a global leader in bauxite, alumina, and
aluminum products, today reported second quarter 2018 results that
reflect continued strong pricing for both alumina and aluminum.
Favorable market conditions have also enabled the Company to lower
volatility risk from its pension obligations. In the second quarter of
2018, Alcoa used the proceeds
from a debt offering and available cash to reduce its net pension
liability by $605 million and finished the quarter with a cash balance
of $1.1 billion on June 30, 2018.
“Market pricing continued to be favorable in the second quarter and
drove a 38 percent sequential increase in adjusted EBITDA excluding
special items,” said Alcoa President and Chief Executive Officer Roy
Harvey. “These market tailwinds also facilitated greater progress on our
strategic priorities to reduce complexity in our Company, drive returns
from our assets, and address pension liabilities to strengthen the
balance sheet for the long-term.”
Alcoa also updated its full-year outlook for adjusted EBITDA excluding
special items to range between $3.0 billion to $3.2 billion1,
down from the prior quarter’s range of $3.5 billion to $3.7 billion. The
new full-year forecast reflects current market prices, tariffs on
imported aluminum, increased energy costs, and some operational impacts.
Harvey continued: “While markets and trade dynamics are likely to remain
fluid, we will continue to be focused on driving value for our
stockholders through all market cycles.”
In second quarter 2018, Alcoa reported net income of $75 million, or
$0.39 per share, compared to $150 million, or $0.80 per share, in first
quarter 2018. The second quarter results include a negative impact of
$211 million for special items, due primarily to a non-cash settlement
charge related to the annuitization
of certain defined benefit pension plan obligations in Canada,
actions related to the Wenatchee
smelter in Washington State, and a loss on a contractor arbitration
matter.
Excluding the impact of special items, second quarter 2018 adjusted net
income was $286 million, or $1.52 per share, up 97 percent sequentially
from $145 million, or $0.77 per share.
In second quarter 2018, Alcoa reported $904 million of adjusted EBITDA
excluding special items, up 38 percent from $653 million in first
quarter 2018. Higher alumina and aluminum prices, as well as a stronger
U.S. dollar, were the primary factors driving this sequential increase.
Somewhat offsetting these factors were unfavorable mix and higher costs
for energy, raw materials, and maintenance activities.
In the second quarter, Alcoa incurred $15 million of costs for tariffs
on imports from its foreign operations for U.S. sale. Alcoa’s imports
were primarily from Canada, where the U.S. government’s Section 232
tariffs became effective on June 1, 2018.
Alcoa reported second quarter 2018 revenue of $3.6 billion, up 16
percent sequentially, primarily due to higher realized alumina and
aluminum prices and increased primary aluminum shipments.
Cash from operations in second quarter 2018 was a negative $430 million
and free cash flow was a negative $525 million, both driven by $605
million in additional contributions made to certain U.S. and Canadian
defined benefit pension plans and $92 million for cash payments related
to the electricity supply contract for Wenatchee and the contractor
arbitration matter. Cash provided by financing activities was $433
million, which includes $492 million in net proceeds from a recent
debt offering, and cash used for investing activities was $100
million in the second quarter of 2018.
Alcoa ended second quarter 2018 with cash on hand of $1.1 billion and
debt of $1.9 billion, for net debt of $0.8 billion. The Company reported
24 days working capital, a 6-day increase from second quarter 2017,
reflecting the impact of higher alumina and aluminum prices.
Warrick Operations Update
In second quarter 2018, Alcoa completed the restart of two of three
potlines included in the partial restart plan for the aluminum smelter
at the Warrick Operations in Indiana. On May 28, 2018, the Company
announced that the third line scheduled for restart had been shut
down due to a temporary power outage.
The Company now expects to complete the restart of the third potline by
the end of the year. Costs to restart this line will be incurred in the
third and fourth quarters of 2018 and are estimated to be approximately
$5 million (after-tax) on a combined basis. Once the partial restart is
completed, the Warrick smelter will comprise approximately 161,000
metric tons of annual operating capacity.
Market Update
The Company continues to project a full-year 2018 global deficit for
both aluminum and alumina and a surplus for bauxite.
In aluminum, the Company expects a larger global deficit ranging between
1.1 million and 1.5 million metric tons, up from last quarter’s estimate
of between 600 thousand and 1 million metric tons. Global aluminum
demand growth remains unchanged from last quarter, projected to be
between 4.25 to 5.25 percent in 2018.
In alumina, Alcoa is projecting a slightly lower global deficit between
200 thousand and 1 million metric tons, compared to last quarter’s
expectation of between 300 thousand and 1.1 million metric tons.
The global market for bauxite is expected to be in a surplus for full
year 2018 with stockpile growth in China and increased exports from
Guinea.
Uncertainty continues to exist in the global supply chain due to U.S.
tariffs and ongoing alumina supply disruptions in the Atlantic region.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern
Daylight Time (EDT) on Wednesday, July 18, to present second quarter
2018 financial results, discuss the business, and review market
conditions.
The call will be webcast via the Company’s homepage on www.alcoa.com.
Presentation materials for the call will be available for viewing on the
same website at approximately 4:15 p.m. EDT on July 18, 2018. 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
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 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, and
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 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 improvement in profitability and
margins, cost savings, cash generation, revenue growth, fiscal
discipline, or strengthening of competitiveness and operations
anticipated from operational and productivity improvements, 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, trade, and regulatory risks in the countries in
which Alcoa Corporation operates or sells products; (j) labor disputes
and work stoppages; (k) the outcome of contingencies, including legal
proceedings, government or regulatory investigations, and environmental
remediation; (l) the impact of cyberattacks and potential information
technology or data security breaches; and (m) the other risk factors
discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal
year ended December 31, 2017 and other reports filed by Alcoa
Corporation with the U.S. Securities and Exchange Commission (SEC).
