Engineered Products and Solutions Delivers Record Profitability
All Segments Achieve Solid Financial Performance
Strong Liquidity Maintained
Forecast of 7 Percent Aluminum Demand Growth in 2013 Reaffirmed
1Q 2013 Highlights
- Net income of $149 million, or $0.13 per share; excluding special items, net income of $121 million, or $0.11 per share
- Record after-tax operating income in Engineered Products and Solutions
- Improved performance in Alumina and Primary Metals year-over-year, despite lower metal prices
- Adjusted EBITDA up 16 percent sequentially and 11 percent year-over-year
- Record-low first quarter days working capital
- Strong liquidity with cash on hand of $1.6 billion
- Debt-to-capital ratio 35 percent; net debt-to-capital ratio 31 percent
- Global end market growth remains solid; forecast of 7 percent global aluminum demand growth in 2013 reaffirmed
Alcoa (NYSE:AA) today reported net income of $149 million, or $0.13 per
share, in first quarter 2013. Net income excluding special items was
$121 million, or $0.11 per share.
First quarter 2013 net income compares to $242 million, or $0.21 per
share, in fourth quarter 2012 and $94 million, or $0.09 per share, in
first quarter 2012. First quarter 2013 net income excluding special
items compares to $64 million, or $0.06 per share, in fourth quarter
2012, and $105 million, or $0.10 per share, in first quarter 2012.
Special items in first quarter 2013 included a net discrete income tax
benefit, the positive impact of mark-to-market changes on certain energy
contracts, and a net insurance recovery related to the March 2012 fire
at our Massena, N.Y. location, all of which were slightly offset by the
negative impact of restructuring.
Adjusted EBITDA in first quarter 2013 grew to $690 million, an increase
of $93 million over fourth quarter 2012 and an increase of $66 million
over first quarter 2012.
Alcoa’s improved net income excluding special items over fourth quarter
2012 was driven by continued productivity improvements across all
businesses, better mix, and higher volumes in the downstream business.
These results were partially offset by higher pension and planned
maintenance cost.
First quarter 2013 revenue was $5.8 billion, a decrease of 1 percent
from fourth quarter 2012 due to fewer production days in the first
quarter, and 3 percent lower than first quarter 2012, largely on lower
London Metal Exchange (LME) aluminum prices and the impact of
curtailments in Alcoa’s European primary metals production.
“This was a strong quarter led by record profitability in our downstream
business, improved results in our midstream business, and remarkable
upstream performance in the face of weak metal prices,” said Klaus
Kleinfeld, Alcoa Chairman and Chief Executive Officer. “Our mid and
downstream businesses now account for 72 percent of our total after-tax
operating income while our upstream business continues to move down the
cost curve. We achieved these results by focusing on the things we can
control and by pressing Alcoa’s innovation edge, scale, and strength in
end markets.”
Continued Growth Across End Markets
Alcoa continues to project 7 percent global aluminum demand growth in
2013 and essentially balanced alumina and aluminum markets. However, the
Company sees a slightly tighter market as supply contracts. The Company
reduced its surplus projection for aluminum from 535,000 metric tons in
the fourth quarter to 155,000 metric tons this quarter, driven by
curtailments.
Alcoa projects global growth this year across the aerospace (9-10
percent), automotive (1-4 percent), commercial transportation (2-7
percent), packaging (2-3 percent), building and construction (4-5
percent), and industrial gas turbine (3-5 percent) end markets.
Strong Execution
The Company continued to deliver excellent results in its midstream and
downstream businesses. Global Rolled Products achieved $385 in adjusted
EBITDA per metric ton, a 4 percent increase sequentially. Engineered
Products and Solutions delivered record first quarter adjusted EBITDA
margin of 20.9 percent, the third consecutive quarter a year-on-year
record was established.
The Company is successfully executing against its 2013 financial and
operational targets. Alcoa achieved $247 million in year-over-year
productivity gains, driven by process improvements and procurement
savings across all businesses.
Capital spending was $235 million in the quarter, compared to $398
million in fourth quarter 2012. Free cash flow for the quarter was
negative $305 million, with cash used for operations of $70 million,
driven by the normal build in working capital, semi-annual interest
payments, and pension contributions. Expenditures on the Saudi Arabia
joint venture project were on track at $67 million.
Alcoa maintained its solid liquidity position, ending the quarter with
cash on hand of $1.6 billion. The Company achieved a first quarter
record low of 28 days working capital – 4 days lower than the previous
first quarter record set in 2012, and 15 days lower than the fourth
quarter of 2008. This is the 14th successive quarter the
Company has demonstrated year-on-year improvement. Alcoa’s
debt-to-capital ratio stood at 34.7 percent, 10 basis points lower than
the sequential quarter, while net debt-to-capital stood at 30.5 percent.
