Alcoa Corporation Reports First Quarter 2018 Results
Alcoa Corporation (NYSE: AA):
- Net income of $150 million, or $0.80 per share
- Excluding special items, adjusted net income of $145 million, or $0.77 per share
- $653 million of adjusted earnings before interest, tax, depreciation, and amortization (EBITDA)
excluding special items
- Revenue of $3.1 billion
- $1.2 billion cash balance and $1.5 billion of debt, for net debt of $0.3 billion, as of March 31,
2018
- Company increased its 2018 projection for adjusted EBITDA excluding special items to $3.5 billion to
$3.7 billion, up from $2.6 billion to $2.8 billion 1
- Company projects full-year 2018 global deficit for both alumina and aluminum
| |
|
|
|
|
|
|
M, except per share amounts |
|
1Q17 |
|
4Q17 |
|
1Q18 |
| Revenue |
|
$ |
2,655 |
|
$ |
3,174 |
|
|
$ |
3,090 |
| Net income (loss) attributable to Alcoa Corporation |
|
$ |
225 |
|
$ |
(196 |
) |
|
$ |
150 |
| Earnings per share attributable to Alcoa Corporation |
|
$ |
1.21 |
|
$ |
(1.06 |
) |
|
$ |
0.80 |
| Adjusted net income |
|
$ |
117 |
|
$ |
195 |
|
|
$ |
145 |
| Adjusted earnings per share |
|
$ |
0.63 |
|
$ |
1.04 |
|
|
$ |
0.77 |
| Adjusted EBITDA excluding special items2 |
|
$ |
554 |
|
$ |
796 |
|
|
$ |
653 |
|
|
|
|
1
|
|
Based on actual YTD 2018 results; outlook for unpriced sales at $2,300 LME, $500 API, $0.21
Midwest premium and updated regional premiums, and currencies.
|
|
|
|
|
2
|
|
On January 1, 2018, Alcoa Corporation adopted changes issued by the Financial Accounting
Standards Board to the presentation of net periodic benefit cost related to pension and other postretirement benefit plans.
These changes require 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, these changes are 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 first quarter 2018
results that show resilient profitability amid lower alumina prices earlier in the year.
In addition, Alcoa ended the quarter on March 31, 2018 with a cash balance of $1.2 billion, down $162 million sequentially, but
up $392 million year-over-year.
“Our first quarter results point to a good start for the year, enabling us to make further progress against our strategic
priorities to reduce complexity, drive returns, and strengthen the balance sheet,” said Alcoa President and Chief Executive Officer
Roy Harvey.
Alcoa also updated its full-year outlook for adjusted EBITDA excluding special items to range between $3.5 billion to $3.7
billion1, up from the prior quarter’s range of $2.6 billion to $2.8 billion, due to recent favorable market
conditions.
“While the markets may continue to change, our portfolio of assets across the aluminum value chain is steadfastly positioned to
perform through commodity cycles,” Harvey said. “Most importantly, we are uniquely suited for today’s market environment, and we
are committed to driving improved pricing to the bottom line to strengthen Alcoa at an even faster rate.”
In first quarter 2018, Alcoa reported net income of $150 million, or $0.80 per share. In fourth quarter 2017, Alcoa reported a
net loss of $196 million, or $1.06 per share, which included $391 million in special items tied primarily to previously announced
actions taken in line with the Company’s strategic priorities.
The Company reported a positive impact of $5 million from special items in first quarter 2018. This impact was primarily due to
a net gain from changes to employee retirement benefits in the United States and Canada, announced in January 2018, and a net
benefit related to certain mark-to-market energy derivatives. Those gains were mostly offset by costs for the partial restart of
the smelter at Warrick Operations in Indiana and a net unfavorable impact for several tax items.
Excluding the impact of special items, first quarter 2018 adjusted net income was $145 million, or $0.77 per share, down 26
percent sequentially from $195 million, or $1.04 per share.
In first quarter 2018, Alcoa reported $653 million of adjusted EBITDA excluding special items, down 18 percent from $796
million2 in fourth quarter 2017. Lower alumina prices were the primary factor driving the sequential change in adjusted
EBITDA. Other factors, including seasonal volume declines and higher raw material costs, were offset by improved aluminum prices
and lower energy costs.
Alcoa reported first quarter 2018 revenue of $3.1 billion, down 3 percent sequentially, largely due to decreased aluminum
shipments and a decline in alumina prices, partially offset by both increased shipments and favorable mix in alumina and higher
aluminum prices.