Alcoa Corporation disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable law. Market
projections are subject to the risks 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.
This release includes a range of forecasted 2018 Adjusted EBITDA for the
Company. Alcoa Corporation has not provided a reconciliation of this
forward-looking non-GAAP financial measure to the most directly
comparable GAAP financial measure for the following reasons. The
Company’s financial results are heavily dependent on market-driven
factors, such as LME-based prices for aluminum, index- and spot-based
prices for alumina, and foreign currency exchange rates. As such, the
Company may experience significant volatility on a daily basis related
to its forecasted Adjusted EBITDA. Management applies estimated
sensitivities, such as those relating to aluminum and alumina prices and
foreign currency exchange rates, to the components that comprise
Adjusted EBITDA. However, a similar analysis cannot be performed
relating to the components necessary to reconcile Adjusted EBITDA to the
most directly comparable GAAP financial measure without unreasonable
effort due to the additional variability and complexity associated with
forecasting such items. Consequently, management believes such
reconciliation would imply a degree of precision that would be confusing
and/or potentially misleading to investors.
|
| |
Alcoa Corporation and subsidiaries |
| Statement of Consolidated Operations (unaudited) |
| (dollars in millions, except per-share amounts) |
| |
|
| | Quarter ended |
| | June 30, |
| March 31, |
| June 30, |
| | 2017 | | 2018 |
| | 2018 |
|
Sales
| |
$
|
2,859
| |
$
|
3,090
| | |
$
|
3,579
|
| | | | | |
|
|
Cost of goods sold (exclusive of expenses below)(1) | | |
2,289
| | |
2,381
| | | |
2,632
|
|
Selling, general administrative, and other expenses(1) | | |
70
| | |
67
| | | |
64
|
|
Research and development expenses
| | |
8
| | |
8
| | | |
9
|
|
Provision for depreciation, depletion, and amortization
| | |
190
| | |
194
| | | |
192
|
|
Restructuring and other charges
| | |
12
| | |
(19
|
)
| | |
231
|
|
Interest expense
| | |
25
| | |
26
| | | |
32
|
|
Other expenses, net(1) | |
| 28 | |
| 21 |
| |
| 9 |
|
Total costs and expenses
| | |
2,622
| | |
2,678
| | | |
3,169
|
| | | | | |
|
|
Income before income taxes
| | |
237
| | |
412
| | | |
410
|
|
Provision for income taxes
| |
| 99 | |
| 138 |
| |
| 180 |
| | | | | |
|
|
Net income
| | |
138
| | |
274
| | | |
230
|
| | | | | |
|
|
Less: Net income attributable to noncontrolling interest
| |
| 63 | |
| 124 |
| |
| 155 |
| | | | | |
|
|
NET INCOME ATTRIBUTABLE TO ALCOA CORPORATION
| | $ | 75 | | $ | 150 |
| | $ | 75 |
| | | | | |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS:
| | | | | | |
|
Basic:
| | | | | | |
|
Net income
| |
$
|
0.41
| |
$
|
0.81
| | |
$
|
0.40
|
|
Average number of shares
| | |
184,240,686
| | |
185,939,770
| | | |
186,398,784
|
| | | | | |
|
|
Diluted:
| | | | | | |
|
Net income
| |
$
|
0.40
| |
$
|
0.80
| | |
$
|
0.39
|
|
Average number of shares
| | |
186,385,250
| | |
188,494,931
| | | |
188,708,013
|
| | | | | |
|
| (1) |
|
On January 1, 2018, Alcoa Corporation adopted guidance issued by the
Financial Accounting Standards Board to the presentation of net
periodic benefit cost related to pension and other postretirement
benefit plans. This guidance requires that an entity report the
service cost component of net periodic benefit cost in the same line
item(s) on its income statement as other compensation costs arising
from services rendered by the pertinent employees during a reporting
period. The other components of net periodic benefit cost (see Note
N to the Consolidated Financial Statements included in Part II Item
8 of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017) are required to be reported separately from the
service cost component. In other words, these other components may
be aggregated and presented as a separate line item or they may be
reported in existing line items on the income statement other than
such line items that include the service cost component. Previously,
Alcoa Corporation reported all components of net periodic benefit
cost, except for certain settlements, curtailments, and special
termination benefits, in Cost of goods sold (business employees) and
Selling, general administrative, and other expenses (corporate
employees) consistent with the location of other compensation costs
related to the respective employees. The non-service cost components
noted as exceptions are reported in Restructuring and other charges,
as applicable. Upon adoption of this guidance, management began
reporting the non-service cost components of net periodic benefit
cost, except for certain settlements, curtailments, and special
termination benefits that will continue to be reported in
Restructuring and other charges, in Other expenses, net on the
Company’s Statement of Consolidated Operations. For the quarters
ended June 30, 2018 and March 31, 2018, the non-service cost
components reported in Other expenses, net was $39 and $38,
respectively. Additionally, the Statement of Consolidated Operations
for the quarter ended June 30, 2017 was recast to reflect the
reclassification of the non-service cost components of net periodic
benefit cost to Other expenses, net from both Cost of goods sold and
Selling, general administrative, and other expenses. As a result,
for the quarter ended June 30, 2017, Cost of goods sold decreased by
$20, Selling, general administrative, and other expenses decreased
by $2, and Other expenses, net changed by $22 from previously
reported amounts.
