1 | --- | --- | --- | --- | --- | |-------|-----------------------|-------|-------|-------------------------| | | | | | | | | Investor Presentation | | | | | | September 2024 | | | | | | | | | OUR VALUES | | | | | | Act with Integrity | | | | | | Operate with Excellence | | | | | | Care for People | | | | | | Lead with Courage | Cautionary Statement regarding Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking ...

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Alcoa reported a net income of $20 million in Q2 2024, a significant turnaround from a prior-year loss, with improved cash flow from operations [Note C: Acquisitions and Divestitures](index=12&type=section&id=C.%20Acquisitions%20and%20Divestitures) Alcoa completed the $2.8 billion acquisition of Alumina Limited, simplifying its structure and assuming $385 million in debt, while managing prior divestiture commitments - Alcoa completed the acquisition of Alumina Limited on August 1, 2024, to gain full ownership of the AWAC joint venture, simplifying its corporate structure and enhancing operational flexibility[24](index=24&type=chunk) - The acquisition involved exchanging Alcoa stock/CDIs for Alumina Shares, with an aggregate purchase consideration of approximately **$2.8 billion**. Alcoa also assumed **~$385 million** of Alumina Limited's debt[26](index=26&type=chunk)[27](index=27&type=chunk) - The company recorded charges of **$4 million** in Q2 2024 and **$15 million** in H1 2024 related to site separation commitments from the 2021 Warrick Rolling Mill divestiture, with a remaining balance of **$14 million** expected to be spent in 2024[30](index=30&type=chunk)[31](index=31&type=chunk) [Note D: Restructuring and Other Charges, Net](index=12&type=section&id=D.%20Restructuring%20and%20Other%20Charges%2C%20Net) Alcoa recorded $220 million in H1 2024 restructuring charges, primarily from the Kwinana refinery curtailment, with additional costs from closed smelter contracts Restructuring and Other Charges, Net (in millions) | Period | Alumina Segment | Aluminum Segment | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | | Q2 2024 | $8 | $0 | $10 | $18 | | H1 2024 | $205 | $0 | $15 | $220 | | Q2 2023 | $1 | $19 | $4 | $24 | | H1 2023 | $2 | $165 | $6 | $173 | - The full curtailment of the Kwinana refinery was completed in June 2024. Charges for the first half of 2024 totaled **$205 million**, covering water management, severance for **~580 employees**, asset retirement, and other costs. Cash outlays of **~$225 million** are expected through 2025[33](index=33&type=chunk) [Note K: Debt](index=24&type=section&id=K.%20Debt) Alcoa issued a $750 million green bond in March 2024, maintained undrawn credit facilities, and assumed $385 million of Alumina Limited's debt post-acquisition - In March 2024, a subsidiary issued **$750 million** of 7.125% Senior Notes due 2031, designated as a green bond, with net proceeds of **$737 million** to finance qualifying environmental projects and support cash needs[61](index=61&type=chunk) - The company's main **$1.25 billion** Revolving Credit Facility and its **$250 million** Japanese Yen Revolving Credit Facility had no outstanding borrowings as of June 30, 2024[66](index=66&type=chunk)[68](index=68&type=chunk) - Upon acquiring Alumina Limited on August 1, 2024, Alcoa assumed approximately **$385 million** of its outstanding debt under a **$500 million** revolving credit facility. Lenders have indicated they will delay any repayment demand until at least December 1, 2024[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) [Note N: Income Taxes](index=35&type=section&id=N.%20Income%20Taxes) Alcoa's 2024 effective tax rate is 105.1% due to valuation allowances on losses, offset by $20 million in tax credits and an expected $100 million deferred tax asset from the Alumina Limited acquisition - The estimated annualized effective tax rate for 2024 is **105.1%**, deviating from the **21%** U.S. statutory rate primarily due to losses in jurisdictions with full valuation allowances, resulting in no tax benefit[91](index=91&type=chunk)[92](index=92&type=chunk) - The company recorded benefits of **$10 million** in Q2 and **$20 million** in H1 2024 under the Inflation Reduction Act's Advanced Manufacturing Tax Credit for its Massena West and Warrick smelters[93](index=93&type=chunk) - Post-acquisition of Alumina Limited, Alcoa will recognize a deferred tax asset of approximately **$100 million** related to Alumina Limited's Australian net operating loss carryforwards[92](index=92&type=chunk) [Note O: Contingencies](index=36&type=section&id=O.