Record Results in Midstream and Downstream Businesses
1Q 2012 Highlights
-
Income from continuing operations of $94 million, or $0.09 per share;
excluding special items, income from continuing operations of $105
million, or $0.10 per share -
Revenue of $6.0 billion, up year-on-year despite 9 percent decline in
realized aluminum prices -
Record results in Global Rolled Products and Engineered Products and
Solutions - Days working capital a record low for first quarter
- Cash on hand of $1.7 billion
-
390,000 metric tons of alumina refining capacity being curtailed to
improve competitive position -
Company raises 2012 global growth forecast for the aerospace market 3
percentage points; reaffirms global aluminum demand growth projection
of 7 percent and a global aluminum supply deficit in 2012
NEW YORK–Alcoa (NYSE:AA) today reported income from continuing operations of $94
million, or $0.09 per share, in first quarter 2012, a $287 million
improvement over fourth quarter 2011, led by strong productivity growth
and improved market conditions.
Excluding the impact of special items, income from continuing operations
was $105 million, or $0.10 per share. Special items in first quarter
2012 included the negative impact of mark-to-market changes on certain
energy contracts and restructuring charges primarily related to smelter
curtailments.
First quarter 2012 income from continuing operations compares to fourth
quarter 2011 loss from continuing operations of $193 million, or $0.18
per share, and first quarter 2011 income from continuing operations of
$309 million, or $0.27 per share.
The improvement over fourth quarter 2011 results was driven by strong
productivity improvements across all businesses, higher realized prices
for aluminum, and improved volume and mix. These were offset somewhat by
a lower realized alumina price and higher input costs.
“Performance rebounded strongly this quarter due to our proactive cash
sustainability actions, our relentless focus on profitable growth, and
stabilizing markets,” said Klaus Kleinfeld, Alcoa Chairman and Chief
Executive Officer.
“We are successfully executing on our aggressive strategy to move down
the cost curve in our upstream businesses, and drive to record
profitability in our midstream and downstream businesses. Challenges
remain in this economy, but we approach them better prepared than ever
before.”
Alcoa recorded first quarter 2012 revenue of $6.0 billion, up slightly
over fourth quarter 2011 and first quarter 2011. A 9 percent drop in the
realized price of aluminum and a 13 percent drop in the realized price
of alumina, year-on-year, were partially offset by higher third-party
shipments in the upstream businesses, better volume and mix in the
midstream business, and improved volume in the downstream business.
Alcoa recorded revenue growth in the first quarter across global end
markets, including industrial products (14 percent), automotive (13
percent), packaging (11 percent), and commercial transportation (11
percent), compared to fourth quarter 2011. Compared to first quarter
2011, revenues were up in commercial transportation (32 percent),
aerospace (15 percent), and automotive (7 percent), while revenues were
down in industrial products (14 percent) and building and construction
(5 percent).
Alcoa is raising its 2012 global growth forecast for the aerospace
market 3 percentage points (13-14 percent), and expects global growth in
the automotive (3-7 percent), commercial transportation (1-5 percent),
packaging (2-3 percent), building and construction (2.5 – 3.5 percent),
and industrial gas turbine (1-2 percent) markets.
Alcoa continues to project a global aluminum supply deficit in 2012 and
reaffirmed its forecast that global aluminum demand would grow 7 percent
in 2012, on top of the 10 percent growth seen in 2011.
First quarter 2012 net income was $94 million, or $0.09 per share,
compared to a net loss of $191 million, or $0.18 per share, in fourth
quarter 2011 and net income of $308 million, or $0.27 per share, in
first quarter 2011. Adjusted EBITDA for the first quarter was $624
million, up 40 percent from fourth quarter 2011, and down 35 percent
from first quarter 2011.
Profitability in Global Rolled Products rebounded in the first quarter
despite continued European weakness, with adjusted EBITDA per metric ton
an all-time high at $430, 83 percent higher than the 10-year average.
Engineered Products and Solutions continued to turn in outstanding
performance, with adjusted EBITDA margin of 19 percent, the highest on
record.
Alcoa’s Cash Sustainability Program is on track to deliver against
financial and operational targets in 2012. The Company achieved strong
first quarter productivity growth across all businesses, driven by
process improvements and procurement savings. Alcoa also achieved a
record low in working capital for the first quarter at 32 days, seven
days lower than the previous record set in 2011. Debt-to-capital ratio
stood at 36 percent, while liquidity remained strong with cash on hand
of $1.7 billion.
