Strong Revenue, Positive Free Cash Flow, Despite Lower Aluminum Prices
2Q 2012 Highlights
-
Earnings per share of $0.00 based on a $2 million loss from continuing
operations; excluding special items, income from continuing operations
of $61 million, or $0.06 per share -
Revenue of $6.0 billion, steady sequentially despite decline in
realized aluminum prices -
Record quarterly results in Engineered Products and Solutions; record
first half results in Global Rolled Products, Engineered Products and
Solutions - Cash from operations of $537 million
- Positive free cash flow of $246 million
- Days working capital a record low for second quarter
- Strong liquidity with cash on hand of $1.7 billion
-
Company reaffirms global aluminum demand growth projection of 7
percent and a global aluminum supply deficit in 2012
NEW YORK–Alcoa (NYSE:AA) today reported $0.00 earnings per share, based on a loss
from continuing operations of $2 million, which includes special items
of $63 million. Excluding the impact of special items, income from
continuing operations was $61 million, or $0.06 per share.
The company reported strong revenue of $6.0 billion, solid free cash
flow and lower debt despite a 4 percent decline in realized aluminum
prices sequentially and 18 percent year-on-year.
“Alcoa maintained revenue strength and solid liquidity by driving high
profitability in our mid and downstream businesses and by reducing costs
and improving performance in our upstream businesses,” said Klaus
Kleinfeld, Chairman and CEO.
“Although aluminum prices are down, the fundamentals of the aluminum
market remain sound with strong demand and tight supply, and Alcoa is
successfully capitalizing on accelerating demand in high-growth end
markets such as aerospace and automotive.”
Second quarter 2012 net loss of $2 million, or $0.00 per share, compared
to net income of $94 million, or $0.09 per share, in first quarter 2012
and net income of $322 million, or $0.28 per share, in second quarter
2011. Adjusted EBITDA for the second quarter was $517 million, down 17
percent from first quarter 2012, and 50 percent from second quarter 2011.
Special items in second quarter 2012 included reserves for environmental
remediation, uninsured losses related to the Massena fire, a net
discrete tax charge, and restructuring and other charges. In addition,
during the quarter, Alcoa proposed to settle the Alba civil suit by
offering Alba a cash payment of $45 million. Alcoa has also offered Alba
a long-term alumina supply contract. Based on the cash offer, Alcoa
recorded a $45 million charge. Alcoa currently estimates an additional
possible charge of up to $75 million to settle the suit. In addition,
Alcoa has been in dialogue with the Department of Justice and the
Securities and Exchange Commission regarding their investigations. If a
settlement of the government’s investigations can be reached, it is
probable that the amount would be material in a particular period to
Alcoa’s results of operations.
Second quarter 2012 revenue was $6.0 billion, steady sequentially and
down 9 percent compared with second quarter 2011, primarily due to an 18
and 17 percent year-on-year decline in the realized metal price and
realized alumina price, respectively.
Alcoa recorded revenue growth in the second quarter across global end
markets, including packaging (5 percent), aerospace (4 percent), and
commercial transportation (3 percent), compared to first quarter 2012.
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.
Strength in the midstream and downstream businesses continued to
mitigate volatility in the upstream businesses. Engineered Products and
Solutions once again turned in record results, with second quarter
adjusted EBITDA margin at 19.4 percent, the highest to date. Despite
continued European weakness, Global Rolled Products achieved record
first half adjusted EBITDA per metric ton of $409, 74 percent higher
than the 10-year average, and record first half ATOI of $191 million.
For the first half of 2012, revenues were $12.0 billion, down 5 percent
over the first half of 2011. Income from continuing operations in the
first half of 2012 was $92 million, or $0.08 per share, compared to $635
million, or $0.56 per share, in the first half of 2011. Net income in
the first half of 2012 was $92 million, or $0.08 per share, compared
with net income in the first half of 2011 of $630 million, or $0.55 per
share.
Alcoa continues to deliver on its Cash Sustainability Program in 2012,
maintaining a stable balance sheet in a volatile economic environment.