%20Contingencies) Alcoa faces $252 million in environmental remediation reserves, a significant tax dispute with the ATO for $143 million in tax and $474 million in interest, and ongoing 'Red Dust' legal proceedings - The environmental remediation reserve was **$252 million** at June 30, 2024, with significant sites including Suriname, Massena (NY), and Point Comfort (TX)[95](index=95&type=chunk)[98](index=98&type=chunk) - AofA is in a dispute with the Australian Taxation Office (ATO) over assessments claiming **~$143 million** in tax and **~$474 million** in interest. AofA has paid **50%** of the tax amount and believes its position will be sustained. The case hearing was completed in June 2024, awaiting a decision[109](index=109&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - In the St. Croix 'Red Dust' legal proceedings, trials for the first group of cases are scheduled to begin in November 2024. The company recorded a reserve for its estimate of probable loss in Q2 2024[120](index=120&type=chunk) [Note R: Subsequent Events](index=42&type=section&id=R.%20Subsequent%20Events) Post-quarter, Alcoa completed the Alumina Limited acquisition, declared a $0.10 per share dividend, and settled a $5 million Clean Air Act violation fine for its Intalco smelter - On August 1, 2024, the Company completed the acquisition of Alumina Limited[127](index=127&type=chunk) - On July 31, 2024, the Board declared a quarterly cash dividend of **$0.10 per share** on common and preferred stock, payable on August 29, 2024[128](index=128&type=chunk) - The company agreed to a stipulated settlement with the U.S. Department of Justice to pay a **$5 million** civil fine for alleged Clean Air Act violations at the Intalco smelter[129](index=129&type=chunk) Consolidated Statement of Operations Highlights (unaudited, in millions) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,906 | $2,684 | $5,505 | $5,354 | | Income (Loss) Before Taxes | $92 | $(99) | $(233) | $(279) | | Net Income (Loss) Attributable to Alcoa | $20 | $(102) | $(232) | $(333) | | Diluted EPS | $0.11 | $(0.57) | $(1.29) | $(1.87) | Consolidated Balance Sheet Highlights (unaudited, in millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,396 | $944 | | Total Current Assets | $4,903 | $4,405 | | Total Assets | $14,307 | $14,155 | | Long-term debt, less current portion | $2,469 | $1,732 | | Total Liabilities | $8,891 | $8,310 | | Total Equity | $5,416 | $5,845 | Consolidated Cash Flow Highlights (unaudited, in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Cash Provided From (Used For) Operations | $64 | $(176) | | Cash Provided From Financing Activities | $679 | $16 | | Cash Used For Investing Activities | $(281) | $(222) | | Net Change in Cash | $446 | $(377) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported improved Q2 2024 net income driven by higher prices and lower restructuring, with the Alumina Limited acquisition completed and liquidity enhanced by a green bond issuance [Business Update](index=43&type=section&id=Business%20Update) Alcoa completed the Alumina Limited acquisition, fully curtailed the Kwinana refinery, progressed the Alumar smelter restart, and faces funding exhaustion at the San Ciprián complex - The acquisition of Alumina Limited was completed on August 1, 2024, simplifying governance and enhancing Alcoa's vertical integration[131](index=131&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk) - The full curtailment of the Kwinana refinery was completed in June 2024, based on factors including its age, costs, and bauxite grades[138](index=138&type=chunk) - The San Ciprián complex remains unviable due to high energy costs and is projected to run out of funding by the end of 2024, at which point Alcoa will not provide additional funding[143](index=143&type=chunk)[144](index=144&type=chunk) - In March 2024, Alcoa issued its first green bond, raising **$750 million** to fund decarbonization, water management, and other sustainability-focused projects[146](index=146&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2024 net income of $20 million reflects a $272 million sequential improvement driven by higher prices and lower restructuring, narrowing the year-to-date net loss Selected Financial Metrics | Metric | Q2 2024 | Q1 2024 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,906M | $2,599M | $5,505M | $5,354M | | Net Income (Loss) Attributable to Alcoa | $20M | $(252)M | $(232)M | $(333)M | | Diluted EPS | $0.11 | $(1.41) | $(1.29) | $(1.87) | | Avg. Realized Alumina Price ($/mt) | $399 | $372 | $385 | $367 | | Avg. Realized Aluminum Price ($/mt) | $2,858 | $2,620 | $2,743 | $3,000 | - The sequential improvement from Q1 to Q2 2024 was primarily due to higher aluminum and alumina prices, lower restructuring