Capital spending was $270 million in the quarter, compared to $486
million in fourth quarter 2011. Expenditures on the Saudi Arabia joint
venture project were also on track at $71 million. An investment in
working capital to support growth in downstream end markets and
increased cash pension contributions resulted in cash used in operations
of $236 million, and negative free cash flow of $506 million.
As previously announced, Alcoa is curtailing 390,000 metric tons of its
system refining capacity to improve the Company’s competitive position
and to reflect updated internal demand following smelting curtailments
announced earlier this year.
Combined with the curtailments and closures of high-cost smelting
capacity, these actions will improve the competitiveness of Alcoa’s
Primary Products business and help the Company meet its previously
stated goal of moving down the cost curve 10 percentage points in
smelting and 7 percentage points in refining by 2015.
Segment Information
Alumina
After-tax operating income (ATOI) was $35 million, down 75 percent
compared to first quarter 2011 and a decrease of $90 million, or 72
percent from fourth quarter 2011. Adjusted EBITDA fell $82 million to
$147 million, down 36 percent sequentially. First quarter results were
impacted by pricing pressures and a weak U.S. dollar compared to fourth
quarter 2011; however, productivity improvements were strong in the
quarter, mitigating volume and cost headwinds.
Primary Metals
ATOI in the first quarter was $10 million, a decrease of $192 million
from a year-ago quarter and an increase of $42 million from the fourth
quarter of 2011. Adjusted EBITDA increased $63 million in first quarter
2012 to $134 million, an 89 percent sequential improvement. Third-party
realized aluminum price showed a 2 percent sequential improvement on
rising London Metal Exchange cash prices. Sequentially, strong
productivity improvements and improving product mix more than offset
cost headwinds for the quarter.
Global Rolled Products
Third-party revenue in the first quarter was $1.8 billion, down 2
percent from first quarter 2011 but up 9 percent sequentially. ATOI was
a first quarter record at $96 million, up 19 percent over first quarter
2011 and $70 million better sequentially. Adjusted EBITDA per metric ton
was an all-time quarterly record of $430, an increase of 17 percent from
first quarter 2011 and 91 percent sequentially. The sequential
improvement was primarily driven by solid productivity gains, favorable
mix, and increased volumes.
Engineered Products and Solutions
Revenue for the first quarter was $1.4 billion, up 11 percent from first
quarter 2011 and up 3 percent on a sequential basis. ATOI for the first
quarter was $155 million, up $25 million, or 19 percent, from first
quarter 2011 and up $33 million, or 27 percent, from fourth quarter
2011. Adjusted EBITDA margin rose in the first quarter, reaching a
record level of 19 percent. Sequentially, improved ATOI was primarily
the result of strong productivity gains and increased volume.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on April 10, 2012 to present the quarter 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 aluminum 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 120 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 superalloys. 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 10 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 31
countries across the world. More information can be found at www.alcoa.com.
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
“estimates,” “expects,” “forecasts,” “outlook,” “plans,” “predicts,”
“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 for aluminum, end market conditions, growth
opportunities for aluminum in automotive, aerospace and other
applications, or other trend projections, targeted financial results or
operating performance, and statements about Alcoa’s strategies,
objectives, goals, targets, 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 automotive and
commercial transportation, aerospace, building and construction,
packaging, consumer electronics, 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 aluminum fluoride, caustic soda or carbon
products; (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 refining and 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 from newly constructed, expanded or acquired
facilities or from international joint ventures as planned and by
targeted completion dates, including the joint venture in Saudi Arabia
or the upstream operations and investments in hydropower projects in
Brazil; (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, and 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) changes in tax rates or benefits; (m) adverse
changes in discount rates or investment returns on pension assets; and
(n) the other risk factors summarized in Alcoa’s Form 10-K for the year
ended December 31, 2011 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.