Solid Segment Performance
Engineered Products and Solutions
After-tax operating income (ATOI) in the first quarter was $173 million,
up from $140 million (revised from $137 million*) in fourth quarter
2012, a 24 percent improvement, and up from $157 million (revised from
$155 million*) in the first quarter of 2012. Sequentially, favorable
productivity and higher volumes in the aerospace businesses drove the
improvement. The Company continues to benefit from share gain increases
in all markets led by innovation. This segment reported a record
quarterly adjusted EBITDA margin of 20.9 percent, compared to 18.0
percent and 19.4 percent, respectively, for fourth quarter 2012 and same
quarter last year.
Global Rolled Products
ATOI in the first quarter was $81 million, up from $77 million (revised
from $69 million*) in fourth quarter 2012, a 5 percent improvement, but
down from $102 million (revised from $96 million*) in first quarter
2012. Sequentially, favorable productivity and strong demand from the
aerospace and automotive markets were mostly offset by weaker pricing
and product mix as well as higher costs. The segment had a 4 percent
increase in adjusted EBITDA per metric ton over fourth quarter 2012.
Days working capital improved by 6.7 days compared with first quarter
2012.
Alumina
ATOI in the first quarter was $58 million, up from $41 million in fourth
quarter 2012, a 41 percent improvement, and up from $35 million
year-on-year, a 66 percent improvement. Sequentially, the increase was
driven by positive alumina pricing along with continued productivity
improvements, partially offset by lower production due to fewer days in
the quarter, costs to relocate the Myara mine crusher in Australia, and
increases in various input costs. Adjusted EBITDA per metric ton reached
$44, the highest since fourth quarter 2011 reflecting the impact of
improving operations, cost focus, and Alumina Price Index-pricing. Days
working capital improved by 8.8 days compared with first quarter 2012.
Primary Metals
ATOI in the first quarter was $39 million, down from $316 million in
fourth quarter 2012, which included a $275 million gain on the Tapoco
Hydroelectric Project asset sale, and up from $10 million in first
quarter 2012. Third-party realized price in the first quarter was $2,398
per metric ton, up 3 percent sequentially, but down 1 percent
year-on-year. Sequentially, results were driven by regional premium and
value-added product mix improvements, continued productivity gains, and
changes to our portfolio of operating plants, partially offset by
planned power plant maintenance outages and other cost pressures.
Adjusted EBITDA per metric ton reached $205, $57 per metric ton higher
than the average for 2012 despite lower LME prices.
Alba Update
Alcoa continues to actively negotiate with the Department of Justice
(DOJ) and the Securities and Exchange Commission (SEC) to reach a
resolution of their investigations of the Alba matter; however, we have
not reached any agreement with either agency. Given the uncertainty
regarding whether a settlement can be reached and, if reached, on what
terms, we are not able to estimate a range of reasonably possible loss
with regard to any such settlement. If a settlement of the government
investigations is reached, we believe that the settlement amount would
be material to Alcoa’s results of operations for the relevant fiscal
period. If a settlement cannot be reached, Alcoa will proceed to trial
with the DOJ and the SEC and under those circumstances is unable to
predict an outcome or to estimate its reasonably possible loss. There
can be no assurance that the final outcome of the government’s
investigations will not have a material adverse effect on Alcoa.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on April 8, 2013 to present quarterly results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com
under “Invest.”