The Company generated free cash flow in the quarter of $246 million, an
improvement of $752 million sequentially. Following the record low in
days working capital achieved for first quarter 2012, Alcoa also
achieved a record low in working capital for the second quarter at 33
days, five days lower than the previous second quarter record set in
2011. The quarterly trend in reduction of days working capital has been
ongoing since first quarter 2009.
The Company continued strong productivity growth across all businesses
this quarter, driven by higher utilization rates, process innovations,
lower scrap rates, and usage reductions.
Debt-to-capital ratio stood at 36.1 percent, while liquidity remained
strong with cash on hand of $1.7 billion. Capital spending was $291
million in the quarter, compared to $270 million in first quarter 2012.
Expenditures on the Saudi Arabia joint venture project were also on
track at $55 million.
Alcoa remains on track to meet its 2012 pension obligations, with
year-to-date cash contributions of $352 million representing more than
50 percent of total 2012 estimated payments.
Alcoa is executing on its previously announced curtailments in the
upstream business, improving competitiveness and driving toward the
Company’s stated goal of moving down the cost curve 10 percentage points
in smelting and 7 percentage points in refining by 2015. In second
quarter 2012, 390,000 metric tons of Alcoa’s system refining capacity
was taken offline. Previously announced smelter curtailments are on
track and expected to be complete by the end of the year.
Segment Information
Alumina
After-tax operating income (ATOI) was $23 million, down $12 million from
first quarter 2012 and $163 million versus second quarter 2011. Adjusted
EBITDA was $127 million, down from $147 million in first quarter 2012.
Sequentially, continued productivity gains and favorable currency offset
the impact of lower volumes due to curtailments, and higher costs from
raw materials, fuel oil, and planned maintenance.
Primary Metals
ATOI in the second quarter was a negative $3 million, a $13 million
decrease sequentially and a $204 million decrease from the year-ago
quarter. Adjusted EBITDA decreased to $119 million from $134 million in
the previous quarter. Third-party realized prices during the second
quarter were down 4 percent sequentially and 18 percent year-over-year.
Sequentially, regional premiums and continued strength in our
value-added sales helped offset the decrease in aluminum prices this
quarter. Strong performance improvements delivered sequential
productivity gains, in addition to reductions in raw materials and
energy costs.
Global Rolled Products
ATOI for the second quarter was $95 million, down 1 percent sequentially
and 4 percent compared with second quarter 2011. Sequentially, higher
volumes and productivity gains offset less favorable price/mix and
increased costs. Third party shipments were up 7 percent over first
quarter 2012, with adjusted EBITDA per metric ton of $390. Days working
capital was a record for the second quarter at 40.3 days, down 6 days
year-over-year.
Engineered Products and Solutions
ATOI in the second quarter was $160 million, up $5 million, or 3
percent, sequentially from first quarter 2012 and up $11 million, or 7
percent, from the year-ago quarter despite the negative impact of the
Massena fire. Adjusted EBITDA of $276 million increased $9 million
sequentially and $15 million year-on-year. The sequential increase in
ATOI was driven by continued productivity improvements and improved
volume, partially offset by higher costs and the unfavorable impact from
Massena. Despite the Massena impact, adjusted EBITDA margin was still a
quarterly record at 19.4 percent.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time
on July 9, 2012 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 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, Form 10-Q for the quarter ended March 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.