|
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, | ||||||||||
| 2011 | 2011 | 2012 | ||||||||||
| Sales | $ | 5,958 | $ | 5,989 | $ | 6,006 | ||||||
| Cost of goods sold (exclusive of expenses below) | 4,715 | 5,228 | 5,098 | |||||||||
| Selling, general administrative, and other expenses | 245 | 268 | 241 | |||||||||
| Research and development expenses | 43 | 48 | 43 | |||||||||
| Provision for depreciation, depletion, and amortization | 361 | 367 | 369 | |||||||||
| Restructuring and other charges | 6 | 232 | 10 | |||||||||
| Interest expense | 111 | 125 | 123 | |||||||||
| Other income, net | (28 | ) | (40 | ) | (16 | ) | ||||||
| Total costs and expenses | 5,453 | 6,228 | 5,868 | |||||||||
| Income (loss) from continuing operations before income taxes | 505 | (239 | ) | 138 | ||||||||
| Provision (benefit) for income taxes | 138 | (74 | ) | 39 | ||||||||
| Income (loss) from continuing operations | 367 | (165 | ) | 99 | ||||||||
| (Loss) income from discontinued operations | (1 | ) | 2 | – | ||||||||
| Net income (loss) | 366 | (163 | ) | 99 | ||||||||
| Less: Net income attributable to noncontrolling interests | 58 | 28 | 5 | |||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 308 | $ | (191 | ) | $ | 94 | |||||
|
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| Income (loss) from continuing operations | $ | 309 | $ | (193 | ) | $ | 94 | |||||
| (Loss) income from discontinued operations | (1 | ) | 2 | – | ||||||||
| Net income (loss) | $ | 308 | $ | (191 | ) | $ | 94 | |||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| Basic: | ||||||||||||
| Income (loss) from continuing operations | $ | 0.29 | $ | (0.18 | ) | $ | 0.09 | |||||
| (Loss) income from discontinued operations | – | – | – | |||||||||
| Net income (loss) | $ | 0.29 | $ | (0.18 | ) | $ | 0.09 | |||||
| Diluted: | ||||||||||||
| Income (loss) from continuing operations | $ | 0.27 | $ | (0.18 | ) | $ | 0.09 | |||||
| (Loss) income from discontinued operations | – | – | – | |||||||||
| Net income (loss) | $ | 0.27 | $ | (0.18 | ) | $ | 0.09 | |||||
| Average number of shares used to compute: | ||||||||||||
| Basic earnings per common share | 1,051,966,282 | 1,064,363,032 | 1,065,810,615 | |||||||||
| Diluted earnings per common share | 1,152,509,018 | 1,064,363,032 | 1,164,213,063 | |||||||||
| Common stock outstanding at the end of the period | 1,063,466,414 | 1,064,412,066 | 1,066,594,279 | |||||||||
| Shipments of aluminum products (metric tons) | 1,212,000 | 1,280,000 | 1,295,000 | |||||||||
|
Alcoa and subsidiaries Consolidated Balance Sheet (unaudited) (in millions) |
|||||||||||
|
December 31, |
March 31, |
||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,939 | $ | 1,749 | |||||||
|
Receivables from customers, less allowances of $46 in 2011 and $45 |
1,571 | 1,526 | |||||||||
| Other receivables | 371 | 587 | |||||||||
| Inventories | 2,899 | 3,097 | |||||||||
| Prepaid expenses and other current assets | 933 | 924 | |||||||||
| Total current assets | 7,713 | 7,883 | |||||||||
| Properties, plants, and equipment | 37,820 | 38,429 | |||||||||
| Less: accumulated depreciation, depletion, and amortization | 18,404 | 18,813 | |||||||||
| Properties, plants, and equipment, net | 19,416 | 19,616 | |||||||||
| Goodwill | 5,251 | 5,271 | |||||||||
| Investments | 1,626 | 1,750 | |||||||||
| Deferred income taxes | 3,546 | 3,615 | |||||||||
| Other noncurrent assets | 2,568 | 2,568 | |||||||||
| Total assets | $ | 40,120 | $ | 40,703 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Short-term borrowings | $ | 62 | $ | 722 | |||||||
| Commercial paper | 224 | 275 | |||||||||
| Accounts payable, trade | 2,692 | 2,734 | |||||||||
| Accrued compensation and retirement costs | 985 | 909 | |||||||||
| Taxes, including income taxes | 438 | 479 | |||||||||