Cash from operations in first quarter 2018 was $55 million and free cash flow was a negative $19 million primarily due to
seasonal increases in working capital. Cash used for financing activities and investing activities was $147 million and $74
million, respectively, in the first quarter of 2018.
Alcoa ended first quarter 2018 with cash on hand of $1.2 billion and $1.5 billion of debt, for net debt of $0.3 billion. The
Company reported 18 days working capital, a 1-day improvement from first quarter 2017.
Earlier this month, Alcoa announced it had signed group annuity contracts with three insurance companies to cover approximately 2,100 retirees or
beneficiaries of Canadian defined benefit pension plans. The transfer of approximately $555 million in obligations and related
assets lowers the Company’s risk to volatility from pension plan obligations. In connection with the transaction, the Company will
record a non-cash charge of approximately $175 million ($128 million after-tax) in the second quarter of 2018. The Company also
contributed approximately $95 million in April 2018 to facilitate the annuity transaction and maintain the funding level of the
remaining plan obligations.
Market Update
Alcoa is projecting a global deficit for both aluminum and alumina in 2018.
Due to delays in projects to expand smelters in China, the Company expects the global aluminum deficit to grow to between 600
thousand metric tons and 1 million metric tons, up from last quarter’s deficit estimate of between 300 thousand metric tons and 700
thousand metric tons. Global aluminum demand growth is projected between 4.25 to 5.25 percent.
In alumina, Alcoa projects a global deficit between 300 thousand metric tons and 1.1 million metric tons for full year 2018,
primarily due to supply disruptions in the Atlantic region. This projection compares to last quarter’s expectations of a balanced
market.
The global market for bauxite is expected to remain in balance.
Considerable uncertainty remains in the global supply chain due to multiple trade actions, sanctions, and supply
disruptions.
Conference Call
Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern Daylight Time (EDT) on Wednesday, April 18, to present first
quarter 2018 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 on the same website at
approximately 4:15 p.m. EDT on April 18. 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 and is 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, 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, 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 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 |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2017 |
|
2017 |
|
2018 |
| Sales |
|
$ |
2,655 |
|
|
$ |
3,174 |
|
|
$ |
3,090 |
|
|
|
|
|
|
|
|
| Cost of goods sold (exclusive of expenses below)(1) |
|
|
2,023 |
|
|
|
2,339 |
|
|
|
2,381 |
|
| Selling, general administrative, and other expenses(1) |
|
|
71 |
|
|
|
69 |
|
|
|
67 |
|
| Research and development expenses |
|
|
7 |
|
|
|
9 |
|
|
|
8 |
|
| Provision for depreciation, depletion, and amortization |
|
|
179 |
|
|
|
187 |
|
|
|
194 |
|
| Restructuring and other charges |
|
|
10 |
|
|
|
297 |
|
|
|
(19 |
) |
| Interest expense |
|
|
26 |
|
|
|
27 |
|
|
|
26 |
|
| Other (income) expenses, net(1) |
|
|
(79 |
) |
|
|
30 |
|
|
|
21 |
|
| Total costs and expenses |
|
|
2,237 |
|
|
|
2,958 |
|
|
|
2,678 |
|
|
|
|
|
|
|
|
| Income before income taxes |
|
|
418 |
|
|
|
216 |
|
|
|
412 |
|
| Provision for income taxes |
|
|
110 |
|
|
|
272 |
|
|
|
138 |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
308 |
|
|
|
(56 |
) |
|
|
274 |
|
|
|
|
|
|
|
|
| Less: Net income attributable to noncontrolling interest |
|
|
83 |
|
|
|
140 |
|
|
|
124 |
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA CORPORATION
|