About Alcoa
Alcoa is the world’s leading producer of primary and fabricated
aluminum, as well as the world’s largest miner of bauxite and refiner of
alumina. In addition to inventing the modern-day aluminum industry,
Alcoa innovation has been behind major milestones in the aerospace,
automotive, packaging, building and construction, commercial
transportation, consumer electronics, and industrial markets over the
past 125 years. Among the solutions Alcoa markets are flat-rolled
products, hard alloy extrusions, and forgings, as well as Alcoa® wheels,
fastening systems, precision and investment castings, and building
systems in addition to its expertise in other light metals such as
titanium and nickel-based super alloys. Sustainability is an integral
part of Alcoa’s operating practices and the product design and
engineering it provides to customers. Alcoa has been a member of the Dow
Jones Sustainability Index for 11 consecutive years and approximately 75
percent of all of the aluminum ever produced since 1888 is still in
active use today. Alcoa employs approximately 61,000 people in 30
countries across the world. For more information, visit www.alcoa.com,
follow @Alcoa on Twitter at www.twitter.com/Alcoa
and follow Alcoa on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This 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,” “estimates,” “expects,” “forecasts,” “intends,”
“outlook,” “plans,” “projects,” “should,” “targets,” “will,” or other
words of similar meaning. All statements that reflect Alcoa’s
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
aluminum, end market conditions, supply/demand balances, and growth
opportunities for aluminum in automotive, aerospace, and other
applications, trend projections, targeted financial results or operating
performance, and statements about Alcoa’s strategies, outlook, and
business and financial prospects. Forward-looking statements are subject
to a number of known and unknown risks, uncertainties, and other factors
and are not guarantees of future performance. Important factors that
could cause actual results to differ materially from those expressed or
implied in the forward-looking statements include: (a) material adverse
changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices
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, including aerospace, automotive,
commercial transportation, building and construction, distribution,
packaging, defense, and industrial gas turbine; (d) the impact of
changes in foreign currency exchange rates on costs and results,
particularly the Australian dollar, Brazilian real, Canadian dollar,
euro, and Norwegian kroner; (e) increases in energy costs, including
electricity, natural gas, and fuel oil, or the unavailability or
interruption of energy supplies; (f) increases in the costs of other raw
materials, including calcined petroleum coke, caustic soda, and liquid
pitch; (g) Alcoa’s 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
(including moving its alumina refining and aluminum smelting businesses
down on the industry cost curves and increasing revenues in its Global
Rolled Products and Engineered Products and Solutions segments)
anticipated from its restructuring programs, productivity improvement,
cash sustainability, and other initiatives; (h) Alcoa’s inability to
realize expected benefits, in each case as planned and by targeted
completion dates, from sales of non-core assets, or from newly
constructed, expanded, or acquired facilities, such as the upstream
operations in Brazil and investments in hydropower projects in Brazil,
or from international joint ventures, including the joint venture in
Saudi Arabia; (i) political, economic, and regulatory risks in the
countries in which Alcoa operates or sells products, including
unfavorable changes in laws and governmental policies, civil unrest, or
other events beyond Alcoa’s control; (j) the outcome of contingencies,
including legal proceedings, government investigations, and
environmental remediation; (k) the business or financial condition of
key customers, suppliers, and business partners; (l) adverse changes in
tax rates or benefits; (m) adverse changes in discount rates or
investment returns on pension assets; (n) the impact of cyber attacks
and potential information technology or data security breaches; and (o)
the other risk factors summarized in Alcoa’s Form 10-K for the year
ended December 31, 2012, and other reports filed with the Securities and