| Other current liabilities | 1,167 | 1,045 | |||||||||
| Long-term debt due within one year | 445 | 128 | |||||||||
| Total current liabilities | 6,013 | 6,292 | |||||||||
| Long-term debt, less amount due within one year | 8,640 | 8,618 | |||||||||
| Accrued pension benefits | 3,261 | 3,059 | |||||||||
| Accrued other postretirement benefits | 2,583 | 2,560 | |||||||||
| Other noncurrent liabilities and deferred credits | 2,428 | 2,548 | |||||||||
| Total liabilities | 22,925 | 23,077 | |||||||||
| EQUITY | |||||||||||
| Alcoa shareholders’ equity: | |||||||||||
| Preferred stock | 55 | 55 | |||||||||
| Common stock | 1,178 | 1,178 | |||||||||
| Additional capital | 7,561 | 7,523 | |||||||||
| Retained earnings | 11,629 | 11,690 | |||||||||
| Treasury stock, at cost | (3,952 | ) | (3,898 | ) | |||||||
| Accumulated other comprehensive loss | (2,627 | ) | (2,406 | ) | |||||||
| Total Alcoa shareholders’ equity | 13,844 | 14,142 | |||||||||
| Noncontrolling interests | 3,351 | 3,484 | |||||||||
| Total equity | 17,195 | 17,626 | |||||||||
| Total liabilities and equity | $ | 40,120 | $ | 40,703 | |||||||
|
Alcoa and subsidiaries Statement of Consolidated Cash Flows (unaudited) (in millions) |
||||||||||
|
Three months ended |
||||||||||
| 2011 (a) | 2012 | |||||||||
| CASH FROM OPERATIONS | ||||||||||
| Net income | $ | 366 | $ | 99 | ||||||
| Adjustments to reconcile net income to cash from operations: | ||||||||||
| Depreciation, depletion, and amortization | 361 | 369 | ||||||||
| Deferred income taxes | (119 | ) | (100 | ) | ||||||
| Equity income, net of dividends | (4 | ) | (8 | ) | ||||||
| Restructuring and other charges | 6 | 10 | ||||||||
| Net loss from investing activities – asset sales | 1 | 2 | ||||||||
| Loss from discontinued operations | 1 | – | ||||||||
| Stock-based compensation | 23 | 19 | ||||||||
| Excess tax benefits from stock-based payment arrangements | (5 | ) | (1 | ) | ||||||
| Other | 6 | 19 | ||||||||
|
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments: |
||||||||||
| (Increase) in receivables | (406 | ) | (139 | ) | ||||||
| (Increase) in inventories | (356 | ) | (153 | ) | ||||||
| (Increase) decrease in prepaid expenses and other current assets | (71 | ) | 5 | |||||||
| Increase in accounts payable, trade | 111 | 3 | ||||||||
| (Decrease) in accrued expenses | (267 | ) | (236 | ) | ||||||
| Increase in taxes, including income taxes | 133 | 41 | ||||||||
| Pension contributions | (31 | ) | (213 | ) | ||||||
| (Increase) in noncurrent assets | (60 | ) | (39 | ) | ||||||
| Increase in noncurrent liabilities | 76 | 88 | ||||||||
| (Increase) in net assets held for sale | – | (2 | ) | |||||||
| CASH USED FOR CONTINUING OPERATIONS | (235 | ) | (236 | ) | ||||||
| CASH USED FOR DISCONTINUED OPERATIONS | (1 | ) | – | |||||||
| CASH USED FOR OPERATIONS | (236 | ) | (236 | ) | ||||||
| FINANCING ACTIVITIES | ||||||||||
|
Net change in short-term borrowings (original maturities of three months or less) |
129 | (10 | ) | |||||||
| Net change in commercial paper | – | 51 | ||||||||
| Additions to debt (original maturities greater than three months) | 5 | 730 | ||||||||
| Debt issuance costs | – | (3 | ) | |||||||
| Payments on debt (original maturities greater than three months) | (33 | ) | (414 | ) | ||||||
| Proceeds from exercise of employee stock options | 28 | 8 | ||||||||
| Excess tax benefits from stock-based payment arrangements | 5 | 1 | ||||||||
| Dividends paid to shareholders | (33 | ) | (33 | ) | ||||||
| Distributions to noncontrolling interests | (97 | ) | (26 | ) | ||||||
| Contributions from noncontrolling interests | 121 | 90 | ||||||||
| CASH PROVIDED FROM FINANCING ACTIVITIES | 125 | 394 | ||||||||
| INVESTING ACTIVITIES | ||||||||||
| Capital expenditures | (204 | ) | (270 | ) | ||||||