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Operations (unaudited), continued |
| (dollars in millions, except per-share amounts) |
| |
|
| | Six months ended |
| | June 30, |
| | 2017 |
|
| 2018 |
|
Sales
| |
$
|
5,514
| | |
$
|
6,669
|
| | | |
|
|
Cost of goods sold (exclusive of expenses below)(1) | | |
4,312
| | | |
5,013
|
|
Selling, general administrative, and other expenses(1) | | |
141
| | | |
131
|
|
Research and development expenses
| | |
15
| | | |
17
|
|
Provision for depreciation, depletion, and amortization
| | |
369
| | | |
386
|
|
Restructuring and other charges
| | |
22
| | | |
212
|
|
Interest expense
| | |
51
| | | |
58
|
|
Other (income) expenses, net(1) | |
| (51 |
)
| |
| 30 |
|
Total costs and expenses
| | |
4,859
| | | |
5,847
|
| | | |
|
|
Income before income taxes
| | |
655
| | | |
822
|
|
Provision for income taxes
| |
| 209 |
| |
| 318 |
| | | |
|
|
Net income
| | |
446
| | | |
504
|
| | | |
|
|
Less: Net income attributable to noncontrolling interest
| |
| 146 |
| |
| 279 |
| | | |
|
|
NET INCOME ATTRIBUTABLE TO ALCOA CORPORATION
| | $ | 300 |
| | $ | 225 |
| | | |
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS:
| | | | |
|
Basic:
| | | | |
|
Net income
| |
$
|
1.63
| | |
$
|
1.21
|
|
Average number of shares
| | |
184,000,248
| | | |
186,163,441
|
| | | |
|
|
Diluted:
| | | | |
|
Net income
| |
$
|
1.61
| | |
$
|
1.19
|
|
Average number of shares
| | |
186,333,415
| | | |
188,626,057
|
| | | |
|
| | | |
|
|
Common stock outstanding at the end of the period
| | |
184,257,057
| | | |
186,468,950
|
| | | | | | |
|
| (1) |
|
On January 1, 2018, Alcoa Corporation adopted guidance issued by the
Financial Accounting Standards Board to the presentation of net
periodic benefit cost related to pension and other postretirement
benefit plans. This guidance requires that an entity report the
service cost component of net periodic benefit cost in the same line
item(s) on its income statement as other compensation costs arising
from services rendered by the pertinent employees during a reporting
period. The other components of net periodic benefit cost (see Note
N to the Consolidated Financial Statements included in Part II Item
8 of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017) are required to be reported separately from the
service cost component. In other words, these other components may
be aggregated and presented as a separate line item or they may be
reported in existing line items on the income statement other than
such line items that include the service cost component. Previously,
Alcoa Corporation reported all components of net periodic benefit
cost, except for certain settlements, curtailments, and special
termination benefits, in Cost of goods sold (business employees) and
Selling, general administrative, and other expenses (corporate
employees) consistent with the location of other compensation costs
related to the respective employees. The non-service cost components
noted as exceptions are reported in Restructuring and other charges,
as applicable. Upon adoption of this guidance, management began
reporting the non-service cost components of net periodic benefit
cost, except for certain settlements, curtailments, and special
termination benefits that will continue to be reported in
Restructuring and other charges, in Other (income) expenses, net on
the Company’s Statement of Consolidated Operations. For the six
months ended June 30, 2018, the non-service cost components reported
in Other expenses, net was $77. Additionally, the Statement of
Consolidated Operations for the six months ended June 30, 2017 was
recast to reflect the reclassification of the non-service cost
components of net periodic benefit cost to Other (income), net from
both Cost of goods sold and Selling, general administrative, and
other expenses. As a result, for the six months ended June 30, 2017,
Cost of goods sold decreased by $40, Selling, general
administrative, and other expenses decreased by $3, and Other
(income), net changed by $43 from previously reported amounts.
|
| |
|
|
| |
| |
| Alcoa Corporation and subsidiaries |
| Consolidated Balance Sheet (unaudited) |
| (in millions) |
| | | |
|
| | December 31, | | June 30, |
| | 2017 | | 2018 |
|
ASSETS
| | | | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| |
$
|
1,358
| | |
$
|
1,089
| |
|
Receivables from customers
| | |
811
| | | |
1,025
| |
|
Other receivables
| | |
232
| | | |
170
| |
|
Inventories
| | |
1,453
| | | |
1,668
| |
|
Fair value of derivative instruments
| | |
113
| | | |
46
| |
|
Prepaid expenses and other current assets(1) | |
| 271 |
| |
| 283 |
|
|
Total current assets
| |
| 4,238 |
| |
| 4,281 |
|
| | | |
|
|
Properties, plants, and equipment
| | |
23,046
| | | |
22,079
| |
|
Less: accumulated depreciation, depletion, and amortization
| |
| 13,908 |
| |
| 13,523 |
|
|
Properties, plants, and equipment, net
| |
| 9,138 |
| |
| 8,556 |
|
|
Investments
| | |
1,410
| | | |
1,390
| |
|
Deferred income taxes
| | |
814
| | | |
612
| |
|
Fair value of derivative instruments
| | |
128
| | | |
44
| |
|
Other noncurrent assets
| |
| 1,719 |
| |
| 1,635 |
|
Total assets
| | $ | 17,447 |
| | $ | 16,518 |
|
| | | |
|
|
LIABILITIES
| | | | |
|
Current liabilities:
| | | | |
|