Exchange Commission. Alcoa 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.
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 U.S. generally accepted
accounting principles (GAAP). Certain of these data are considered
“non-GAAP financial measures” under SEC rules. These non-GAAP financial
measures supplement our GAAP disclosures and should not be considered an
alternative to the GAAP measure. 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 and on our website at www.alcoa.com
under the “Invest” section.
* On January 1, 2013, the Company revised the inventory-costing method
used by certain locations within the Global Rolled Products and
Engineered Products and Solutions segments in order to improve internal
consistency and enhance industry comparability. This revision does not
impact the consolidated results of Alcoa. Segment information for all
prior periods presented was revised to reflect this change.
|
Alcoa and subsidiaries |
||||||||||||
| Statement of Consolidated Operations (unaudited) | ||||||||||||
| (in millions, except per-share, share, and metric ton amounts) | ||||||||||||
| Quarter ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
|
2012 |
2012 |
2013 |
||||||||||
| Sales | $ | 6,006 | $ | 5,898 | $ | 5,833 | ||||||
| Cost of goods sold (exclusive of expenses below) | 5,098 | 4,968 | 4,847 | |||||||||
| Selling, general administrative, and other expenses | 241 | 277 | 251 | |||||||||
| Research and development expenses | 43 | 56 | 45 | |||||||||
| Provision for depreciation, depletion, and amortization | 369 | 362 | 361 | |||||||||
| Restructuring and other charges | 10 | 60 | 7 | |||||||||
| Interest expense | 123 | 120 | 115 | |||||||||
| Other income, net | (16 | ) | (345 | ) | (27 | ) | ||||||
| Total costs and expenses | 5,868 | 5,498 | 5,599 | |||||||||
| Income before income taxes | 138 | 400 | 234 | |||||||||
| Provision for income taxes | 39 | 143 | 64 | |||||||||
| Net income | 99 | 257 | 170 | |||||||||
| Less: Net income attributable to noncontrolling interests | 5 | 15 | 21 | |||||||||
| NET INCOME ATTRIBUTABLE TO ALCOA | $ | 94 | $ | 242 | $ | 149 | ||||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| Basic: | ||||||||||||
| Net income | $ | 0.09 | $ | 0.23 | $ | 0.14 | ||||||
| Average number of shares | 1,065,810,615 | 1,067,197,166 | 1,068,814,403 | |||||||||
| Diluted: | ||||||||||||
| Net income | $ | 0.09 | $ | 0.21 | $ | 0.13 | ||||||
| Average number of shares | 1,164,213,063 | 1,167,549,803 | 1,168,961,421 | |||||||||
| Common stock outstanding at the end of the period | 1,066,594,279 | 1,067,211,953 | 1,069,377,561 | |||||||||
| Shipments of aluminum products (metric tons) | 1,295,000 | 1,280,000 | 1,224,000 | |||||||||
| Alcoa and subsidiaries | ||||||||
| Consolidated Balance Sheet (unaudited) | ||||||||
| (in millions) | ||||||||
| December 31, | March 31, | |||||||
|
2012 |
2013 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,861 | $ | 1,555 | ||||
|
Receivables from customers, less allowances of $39 in 2012 and $35 |
1,399 | 1,680 | ||||||
| Other receivables | 340 | 338 | ||||||
| Inventories | 2,825 | 2,982 | ||||||
| Prepaid expenses and other current assets | 1,275 | 1,213 | ||||||
| Total current assets | 7,700 | 7,768 | ||||||
| Properties, plants, and equipment | 38,137 | 38,378 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 19,190 | 19,422 | ||||||
| Properties, plants, and equipment, net | 18,947 | 18,956 | ||||||
| Goodwill | 5,170 | 5,123 | ||||||
| Investments | 1,860 | 1,862 | ||||||
| Deferred income taxes | 3,790 | 3,717 | ||||||
| Other noncurrent assets | 2,712 | 2,680 | ||||||
| Total assets | $ | 40,179 | $ | 40,106 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 53 | $ | 51 | ||||
| Commercial paper | – | 104 | ||||||
| Accounts payable, trade | 2,702 | 2,860 | ||||||
| Accrued compensation and retirement costs | 1,058 | 932 | ||||||
| Taxes, including income taxes | 366 | 438 | ||||||
| Other current liabilities | 1,298 | 1,090 | ||||||
| Long-term debt due within one year | 465 | 1,025 | ||||||
| Total current liabilities | 5,942 | 6,500 | ||||||
| Long-term debt, less amount due within one year | 8,311 | 7,745 | ||||||
| Accrued pension benefits | 3,722 | 3,626 | ||||||
| Accrued other postretirement benefits | 2,603 | 2,578 | ||||||
| Other noncurrent liabilities and deferred credits | 3,078 | 2,883 | ||||||
| Total liabilities | 23,656 | 23,332 | ||||||