|
$ |
225 |
|
|
$ |
(196 |
) |
|
$ |
150 |
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS:
|
|
|
|
|
|
|
| Basic: |
|
|
|
|
|
|
| Net income (loss) |
|
$ |
1.23 |
|
|
$ |
(1.06 |
) |
|
$ |
0.81 |
|
| Average number of shares |
|
|
183,816,083 |
|
|
|
185,078,245 |
|
|
|
185,939,770 |
|
|
|
|
|
|
|
|
| Diluted: |
|
|
|
|
|
|
| Net income (loss) |
|
$ |
1.21 |
|
|
$ |
(1.06 |
) |
|
$ |
0.80 |
|
| Average number of shares |
|
|
186,303,547 |
|
|
|
185,078,245 |
|
|
|
188,494,931 |
|
|
|
|
|
|
|
|
| Common stock outstanding at the end of the period |
|
|
184,225,341 |
|
|
|
185,200,713 |
|
|
|
186,210,129 |
|
| (1) |
|
On January 1, 2018, Alcoa Corporation adopted changes issued by the Financial
Accounting Standards Board to the presentation of net periodic benefit cost related to pension and other postretirement benefit
plans. These changes require 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
presented 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 included in existing line items on the income statement other than such line items that
include the service cost component. Previously, Alcoa Corporation included all components of net periodic benefit cost, except
for certain settlements, curtailments, and special termination benefits related to severance programs, 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
included in Restructuring and other charges, as applicable. Upon adoption of these changes, management began classifying the
non-service cost components of net periodic benefit cost, except for certain settlements, curtailments, and special termination
benefits related to severance programs 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 quarter ended March 31, 2018, the non-service cost
components included in Other expenses, net was $38. Additionally, the Statement of Consolidated Operations for the quarters
ended March 31, 2017 and December 31, 2017 were recast to reflect the reclassification of the non-service cost components of
net periodic benefit cost to Other (income) expenses, net from both Cost of goods sold and Selling, general administrative, and
other expenses. As a result, for the quarters ended March 31, 2017 and December 31, 2017, Cost of goods sold decreased by $20,
Selling, general administrative, and other expenses decreased by $1, and Other (income) expenses, net changed by $21. |
|
|
|
|
|
|
|
|
| Alcoa Corporation and subsidiaries |
| Consolidated Balance Sheet (unaudited) |
| (in millions) |
|
|
|
|
|
|
|
December 31, |
|
March 31, |
|
|
2017 |
|
2018 |
| ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
1,358 |
|
|
$ |
1,196 |
|
| Receivables from customers |
|
|
811 |
|
|
|
814 |
|
| Other receivables |
|
|
232 |
|
|
|
187 |
|
| Inventories |
|
|
1,453 |
|
|
|
1,630 |
|
| Fair value of derivative contracts |
|
|
113 |
|
|
|
52 |
|
| Prepaid expenses and other current assets(1) |
|
|
271 |
|
|
|
270 |
|
| Total current assets |
|
|
4,238 |
|
|
|
4,149 |
|
|
|
|
|
|
| Properties, plants, and equipment |
|
|
23,046 |
|
|
|
22,837 |
|
| Less: accumulated depreciation, depletion, and amortization |
|
|
13,908 |
|
|
|
13,803 |
|
| Properties, plants, and equipment, net |
|
|
9,138 |
|
|
|
9,034 |
|
| Investments |
|
|
1,410 |
|
|
|
1,413 |
|
| Deferred income taxes |
|
|
814 |
|
|
|
700 |
|
| Fair value of derivative contracts |
|
|
128 |
|
|
|
99 |
|
| Other noncurrent assets |
|
|
1,719 |
|
|
|
1,701 |
|
| Total assets |
|
$ |
17,447 |
|
|
$ |
17,096 |
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable, trade |
|
$ |
1,898 |
|
|
$ |
1,813 |
|
| Accrued compensation and retirement costs |
|
|
459 |
|
|
|
416 |
|
| Taxes, including income taxes |
|
|
282 |
|
|
|
325 |
|
| Fair value of derivative contracts |
|
|
185 |
|
|
|
113 |
|
| Other current liabilities |
|
|
412 |
|
|
|
294 |
|