charges (Q2 charge of **$18 million** vs Q1 charge of **$202 million**), and favorable derivative results[151](index=151&type=chunk)[160](index=160&type=chunk) - The year-over-year improvement for the first six months was mainly due to favorable raw material and energy costs and lower equity losses, which partially offset the negative impact of a lower average realized price for aluminum[152](index=152&type=chunk) [Segment Information](index=51&type=section&id=Segment%20Information) Alumina and Aluminum segments showed significant Q2 2024 Adjusted EBITDA improvements driven by higher prices, with shipment guidance maintained for 2024 Alumina Segment Performance (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Segment Adjusted EBITDA | $186M | $139M | | Avg. Realized Price/mt | $399 | $372 | | Alumina Production (kmt) | 2,539 | 2,670 | | Total Shipments (kmt) | 3,292 | 3,340 | Aluminum Segment Performance (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Segment Adjusted EBITDA | $233M | $50M | | Avg. Realized Price/mt | $2,858 | $2,620 | | Production (kmt) | 543 | 542 | | Total Shipments (kmt) | 677 | 634 | - The Alumina segment's sequential EBITDA increase was driven by higher prices, partially offset by higher production costs from the Kwinana curtailment. Production decreased **5%** due to the curtailment[176](index=176&type=chunk)[178](index=178&type=chunk) - The Aluminum segment's sequential EBITDA increase was primarily due to higher average realized prices. This was partially offset by unfavorable raw material costs from higher alumina input prices[191](index=191&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) Alcoa's liquidity is adequate with improved H1 2024 cash from operations and a $737 million bond issuance, despite recent credit rating downgrades and assumed acquisition debt - Cash provided from operations was **$64 million** in H1 2024, a **$240 million** positive swing from the **$176 million** used in H1 2023, driven by better underlying earnings and lower tax payments[202](index=202&type=chunk) - Financing activities provided **$679 million** in cash in H1 2024, primarily from the **$737 million** net proceeds of the March 2024 senior notes issuance[205](index=205&type=chunk)[208](index=208&type=chunk) - In March 2024, Moody's, Fitch, and S&P all downgraded Alcoa's long-term debt ratings, citing market conditions and operational challenges[219](index=219&type=chunk)[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Alcoa's market risk exposure remains materially unchanged since fiscal year-end 2023, with further details available in the 2023 Form 10-K and Note M - Alcoa's exposure to market risk has not changed materially since December 31, 2023[224](index=224&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Alcoa's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during Q2 2024 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2024[225](index=225&type=chunk) - No changes in internal control over financial reporting occurred during Q2 2024 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[226](index=226&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Alcoa faces ongoing 'Red Dust' legal proceedings with trials starting November 2024 and settled a $5 million Clean Air Act violation fine for its Intalco smelter - In the St. Croix 'Red Dust' proceedings, trials for the first group of lead cases are scheduled to begin in November 2024 and continue through July 2025, with court-ordered mediation to occur by August 31, 2024[230](index=230&type=chunk) - The company settled a Notice of Violation from the EPA regarding the Intalco smelter, agreeing to pay a civil fine of **$5 million** for alleged Clean Air Act violations[232](index=232&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) New risks from the Alumina Limited acquisition include shareholder dilution, potential stock price pressure, dual listing complexities, increased currency exposure, and assumed liabilities - The issuance of new shares for the Alumina Limited acquisition has diluted existing Alcoa stockholders, who now own a smaller proportion of the company, and may depress the market price of Alcoa's stock[235](index=235&type=chunk)[236](index=236&type=chunk) - The secondary listing of Alcoa's stock as CDIs on the Australian Stock Exchange (ASX) could lead to price variations between the NYSE and ASX due to currency differences and other factors[237](index=237&type=chunk)[238](index=238&type=chunk) - The integration of Alumina Limited subjects Alcoa to all of Alumina's existing and potential liabilities, including those related to its revolving credit facility and potential tax