| EQUITY | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 1,178 | 1,178 | ||||||
| Additional capital | 7,560 | 7,508 | ||||||
| Retained earnings | 11,689 | 11,805 | ||||||
| Treasury stock, at cost | (3,881 | ) | (3,816 | ) | ||||
| Accumulated other comprehensive loss | (3,402 | ) | (3,309 | ) | ||||
| Total Alcoa shareholders’ equity | 13,199 | 13,421 | ||||||
| Noncontrolling interests | 3,324 | 3,353 | ||||||
| Total equity | 16,523 | 16,774 | ||||||
| Total liabilities and equity | $ | 40,179 | $ | 40,106 | ||||
| Alcoa and subsidiaries | |||||||
| Statement of Consolidated Cash Flows (unaudited) | |||||||
| (in millions) | |||||||
| Three months ended | |||||||
|
March 31, |
|||||||
|
2012 |
2013 |
||||||
| CASH FROM OPERATIONS | |||||||
| Net income | $ | 99 | $ | 170 | |||
| Adjustments to reconcile net income to cash from operations: | |||||||
| Depreciation, depletion, and amortization | 369 | 361 | |||||
| Deferred income taxes | (100 | ) | (13 | ) | |||
| Equity (income) loss, net of dividends | (8 | ) | 13 | ||||
| Restructuring and other charges | 10 | 7 | |||||
| Net loss (gain) from investing activities – asset sales | 2 | (5 | ) | ||||
| Stock-based compensation | 19 | 23 | |||||
| Excess tax benefits from stock-based payment arrangements | (1 | ) | – | ||||
| Other | 19 | – | |||||
|
Changes in assets and liabilities, excluding effects of |
|||||||
| (Increase) in receivables | (139 | ) | (321 | ) | |||
| (Increase) in inventories | (153 | ) | (182 | ) | |||
| (Increase) decrease in prepaid expenses and other current assets | (11 | ) | 25 | ||||
| Increase in accounts payable, trade | 3 | 180 | |||||
| (Decrease) in accrued expenses | (236 | ) | (372 | ) | |||
| Increase in taxes, including income taxes | 57 | 61 | |||||
| Pension contributions | (213 | ) | (83 | ) | |||
| (Increase) in noncurrent assets | (39 | ) | (26 | ) | |||
| Increase in noncurrent liabilities | 88 | 92 | |||||
| (Increase) in net assets held for sale | (2 | ) | – | ||||
| CASH USED FOR OPERATIONS | (236 | ) | (70 | ) | |||
| FINANCING ACTIVITIES | |||||||
|
Net change in short-term borrowings (original maturities of three months or less) |
(10 | ) | – | ||||
| Net change in commercial paper | 51 | 104 | |||||
| Additions to debt (original maturities greater than three months) | 730 | 625 | |||||
| Debt issuance costs | (3 | ) | – | ||||
| Payments on debt (original maturities greater than three months) | (414 | ) | (639 | ) | |||
| Proceeds from exercise of employee stock options | 8 | – | |||||
| Excess tax benefits from stock-based payment arrangements | 1 | – | |||||
| Dividends paid to shareholders | (33 | ) | (33 | ) | |||
| Distributions to noncontrolling interests | (26 | ) | (25 | ) | |||
| Contributions from noncontrolling interests | 90 | 15 | |||||
| CASH PROVIDED FROM FINANCING ACTIVITIES | 394 | 47 | |||||
| INVESTING ACTIVITIES | |||||||
|
Capital expenditures |
(270 | ) | (235 | ) | |||
| Proceeds from the sale of assets and businesses | 11 | 2 | |||||
| Additions to investments | (104 | ) | (121 | ) | |||
| Sales of investments | 11 | – | |||||
| Net change in restricted cash | (9 | ) | 59 | ||||
| Other | 11 | 10 | |||||
| CASH USED FOR INVESTING ACTIVITIES | (350 | ) | (285 | ) | |||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
2 |
2 |
|||||
| Net change in cash and cash equivalents | (190 | ) | (306 | ) | |||
| Cash and cash equivalents at beginning of year | 1,939 | 1,861 | |||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,749 | $ | 1,555 | |||
| Alcoa and subsidiaries | |||||||||||||||||||||||
| Segment Information (unaudited) | |||||||||||||||||||||||
|
(dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt]) |
|||||||||||||||||||||||
|
1Q12 |
2Q12 |
3Q12 |
4Q12 |
2012 |
1Q13 |
||||||||||||||||||
| Alumina: | |||||||||||||||||||||||
| Alumina production (kmt) | 4,153 | 4,033 | 4,077 | 4,079 | 16,342 | 3,994 | |||||||||||||||||
| Third-party alumina shipments (kmt) | 2,293 | 2,194 | 2,368 | 2,440 | 9,295 | 2,457 | |||||||||||||||||
| Third-party sales | $ | 775 | $ | 750 | $ | 764 | $ | 803 | $ | 3,092 | $ | 826 | |||||||||||
| Intersegment sales | $ | 617 | $ | 576 | $ | 575 | $ | 542 | $ | 2,310 | $ | 595 | |||||||||||
| Equity income | $ | 1 | $ | 1 | $ | 2 | $ | 1 | $ | 5 | $ | 1 | |||||||||||
| Depreciation, depletion, and amortization | $ | 114 | $ | 114 | $ | 120 | $ | 107 | $ | 455 | $ | 109 | |||||||||||
