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Aluminum producer Alcoa reported better than expected third quarter earnings on revenue down 5% sequentially on lower aluminum prices Special items of $160M driven by pension/OPEB action written off.  Warned again on the Trade War affect and tariffs. 

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Alcoa Corp NYSE: AA Earnings Beat After Close Wednesday

$0.63 Beat $0.36 EPS AND $3.339 Billion Beat $3.31 Billion Forecast in Revenue 

Earnings

Adjusted net earnings $119 million; adjusted EPS $0.63 on $3.339 billion, analysts had forecast Alcoa earnings to fall 50% to 36 cents a share on a revenue increase of 11.8% to $3.31 billion. Unadjusted $AA had a net loss of $41 million, or $0.22 per share. There were  adjusted EBITDA excluding special items of $795 million. Alcoa ended with a cash balance at $1.0 billion on September 30, 2018.

Alcoa Corp NYSE: AA

Market Reaction > After hours $38.03 +1.33 (+3.62%)

Highlights

  • One serious injury in 3Q18; reviewing heat stress prevention practices
  • Pension and OPEB net liability down ~$500 million to $2.2 billion
  • Members of the Australian Workers’ Union returned to work; voting on new agreement
  • Launched formal consultation process with workers’ representatives for collective dismissals of employees at two Spanish smelters
  • Continue to project alumina and aluminum deficits, and increasing bauxite stockpile
  • FY18 adjusted EBITDA excluding special items outlook of $3.1 to $3.2 billion
  • Announcing $200 million stock repurchase authorization
  • Strengthening organization to support operator-centric approach

Alcoa Q3 18 Aluminium Prices

Outlook

  • Tightened the range for full-year 2018 projection of adjusted EBITDA excluding special items to between $3.1 billion and $3.2 billion, from the prior quarter’s estimate of $3.0 billion to $3.2 billion
  • Projecting full-year global deficits for both alumina and aluminum in 2018; surplus for bauxite 
  • Launched formal consultation process for collective dismissals of employees at two Spanish smelters 
  • Strengthening organization to support operator-centric approach

 

Alcoa Corp NYSE: AA Q2 Earnings Recap

Earnings

Alcoa Corporation $AA is a global leader in bauxite, alumina, and aluminum products. The stock had been rising on protectionist hopes as the Trump administration mulls curbs of imports on national security grounds. The tariff war has changed the dynmaics of such a hope. hese were just the second year of results since AA split off it's aerospace division. Alcoa is a harbinger for many in the commodities and global growth sectors.

Earnings: 

Net income of $75 million, or $0.39 per share excluding special items, adjusted net income of $286 million, or $1.52 per share on revenue of $3.58 billion beating expectations of $1.33 EPS and $3.555 revenu. 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.

  • Alcoa Inc NYSE: $AA
  • Market Reaction Pre-market $43.01 ▼ 4.93 (-10.28%)

Cash Position

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.

Outlook:

Adjusted full-year EBITDA is now seen at $3 billion-$3.2 billion, down from a prior view of $3.5 billion-$3.7 billion.

Management said the cut "reflects current market prices, tariffs on imported aluminum, increased energy costs, and some operational impacts." "Uncertainty continues to exist in the global supply chain due to U.S. tariffs and ongoing alumina supply disruptions in the Atlantic region," the company said in a statement.

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

About Alcoa

Alcoa Corporation $AA is a global leader in bauxite, alumina, and aluminum products. The stock had been rising on protectionist hopes as the Trump administration mulls curbs of imports on national security grounds. The tariff war has changed the dynmaics of such a hope. hese were just the second year of results since AA split off it's aerospace division. Alcoa is a harbinger for many in the commodities and global growth sectors.

Source: Alcoa

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