|
Alcoa and subsidiaries |
||||||||||||
| Quarter ended | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2011 | 2012 | 2012 | ||||||||||
| Sales | $ | 6,585 | $ | 6,006 | $ | 5,963 | ||||||
| Cost of goods sold (exclusive of expenses below) | 5,247 | 5,098 | 5,154 | |||||||||
| Selling, general administrative, and other expenses | 253 | 241 | 245 | |||||||||
| Research and development expenses | 46 | 43 | 47 | |||||||||
| Provision for depreciation, depletion, and amortization | 375 | 369 | 363 | |||||||||
| Restructuring and other charges | 34 | 10 | 15 | |||||||||
| Interest expense | 163 | 123 | 123 | |||||||||
| Other (income) expenses, net | (50 | ) | (16 | ) | 22 | |||||||
| Total costs and expenses | 6,068 | 5,868 | 5,969 | |||||||||
| Income (loss) from continuing operations before income taxes | 517 | 138 | (6 | ) | ||||||||
| Provision for income taxes | 136 | 39 | 13 | |||||||||
| Income (loss) from continuing operations | 381 | 99 | (19 | ) | ||||||||
| Loss from discontinued operations | (4 | ) | – | – | ||||||||
| Net income (loss) | 377 | 99 | (19 | ) | ||||||||
| Less: Net income (loss) attributable to noncontrolling interests | 55 | 5 | (17 | ) | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA | $ | 322 | $ | 94 | $ | (2 | ) | |||||
|
AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| Income (loss) from continuing operations | $ | 326 | $ | 94 | $ | (2 | ) | |||||
| Loss from discontinued operations | (4 | ) | – | – | ||||||||
| Net income (loss) | $ | 322 | $ | 94 | $ | (2 | ) | |||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||||||
| Basic: | ||||||||||||
| Income (loss) from continuing operations | $ | 0.31 | $ | 0.09 | $ | – | ||||||
| Loss from discontinued operations | (0.01 | ) | – | – | ||||||||
| Net income (loss) | $ | 0.30 | $ | 0.09 | $ | – | ||||||
| Diluted: | ||||||||||||
| Income (loss) from continuing operations | $ | 0.28 | $ | 0.09 | $ | – | ||||||
| Loss from discontinued operations | – | – | – | |||||||||
| Net income (loss) | $ | 0.28 | $ | 0.09 | $ | – | ||||||
| Average number of shares used to compute: | ||||||||||||
| Basic earnings per common share | 1,063,850,843 | 1,065,810,615 | 1,066,763,022 | |||||||||
| Diluted earnings per common share | 1,165,059,389 | 1,164,213,063 | 1,066,763,022 | |||||||||
| Shipments of aluminum products (metric tons) | 1,268,000 | 1,295,000 | 1,305,000 | |||||||||
|
Alcoa and subsidiaries |
||||||||
| Six months ended | ||||||||
| June 30, | ||||||||
| 2011 | 2012 | |||||||
| Sales | $ | 12,543 | $ | 11,969 | ||||
| Cost of goods sold (exclusive of expenses below) | 9,962 | 10,252 | ||||||
| Selling, general administrative, and other expenses | 498 | 486 | ||||||
| Research and development expenses | 89 | 90 | ||||||
| Provision for depreciation, depletion, and amortization | 736 | 732 | ||||||
| Restructuring and other charges | 40 | 25 | ||||||
| Interest expense | 274 | 246 | ||||||
| Other (income) expenses, net | (78 | ) | 6 | |||||
| Total costs and expenses | 11,521 | 11,837 | ||||||
| Income from continuing operations before income taxes | 1,022 | 132 | ||||||
| Provision for income taxes | 274 | 52 | ||||||
| Income from continuing operations | 748 | 80 | ||||||
| Loss from discontinued operations | (5 | ) | – | |||||
| Net income | 743 | 80 | ||||||
| Less: Net income (loss) attributable to noncontrolling interests | 113 | (12 | ) | |||||
| NET INCOME ATTRIBUTABLE TO ALCOA | $ | 630 | $ | 92 | ||||