| Income taxes | $ | (1 | ) | $ | (6 | ) | $ | (22 | ) | $ | 2 | $ | (27 | ) | $ | 14 | |||||||
| After-tax operating income (ATOI) | $ | 35 | $ | 23 | $ | (9 | ) | $ | 41 | $ | 90 | $ | 58 | ||||||||||
| Primary Metals: | |||||||||||||||||||||||
| Aluminum production (kmt) | 951 | 941 | 938 | 912 | 3,742 | 891 | |||||||||||||||||
| Third-party aluminum shipments (kmt) | 771 | 749 | 768 | 768 | 3,056 | 705 | |||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,433 |
$ |
2,329 |
$ |
2,222 |
$ |
2,325 |
$ |
2,327 |
$ |
2,398 |
|||||||||||
| Third-party sales | $ | 1,944 | $ | 1,804 | $ | 1,794 | $ | 1,890 | $ | 7,432 | $ | 1,758 | |||||||||||
| Intersegment sales | $ | 761 | $ | 782 | $ | 691 | $ | 643 | $ | 2,877 | $ | 727 | |||||||||||
| Equity loss | $ | (2 | ) | $ | (9 | ) | $ | (5 | ) | $ | (11 | ) | $ | (27 | ) | $ | (9 | ) | |||||
| Depreciation, depletion, and amortization | $ | 135 | $ | 133 | $ | 130 | $ | 134 | $ | 532 | $ | 135 | |||||||||||
| Income taxes | $ | (13 | ) | $ | (19 | ) | $ | (19 | ) | $ | 157 | $ | 106 | $ | 1 | ||||||||
| ATOI | $ | 10 | $ | (3 | ) | $ | (14 | ) | $ | 316 | $ | 309 | $ | 39 | |||||||||
| Global Rolled Products: | |||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 452 | 484 | 483 | 448 | 1,867 | 450 | |||||||||||||||||
| Third-party sales | $ | 1,845 | $ | 1,913 | $ | 1,849 | $ | 1,771 | $ | 7,378 | $ | 1,779 | |||||||||||
| Intersegment sales | $ | 44 | $ | 44 | $ | 42 | $ | 33 | $ | 163 | $ | 51 | |||||||||||
| Equity loss | $ | (1 | ) | $ | (2 | ) | $ | (1 | ) | $ | (2 | ) | $ | (6 | ) | $ | (4 | ) | |||||
| Depreciation, depletion, and amortization | $ | 57 | $ | 57 | $ | 57 | $ | 58 | $ | 229 | $ | 57 | |||||||||||
| Income taxes* | $ | 51 | $ | 34 | $ | 39 | $ | 35 | $ | 159 | $ | 39 | |||||||||||
| ATOI* | $ | 102 | $ | 78 | $ | 89 | $ | 77 | $ | 346 | $ | 81 | |||||||||||
| Engineered Products and Solutions: | |||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 58 | 59 | 53 | 52 | 222 | 55 | |||||||||||||||||
| Third-party sales | $ | 1,390 | $ | 1,420 | $ | 1,367 | $ | 1,348 | $ | 5,525 | $ | 1,423 | |||||||||||
| Depreciation, depletion, and amortization | $ | 40 | $ | 39 | $ | 39 | $ | 40 | $ | 158 | $ | 40 | |||||||||||
| Income taxes* | $ | 73 | $ | 76 | $ | 77 | $ | 71 | $ | 297 | $ | 84 | |||||||||||
| ATOI* | $ | 157 | $ | 157 | $ | 158 | $ | 140 | $ | 612 | $ | 173 | |||||||||||
|
Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa: |
|||||||||||||||||||||||
| Total segment ATOI* | $ | 304 | $ | 255 | $ | 224 | $ | 574 | $ | 1,357 | $ | 351 | |||||||||||
| Unallocated amounts (net of tax): | |||||||||||||||||||||||
| Impact of LIFO | – | 19 | (7 | ) | 8 | 20 | (2 | ) | |||||||||||||||
| Interest expense | (80 | ) | (80 | ) | (81 | ) | (78 | ) | (319 | ) | (75 | ) | |||||||||||
| Noncontrolling interests | (5 | ) | 17 | 32 | (15 | ) | 29 | (21 | ) | ||||||||||||||
| Corporate expense | (64 | ) | (69 | ) | (62 | ) | (87 | ) | (282 | ) | (67 | ) | |||||||||||
| Restructuring and other charges | (7 | ) | (10 | ) | (2 | ) | (56 | ) | (75 | ) | (5 | ) | |||||||||||
| Other* | (54 | ) | (134 | ) | (247 | ) | (104 | ) | (539 | ) | (32 | ) | |||||||||||
| Consolidated net income (loss) attributable to Alcoa |
$ |
94 |
$ |
(2 |
) |
$ |
(143 |
) |
$ |
242 |
$ |
191 |
$ |
149 |
|||||||||
|
The difference between certain segment totals and consolidated amounts is in Corporate. |
|
|
* |
On January 1, 2013, management revised the inventory-costing |
| Alcoa and subsidiaries | ||||||||||||
| Calculation of Financial Measures (unaudited) | ||||||||||||
| (dollars in millions) | ||||||||||||
| Adjusted EBITDA Margin | Quarter ended | |||||||||||
|
March 31, |
December 31, |
March 31, |
||||||||||
| Net income attributable to Alcoa | $ | 94 | $ | 242 | $ | 149 | ||||||
| Add: | ||||||||||||
|
Net income attributable to noncontrolling interests |
5 | 15 | 21 | |||||||||
| Provision for income taxes | 39 | 143 | 64 | |||||||||
| Other income, net | (16 | ) | (345 | ) | (27 | ) | ||||||
| Interest expense | 123 | 120 | 115 | |||||||||
| Restructuring and other charges | 10 | 60 | 7 | |||||||||
| Provision for depreciation, depletion, and amortization | 369 | 362 | 361 | |||||||||
| Adjusted EBITDA | $ | 624 | $ | 597 | $ | 690 | ||||||
| Sales | $ | 6,006 | $ | 5,898 | $ | 5,833 | ||||||
| Adjusted EBITDA Margin | 10.4 | % | 10.1 | % | 11.8 | % | ||||||
Alcoa’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’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.