| Long-term debt due within one year |
|
|
16 |
|
|
|
15 |
|
| Total current liabilities |
|
|
3,252 |
|
|
|
2,976 |
|
| Long-term debt, less amount due within one year |
|
|
1,388 |
|
|
|
1,445 |
|
| Accrued pension benefits |
|
|
2,341 |
|
|
|
2,218 |
|
| Accrued other postretirement benefits |
|
|
1,100 |
|
|
|
1,075 |
|
| Asset retirement obligations |
|
|
617 |
|
|
|
631 |
|
| Environmental remediation |
|
|
258 |
|
|
|
234 |
|
| Fair value of derivative contracts |
|
|
1,105 |
|
|
|
466 |
|
| Noncurrent income taxes |
|
|
309 |
|
|
|
285 |
|
| Other noncurrent liabilities and deferred credits |
|
|
279 |
|
|
|
249 |
|
| Total liabilities |
|
|
10,649 |
|
|
|
9,579 |
|
|
|
|
|
|
| EQUITY |
|
|
|
|
| Alcoa Corporation shareholders’ equity: |
|
|
|
|
| Common stock |
|
|
2 |
|
|
|
2 |
|
| Additional capital |
|
|
9,590 |
|
|
|
9,633 |
|
| Retained earnings |
|
|
113 |
|
|
|
263 |
|
| Accumulated other comprehensive loss |
|
|
(5,182 |
) |
|
|
(4,530 |
) |
| Total Alcoa Corporation shareholders' equity |
|
|
4,523 |
|
|
|
5,368 |
|
| Noncontrolling interest |
|
|
2,275 |
|
|
|
2,149 |
|
| Total equity |
|
|
6,798 |
|
|
|
7,517 |
|
| Total liabilities and equity |
|
$ |
17,447 |
|
|
$ |
17,096 |
|
| (1) |
|
This line item includes $7 of restricted cash as of both December 31, 2017 and March
31, 2018. |
|
|
|
|
|
|
| Alcoa Corporation and subsidiaries |
| Statement of Consolidated Cash Flows (unaudited) |
| (in millions) |
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2017 |
|
2018 |
| CASH FROM OPERATIONS |
|
|
|
|
| Net income |
|
$ |
308 |
|
|
$ |
274 |
|
| Adjustments to reconcile net income to cash from operations: |
|
|
|
|
| Depreciation, depletion, and amortization |
|
|
179 |
|
|
|
194 |
|
| Deferred income taxes |
|
|
23 |
|
|
|
(11 |
) |
| Equity earnings, net of dividends |
|
|
(1 |
) |
|
|
(6 |
) |
| Restructuring and other charges |
|
|
10 |
|
|
|
(19 |
) |
| Net gain from investing activities – asset sales |
|
|
(120 |
) |
|
|
(5 |
) |
| Net periodic pension benefit cost |
|
|
28 |
|
|
|
40 |
|
| Stock-based compensation |
|
|
7 |
|
|
|
10 |
|
| Other |
|
|
9 |
|
|
|
(14 |
) |
| Changes in assets and liabilities, excluding effects of acquisitions, divestitures,
and foreign currency translation adjustments: |
|
|
|
|
| Decrease in receivables |
|
|
7 |
|
|
|
43 |
|
| (Increase) in inventories |
|
|
(102 |
) |
|
|
(169 |
) |
| Decrease in prepaid expenses and other current assets |
|
|
13 |
|
|
|
2 |
|
| (Decrease) in accounts payable, trade |
|
|
(45 |
) |
|
|
(106 |
) |
| (Decrease) in accrued expenses |
|
|
(181 |
) |
|
|
(186 |
) |
| (Decrease) Increase in taxes, including income taxes |
|
|
(17 |
) |
|
|
84 |
|
| Pension contributions |
|
|
(21 |
) |
|
|
(40 |
) |
| (Increase) in noncurrent assets |
|
|
(3 |
) |
|
|
(13 |
) |
| (Decrease) in noncurrent liabilities |
|
|
(20 |
) |
|
|
(23 |
) |
| CASH PROVIDED FROM OPERATIONS |
|
|
74 |
|
|
|
55 |
|
|
|
|
|
|
| FINANCING ACTIVITIES |
|
|
|
|
| Cash paid to former parent company related to separation(1) |
|
|
(238 |
) |
|
|
– |
|
| Net change in short-term borrowings (original maturities of three months or
less) |
|
|
2 |
|
|
|
– |
|
| Additions to debt (original maturities greater than three months) |
|
|
2 |
|
|
|
61 |
|
| Payments on debt (original maturities greater than three months) |
|
|
(5 |
) |
|
|
(4 |
) |
| Proceeds from the exercise of employee stock options |
|
|
18 |
|
|
|
15 |
|
| Contributions from noncontrolling interest |
|
|
24 |
|
|
|
53 |
|
| Distributions to noncontrolling interest |
|
|
(57 |
) |
|
|
(267 |
) |
| Other |
|
|
(6 |
) |
|
|
(5 |
) |
| CASH USED FOR FINANCING ACTIVITIES |
|
|
(260 |
) |
|
|
(147 |
) |
|
|
|
|
|
| INVESTING ACTIVITIES |
|
|
|
|
| Capital expenditures |
|
|
(71 |
) |
|
|
(74 |
) |
| Proceeds from the sale of assets and businesses |
|