| AMOUNTS ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: | ||||||||
| Income from continuing operations | $ | 635 | $ | 92 | ||||
| Loss from discontinued operations | (5 | ) | – | |||||
| Net income | $ | 630 | $ | 92 | ||||
|
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS: |
||||||||
| Basic: | ||||||||
| Income from continuing operations | $ | 0.60 | $ | 0.09 | ||||
| Loss from discontinued operations | (0.01 | ) | – | |||||
| Net income | $ | 0.59 | $ | 0.09 | ||||
| Diluted: | ||||||||
| Income from continuing operations | $ | 0.56 | $ | 0.08 | ||||
| Loss from discontinued operations | (0.01 | ) | – | |||||
| Net income | $ | 0.55 | $ | 0.08 | ||||
| Average number of shares used to compute: | ||||||||
| Basic earnings per common share | 1,057,837,076 | 1,066,242,896 | ||||||
| Diluted earnings per common share | 1,158,709,043 | 1,075,454,724 | ||||||
| Common stock outstanding at the end of the period | 1,064,103,706 | 1,066,881,927 | ||||||
| Shipments of aluminum products (metric tons) | 2,480,000 | 2,600,000 | ||||||
|
Alcoa and subsidiaries |
||||||||
|
December 31,
2011 (a) |
June 30,
2012 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,939 | $ | 1,712 | ||||
|
Receivables from customers, less allowances of $46 in 2011 and $42 |
1,571 | 1,575 | ||||||
| Other receivables | 371 | 481 | ||||||
| Inventories | 2,899 | 3,051 | ||||||
| Prepaid expenses and other current assets | 933 | 948 | ||||||
| Total current assets | 7,713 | 7,767 | ||||||
| Properties, plants, and equipment | 37,608 | 37,219 | ||||||
| Less: accumulated depreciation, depletion, and amortization | 18,326 | 18,483 | ||||||
| Properties, plants, and equipment, net | 19,282 | 18,736 | ||||||
| Goodwill | 5,157 | 5,141 | ||||||
| Investments | 1,626 | 1,775 | ||||||
| Deferred income taxes | 3,546 | 3,443 | ||||||
| Other noncurrent assets | 2,796 | 2,636 | ||||||
| Total assets | $ | 40,120 | $ | 39,498 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 62 | $ | 559 | ||||
| Commercial paper | 224 | 318 | ||||||
| Accounts payable, trade | 2,692 | 2,633 | ||||||
| Accrued compensation and retirement costs | 985 | 942 | ||||||
| Taxes, including income taxes | 438 | 406 | ||||||
| Other current liabilities | 1,167 | 1,175 | ||||||
| Long-term debt due within one year | 445 | 118 | ||||||
| Total current liabilities | 6,013 | 6,151 | ||||||
| Long-term debt, less amount due within one year | 8,640 | 8,547 | ||||||
| Accrued pension benefits | 3,261 | 2,899 | ||||||
| Accrued other postretirement benefits | 2,583 | 2,536 | ||||||
| Other noncurrent liabilities and deferred credits | 2,428 | 2,451 | ||||||
| Total liabilities | 22,925 | 22,584 | ||||||
| EQUITY | ||||||||
| Alcoa shareholders’ equity: | ||||||||
| Preferred stock | 55 | 55 | ||||||
| Common stock | 1,178 | 1,178 | ||||||
| Additional capital | 7,561 | 7,538 | ||||||
| Retained earnings | 11,629 | 11,655 | ||||||
| Treasury stock, at cost | (3,952 | ) | (3,890 | ) | ||||
| Accumulated other comprehensive loss | (2,627 | ) | (2,878 | ) | ||||
| Total Alcoa shareholders’ equity | 13,844 | 13,658 | ||||||
| Noncontrolling interests | 3,351 | 3,256 | ||||||
| Total equity | 17,195 | 16,914 | ||||||
| Total liabilities and equity | $ | 40,120 | $ | 39,498 | ||||
| (a) |