| Free Cash Flow | Quarter ended | |||||||||||
|
March 31, |
December 31, |
March 31, |
||||||||||
| Cash from operations | $ | (236 | ) | $ | 933 | $ | (70 | ) | ||||
| Capital expenditures |
(270 |
) |
(398 |
) |
(235 |
) |
||||||
| Free cash flow | $ | (506 | ) | $ | 535 | $ | (305 | ) | ||||
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 due to the fact that these expenditures are considered
necessary to maintain and expand Alcoa’s asset base and are 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.
| Alcoa and subsidiaries | ||||||||||||||||||||
| Calculation of Financial Measures (unaudited), continued | ||||||||||||||||||||
| (dollars in millions, except per-share amounts) | ||||||||||||||||||||
| Adjusted Income | Income | Diluted EPS | ||||||||||||||||||
| Quarter ended | Quarter ended | |||||||||||||||||||
|
March 31, |
December 31, |
March 31, |
March 31, |
December 31, |
March 31, |
|||||||||||||||
| Net income attributable to Alcoa | $ | 94 | $ | 242 | $ | 149 | $ | 0.09 | $ | 0.21 | $ | 0.13 | ||||||||
|
Restructuring and other charges |
7 |
54 |
5 |
|||||||||||||||||
|
Discrete tax items* |
– |
(58 |
) |
(19 |
) |
|||||||||||||||
| Other special items** |
4 |
(174 |
) |
(14 |
) |
|||||||||||||||
|
Net income attributable to Alcoa – as adjusted |
$ |
105 |
$ |
64 |
$ |
121 |
0.10 |
0.06 |
0.11 |
|||||||||||
Net income attributable to Alcoa – 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
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
determined under GAAP as well as Net income attributable to Alcoa – as
adjusted.
* Discrete tax items include the following:
-
for the quarter ended March 31, 2013, a benefit related to the
reinstatement under the American Taxpayer Relief Act of 2012 of two
tax provisions that will be applied in 2013 to Alcoa’s U.S. income tax
return for calendar year 2012 ($19); and -
for the quarter ended December 31, 2012, a benefit related to the
interim period treatment of losses in jurisdictions for which no tax
benefit was recognized during the nine months ended September 30, 2012
($39); a benefit for a change in the legal structure of an investment
($13); and a net benefit for other miscellaneous items ($6).
** Other special items include the following:
-
for the quarter ended March 31, 2013, a net favorable change in
certain mark-to-market energy derivative contracts ($9) and a net
insurance recovery related to the March 2012 cast house fire at the
Massena, NY location ($5); -
for the quarter ended December 31, 2012, a gain on the sale of the
Tapoco Hydroelectric Project ($161: $275 is included in the Primary
Metals segment and $(114) is included in Corporate); a net favorable
change in certain mark-to-market energy derivative contracts ($12);
interest income on an escrow deposit ($8); and uninsured losses
related to fire damage to the cast house at the Massena, NY location
($7); and -
for the quarter ended March 31, 2012, a net unfavorable change in
certain mark-to-market energy derivative contracts.
| Alcoa and subsidiaries | |||||||||
| Calculation of Financial Measures (unaudited), continued | |||||||||
| (dollars in millions) | |||||||||
| Days Working Capital | Quarter ended | ||||||||
|
March 31, |
December 31, |
March 31, |
|||||||
| Receivables from customers, less allowances | $ | 1,526 | $ | 1,399 | $ | 1,680 | |||
| Add: Deferred purchase price receivable* | 254 | 18 | 14 | ||||||
| Receivables from customers, less allowances, as adjusted |
1,780 |
1,417 |
1,694 |
||||||
| Add: Inventories | 3,097 | 2,825 | 2,982 | ||||||
| Less: Accounts payable, trade | 2,734 | 2,702 | 2,860 | ||||||
| Working Capital | $ | 2,143 | $ | 1,540 | $ | 1,816 | |||
| Sales | $ | 6,006 | $ | 5,898 | $ | 5,833 | |||
| Days Working Capital | 32 | 24 | 28 | ||||||
|
Days Working Capital = Working Capital divided by (Sales/number of days in the quarter). |
|
|
* |
The deferred purchase price receivable relates to an arrangement |
| Net Debt-to-Capital | March 31, 2013 | ||||||||||
|
Debt-to- |
Cash and |
Net Debt-to- |
|||||||||
| Total Debt | |||||||||||
| Short-term borrowings | $ | 51 | |||||||||
| Commercial paper | 104 | ||||||||||
| Long-term debt due within one year | 1,025 | ||||||||||
| Long-term debt, less amount due within one year | 7,745 | ||||||||||
| Numerator | $ | 8,925 | $ | 1,555 | $ | 7,370 | |||||
| Total Capital | |||||||||||
| Total debt | $ | 8,925 | |||||||||
| Total equity | 16,774 | ||||||||||
| Denominator | $ | 25,699 | $ | 1,555 | $ | 24,144 | |||||
| Ratio | 34.7 | % | 30.5 | % | |||||||
Net debt-to-capital is a non-GAAP financial measure. Management believes
that this measure is meaningful to investors because management assesses
Alcoa’s leverage position after factoring in available cash that could
be used to repay outstanding debt.