issues[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Alcoa did not repurchase common stock in Q2 2024, with the full $500 million share repurchase authorization remaining available Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Weighted Avg. Price Paid | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2024 | 0 | N/A | $500,000,000 | | May 2024 | 0 | N/A | $500,000,000 | | June 2024 | 0 | N/A | $500,000,000 | [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2024 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024[244](index=244&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including documents related to the Alumina Limited acquisition, new stock, bylaws, and officer certifications - Exhibits filed include documents related to the Alumina Limited acquisition, new preferred stock designation, amended bylaws, and required officer certifications (31.1, 31.2, 32.1, 32.2)[248](index=248&type=chunk)

Group 1 - Alcoa (AA) has experienced an 8.5% decline over the past four weeks, indicating significant selling pressure, but it is now in oversold territory, suggesting a potential trend reversal [1] - Wall Street analysts have strong consensus that Alcoa will report better earnings than previously predicted, with a notable increase in earnings estimates [1][3] - The Relative Strength Index (RSI) for Alcoa is at 29.93, indicating that the heavy selling may be exhausting, which could lead to a price rebound [2][3] Group 2 - There has been a 521.2% increase in the consensus EPS estimate for Alcoa over the last 30 days, driven by a strong agreement among sell-side analysts [3] - Alcoa holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [3]

Quite a few stocks stand out after exceeding Q2 earnings expectations this week with several sporting a Zacks Rank #2 (Buy) following their favorable quarterly reports.Furthermore, here’s a look at two of these buy-rated stocks that investors shouldn’t overlook after beating EPS estimates on Wednesday.Alcoa (AA) Integrated aluminum producer and bauxite miner Alcoa is appealing among the industrial products sector after Q2 EPS of $0.16 comfortably topped estimates of $0.11 per share. More importantly, this c ...

Core Insights - Alcoa Corporation is focused on completing the acquisition of Alumina Limited by the target date of August 1, indicating a strategic move to enhance its operational capabilities [1] - The company has achieved a $350 million run-rate in its profitability improvement program, with $295 million remaining to be achieved over the second half of the year and into 2025 [1][2] - Investors are keen on the potential through-cycle earnings driven by operational improvements, with a focus on the upcoming decision regarding the lossmaking San Ciprian complex [3] Financial Performance - The third-quarter adjusted EBITDA estimate has been revised down from $437 million to $427 million [2] - The profitability program has yielded $350 million in improvements, with $250 million attributed to raw materials savings and $30 million each from productivity initiatives and the Warrick optimization [2] - Approximately 55% of Alcoa's cost-saving initiatives, targeting a $645 million run-rate by 2025, have already been achieved, indicating effective execution of the strategy [2] Market Reaction - Alcoa shares have experienced a decline of 1.98%, trading at $36.08 [3]

Financial Data and Key Metrics Changes - Revenue increased sequentially to $2.9 billion, driven by higher alumina and aluminum prices [9] - Net income attributable to Alcoa was $20 million, a significant improvement from a loss of $252 million in the prior quarter, with earnings per share rising to $0.11 [9] - Adjusted EBITDA increased by $193 million to $325 million, primarily due to higher average realized prices for alumina and aluminum [10] - Free cash flow was positive at $101 million, improving sequentially by $370 million [13] Business Line Data and Key Metrics Changes - In the Alumina segment, third-party revenue increased by 5% due to higher average realized prices, despite lower shipments [9] - In the Aluminum segment, third-party revenue rose by 16% on higher average realized prices and increased shipments [9] - Adjusted EBITDA for the Alumina segment increased by $47 million, while the Aluminum segment saw an increase of $183 million [10] Market Data and Key Metrics Changes - Alumina prices surged in the second quarter due to supply-side disruptions and strong demand from smelters, with a global alumina deficit of approximately 3 million metric tons anticipated for the full year [17][41] - Aluminum prices also increased, supported by limited new smelting projects and strong global demand, particularly in the