In June 2012, Alcoa reached an agreement to sell its Tapoco Hydroelectric Project. As a result, the Consolidated Balance Sheet as of December 31, 2011 was revised to reflect the movement of the Tapoco Hydroelectric Project’s assets to held for sale classification in the second quarter of 2012. Assets held for sale are included in the Other noncurrent assets line item. |
|
|
Alcoa and subsidiaries |
||||||||
|
Six months ended
June 30, |
||||||||
| 2011 (b) | 2012 | |||||||
| CASH FROM OPERATIONS | ||||||||
| Net income | $ | 743 | $ | 80 | ||||
| Adjustments to reconcile net income to cash from operations: | ||||||||
| Depreciation, depletion, and amortization | 736 | 733 | ||||||
| Deferred income taxes | (42 | ) | (103 | ) | ||||
| Equity income, net of dividends | (27 | ) | (9 | ) | ||||
| Restructuring and other charges | 40 | 25 | ||||||
| Net loss from investing activities – asset sales | 1 | 1 | ||||||
| Loss from discontinued operations | 5 | – | ||||||
| Stock-based compensation | 45 | 39 | ||||||
| Excess tax benefits from stock-based payment arrangements | (6 | ) | (1 | ) | ||||
| Other | 5 | 83 | ||||||
|
Changes in assets and liabilities, excluding effects of |
||||||||
| (Increase) in receivables | (438 | ) | (215 | ) | ||||
| (Increase) in inventories | (522 | ) | (188 | ) | ||||
| (Increase) decrease in prepaid expenses and other current assets | (22 | ) | 13 | |||||
| Increase (decrease) in accounts payable, trade | 196 | (33 | ) | |||||
| (Decrease) in accrued expenses | (146 | ) | (75 | ) | ||||
| Increase (decrease) in taxes, including income taxes | 78 | (9 | ) | |||||
| Pension contributions | (103 | ) | (352 | ) | ||||
| (Increase) decrease in noncurrent assets | (104 | ) | 74 | |||||
| Increase in noncurrent liabilities | 129 | 242 | ||||||
| (Increase) in net assets held for sale | – | (2 | ) | |||||
| CASH PROVIDED FROM CONTINUING OPERATIONS | 568 | 303 | ||||||
| CASH USED FOR DISCONTINUED OPERATIONS | (6 | ) | (2 | ) | ||||
| CASH PROVIDED FROM OPERATIONS | 562 | 301 | ||||||
| FINANCING ACTIVITIES | ||||||||
|
Net change in short-term borrowings (original maturities of three months or less) |
(28 | ) | 44 | |||||
| Net change in commercial paper | – | 94 | ||||||
| Additions to debt (original maturities greater than three months) | 1,254 | 735 | ||||||
| Debt issuance costs | (7 | ) | (3 | ) | ||||
| Payments on debt (original maturities greater than three months) | (1,095 | ) | (659 | ) | ||||
| Proceeds from exercise of employee stock options | 34 | 10 | ||||||
| Excess tax benefits from stock-based payment arrangements | 6 | 1 | ||||||
| Dividends paid to shareholders | (65 | ) | (66 | ) | ||||
| Distributions to noncontrolling interests | (187 | ) | (70 | ) | ||||
| Contributions from noncontrolling interests | 128 | 110 | ||||||
| CASH PROVIDED FROM FINANCING ACTIVITIES | 40 | 196 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (476 | ) | (561 | ) | ||||
| Acquisitions, net of cash acquired | (240 | ) | – | |||||
| Proceeds from the sale of assets and businesses | 1 | 13 | ||||||
| Additions to investments | (199 | ) | (187 | ) | ||||
| Sales of investments | 5 | 11 | ||||||
| Other | 7 | 20 | ||||||
| CASH USED FOR INVESTING ACTIVITIES | (902 | ) | (704 | ) | ||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
17 |
(20 |
) |
|||||
| Net change in cash and cash equivalents | (283 | ) | (227 | ) | ||||
| Cash and cash equivalents at beginning of year | 1,543 | 1,939 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,260 | $ | 1,712 | ||||
| (b) |