Accounts payable, trade
| |
$
|
1,898
| | |
$
|
1,752
| |
|
Accrued compensation and retirement costs
| | |
459
| | | |
421
| |
|
Taxes, including income taxes
| | |
282
| | | |
323
| |
|
Fair value of derivative instruments
| | |
185
| | | |
151
| |
|
Other current liabilities
| | |
412
| | | |
353
| |
|
Long-term debt due within one year
| |
| 16 |
| |
| 13 |
|
|
Total current liabilities
| |
| 3,252 |
| |
| 3,013 |
|
|
Long-term debt, less amount due within one year
| | |
1,388
| | | |
1,916
| |
|
Accrued pension benefits
| | |
2,341
| | | |
1,580
| |
|
Accrued other postretirement benefits
| | |
1,100
| | | |
1,025
| |
|
Asset retirement obligations
| | |
617
| | | |
560
| |
|
Environmental remediation
| | |
258
| | | |
237
| |
|
Fair value of derivative instruments
| | |
1,105
| | | |
580
| |
|
Noncurrent income taxes
| | |
309
| | | |
256
| |
|
Other noncurrent liabilities and deferred credits
| |
| 279 |
| |
| 243 |
|
|
Total liabilities
| |
| 10,649 |
| |
| 9,410 |
|
| | | |
|
|
EQUITY
| | | | |
|
Alcoa Corporation shareholders’ equity:
| | | | |
|
Common stock
| | |
2
| | | |
2
| |
|
Additional capital
| | |
9,590
| | | |
9,650
| |
|
Retained earnings
| | |
113
| | | |
339
| |
|
Accumulated other comprehensive loss
| |
| (5,182 |
)
| |
| (4,967 |
)
|
|
Total Alcoa Corporation shareholders' equity
| |
| 4,523 |
| |
| 5,024 |
|
|
Noncontrolling interest
| |
| 2,275 |
| |
| 2,084 |
|
|
Total equity
| |
| 6,798 |
| |
| 7,108 |
|
Total liabilities and equity
| | $ | 17,447 |
| | $ | 16,518 |
|
| (1) |
|
This line item includes $7 and $6 of restricted cash as of December
31, 2017 and June 30, 2018, respectively.
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Cash Flows (unaudited) |
| (in millions) |
| |
|
| | Six months ended |
| | June 30, |
| | 2017 |
| 2018 |
|
CASH FROM OPERATIONS
| | | | |
|
Net income
| |
$
|
446
| | |
$
|
504
| |
|
Adjustments to reconcile net income to cash from operations:
| | | | |
|
Depreciation, depletion, and amortization
| | |
369
| | | |
387
| |
|
Deferred income taxes
| | |
50
| | | |
(31
|
)
|
|
Equity earnings, net of dividends
| | |
14
| | | |
(11
|
)
|
|
Restructuring and other charges
| | |
22
| | | |
212
| |
|
Net gain from investing activities – asset sales
| | |
(116
|
)
| | |
(3
|
)
|
|
Net periodic pension benefit cost
| | |
55
| | | |
81
| |
|
Stock-based compensation
| | |
14
| | | |
20
| |
|
Other
| | |
(3
|
)
| | |
(32
|
)
|
|
Changes in assets and liabilities, excluding effects of
acquisitions, divestitures, and foreign currency translation
adjustments:
| | | | |
|
(Increase) in receivables
| | |
(75
|
)
| | |
(209
|
)
|
|
(Increase) in inventories
| | |
(86
|
)
| | |
(267
|
)
|
|
Decrease (Increase) in prepaid expenses and other current assets
| | |
52
| | | |
(8
|
)
|
|
Increase (Decrease) in accounts payable, trade
| | |
19
| | | |
(105
|
)
|
|
(Decrease) in accrued expenses
| | |
(238
|
)
| | |
(243
|
)
|
|
(Decrease) Increase in taxes, including income taxes
| | |
(44
|
)
| | |
101
| |
|
Pension contributions(1) | | |
(47
|
)
| | |
(692
|
)
|
|
(Increase) in noncurrent assets
| | |
(46
|
)
| | |
(49
|
)
|
|
(Decrease) in noncurrent liabilities
| |
| (1 |
)
| |
| (30 |
)
|
|
CASH PROVIDED FROM (USED FOR) OPERATIONS
| |
| 385 |
| |
| (375 |
)
|
| | | |
|
|
FINANCING ACTIVITIES
| | | | |
|
Cash paid to former parent company related to separation(2) | | |
(247
|
)
| | |
–
| |
|
Net change in short-term borrowings (original maturities of three
months or less)
| | |
3
| | | |
–
| |
|
Additions to debt (original maturities greater than three months)(1) | | |
3
| | | |
553
| |
|
Payments on debt (original maturities greater than three months)
| | |
(10
|
)
| | |
(7
|
)
|
|
Proceeds from the exercise of employee stock options
| | |
18
| | | |
22
| |
|
Contributions from noncontrolling interest
| | |
56
| | | |
109
| |
|
Distributions to noncontrolling interest
| | |
(155
|
)
| | |
(385
|
)
|
|
Other
| |
| (6 |
)
| |
| (6 |
)
|
|
CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES
| |
| (338 |
)
| |
| 286 |
|
| | | |
|
|
INVESTING ACTIVITIES
| | | | |
|
Capital expenditures
| | |
(159
|
)
| | |
(169
|
)
|
|
Proceeds from the sale of assets and businesses
| | |
243
| | | |
–
| |
|
Additions to investments
| |
| (36 |
)
| |
| (5 |
)
|
|
CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES(3) | |
| 48 |
| |
| (174 |
)
|
| | | |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH(3) | |
| 11 |
| |
| (7 |
)
|
|
Net change in cash and cash equivalents and restricted cash(3) | | |
106
| | | |
(270
|
)
|
Cash and cash equivalents and restricted cash at beginning of year(3) | |
| 859 |
| |
| 1,365 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD(3) | | $ | 965 |
| | $ | 1,095 |
|
| | | | | | | |
|
|
| |
|
(1)
| |
On May 17, 2018, Alcoa Nederland Holding B.V., a wholly-owned
subsidiary of Alcoa Corporation, issued $500 in 6.125% senior notes
due 2028. The gross proceeds from the debt issuance were used to
make discretionary contributions to three of Alcoa Corporation’s
U.S. defined benefit pension plans. Accordingly, for the six months
ended June 30, 2018, the Pension contributions line item includes a
cash outflow of $500 and the Additions to debt line item includes a
cash inflow of $492 (net of an $8 initial purchasers discount).