packaging and electrical sectors [20][22] - Regional premiums for aluminum rose sequentially across North America, Europe, and Asia, driven by sanctions against Russian metal and supply chain disruptions [21] Company Strategy and Development Direction - The company is nearing completion of the Alumina Limited acquisition, expected to close on August 1, which is anticipated to enhance operational and financial flexibility [7][29] - Focus on safety, operational stability, and continuous improvement is emphasized, with production records set at various smelting locations [24] - The company is pursuing profitability improvement programs aimed at capturing approximately $645 million in adjusted EBITDA improvements by the end of 2025 [25] Management Comments on Operating Environment and Future Outlook - Management noted that favorable alumina and aluminum markets have contributed to improved profitability and cash flows [8] - The long-term outlook for both alumina and aluminum markets remains positive, driven by a transition towards low-carbon products [22] - Challenges in the supply chain and energy costs are acknowledged, particularly regarding the San Ciprian facility, with ongoing efforts to find competitive energy solutions [28] Other Important Information - The company is investing in two vessels for bauxite transportation in Brazil, expected to save $14 to $16 per tonne of alumina [12] - The company plans to reduce debt levels and maintain a strong balance sheet while exploring various deleveraging options [14][60] Q&A Session Summary Question: Synergies from the Alumina Limited acquisition - Management expects to realize overhead savings of $12 million immediately post-acquisition, with capital allocation improvements taking longer [32] Question: Impact of bauxite grade in Australia - Unfavorable costs of approximately $10 million are anticipated due to maintenance needs related to lower bauxite quality [36][37] Question: Sustainability of the alumina market dynamics - The alumina market is currently in a deficit, and sustainability will depend on resolving supply issues and potential smelter curtailments [41] Question: Interest in the San Ciprian facility - Six companies have expressed interest in the sale process, which is ongoing [56][68] Question: Deleveraging options - The company is exploring various options for deleveraging, including managing debt placement and evaluating cash flows [60][64]

Core Insights - Alcoa reported revenue of $2.91 billion for the quarter ended June 2024, reflecting an 8.3% increase year-over-year, with EPS at $0.16 compared to -$0.35 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $2.96 billion by 1.92%, while the EPS exceeded expectations by 45.45% [1] Financial Performance Metrics - Average realized third-party price per metric ton of alumina was $399, surpassing the average estimate of $383.76 [2] - Average realized third-party price per metric ton of aluminum was $2,858, below the average estimate of $2,999.99 [2] - Third-party alumina shipments totaled 2,267 Kmt, slightly above the estimated 2,245.65 Kmt [2] - Third-party aluminum shipments reached 677 Kmt, exceeding the estimate of 653.99 Kmt [2] - Total sales for alumina were $1.47 billion, above the estimated $1.39 billion, marking a 13.6% increase year-over-year [2] - Total sales for aluminum were $1.90 billion, slightly below the estimated $1.98 billion, with a year-over-year increase of 5.9% [2] - Third-party sales of bauxite were $96 million, below the estimate of $110.07 million, representing a 15% decrease year-over-year [2] - Third-party sales of alumina were $914 million, exceeding the estimate of $875.72 million, with a 2.2% year-over-year increase [2] - Intersegment sales of aluminum were $3 million, below the estimate of $4.50 million, reflecting a 25% year-over-year decrease [2] - Total third-party sales were $2.91 billion, below the average estimate of $2.96 billion, with an 8.3% year-over-year increase [2] - Intersegment sales of alumina were $457 million, above the estimate of $400.09 million [2] - Third-party sales of aluminum were $1.90 billion, below the average estimate of $1.97 billion, with a 6% year-over-year increase [2] Stock Performance - Alcoa shares have returned +3.1% over the past month, compared to the S&P 500 composite's +4.4% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

2 nd Quarter Earnings Alcoa Corporation July 17, 2024 1 Cautionary Statement regarding Forward-Looking Statements This presentation 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 "aims," "ambition," "anticipates," "believes," "could," "develop," "endeavors," "estimates," "expects," "forecasts," "goal ...