The Statement of Consolidated Cash Flows for the six months ended June 30, 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 |
||||||||||||||||||||||||||||
| 1Q11 | 2Q11 | 3Q11 | 4Q11 | 2011 | 1Q12 | 2Q12 | ||||||||||||||||||||||
| Alumina: | ||||||||||||||||||||||||||||
| Alumina production (kmt) | 4,024 | 4,144 | 4,140 | 4,178 | 16,486 | 4,153 | 4,033 | |||||||||||||||||||||
| Third-party alumina shipments (kmt) | 2,206 | 2,378 | 2,256 | 2,378 | 9,218 | 2,293 | 2,194 | |||||||||||||||||||||
| Third-party sales | $ | 810 | $ | 926 | $ | 879 | $ | 847 | $ | 3,462 | $ | 775 | $ | 750 | ||||||||||||||
| Intersegment sales | $ | 633 | $ | 723 | $ | 751 | $ | 620 | $ | 2,727 | $ | 617 | $ | 576 | ||||||||||||||
| Equity income (loss) | $ | 3 | $ | 22 | $ | 2 | $ | (2 | ) | $ | 25 | $ | 1 | $ | 1 | |||||||||||||
| Depreciation, depletion, and amortization | $ | 103 | $ | 112 | $ | 117 | $ | 112 | $ | 444 | $ | 114 | $ | 114 | ||||||||||||||
| Income taxes | $ | 44 | $ | 60 | $ | 42 | $ | 33 | $ | 179 | $ | (1 | ) | $ | (6 | ) | ||||||||||||
| After-tax operating income (ATOI) | $ | 142 | $ | 186 | $ | 154 | $ | 125 | $ | 607 | $ | 35 | $ | 23 | ||||||||||||||
| Primary Metals: | ||||||||||||||||||||||||||||
| Aluminum production (kmt) | 904 | 945 | 964 | 962 | 3,775 | 951 | 941 | |||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 698 | 724 | 754 | 805 | 2,981 | 771 | 749 | |||||||||||||||||||||
| Alcoa’s average realized price per metric ton of aluminum |
$ |
2,682 |
$ |
2,830 |
$ |
2,689 |
$ |
2,374 |
$ |
2,636 |
$ |
2,433 |
$ |
2,329 |
||||||||||||||
| Third-party sales | $ | 1,980 | $ | 2,145 | $ | 2,124 | $ | 1,991 | $ | 8,240 | $ | 1,944 | $ | 1,804 | ||||||||||||||
| Intersegment sales | $ | 839 | $ | 922 | $ | 798 | $ | 633 | $ | 3,192 | $ | 761 | $ | 782 | ||||||||||||||
| Equity income (loss) | $ | 1 | $ | (1 | ) | $ | (4 | ) | $ | (3 | ) | $ | (7 | ) | $ | (2 | ) | $ | (9 | ) | ||||||||
| Depreciation, depletion, and amortization | $ | 141 | $ | 142 | $ | 137 | $ | 136 | $ | 556 | $ | 135 | $ | 133 | ||||||||||||||
| Income taxes | $ | 53 | $ | 55 | $ | 21 | $ | (37 | ) | $ | 92 | $ | (13 | ) | $ | (19 | ) | |||||||||||
| ATOI | $ | 202 | $ | 201 | $ | 110 | $ | (32 | ) | $ | 481 | $ | 10 | $ | (3 | ) | ||||||||||||
| Global Rolled Products: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 446 | 473 | 454 | 407 | 1,780 | 452 | 484 | |||||||||||||||||||||
| Third-party sales | $ | 1,892 | $ | 2,085 | $ | 1,974 | $ | 1,691 | $ | 7,642 | $ | 1,845 | $ | 1,913 | ||||||||||||||
| Intersegment sales | $ | 69 | $ | 62 | $ | 48 | $ | 39 | $ | 218 | $ | 44 | $ | 44 | ||||||||||||||
| Equity loss | $ | – | $ | – | $ | – | $ | (3 | ) | $ | (3 | ) | $ | (1 | ) | $ | (2 | ) | ||||||||||
| Depreciation, depletion, and amortization | $ | 58 | $ | 60 | $ | 61 | $ | 58 | $ | 237 | $ | 57 | $ | 57 | ||||||||||||||
| Income taxes | $ | 33 | $ | 35 | $ | 26 | $ | 10 | $ | 104 | $ | 49 | $ | 43 | ||||||||||||||
| ATOI | $ | 81 | $ | 99 | $ | 60 | $ | 26 | $ | 266 | $ | 96 | $ | 95 | ||||||||||||||
| Engineered Products and Solutions: | ||||||||||||||||||||||||||||
| Third-party aluminum shipments (kmt) | 55 | 57 | 56 | 53 | 221 | 58 | 59 | |||||||||||||||||||||
| Third-party sales | $ | 1,247 | $ | 1,370 | $ | 1,373 | $ | 1,355 | $ | 5,345 | $ | 1,390 | $ | 1,420 | ||||||||||||||
| Equity income | $ | 1 | $ | – | $ | – | $ | – | $ | 1 | $ | – | $ | – | ||||||||||||||
| Depreciation, depletion, and amortization | $ | 38 | $ | 41 | $ | 40 | $ | 39 | $ | 158 | $ | 40 | $ | 39 | ||||||||||||||