| Acquisitions, net of cash acquired | (239 | ) | – | |||||||
| Proceeds from the sale of assets and businesses | – | 11 | ||||||||
| Additions to investments | (118 | ) | (104 | ) | ||||||
| Sales of investments | 5 | 11 | ||||||||
| Other | 4 | 2 | ||||||||
| CASH USED FOR INVESTING ACTIVITIES | (552 | ) | (350 | ) | ||||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
7 |
2 |
||||||||
| Net change in cash and cash equivalents | (656 | ) | (190 | ) | ||||||
| Cash and cash equivalents at beginning of year | 1,543 | 1,939 | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 887 | $ | 1,749 | ||||||
| (a) |
The Statement of Consolidated Cash Flows for the three months ended March 31, 2011 was revised to reflect the movement of the Global Foil business (one remaining plant located in Brazil) from held for sale classification in the fourth quarter of 2011. Management is no longer committed to a plan to sell the location and has refocused their efforts to drive higher profitability and is evaluating expanding the functionality of the plant so that it can manufacture certain products aimed at capturing new growth in Brazil. |
|
|
Alcoa and subsidiaries Segment Information (unaudited)
(dollars in millions, except realized prices; production and |
||||||||||||||||||||||||
| 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | |||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||
| Alumina production (kmt) | 4,024 | 4,144 | 4,140 | 4,178 | 16,486 | 4,153 | ||||||||||||||||||
| Third-party alumina shipments (kmt) | 2,206 | 2,378 | 2,256 | 2,378 | 9,218 | 2,293 | ||||||||||||||||||
| Third-party sales | $ | 810 | $ | 926 | $ | 879 | $ | 847 | $ | 3,462 | $ | 775 | ||||||||||||
| Intersegment sales | $ | 633 | $ | 723 | $ | 751 | $ | 620 | $ | 2,727 | $ | 617 | ||||||||||||
| Equity income (loss) | $ | 3 | $ | 22 | $ | 2 | $ | (2 | ) | $ | 25 | $ | 1 | |||||||||||
| Depreciation, depletion, and amortization | $ | 103 | $ | 112 | $ | 117 | $ | 112 | $ | 444 | $ | 114 | ||||||||||||
| Income taxes | $ | 44 | $ | 60 | $ | 42 | $ | 33 | $ | 179 | $ | (1 | ) | |||||||||||
| After-tax operating income (ATOI) | $ | 142 | $ | 186 | $ | 154 | $ | 125 | $ | 607 | $ | 35 | ||||||||||||
| Primary Metals: | ||||||||||||||||||||||||
| Aluminum production (kmt) | 904 | 945 | 964 | 962 | 3,775 | 951 | ||||||||||||||||||
| Third-party aluminum shipments (kmt) | 698 | 724 | 754 | 805 | 2,981 | 771 | ||||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,682 |
$ |
2,830 |
$ |
2,689 |
$ |
2,374 |
$ |
2,636 |
$ |
2,433 |
||||||||||||
| Third-party sales | $ | 1,980 | $ | 2,145 | $ | 2,124 | $ | 1,991 | $ | 8,240 | $ | 1,944 | ||||||||||||
| Intersegment sales | $ | 839 | $ | 922 | $ | 798 | $ | 633 | $ | 3,192 | $ | 761 | ||||||||||||
| Equity income (loss) | $ | 1 | $ | (1 | ) | $ | (4 | ) | $ | (3 | ) | $ | (7 | ) | $ | (2 | ) | |||||||
| Depreciation, depletion, and amortization | $ | 141 | $ | 142 | $ | 137 | $ | 136 | $ | 556 | $ | 135 | ||||||||||||
| Income taxes | $ | 53 | $ | 55 | $ | 21 | $ | (37 | ) | $ | 92 | $ | (13 | ) | ||||||||||
| ATOI | $ | 202 | $ | 201 | $ | 110 | $ | (32 | ) | $ | 481 | $ | 10 | |||||||||||
| Global Rolled Products*: | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 446 | 473 | 454 | 407 | 1,780 | 452 | ||||||||||||||||||
| Third-party sales | $ | 1,892 | $ | 2,085 | $ | 1,974 | $ | 1,691 | $ | 7,642 | $ | 1,845 | ||||||||||||
| Intersegment sales | $ | 69 | $ | 62 | $ | 48 | $ | 39 | $ | 218 | $ | 44 | ||||||||||||
| Equity loss | $ | – | $ | – | $ | – | $ | (3 | ) | $ | (3 | ) | $ | (1 | ) | |||||||||
| Depreciation, depletion, and amortization | $ | 58 | $ | 60 | $ | 61 | $ | 58 | $ | 237 | $ | 57 | ||||||||||||
| Income taxes | $ | 33 | $ | 35 | $ | 26 | $ | 10 | $ | 104 | $ | 49 | ||||||||||||