分组1 - Alcoa reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, compared to a loss of $0.35 per share a year ago, indicating a significant improvement [1] - The company's quarterly revenue was $2.91 billion, which missed the Zacks Consensus Estimate by 1.92%, but showed an increase from $2.68 billion year-over-year [1] - Over the last four quarters, Alcoa has surpassed consensus EPS estimates two times and topped consensus revenue estimates twice [1] 分组2 - Alcoa shares have increased by approximately 13.7% since the beginning of the year, while the S&P 500 has gained 18.8% [2] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $0.87 for the coming quarter and $2.20 for the current fiscal year [4] - The Metal Products - Distribution industry, to which Alcoa belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable industry outlook [4] 分组3 - The estimate revisions trend for Alcoa is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, suggesting it is expected to outperform the market in the near future [3] - Constellium, another company in the same industry, is expected to report quarterly earnings of $0.43 per share, reflecting a year-over-year change of +22.9% [5] - Constellium's anticipated revenues are $2.12 billion, which represents a slight decline of 0.2% from the previous year [5]

[Q2 2024 Financial Highlights](index=1&type=section&id=Alcoa%20Corporation%20Reports%20Second%20Quarter%202024%20Results) Alcoa reported significantly improved second-quarter 2024 results, driven by higher prices and profitability programs, with the Alumina Limited acquisition nearing completion [Financial Results and Highlights](index=1&type=section&id=Financial%20Results%20and%20Highlights) Alcoa reported significantly improved second-quarter 2024 results, with sequential increases in revenue, net income, and Adjusted EBITDA, driven by higher alumina and aluminum prices, alongside progress in profitability programs, and is nearing the completion of its acquisition of Alumina Limited Q2 2024 Key Financial Metrics (in millions, except per share amounts) | M, except per share amounts | 2Q24 | 1Q24 | 2Q23 | | :--- | :--- | :--- | :--- | | Revenue | $2,906 | $2,599 | $2,684 | | Net income (loss) attributable to Alcoa Corporation | $20 | $(252) | $(102) | | Income (loss) per share attributable to Alcoa Corporation | $0.11 | $(1.41) | $(0.57) | | Adjusted net income (loss) | $30 | $(145) | $(62) | | Adjusted income (loss) per share | $0.16 | $(0.81) | $(0.35) | | Adjusted EBITDA excluding special items | $325 | $132 | $137 | - Revenue increased **12% sequentially to $2.9 billion**, primarily due to higher alumina and aluminum prices[3](index=3&type=chunk) - Adjusted EBITDA excluding special items more than doubled sequentially, increasing to **$325 million** from **$132 million** in Q1 2024[4](index=4&type=chunk) - The acquisition of Alumina Limited is expected to close on or about August 1, 2024[4](index=4&type=chunk) - The company finished the second quarter with a cash balance of **$1.4 billion** and paid a quarterly dividend of **$0.10 per share**[4](index=4&type=chunk) [Detailed Financial and Operational Review](index=2&type=section&id=Detailed%20Financial%20and%20Operational%20Review) This section provides an in-depth analysis of Alcoa's second-quarter financial and operational performance, strategic initiatives, and the full-year 2024 outlook [Second Quarter 2024 Results Analysis](index=2&type=section&id=Second%20Quarter%202024%20Results) The company's Q2 performance reflects strong pricing in both Alumina and Aluminum segments, driving a 12% sequential revenue increase, with net income turning positive to $20 million, benefiting from the non-recurrence of a significant Q1 charge related to the Kwinana refinery curtailment, while strategic initiatives are progressing on schedule [Financial Performance](index=2&type=section&id=Financial%20Performance) Revenue grew to $2.9 billion, with a 5% increase in Alumina and a 16% increase in Aluminum third-party revenue, driven by 7% and 9% price increases, respectively, while net income of $20 million marked a significant turnaround from a $252 million loss in Q1, largely due to the absence of the prior quarter's $197 million Kwinana curtailment charge, and Adjusted EBITDA surged by $193 million sequentially to $325 million, with the company generating $123 million in free cash flow and ending the quarter with a $1.4 billion cash balance - Total third-party revenue increased **12% sequentially to $2.9 billion**, with Alumina segment revenue rising **5%** on a **7% price increase**, and Aluminum segment revenue rising **16%** on a **9% price increase** and higher shipments[7](index=7&type=chunk) - Net income improved to **$20 million**, reflecting higher prices and the non-recurrence of a **$197 million