| Income taxes | $ | 62 | $ | 72 | $ | 67 | $ | 59 | $ | 260 | $ | 72 | $ | 77 | ||||||||||||||
| ATOI | $ | 130 | $ | 149 | $ | 138 | $ | 122 | $ | 539 | $ | 155 | $ | 160 | ||||||||||||||
|
Reconciliation of ATOI to consolidated |
||||||||||||||||||||||||||||
| Total segment ATOI | $ | 555 | $ | 635 | $ | 462 | $ | 241 | $ | 1,893 | $ | 296 | $ | 275 | ||||||||||||||
| Unallocated amounts (net of tax): | ||||||||||||||||||||||||||||
| Impact of LIFO | (24 | ) | (27 | ) | 2 | 11 | (38 | ) | – | 19 | ||||||||||||||||||
| Interest expense | (72 | ) | (106 | ) | (81 | ) | (81 | ) | (340 | ) | (80 | ) | (80 | ) | ||||||||||||||
| Noncontrolling interests | (58 | ) | (55 | ) | (53 | ) | (28 | ) | (194 | ) | (5 | ) | 17 | |||||||||||||||
| Corporate expense | (67 | ) | (76 | ) | (76 | ) | (71 | ) | (290 | ) | (64 | ) | (69 | ) | ||||||||||||||
| Restructuring and other charges | (6 | ) | (22 | ) | (7 | ) | (161 | ) | (196 | ) | (7 | ) | (10 | ) | ||||||||||||||
| Discontinued operations | (1 | ) | (4 | ) | – | 2 | (3 | ) | – | – | ||||||||||||||||||
| Other | (19 | ) | (23 | ) | (75 | ) | (104 | ) | (221 | ) | (46 | ) | (154 | ) | ||||||||||||||
| Consolidated net income (loss) attributable to Alcoa |
$ |
308 |
$ |
322 |
$ |
172 |
$ |
(191 |
) |
$ |
611 |
$ |
94 |
$ |
(2 |
) |
||||||||||||
The difference between certain segment totals and consolidated amounts
is in Corporate.
|
Alcoa and subsidiaries |
||||||||||||
| Adjusted EBITDA Margin | Quarter ended | |||||||||||
|
June 30,
2011 |
March 31,
2012 |
June 30,
2012 |
||||||||||
| Net income attributable to Alcoa | $ | 322 | $ | 94 | $ | (2 | ) | |||||
| Add: | ||||||||||||
| Net income (loss) attributable to noncontrolling interests |
55 |
5 |
(17 |
) |
||||||||
| Loss from discontinued operations | 4 | – | – | |||||||||
| Provision for income taxes | 136 | 39 | 13 | |||||||||
| Other (income) expenses, net | (50 | ) | (16 | ) | 22 | |||||||
| Interest expense | 163 | 123 | 123 | |||||||||
| Restructuring and other charges | 34 | 10 | 15 | |||||||||
| Provision for depreciation, depletion, and amortization | 375 | 369 | 363 | |||||||||
| Adjusted EBITDA | $ | 1,039 | $ | 624 | $ | 517 | ||||||
| Sales | $ | 6,585 | $ | 6,006 | $ | 5,963 | ||||||
| Adjusted EBITDA Margin | 15.8 | % | 10.4 | % | 8.7 | % | ||||||
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 | |||||||||||
|
June 30,
2011 |
March 31,
2012 |
June 30,
2012 |
||||||||||
| Cash from operations | $ | 798 | $ | (236 | ) | $ | 537 | |||||
| Capital expenditures |
(272 |
) |
(270 |
) |
(291 |
) |
||||||
| Free cash flow | $ | 526 | $ | (506 | ) | $ | 246 | |||||
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 |
||||||||
| Adjusted Income | Quarter ended | |||||||
|
June 30,
2012 |
||||||||
|
(Loss)
Income |
Diluted |
|||||||
| Net loss attributable to Alcoa | $ | (2 | ) | $ | – | |||
| Loss from discontinued operations | – | |||||||
| Loss from continuing operations attributable to Alcoa |
(2 |
) |
– |
|||||
| Restructuring and other charges | 10 | |||||||
| Discrete tax items* | 10 | |||||||
| Other special items** | 43 | |||||||
| Income from continuing operations attributable to Alcoa – as adjusted |
$ |
61 |
0.06 |
|||||
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 Loss from
continuing operations attributable to Alcoa determined under GAAP as
well as Income from continuing operations attributable to Alcoa – as
adjusted.