|
238 |
|
|
|
– |
|
| Additions to investments |
|
|
(25 |
) |
|
|
– |
|
| CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES(2) |
|
|
142 |
|
|
|
(74 |
) |
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH(2)
|
|
|
7
|
|
|
|
4
|
|
| Net change in cash and cash equivalents and restricted cash(2) |
|
|
(37 |
) |
|
|
(162 |
) |
| Cash and cash equivalents and restricted cash at beginning of
year(2) |
|
|
859 |
|
|
|
1,365 |
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD(2)
|
|
$
|
822
|
|
|
$
|
1,203
|
|
|
(1)
|
|
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 $238 from the sale of the Yadkin
Hydroelectric Project. |
|
|
|
|
(2)
|
|
On January 1, 2018, Alcoa Corporation adopted changes issued by the Financial
Accounting Standards Board to the presentation of restricted cash in the statement of cash flows. These changes require 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 three months ended March 31, 2018,
both 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 $7 of restricted cash. Additionally, the Company’s Statement of Consolidated Cash Flows for
the three months ended March 31, 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 $6 and $18, respectively, of restricted cash. Of the $12 increase in restricted cash for the three months ended
March 31, 2017, $11 was previously presented as a cash outflow in the investing activities section of the Company’s Statement
of Consolidated Cash Flows for the three months ended March 31, 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 |
| Bauxite: |
|
|
|
|
|
|
|
|
|
|
|
|
| Production(1) (mdmt) |
|
|
11.1 |
|
|
|
11.0 |
|
|
|
11.6 |
|
|
|
12.1 |
|
|
|
45.8 |
|
|
|
11.2 |
|
| Third-party shipments (mdmt) |
|
|
1.4 |
|
|
|
1.6 |
|
|
|
2.1 |
|
|
|
1.5 |
|
|
|
6.6 |
|
|
|
1.1 |
|
| Intersegment shipments (mdmt) |
|
|
10.2 |
|
|
|
9.9 |
|
|
|
10.2 |
|
|
|
10.8 |
|
|
|
41.1 |
|
|
|
10.4 |
|
| Third-party sales |
|
$ |
70 |
|
|
$ |
80 |
|
|
$ |
104 |
|
|
$ |
79 |
|
|
$ |
333 |
|
|
$ |
47 |
|
| Intersegment sales |
|
$ |
219 |
|
|
$ |
208 |
|
|
$ |
221 |
|
|
$ |
227 |
|
|
$ |
875 |
|
|
$ |
249 |
|
| Adjusted EBITDA(2) |
|
$ |
110 |
|
|
$ |
97 |
|
|
$ |
112 |
|
|
$ |
105 |
|
|
$ |
424 |
|
|
$ |
110 |
|
| Depreciation, depletion, and amortization |
|
$ |
18 |
|
|
$ |
19 |
|
|
$ |
24 |
|
|
$ |
21 |
|
|
$ |
82 |
|
|
$ |
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Alumina: |
|
|
|
|
|
|
|
|
|
|
|
|
| Production (kmt) |
|
|
3,211 |
|
|
|
3,249 |
|
|
|
3,305 |
|
|
|
3,331 |
|
|
|
13,096 |
|
|
|
3,173 |
|
| Third-party shipments (kmt) |
|
|
2,255 |
|
|
|
2,388 |
|
|
|
2,271 |
|
|
|
2,306 |
|
|
|
9,220 |
|
|
|
2,376 |
|
| Intersegment shipments (kmt) |
|
|
947 |
|
|
|
1,152 |
|
|
|
1,153 |
|
|
|
1,223 |
|
|
|
4,475 |
|
|
|
1,097 |
|
| Average realized third-party price per metric ton of alumina |
|
$
|
325
|
|
|
$
|
314
|
|
|
$
|
314
|
|
|
$
|
406
|
|
|
$
|
340
|
|
|
$
|
385
|
|
| Third-party sales |
|
$ |
734 |
|
|
$ |
749 |
|
|
$ |
713 |
|
|
$ |
937 |
|
|
$ |
3,133 |
|
|
$ |
914 |
|
| Intersegment sales |
|
$ |
361 |
|
|
$ |
384 |
|
|
$ |
398 |
|
|
$ |
580 |
|
|
$ |
1,723 |
|
|
$ |
454 |
|
| Adjusted EBITDA(2) |
|
$ |
297 |
|
|
$ |
227 |
|
|
$ |
203 |
|
|
$ |
562 |
|
|
$ |
1,289 |
|
|
$ |
392 |
|
| Depreciation and amortization |
|
$ |
49 |
|
|
$ |
53 |
|
|
$ |
53 |
|
|
$ |
52 |
|
|
$ |
207 |
|
|
$ |
53 |
|
| Equity income (loss) |
|
$ |
1 |
|
|
$ |
(6 |
) |
|
$ |
(5 |
) |
|
$ |
5 |
|
|
$ |
(5 |
) |
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aluminum: |
|
|
|
|
|
|
|
|
|
|
|
|
| Primary aluminum production (kmt) |
|
|
559 |
|
|
|
575 |
|
|
|
596 |
|
|
|
598 |
|
|
|
2,328 |
|
|
|
554 |
|
| Third-party aluminum shipments(3) (kmt) |
|
|
801 |
|
|
|
833 |
|
|
|
868 |
|
|
|
854 |
|
|
|
3,356 |
|
|
|
794 |
|
| Average realized third-party price per metric ton of primary aluminum |