|
Alcoa and subsidiaries |
|
Calculation of Financial Measures (unaudited), continued |
|
(dollars in millions, except per metric ton amounts) |
| Segment Measures | Alumina | Primary Metals | ||||||||||||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | |||||||||||||||||||||||||||||||
|
March 31, |
December 31, |
March 31, |
March 31, |
June 30, |
September 30, |
December 31, |
March 31, |
|||||||||||||||||||||||||
| After-tax operating income (ATOI) | $ | 35 | $ | 41 | $ | 58 | $ | 10 | $ | (3 | ) | $ | (14 | ) | $ | 316 | $ | 39 | ||||||||||||||
| Add: | ||||||||||||||||||||||||||||||||
|
Depreciation, depletion, and amortization |
114 |
107 |
109 |
135 |
133 |
130 |
134 |
135 |
||||||||||||||||||||||||
| Equity (income) loss |
(1 |
) |
(1 |
) |
(1 |
) |
2 |
9 |
5 |
11 |
9 |
|||||||||||||||||||||
| Income taxes | (1 | ) | 2 | 14 | (13 | ) | (19 | ) | (19 | ) | 157 | 1 | ||||||||||||||||||||
| Other | – | (4 | ) | (3 | ) | – | (1 | ) | 2 | (423 | ) | (1 | ) | |||||||||||||||||||
| Adjusted EBITDA |
$ |
147 |
$ |
145 |
$ |
177 |
$ |
134 |
$ |
119 |
$ |
104 |
$ |
195 |
$ |
183 |
||||||||||||||||
|
Production (thousand metric tons) (kmt) |
4,153 |
4,079 |
3,994 |
951 |
941 |
938 |
912 |
891 |
||||||||||||||||||||||||
| Adjusted EBITDA / Production ($ per metric ton) |
$ |
35 |
$ |
36 |
$ |
44 |
$ |
141 |
$ |
126 |
$ |
111 |
$ |
214 |
$ |
205 |
||||||||||||||||
Alcoa’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 Other
line in the table above includes gains/losses on asset sales and other
nonoperating items. 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’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.
|
Alcoa and subsidiaries |
|
Calculation of Financial Measures (unaudited), continued |
|
(dollars in millions, except per metric ton amounts) |
| Segment Measures | Global Rolled Products* | Engineered Products and Solutions* | ||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | |||||||||||||||||||||
|
March 31, |
December 31, |
March 31, |
March 31, |
December 31, |
March 31, |
|||||||||||||||||
| After-tax operating income (ATOI) | $ | 102 | $ | 77 | $ | 81 | $ | 157 | $ | 140 | $ | 173 | ||||||||||
| Add: | ||||||||||||||||||||||
| Depreciation, depletion, and amortization |
57 |
58 |
57 |
40 |
40 |
40 |
||||||||||||||||
| Equity loss | 1 | 2 | 4 | – | – | – | ||||||||||||||||
| Income taxes | 51 | 35 | 39 | 73 | 71 | 84 | ||||||||||||||||
| Other | – | – | (1 | ) | – | (9 | ) | – | ||||||||||||||
| Adjusted EBITDA |
$ |
211 |
$ |
172 |
$ |
180 |
$ |
270 |
$ |
242 |
$ |
297 |
||||||||||
| Total shipments (thousand metric tons) (kmt) |
472 |
465 |
468 |
|||||||||||||||||||
| Adjusted EBITDA/Total shipments ($ per metric ton) |
$ |
447 |
$ |
370 |
$ |
385 |
||||||||||||||||
| Third-party sales |
$ |
1,390 |
$ |
1,348 |
$ |
1,423 |
||||||||||||||||
| Adjusted EBITDA Margin |
19 |
% |
18 |
% |
21 |
% |
||||||||||||||||
Alcoa’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 Other
line in the table above includes gains/losses on asset sales and other
nonoperating items. 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’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.
|
* |
On January 1, 2013, management revised the inventory-costing |
Alcoa
Investor Contact:
Kelly Pasterick, 212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact:
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com