| ATOI | $ | 81 | $ | 99 | $ | 60 | $ | 26 | $ | 266 | $ | 96 | ||||||||||||
| Engineered Products and Solutions: | ||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 55 | 57 | 56 | 53 | 221 | 58 | ||||||||||||||||||
| Third-party sales | $ | 1,247 | $ | 1,370 | $ | 1,373 | $ | 1,355 | $ | 5,345 | $ | 1,390 | ||||||||||||
| Equity income | $ | 1 | $ | – | $ | – | $ | – | $ | 1 | $ | – | ||||||||||||
| Depreciation, depletion, and amortization | $ | 38 | $ | 41 | $ | 40 | $ | 39 | $ | 158 | $ | 40 | ||||||||||||
| Income taxes | $ | 62 | $ | 72 | $ | 67 | $ | 59 | $ | 260 | $ | 72 | ||||||||||||
| ATOI | $ | 130 | $ | 149 | $ | 138 | $ | 122 | $ | 539 | $ | 155 | ||||||||||||
|
Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa: |
||||||||||||||||||||||||
| Total segment ATOI | $ | 555 | $ | 635 | $ | 462 | $ | 241 | $ | 1,893 | $ | 296 | ||||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||
| Impact of LIFO | (24 | ) | (27 | ) | 2 | 11 | (38 | ) | – | |||||||||||||||
| Interest expense | (72 | ) | (106 | ) | (81 | ) | (81 | ) | (340 | ) | (80 | ) | ||||||||||||
| Noncontrolling interests | (58 | ) | (55 | ) | (53 | ) | (28 | ) | (194 | ) | (5 | ) | ||||||||||||
| Corporate expense | (67 | ) | (76 | ) | (76 | ) | (71 | ) | (290 | ) | (64 | ) | ||||||||||||
| Restructuring and other charges | (6 | ) | (22 | ) | (7 | ) | (161 | ) | (196 | ) | (7 | ) | ||||||||||||
| Discontinued operations | (1 | ) | (4 | ) | – | 2 | (3 | ) | – | |||||||||||||||
| Other | (19 | ) | (23 | ) | (75 | ) | (104 | ) | (221 | ) | (46 | ) | ||||||||||||
| Consolidated net income (loss) attributable to Alcoa |
$ |
308 |
$ |
322 |
$ |
172 |
$ |
(191 |
) |
$ |
611 |
$ |
94 |
|||||||||||
|
The difference between certain segment totals and consolidated amounts is in Corporate. |
|
* In the first quarter of 2012, Alcoa changed the name of the |
|
Alcoa and subsidiaries Calculation of Financial Measures (unaudited) (dollars in millions) |
||||||||||||
| Adjusted EBITDA Margin | Quarter ended | |||||||||||
|
March 31, |
December 31, |
March 31, |
||||||||||
| Net income (loss) attributable to Alcoa | $ | 308 | $ | (191 | ) | $ | 94 | |||||
| Add: | ||||||||||||
| Net income attributable to noncontrolling interests | 58 | 28 | 5 | |||||||||
| Loss (income) from discontinued operations | 1 | (2 | ) | – | ||||||||
| Provision (benefit) for income taxes | 138 | (74 | ) | 39 | ||||||||
| Other income, net | (28 | ) | (40 | ) | (16 | ) | ||||||
| Interest expense | 111 | 125 | 123 | |||||||||
| Restructuring and other charges | 6 | 232 | 10 | |||||||||
| Provision for depreciation, depletion, and amortization | 361 | 367 | 369 | |||||||||
| Adjusted EBITDA | $ | 955 | $ | 445 | $ | 624 | ||||||
| Sales | $ | 5,958 | $ | 5,989 | $ | 6,006 | ||||||
| Adjusted EBITDA Margin | 16.0 | % | 7.4 | % | 10.4 | % | ||||||
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 | ) | $ | 1,142 | $ | (236 | ) | ||||||||
| Capital expenditures |
(204 |
) |
(486 |
) |
(270 |
) |
||||||||||
| Free cash flow | $ | (440 | ) | $ | 656 | $ | (506 | ) | ||||||||
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 | Quarter ended | ||||||
|
March 31, |
|||||||
|
Income |
Diluted EPS | ||||||
| Net income attributable to Alcoa | $ | 94 | $ | 0.09 | |||
| Loss from discontinued operations | – | ||||||
| Income from continuing operations attributable to Alcoa |
94 |
0.09 |
|||||
| Restructuring and other charges | 7 | ||||||
| Discrete tax items | – | ||||||
| Other special items* | 4 | ||||||
| Income from continuing operations attributable to Alcoa – as adjusted |
$ |
105 |
0.10 |
||||
Income from continuing operations 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 Income from
continuing operations attributable to Alcoa determined under GAAP as
well as Income from continuing operations attributable to Alcoa – as
adjusted.