|
| |
|
|
(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)
| |
On January 1, 2018, Alcoa Corporation adopted guidance issued by the
Financial Accounting Standards Board to the presentation of
restricted cash in the statement of cash flows. This guidance
requires that restricted cash be aggregated with cash and cash
equivalents in both the beginning-of-period and end-of-period line
items at the bottom of the statement of cash flows. Previously, the
change in restricted cash between the beginning-of-period and end-of
period was reflected as either an investing, financing, operating,
or non-cash activity based on the underlying nature of the
transaction. Accordingly, for the Company’s Statement of
Consolidated Cash Flows for the six months ended June 30, 2018, the
Cash and cash equivalents and restricted cash at beginning of year
and Cash and cash equivalents and restricted cash at end of period
line items include restricted cash of $7 and $6, respectively.
Additionally, the Company’s Statement of Consolidated Cash Flows for
the six months ended June 30, 2017 was recast to reflect this change
in presentation. As a result, the Cash and cash equivalents and
restricted cash at beginning of year and Cash and cash equivalents
and restricted cash at end of period line items include restricted
cash of $6 and $11, respectively. Of the $5 increase in restricted
cash for the six months ended June 30, 2017, $4 was previously
presented as a cash outflow in the investing activities section of
the Company’s Statement of Consolidated Cash Flows for the six
months ended June 30, 2017. The remaining change of $1 is now
reflected in the Effect of exchange rate changes on cash and cash
equivalents and restricted cash line item.
|
| |
|
|
| |
| |
| |
| |
| |
| |
| |
| Alcoa Corporation and subsidiaries |
| Segment Information (unaudited) |
| (dollars in millions, except realized prices; dry metric tons in
millions (mdmt); metric tons in thousands (kmt)) |
| | | | | | | | | | | | | |
|
| | 1Q17 | | 2Q17 | | 3Q17 | | 4Q17 | | 2017 | | 1Q18 | | 2Q18 |
| Bauxite: | | | | | | | | | | | | | | |
|
Production(1) (mdmt)
| | |
11.1
| | | |
11.0
| | | |
11.6
| | | |
12.1
| | | |
45.8
| | | |
11.2
| | | |
11.3
| |
|
Third-party shipments (mdmt)
| | |
1.4
| | | |
1.6
| | | |
2.1
| | | |
1.5
| | | |
6.6
| | | |
1.1
| | | |
1.6
| |
|
Intersegment shipments (mdmt)
| | |
10.2
| | | |
9.9
| | | |
10.2
| | | |
10.8
| | | |
41.1
| | | |
10.4
| | | |
10.0
| |
|
Third-party sales
| |
$
|
70
| | |
$
|
80
| | |
$
|
104
| | |
$
|
79
| | |
$
|
333
| | |
$
|
47
| | |
$
|
77
| |
|
Intersegment sales
| |
$
|
219
| | |
$
|
208
| | |
$
|
221
| | |
$
|
227
| | |
$
|
875
| | |
$
|
249
| | |
$
|
226
| |
|
Adjusted EBITDA(2),(3) | |
$
|
110
| | |
$
|
97
| | |
$
|
112
| | |
$
|
105
| | |
$
|
424
| | |
$
|
110
| | |
$
|
100
| |
|
Depreciation, depletion, and amortization
|
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
24
|
|
|
$
|
21
|
|
|
$
|
82
|
|
|
$
|
29
|
|
|
$
|
27
|
|
| | | | | | | | | | | | | |
|
| Alumina: | | | | | | | | | | | | | | |
|
Production (kmt)
| | |
3,211
| | | |
3,249
| | | |
3,305
| | | |
3,331
| | | |
13,096
| | | |
3,173
| | | |
3,227
| |
|
Third-party shipments (kmt)
| | |
2,255
| | | |
2,388
| | | |
2,271
| | | |
2,306
| | | |
9,220
| | | |
2,376
| | | |
2,285
| |
|
Intersegment shipments (kmt)
| | |
947
| | | |
1,152
| | | |
1,153
| | | |
1,223
| | | |
4,475
| | | |
1,097
| | | |
1,031
| |
|
Average realized third-party price per metric ton of alumina
| |
$
|
325
| | |
$
|
314
| | |
$
|
314
| | |
$
|
406
| | |
$
|
340
| | |
$
|
385
| | |
$
|
467
| |
|
Third-party sales
| |
$
|
734
| | |
$
|
749
| | |
$
|
713
| | |
$
|
937
| | |
$
|
3,133
| | |
$
|
914
| | |
$
|
1,068
| |
|
Intersegment sales
| |
$
|
361
| | |
$
|
384
| | |
$
|
398
| | |
$
|
580
| | |
$
|
1,723
| | |
$
|
454
| | |
$
|
536
| |
|
Adjusted EBITDA(2),(3) | |
$
|
297
| | |
$
|
227
| | |
$
|
203
| | |
$
|
562
| | |
$
|
1,289
| | |
$
|
392
| | |
$
|
638
| |
|
Depreciation and amortization
| |
$
|
49
| | |
$
|
53
| | |
$
|
53
| | |
$
|
52
| | |
$
|
207
| | |
$
|
53
| | |
$
|
49
| |
|
Equity income (loss)