|
$
|
2,080
|
|
|
$
|
2,199
|
|
|
$
|
2,237
|
|
|
$
|
2,365
|
|
|
$
|
2,224
|
|
|
$
|
2,483
|
|
| Third-party sales |
|
$ |
1,806 |
|
|
$ |
1,988 |
|
|
$ |
2,090 |
|
|
$ |
2,143 |
|
|
$ |
8,027 |
|
|
$ |
2,111 |
|
| Intersegment sales |
|
$ |
4 |
|
|
$ |
3 |
|
|
$ |
9 |
|
|
$ |
5 |
|
|
$ |
21 |
|
|
$ |
4 |
|
| Adjusted EBITDA(2) |
|
$ |
217 |
|
|
$ |
234 |
|
|
$ |
315 |
|
|
$ |
246 |
|
|
$ |
1,012 |
|
|
$ |
153 |
|
| Depreciation and amortization |
|
$ |
101 |
|
|
$ |
108 |
|
|
$ |
106 |
|
|
$ |
104 |
|
|
$ |
419 |
|
|
$ |
106 |
|
| Equity (loss) income |
|
$ |
(7 |
) |
|
$ |
3 |
|
|
$ |
(7 |
) |
|
$ |
(8 |
) |
|
$ |
(19 |
) |
|
$ |
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
| Unallocated amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
| Transformation(4),(5) |
|
|
(20 |
) |
|
|
(28 |
) |
|
|
(11 |
) |
|
|
10 |
|
|
|
(49 |
) |
|
|
(2 |
) |
| Corporate inventory accounting(4),(6) |
|
|
(17 |
) |
|
|
14 |
|
|
|
(9 |
) |
|
|
(95 |
) |
|
|
(107 |
) |
|
|
31 |
|
| Corporate expenses(2),(7) |
|
|
(33 |
) |
|
|
(34 |
) |
|
|
(33 |
) |
|
|
(31 |
) |
|
|
(131 |
) |
|
|
(27 |
) |
| Provision for depreciation, depletion, and amortization |
|
|
(179
|
)
|
|
|
(190
|
)
|
|
|
(194
|
)
|
|
|
(187
|
)
|
|
|
(750
|
)
|
|
|
(194
|
)
|
| Restructuring and other charges |
|
|
(10 |
) |
|
|
(12 |
) |
|
|
10 |
|
|
|
(297 |
) |
|
|
(309 |
) |
|
|
19 |
|
| Interest expense |
|
|
(26 |
) |
|
|
(25 |
) |
|
|
(26 |
) |
|
|
(27 |
) |
|
|
(104 |
) |
|
|
(26 |
) |
| Other income (expenses), net(2) |
|
|
79 |
|
|
|
(28 |
) |
|
|
(48 |
) |
|
|
(30 |
) |
|
|
(27 |
) |
|
|
(21 |
) |
| Other(2),(4),(8) |
|
|
– |
|
|
|
(18 |
) |
|
|
(31 |
) |
|
|
(40 |
) |
|
|
(89 |
) |
|
|
(23 |
) |
| Consolidated income before income taxes |
|
|
418 |
|
|
|
237 |
|
|
|
288 |
|
|
|
216 |
|
|
|
1,159 |
|
|
|
412 |
|
| Provision for income taxes |
|
|
(110 |
) |
|
|
(99 |
) |
|
|
(119 |
) |
|
|
(272 |
) |
|
|
(600 |
) |
|
|
(138 |
) |
| Net income attributable to noncontrolling interest |
|
|
(83 |
) |
|
|
(63 |
) |
|
|
(56 |
) |
|
|
(140 |
) |
|
|
(342 |
) |
|
|
(124 |
) |
| Consolidated net income (loss) attributable to Alcoa Corporation |
|
$
|
225
|
|
|
$
|
75
|
|
|
$
|
113
|
|
|
$
|
(196
|
)
|
|
$
|
217
|
|
|
$
|
150
|
|
| The difference between certain segment totals and consolidated amounts is
in Corporate. |
|
|
|
| (1) |
|
The production amounts do not include additional bauxite (approximately 3 mdmt 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. |
|
|
|
| (2) |
|
On January 1, 2018, Alcoa Corporation adopted changes issued by the Financial
Accounting Standards Board to the presentation of net periodic benefit cost related to pension and other postretirement benefit
plans. These changes require 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, these changes are 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 for additional
information. |
|
|
|
| (3) |
|
The Aluminum segment’s third-party aluminum shipments are composed of both primary
aluminum and flat-rolled aluminum. |
|
|
|
| (4) |
|
Effective in the first quarter of 2017, 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 5), 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 6). 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. |
|
|
|
| (5) |
|
Transformation includes, among other items, the Adjusted EBITDA of previously closed
operations. |
|
|
|
| (6) |
|
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. |
|
|
|
| (7) |
|
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. |
|
|
|
| (8) |
|
Other includes items described as “Other special items” (see footnote 2 to the
reconciliation of Adjusted Income on the Calculation of Financial Measures) that impact Cost of goods sold and Selling, general
administrative, and other expenses on Alcoa Corporation’s Statement of Consolidated Operations. |
