Earnings Reports

Google Ad

Aluminum producer Alcoa reported worse than expected second quarter earnings on Wednesday with a wider-than-expected loss hit by lower alumina prices. $AA has been hurt by demand, and the implications for the global economy with the Trade War affect and tariffs.

Alcoa Smelting

Alcoa Corp NYSE: AA Reported Earnings After Close Wednesday

($0.44) Missed ($0.33) EPS AND $2.6 Billion Matched $2.6 Billion Forecast in Revenue

Earnings

Alcoa Corporation (NYSE: AA) said in the third quarter it swung to a loss of 44 cents per share or $0.22 per share from a profit of 82 cents per share last year, missing Wall Street projection of a loss of 33 cents per share. Excluding special items, adjusted net income of $119 million, or $0.63 per share.

On a reported basis, net loss per share widened to $1.19 from $0.03. Revenue for the quarter fell 5% to $2.6 billion, which was in line with the street consensus. Adjusted EBITDA excluding special items of $795 million▪Cash balance at $1.0 billion on September 30, 2019.

 

Alcoa Corp NYSE: AA

Market Reaction After hours $19.60 +0.44 (+2.04%)

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

 

Capital allocation framework and update

Announcing $200M stock repurchase program

  • Cash at $1.0 billion; ~30% attributable to noncontrolling interest
  • Sustaining capital expenditures on track Anticipating to spend approximately $100 million on return seeking projects
  • Completed ~$300 million in liability optimization
  • Announcing $200 million stock repurchase authorization effective immediately and to be executed based upon cash availability and market conditiions

 

Outlook

Alcoa said it estimates "Global aluminum demand for full-year 2019 is now estimated to be lower year-over-year, ranging between -0.6% and -0.4%, compared to the previous quarter’s estimate of growth between 1.25% and 2.25%. The change is driven by weakening macroeconomic conditions, trade tensions, and contracting manufacturing activity, especially in the global automotive sector,” the company said in a statement.

Alumina price and Smelting Cost Curve Alcoa

Asset Sales

Alcoa also announced that it intends to pursue non-core asset sales over the next 12 to 18 months, which is expected to generate an estimated $500 million to $1 billion in net proceeds. The company added that it is looking at a new operating model to create a leaner, more operator-centric organization.

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 and the stock has fallen for the past 18 months. These 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

Live From The Pit

Log in to comment
Discuss this article in the forums (0 replies).