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
$
|
(5
|
)
|
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
| | | | | | | | | | | | | |
|
| Aluminum: | | | | | | | | | | | | | | |
|
Primary aluminum production (kmt)
| | |
559
| | | |
575
| | | |
596
| | | |
598
| | | |
2,328
| | | |
554
| | | |
565
| |
|
Third-party aluminum shipments(4) (kmt)
| | |
801
| | | |
833
| | | |
868
| | | |
854
| | | |
3,356
| | | |
794
| | | |
853
| |
|
Average realized third-party price per metric ton of primary aluminum
| |
$
|
2,080
| | |
$
|
2,199
| | |
$
|
2,237
| | |
$
|
2,365
| | |
$
|
2,224
| | |
$
|
2,483
| | |
$
|
2,623
| |
|
Third-party sales
| |
$
|
1,806
| | |
$
|
1,988
| | |
$
|
2,090
| | |
$
|
2,143
| | |
$
|
8,027
| | |
$
|
2,111
| | |
$
|
2,413
| |
|
Intersegment sales
| |
$
|
4
| | |
$
|
3
| | |
$
|
9
| | |
$
|
5
| | |
$
|
21
| | |
$
|
4
| | |
$
|
4
| |
|
Adjusted EBITDA(2),(3) | |
$
|
217
| | |
$
|
234
| | |
$
|
315
| | |
$
|
246
| | |
$
|
1,012
| | |
$
|
153
| | |
$
|
231
| |
|
Depreciation and amortization
| |
$
|
101
| | |
$
|
108
| | |
$
|
106
| | |
$
|
104
| | |
$
|
419
| | |
$
|
106
| | |
$
|
108
| |
|
Equity (loss) income
|
|
$
|
(7
|
)
|
|
$
|
3
|
|
|
$
|
(7
|
)
|
|
$
|
(8
|
)
|
|
$
|
(19
|
)
|
|
$
|
–
|
|
|
$
|
(8
|
)
|
| | | | | | | | | | | | | |
|
| Reconciliation of total segment Adjusted EBITDA to consolidated
net income (loss) attributable to Alcoa Corporation: | | | | | | | | | | | | | | |
|
Total segment Adjusted EBITDA(2) | |
$
|
624
| | |
$
|
558
| | |
$
|
630
| | |
$
|
913
| | |
$
|
2,725
| | |
$
|
655
| | |
$
|
969
| |
|
Unallocated amounts:
| | | | | | | | | | | | | | |
|
Transformation(5),(6) | | |
(20
|
)
| | |
(28
|
)
| | |
(11
|
)
| | |
10
| | | |
(49
|
)
| | |
(2
|
)
| | |
(1
|
)
|
|
Corporate inventory accounting(5),(7) | | |
(17
|
)
| | |
14
| | | |
(9
|
)
| | |
(95
|
)
| | |
(107
|
)
| | |
31
| | | |
(32
|
)
|
|
Corporate expenses(3),(8) | | |
(33
|
)
| | |
(34
|
)
| | |
(33
|
)
| | |
(31
|
)
| | |
(131
|
)
| | |
(27
|
)
| | |
(26
|
)
|
|
Provision for depreciation, depletion, and amortization
| | |
(179
|
)
| | |
(190
|
)
| | |
(194
|
)
| | |
(187
|
)
| | |
(750
|
)
| | |
(194
|
)
| | |
(192
|
)
|
|
Restructuring and other charges
| | |
(10
|
)
| | |
(12
|
)
| | |
10
| | | |
(297
|
)
| | |
(309
|
)
| | |
19
| | | |
(231
|
)
|
|
Interest expense
| | |
(26
|
)
| | |
(25
|
)
| | |
(26
|
)
| | |
(27
|
)
| | |
(104
|
)
| | |
(26
|
)
| | |
(32
|
)
|
|
Other income (expenses), net(3) | | |
79
| | | |
(28
|
)
| | |
(48
|
)
| | |
(30
|
)
| | |
(27
|
)
| | |
(21
|
)
| | |
(9
|
)
|
|
Other(3),(5),(9) |
|
|
–
|
|
|
|
(18
|
)
|
|
|
(31
|
)
|
|
|
(40
|
)
|
|
|
(89
|
)
|
|
|
(23
|
)
|
|
|
(36
|
)
|
|
Consolidated income before income taxes
| | |
418
| | | |
237
| | | |
288
| | | |
216
| | | |
1,159
| | | |
412
| | | |
410
| |
|
Provision for income taxes
| | |
(110
|
)
| | |
(99
|
)
| | |
(119
|
)
| | |
(272
|
)
| | |
(600
|
)
| | |
(138
|
)
| | |
(180
|
)
|
|
Net income attributable to noncontrolling interest
|
|
|
(83
|
)
|
|
|
(63
|
)
|
|
|
(56
|
)
|
|
|
(140
|
)
|
|
|
(342
|
)
|
|
|
(124
|
)
|
|
|
(155
|
)
|
|
Consolidated net income (loss) attributable to Alcoa Corporation
|
|
$
|
225
|
|
|
$
|
75
|
|
|
$
|
113
|
|
|
$
|
(196
|
)
|
|
$
|
217
|
|
|
$
|
150
|
|
|
$
|
75
|
|
| | | | | | | | | | | | | |
|
The difference between segment totals and consolidated amounts is
in Corporate.
|
|
|
| (1) |
|
The production amounts do not include additional bauxite
(approximately 3 mdmt per annum) that Alcoa World Alumina and
Chemicals is entitled to receive (i.e. an amount in excess of its
equity ownership interest) from certain other partners at the mine
in Guinea.
|
| |
|
| (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) | |
On January 1, 2018, Alcoa Corporation adopted guidance issued by the
Financial Accounting Standards Board to the presentation of net
periodic benefit cost related to pension and other postretirement
benefit plans. This guidance requires the non-service cost
components of net periodic benefit cost to be reported separately
from the service cost component in an entity’s income statement.