|
|
|
|
|
|
|
|
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited) |
| (in millions, except per-share amounts) |
|
|
|
|
|
| Adjusted Income |
|
Income (Loss) |
|
Diluted EPS (4) |
|
Quarter ended |
|
Quarter ended |
|
March 31,
2017
|
|
December 31,
2017
|
|
March 31,
2018
|
|
March 31,
2017
|
|
December 31,
2017
|
|
March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) attributable to Alcoa Corporation |
|
$ |
225
|
|
|
$ |
(196 |
) |
|
$ |
150 |
|
|
$ |
1.21 |
|
$ |
(1.06 |
) |
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
| Restructuring and other charges |
|
|
10
|
|
|
|
297
|
|
|
|
(19
|
)
|
|
|
|
|
|
|
| Discrete tax items(1) |
|
|
(2
|
)
|
|
|
82
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
| Other special items(2) |
|
|
(124
|
)
|
|
|
31
|
|
|
|
18
|
|
|
|
|
|
|
|
| Tax impact(3) |
|
|
5
|
|
|
|
(7 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
| Noncontrolling interest impact(3) |
|
|
3
|
|
|
|
(12
|
)
|
|
|
–
|
|
|
|
|
|
|
|
| Subtotal |
|
|
(108
|
) |
|
|
391 |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Alcoa Corporation – as adjusted |
|
$
|
117
|
|
|
$
|
195
|
|
|
$
|
145
|
|
|
|
0.63
|
|
|
1.04
|
|
|
|
0.77
|
| 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 (loss)
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, 2017, a net benefit for several small items; |
|
•
|
|
for the quarter ended December 31, 2017, a charge for a valuation allowance related
to certain non-U.S. deferred income tax assets ($60), a charge for the remeasurement of certain non-U.S. deferred income tax
assets due to a tax rate change ($16), a charge for the remeasurement of U.S. deferred income tax assets and liabilities at the
new corporate income tax rate of 21% (from 35%) under the 2017 Tax Cuts and Jobs Act signed into law on December 22, 2017
($22), and a net benefit for several other items ($16); and |
|
•
|
|
for the quarter ended March 31, 2018, a net benefit for several small items. |
|
|
|
| (2) |
|
Other special items include the following: |
|
•
|
|
for the quarter ended March 31, 2017, a gain on the sale of the Yadkin Hydroelectric
Project in the United States ($120) and a net favorable change in certain mark-to-market energy derivative instruments
($4); |
|
•
|
|
for the quarter ended December 31, 2017, costs related to the partial restart of the
Warrick (Indiana) smelter ($29), 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 ($13), a write-down of inventory
related to the permanent closure of the Rockdale (Texas) smelter ($6), an unfavorable tax impact related to the interim period
treatment of operational losses in certain jurisdictions for which no tax benefit was recognized ($6), preparation and
contingency costs for a potential work stoppage (lockout commenced on January 11, 2018) at a non-U.S. smelter ($4), an
additional gain on the sale of the Yadkin Hydroelectric Project in the United States ($2), and a net unfavorable change in
certain mark-to-market energy derivative instruments ($1); and |
|
•
|
|
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). |
|
|
|
| (3) |
|
The tax impact on special items is based on the applicable statutory rates in the
jurisdictions where the special items occurred. The noncontrolling interest impact on special items represents Alcoa’s
partner’s share of certain special items. |
| |
| (4) |
|
In any given period, the average number of shares applicable to diluted EPS for Net
income (loss) attributable to Alcoa Corporation common shareholders may exclude certain share equivalents as their effect is
anti-dilutive. However, certain of these share equivalents may become dilutive in the EPS calculation applicable to Net income
attributable to Alcoa Corporation common shareholders – as adjusted due to a larger and/or positive numerator.