* Other special items include a net unfavorable change in certain
mark-to-market energy derivative contracts.
| Days Working Capital | Quarter ended | |||||||||||
|
March 31, |
December 31, |
March 31, |
||||||||||
| Receivables from customers, less allowances | $ | 2,030 | $ | 1,571 | $ | 1,526 | ||||||
| Add: Deferred purchase price receivable* | – | – | 254 | |||||||||
| Receivables from customers, less allowances, as adjusted |
2,030 |
1,571 |
1,780 |
|||||||||
| Add: Inventories | 3,018 | 2,899 | 3,097 | |||||||||
| Less: Accounts payable, trade | 2,495 | 2,692 | 2,734 | |||||||||
| Working Capital | $ | 2,553 | $ | 1,778 | $ | 2,143 | ||||||
| Sales | $ | 5,958 | $ | 5,989 | $ | 6,006 | ||||||
| Days Working Capital | 39 | 27 | 32 | |||||||||
|
Days Working Capital = Working Capital divided by (Sales/number of days in the quarter). |
||
| * |
On March 30, 2012, Alcoa finalized an arrangement with a financial |
|
|
Alcoa and subsidiaries Calculation of Financial Measures (unaudited), continued (dollars in millions, except per metric ton amounts) |
|||||||||||||||||||||||||||||
| Segment Measures | Alumina | Primary Metals | Global Rolled Products |
Engineered |
|||||||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | ||||||||||||||||||||||||||||
|
December 31,
2011 |
March 31,
2012 |
December 31,
2011 |
March 31,
2012 |
March 31,
2011 |
December 31,
2011 |
March 31,
2012 |
March 31, |
||||||||||||||||||||||
| After-tax operating income (ATOI) | $ | 125 | $ | 35 | $ | (32 | ) | $ | 10 | $ | 81 | $ | 26 | $ | 96 | $ | 155 | ||||||||||||
| Add: | |||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization |
112 |
114 |
136 |
135 |
58 |
58 |
57 |
40 |
|||||||||||||||||||||
| Equity loss (income) |
2 |
(1 |
) |
3 |
2 |
– |
3 |
1 |
– |
||||||||||||||||||||
| Income taxes | 33 | (1 | ) | (37 | ) | (13 | ) | 33 | 10 | 49 | 72 | ||||||||||||||||||
| Other | (43 | ) | – | 1 | – | 1 | 1 | – | – | ||||||||||||||||||||
| Adjusted EBITDA |
$ |
229 |
$ |
147 |
$ |
71 |
$ |
134 |
$ |
173 |
$ |
98 |
$ |
203 |
$ |
267 |
|||||||||||||
| Production (thousand metric tons) (kmt) |
4,178 |
4,153 |
962 |
951 |
|||||||||||||||||||||||||
| Adjusted EBITDA / Production ($ per metric ton) |
$ |
55 |
$ |
35 |
$ |
74 |
$ |
141 |
|||||||||||||||||||||
|
Total shipments (thousand metric tons) (kmt) |
470 |
436 |
472 |
||||||||||||||||||||||||||
| Adjusted EBITDA/Total shipments ($ per metric ton) |
$ |
368 |
$ |
225 |
$ |
430 |
|||||||||||||||||||||||
| Total sales | $ | 1,390 | |||||||||||||||||||||||||||
| Adjusted EBITDA Margin |
19 |
% |
|||||||||||||||||||||||||||
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.