Additionally, this guidance is required to be applied
retrospectively. Accordingly, previously reported amounts for Cost
of goods sold, Selling, general administrative, and other expenses,
and Other expenses (income), net on Alcoa Corporation’s Statement of
Consolidated Operations have been recast to reflect these changes.
As a result, previously reported amounts for Adjusted EBITDA on both
a consolidated basis and for each of the Company’s three segments
have been updated to reflect these changes. See footnote 1 to the
Statement of Consolidated Operations included in this release for
additional information.
|
| |
|
| (4) | |
The Aluminum segment’s third-party aluminum shipments are composed
of both primary aluminum and flat-rolled aluminum.
|
| |
|
| (5) | |
Effective in the first quarter of 2018, management elected to change
the presentation of certain line items in the reconciliation of
total segment Adjusted EBITDA to consolidated net income (loss)
attributable to Alcoa Corporation to provide additional transparency
to the nature of these reconciling items. Accordingly,
Transformation (see footnote 6), which was previously reported
within Other, is presented as a separate line item. Additionally,
Impact of LIFO (last in, first out) and Metal price lag, which were
previously reported as separate line items, are now combined and
reported in a new line item labeled Corporate inventory accounting
(see footnote 7). Also, the impact of intersegment profit
eliminations, which was previously reported within Other, is
reported in the new Corporate inventory accounting line item. The
applicable information for all prior periods presented was recast to
reflect these changes.
|
| |
|
| (6) | |
Transformation includes, among other items, the Adjusted EBITDA of
previously closed operations.
|
| |
|
| (7) | |
Corporate inventory accounting is composed of the impacts of LIFO
inventory accounting, metal price lag, and intersegment profit
eliminations. 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.
|
| |
|
| (8) | |
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.
|
| |
|
| (9) | |
Other includes certain items that impact Cost of goods sold and
Selling, general administrative, and other expenses on Alcoa
Corporation’s Statement of Consolidated Operations that are not
included in the Adjusted EBITDA of the reportable segments,
including those described as “Other special items” (see footnote 2
to the reconciliation of Adjusted Income within Calculation of
Financial Measures included in this release).
|
| |
|
|
| |
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited) |
| (in millions, except per-share amounts) |
| | | |
|
| Adjusted Income | | Income | | Diluted EPS |
| Quarter ended | | Quarter ended |
| June 30,
2017 |
| March 31,
2018 |
| June 30,
2018 | | June 30,
2017 |
| March 31,
2018 |
| June 30,
2018 |
| | | | | | | | | | | |
|
|
Net income attributable to Alcoa Corporation
| |
$
|
75
| | |
$
|
150
| | |
$
|
75
| | |
$
|
0.40
| |
$
|
0.80
| |
$
|
0.39
|
| | | | | | | | | | | |
|
|
Special items:
| | | | | | | | | | | | |
|
Restructuring and other charges
| | |
12
| | | |
(19
|
)
|
| |
231
| | | | | | | |
|
Discrete tax items(1) | | |
–
| | | |
(2
|
)
| | |
2
| | | | | | | |
|
Other special items(2) | | |
48
| | | |
18
| | | |
34
| | | | | | | |
|
Tax impact(3) | | |
(11
|
)
| | |
(2
|
)
| | |
(43
|
)
| | | | | | |
|
Noncontrolling interest impact(3) | |
|
(8 |
)
| |
|
– |
| |
|
(13 |
)
| | | | | | |
|
Subtotal
| |
| 41 |
| |
| (5 |
)
| |
| 211 |
| | | | | | |
| | | | | | | | | | | |
|
|
Net income attributable to Alcoa Corporation – as adjusted
| | $ | 116 |
| | $ | 145 |
| | $ | 286 |
| | |
0.62
| | |
0.77
| | |
1.52
|
| | | | | | | | | | | |
|
Net 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 income attributable to
Alcoa Corporation determined under GAAP as well as Net income
attributable to Alcoa Corporation – as adjusted.
|
|
| |
(1) | |
Discrete tax items include the following:
|
•
| |
for the quarter ended March 31, 2018, a net benefit for several
small items; and
|
•
| |
for the quarter ended June 30, 2018, a net charge for several
small items.
|
| |
|
(2) | |
Other special items include the following:
|
•
| |
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 instruments ($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 (Australia) smelter ($13), and a
favorable tax impact resulting from the difference between Alcoa
Corporation’s consolidated estimated annual effective tax rate and
the statutory rates applicable to special items ($10);
|
•
| |
for the quarter ended March 31, 2018, a net favorable change in
certain mark-to-market energy derivative instruments ($17), costs
related to the partial restart of the Warrick (Indiana) smelter
($16), an unfavorable tax impact resulting from the difference
between Alcoa Corporation’s consolidated estimated annual
effective tax rate and the statutory rates applicable to special
items ($15), costs, primarily contractor services, related to a
work stoppage at a non-U.S. smelter ($3), and an unfavorable tax
impact related to the interim period treatment of operational
losses in certain jurisdictions for which no tax benefit was
recognized ($1); and
|
•
| |
for the quarter ended June 30, 2018, a loss on a contractor
arbitration matter ($29), a net unfavorable change in certain
mark-to-market energy derivative instruments ($6), a favorable tax
impact related to the interim period treatment of operational
losses in certain jurisdictions for which no tax benefit was
recognized ($5), costs related to the partial restart of the
Warrick (Indiana) smelter ($2), and costs, primarily contractor
services, related to a work stoppage at a non-U.S. smelter ($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.