Specifically: |
|
•
|
|
for the quarter ended March 31, 2017, no additional share equivalents were dilutive
based on Net income attributable to Alcoa Corporation common shareholders – as adjusted, resulting in a diluted average number
of shares of 186,303,547; |
|
•
|
|
for the quarter ended December 31, 2017, share equivalents associated with
outstanding employee stock options and awards were dilutive based on Net income attributable to Alcoa Corporation common
shareholders – as adjusted, resulting in a diluted average number of shares of 188,027,654; and |
|
•
|
|
for the quarter ended March 31, 2018, no additional share equivalents were dilutive
based on Net income attributable to Alcoa Corporation common shareholders – as adjusted, resulting in a diluted average number
of shares of 188,494,931. |
|
|
|
|
|
|
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
|
|
|
| Adjusted EBITDA |
|
Quarter ended
|
|
March 31,
2017
|
|
December 31,
2017
|
|
March 31,
2018
|
|
|
|
|
|
|
|
| Net income (loss) attributable to Alcoa Corporation |
|
$ |
225
|
|
|
$ |
(196 |
) |
|
$ |
150 |
|
|
|
|
|
|
|
|
| Add: |
|
|
|
|
|
|
| Net income attributable to noncontrolling interest |
|
|
83
|
|
|
|
140
|
|
|
|
124
|
|
| Provision for income taxes |
|
|
110
|
|
|
|
272 |
|
|
|
138 |
|
| Other (income) expenses, net(1) |
|
|
(79
|
) |
|
|
30 |
|
|
|
21 |
|
| Interest expense |
|
|
26
|
|
|
|
27 |
|
|
|
26 |
|
| Restructuring and other charges |
|
|
10
|
|
|
|
297 |
|
|
|
(19 |
) |
| Provision for depreciation, depletion, and amortization |
|
|
179
|
|
|
|
187
|
|
|
|
194
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA(1) |
|
$ |
554
|
|
|
$ |
757 |
|
|
$ |
634 |
|
|
|
|
|
|
|
|
| Special items(2) |
|
|
–
|
|
|
|
39 |
|
|
|
19 |
|
|
|
|
|
|
|
|
| Adjusted EBITDA, excluding special items(1) |
|
$
|
554
|
|
|
$
|
796
|
|
|
$
|
653
|
|
| 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) |
|
On January 1, 2018, Alcoa Corporation adopted changes issued by the Financial
Accounting Standards Board to the presentation of net periodic benefit cost related to pension and other postretirement benefit
plans. These changes require 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, these changes are 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 quarters ended March 31, 2017 and December 31, 2017, Other (income) expenses, net changed by $21.
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 for additional information. |
|
|
|
| (2) |
|
Special items include the following (see reconciliation of Adjusted Income above for
additional information): |
|
•
|
|
for the quarter ended December 31, 2017, costs related to the partial restart of the
Warrick (Indiana) smelter ($29), a write-down of inventory related to the permanent closure of the Rockdale (Texas) smelter
($6), and preparation and contingency costs for a potential work stoppage (lockout commenced on January 11, 2018) at a non-U.S.
smelter ($4); and |
|
•
|
|
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). |
|
|
|
|
|
|
| Alcoa Corporation and subsidiaries |
| Calculation of Financial Measures (unaudited), continued |
| (in millions) |
|
|
|
| Free Cash Flow |
|
Quarter ended |
|
March 31,
2017
|
|
December 31,
2017
|
|
March 31,
2018
|
|
|
|
|
|
|
|
| Cash from operations |
|
$ |
74
|
|
|
$ |
455 |
|
|
$ |
55 |
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
(71
|
)
|
|
|
(150
|
)
|
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Free cash flow |
|
$ |
3
|
|
|
$ |
305 |
|
|
$ |
(19 |
) |
| 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 |
|
December 31,
2017
|
|
March 31,
2018
|
|
|
|
|
|
| Short-term borrowings |
|
$ |
8 |
|
$ |
– |
| Long-term debt due within one year |
|
|
16 |
|
|
15 |
| Long-term debt, less amount due within one year |
|
|
1,388 |
|
|
1,445 |
| Total debt |
|
$ |
1,412 |
|
$ |
1,460 |
|
|
|
|
|
| Less: Cash and cash equivalents |
|
|
1,358 |
|
|
1,196 |
|
|
|
|
|
| Net debt |
|
$ |
54 |
|
$ |
264 |
| 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. |
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20180418006272/en/