|
* |
Discrete tax items include a charge for the true-up of a deferred |
|
|
** |
Other special items include a litigation reserve ($18), uninsured |
|
| Days Working Capital | Quarter ended | |||||||||
|
June 30,
2011 |
March 31,
2012 |
June 30,
2012 |
||||||||
| Receivables from customers, less allowances | $ | 2,114 | $ | 1,526 | $ | 1,575 | ||||
| Add: Deferred purchase price receivable* | – | 254 | 141 | |||||||
| Receivables from customers, less allowances, as adjusted |
2,114 |
1,780 |
1,716 |
|||||||
| Add: Inventories | 3,227 | 3,097 | 3,051 | |||||||
| Less: Accounts payable, trade | 2,614 | 2,734 | 2,633 | |||||||
| Working Capital | $ | 2,727 | $ | 2,143 | $ | 2,134 | ||||
| Sales | $ | 6,585 | $ | 6,006 | $ | 5,963 | ||||
| Days Working Capital | 38 | 32 | 33 | |||||||
Days Working Capital = Working Capital divided by (Sales/number of days
in the quarter).
|
* |
The deferred purchase price receivable relates to an arrangement |
|
Alcoa and subsidiaries |
||||||||||||||||||||||||||||||
| Segment Measures | Alumina | Primary Metals | Global Rolled Products |
Engineered |
||||||||||||||||||||||||||
| Adjusted EBITDA | Quarter ended | |||||||||||||||||||||||||||||
|
March 31,
2012 |
June 30,
2012 |
March 31,
2012 |
June 30,
2012 |
June 30,
2011 |
March 31,
2012 |
June 30,
2012 |
June 30,
2012 |
|||||||||||||||||||||||
|
After-tax operating income (ATOI) |
$ | 35 | $ | 23 | $ | 10 | $ | (3 | ) | $ | 99 | $ | 96 | $ | 95 | $ | 160 | |||||||||||||
| Add: | ||||||||||||||||||||||||||||||
|
Depreciation, depletion, and amortization |
114 |
114 |
135 |
133 |
60 |
57 |
57 |
39 |
||||||||||||||||||||||
|
Equity (income) loss |
(1 |
) |
(1 |
) |
2 |
9 |
– |
1 |
2 |
– |
||||||||||||||||||||
| Income taxes | (1 | ) | (6 | ) | (13 | ) | (19 | ) | 35 | 49 | 43 | 77 | ||||||||||||||||||
| Other | – | (3 | ) | – | (1 | ) | (1 | ) | – | – | – | |||||||||||||||||||
| Adjusted EBITDA |
$ |
147 |
$ |
127 |
$ |
134 |
$ |
119 |
$ |
193 |
$ |
203 |
$ |
197 |
$ |
276 |
||||||||||||||
| Production (thousand metric tons) (kmt) |
4,153 |
4,033 |
951 |
941 |
||||||||||||||||||||||||||
| Adjusted EBITDA / Production ($ per metric ton) |
$ |
35 |
$ |
31 |
$ |
141 |
$ |
126 |
||||||||||||||||||||||
| Total shipments (thousand metric tons) (kmt) |
491 |
472 |
505 |
|||||||||||||||||||||||||||
| Adjusted EBITDA/Total shipments ($ per metric ton) |
$ |
393 |
$ |
430 |
$ |
390 |
||||||||||||||||||||||||
| Total sales | $ | 1,420 | ||||||||||||||||||||||||||||
| 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.