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
| |
|
| Adjusted EBITDA | | Quarter ended |
| June 30,
2017 |
| March 31,
2018 |
| June 30,
2018 |
| | | | | |
|
|
Net income attributable to Alcoa Corporation
| |
$
|
75
| |
$
|
150
| | |
$
|
75
|
| | | | | |
|
|
Add:
| | | | | | |
|
Net income attributable to noncontrolling interest
| | |
63
| | |
124
| | | |
155
|
|
Provision for income taxes
| | |
99
| | |
138
| | | |
180
|
|
Other expenses, net(1) | | |
28
| | |
21
| | | |
9
|
|
Interest expense
| | |
25
| | |
26
| | | |
32
|
|
Restructuring and other charges
| | |
12
| | |
(19
|
)
| | |
231
|
|
Provision for depreciation, depletion, and amortization
| |
| 190 | |
| 194 |
| |
| 192 |
| | | | | |
|
|
Adjusted EBITDA(1) | | $ | 492 | | $ | 634 |
| | $ | 874 |
| | | | | |
|
|
Special items(2) | |
| 13 | |
| 19 |
| |
| 30 |
| | | | | |
|
|
Adjusted EBITDA, excluding special items(1) | | $ | 505 | | $ | 653 |
| | $ | 904 |
| | | | | | | | | |
|
|
|
|
Alcoa Corporation’s definition of Adjusted EBITDA (Earnings before
interest, taxes, depreciation, and amortization) is net margin plus
an add-back for depreciation, depletion, and amortization. Net
margin is equivalent to Sales minus the following items: Cost of
goods sold; Selling, general administrative, and other expenses;
Research and development expenses; and Provision for depreciation,
depletion, and amortization. Adjusted EBITDA is a non-GAAP financial
measure. Management believes 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) |
|
On January 1, 2018, Alcoa Corporation adopted guidance issued by the
Financial Accounting Standards Board to the presentation of net
periodic benefit cost related to pension and other postretirement
benefit plans. This guidance requires the non-service cost
components of net periodic benefit cost to be reported separately
from the service cost component in an entity’s income statement.
Additionally, this guidance is required to be applied
retrospectively. Accordingly, previously reported amounts for Cost
of goods sold, Selling, general administrative, and other expenses,
and Other expenses (income), net on Alcoa Corporation’s Statement of
Consolidated Operations have been recast to reflect these changes.
As a result, for the quarter ended June 30, 2017, Other expenses,
net changed by $22. Moreover, previously reported amounts for
Adjusted EBITDA and Adjusted EBITDA, excluding special items have
been updated to reflect these changes. See footnote 1 to the
Statement of Consolidated Operations included in this release for
additional information.
|
| |
|
| (2) | |
Special items include the following (see reconciliation of Adjusted
Income above for additional information):
|
•
| |
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 (Australia) smelter;
|
•
| |
for the quarter ended March 31, 2018, costs related to the partial
restart of the Warrick (Indiana) smelter ($16) and costs, primarily
contractor services, related to a work stoppage at a non-U.S.
smelter ($3); and
|
•
| |
for the quarter ended June 30, 2018, a loss on a contractor
arbitration matter ($26), costs related to the partial restart of
the Warrick (Indiana) smelter ($2), and costs, primarily contractor
services, related to a work stoppage at a non-U.S. smelter ($2).
|
| |
|
|
| |
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
| |
|
| Free Cash Flow | | Quarter ended |
| June 30,
2017 |
| March 31,
2018 |
| June 30,
2018 |
| | | | | |
|
|
Cash from operations*
| |
$
|
311
| | |
$
|
55
| | |
$
|
(430
|
)
|
| | | | | |
|
|
Capital expenditures
| |
| (88 |
)
| |
| (74 |
)
| |
| (95 |
)
|
| | | | | |
|
| | | | | |
|
|
Free cash flow
| | $ | 223 |
| | $ | (19 |
)
| | $ | (525 |
)
|
| | | | | | | | | | | |
|
|
|
|
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.
|
|
|
*
|
Cash from operations for the quarter ended June 30, 2018 includes
a $500 cash outflow for discretionary contributions made to three
of Alcoa Corporation’s U.S. defined benefit pension plans. The
$500 was funded with the gross proceeds of 6.125% senior notes due
2028 issued in May 2018.
|
|
|
|
| |
| |
| Net Debt | | March 31,
2018 | | June 30,
2018 |
| | | |
|
|
Long-term debt due within one year
| |
$
|
15
| |
$
|
13
|
|
Long-term debt, less amount due within one year
| |
| 1,445 | |
| 1,916 |
|
Total debt*
| |
$
|
1,460
| |
$
|
1,929
|
| | | |
|
|
Less: Cash and cash equivalents
| |
| 1,196 | |
| 1,089 |
| | | |
|
|
Net debt
| | $ | 264 | | $ | 840 |
| | | |
|
|
|
|
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.
|
|
|
*
|
Total debt as of June 30, 2018 includes $500 aggregate principal
amount of 6.125% senior notes due 2028 issued in May 2018, the
gross proceeds of which were used to make discretionary
contributions to three of Alcoa Corporation’s U.S. defined benefit
pension plans.
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180718005781/en/
Alcoa Corporation
Investor Contact:
James Dwyer, +1
412-992-5450
James.Dwyer@alcoa.com
or
Media
Contact:
Monica Orbe, +1 412-315-2896
Monica.Orbe@alcoa.com
Source: Alcoa Corporation