charge** in Q1 2024 for the Kwinana refinery curtailment[7](index=7&type=chunk) - Adjusted EBITDA increased by **$193 million sequentially to $325 million**, primarily due to higher prices and lower production costs, partially offset by higher energy costs[7](index=7&type=chunk) - The company ended the quarter with **$1.4 billion in cash**, generating **$287 million in cash from operations** and **$123 million in free cash flow**[7](index=7&type=chunk) [Operational Performance](index=2&type=section&id=Operational%20Performance) Alumina production decreased by 5% sequentially to 2.53 million metric tons, a direct result of the completed Kwinana refinery curtailment, while aluminum production rose for the seventh consecutive quarter to 543,000 metric tons, and total aluminum shipments increased by 7% sequentially Q2 2024 Production & Shipments | Segment | Metric | Value (kmt) | Sequential Change | | :--- | :--- | :--- | :--- | | Alumina | Production | 2,530 | -5% | | Alumina | 3rd Party Shipments | - | -5% | | Aluminum | Production | 543 | Increased (7th consecutive quarter) | | Aluminum | Total Shipments | - | +7% | [Strategic Initiatives and Key Actions](index=2&type=section&id=Strategic%20Initiatives%20and%20Key%20Actions) Alcoa is advancing several key strategic goals, with the acquisition of Alumina Limited set to close around August 1, 2024, the full curtailment of the Kwinana refinery completed in June as planned, and the company's profitability improvement program on track, having achieved $350 million of its $645 million year-end 2025 target - The acquisition of Alumina Limited is expected to be completed on or about August 1, 2024, with all regulatory approvals received[7](index=7&type=chunk) - The full curtailment of the Kwinana refinery in Australia was completed in June 2024 as planned[7](index=7&type=chunk) - Profitability improvement programs are projected to achieve **$350 million** of the **$645 million target** by year-end 2025, indicating the company is on track[7](index=7&type=chunk) - Regarding the San Ciprián complex, Alcoa continues to seek competitive energy solutions and progress a potential sale, but anticipates available funding will be exhausted by the end of 2024[7](index=7&type=chunk) [2024 Outlook](index=3&type=section&id=2024%20Outlook) Alcoa reaffirmed its full-year 2024 production and shipment guidance for both the Alumina and Aluminum segments, and for the third quarter, the company anticipates specific financial impacts, including unfavorable bauxite grade effects in Alumina, favorable raw material prices in Aluminum, increased interest expense following the Alumina Limited acquisition, and an operational tax expense of $60 to $70 million Full Year 2024 Shipment & Production Outlook | Segment | Metric | Range (million metric tons) | | :--- | :--- | :--- | | Alumina | Production | 9.8 - 10.0 | | Alumina | Shipments | 12.7 - 12.9 | | Aluminum | Production | 2.2 - 2.3 | | Aluminum | Shipments | 2.5 - 2.6 | - For Q3 2024, Alumina Segment Adjusted EBITDA is expected to see an unfavorable impact of **$10 million** due to bauxite grade in Australia[10](index=10&type=chunk) - For Q3 2024, Aluminum Segment Adjusted EBITDA is expected to see a favorable impact of **$10 million** from raw material prices[10](index=10&type=chunk) - Q3 2024 interest expense is expected to increase by approximately **$5 million** due to the assumption of Alumina Limited debt[11](index=11&type=chunk) - Third quarter operational tax expense is expected to be between **$60 million and $70 million**[11](index=11&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents Alcoa's consolidated financial statements, including the statement of operations, balance sheet, and cash flows [Statement of Consolidated Operations](index=6&type=section&id=Statement%20of%20Consolidated%20Operations) For the second quarter of 2024, Alcoa reported sales of $2.906 billion and net income attributable to the company of $20 million, or $0.11 per diluted share, representing a significant improvement from a net loss of $252 million in Q1 2024 and a net loss of $102 million in Q2 2023, with the company posting a net loss of $232 million for the six months ended June 30, 2024 Quarterly Statement of Operations Highlights (in millions) | Line Item | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Sales | $2,906 | $2,599 | $2,684 | | Income (loss) before income taxes | $92 | $(325) | $(99) | | Net income (loss) attributable to Alcoa | $20 | $(252) | $(102) | | Diluted EPS | $0.11 | $(1.41) | $(0.57) | Six-Month Statement of Operations Highlights (in millions) | Line Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Sales | $5,505 | $5,354 | | Loss before income taxes | $(233) | $(279) | | Net loss attributable to Alcoa | $(232) | $(333) | | Diluted EPS | $(1.29) | $(1.87) | [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2024, Alcoa's balance sheet showed total assets of $14.307 billion and total liabilities of $8.891 billion, with cash and cash equivalents increasing significantly to $1.396 billion from $944 million at year-end 2023, while long-term debt also increased, contributing to a rise in total liabilities Key Balance Sheet Items (in millions) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,396 | $944 | | Total current assets | $4,903 | $4,405 | | Total assets | $14,307 | $14,155 | | Total current liabilities | $3,166 | $3,030 | | Long-term debt | $2,469 | $1,732 | | Total liabilities | $8,891 | $8,310 | | Total equity | $5,416 | $5,845 | [Statement of Consolidated Cash Flows](index=9&type=section&id=Statement%20of%20Consolidated%20Cash%20Flows) For the first six months of 2024, Alcoa generated $64 million in cash from operations, a notable improvement from the $176 million used in the same period of 2023, with cash used for investing activities at $281 million, primarily for capital expenditures, and financing activities providing $679 million, largely from new debt issuance, resulting in a net increase in cash of $446 million for the period Six-Month Cash Flow Summary (in millions) | Cash Flow Category | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Cash Provided From (Used For) Operations | $64 | $(176) | | Cash Used For Investing Activities | $(281) | $(222) | | Cash Provided From Financing Activities | $679 | $16 | | Net Change in Cash | $446 | $(377) | [Segment Information](index=10&type=section&id=Segment%20Information) This section details the financial and operational performance of Alcoa's Alumina and Aluminum segments [Segment Performance](index=10&type=section&id=Segment%20Performance) In Q2 2024, the Alumina segment's Adjusted EBITDA rose to $186 million from $139 million in Q1, benefiting from a higher average realized price of $399 per metric ton, while the Aluminum segment showed a more dramatic improvement, with Adjusted EBITDA jumping to $233 million from $50 million in Q1, driven by a significant increase in the average realized price to $2,858 per metric ton Alumina Segment Key Metrics | Metric | 2Q24 | 1Q24 | | :--- | :--- | :--- | | Alumina production (kmt) | 2,539 | 2,670 | | Third-party alumina shipments (kmt) | 2,267 | 2,397 | | Average realized third-party price per mt | $399 | $372 | | Segment Adjusted EBITDA (M) | $186 | $139 | Aluminum Segment Key Metrics | Metric | 2Q24 | 1Q24 | | :--- | :--- | :--- | | Aluminum production (kmt) | 543 | 542 | | Total aluminum shipments (kmt) | 677 | 634 | | Average realized third-party price per mt | $2,858 | $2,620 | | Segment Adjusted EBITDA (M) | $233 | $50 | [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations for Alcoa's non-GAAP financial measures, including Adjusted Income, Adjusted EPS, Adjusted EBITDA, Free Cash Flow, Net Debt, and Working Capital [Adjusted Income and Adjusted EPS](index=11&type=section&id=Adjusted%20Income%20and%20Adjusted%20EPS) Alcoa's Q2 2024 adjusted net income was $30 million, or $0.16 per diluted share, a non-GAAP measure derived by adjusting the GAAP net income of $20 million for $10 million in net special items, which included restructuring charges, mark-to-market gains on energy derivatives, and costs related to portfolio actions Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (in millions) | Description | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Alcoa (GAAP) | $20 | $(252) | $(102) | | Special items (subtotal) | $10 | $107 | $40 | | **Net income (loss) attributable to Alcoa – as adjusted** | **$30** | **$(145)** | **$(62)** | [Adjusted EBITDA](index=12&type=section&id=Adjusted%20EBITDA) The company reported Adjusted EBITDA excluding special items of $325 million for Q2 2024, calculated by taking the GAAP net income attributable to Alcoa ($20 million) and adding back items such as taxes, interest, D&A, and restructuring charges, then adjusting for $34 million in special items Reconciliation to Adjusted EBITDA, excluding special items (in millions) | Description | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Alcoa (GAAP) | $20 | $(252) | $(102) | | Add back various items (NCI, Taxes, Interest, etc.) | $253 | $395 | $183 | | Adjusted EBITDA | $291 | $124 | $111 | | Special items | $34 | $8 | $26 | | **Adjusted EBITDA, excluding special items** | **$325** | **$132** | **$137** | [Free Cash Flow and Net Debt](index=13&type=section&id=Free%20Cash%20Flow%20and%20Net%20Debt) Alcoa generated $123 million in free cash flow during Q2 2024, a significant positive swing from the $324 million used in Q1 2024, and as of June 30, 2024, the company's net debt stood at $1.183 billion, an increase from $923 million at the end of 2023, reflecting higher total debt levels Free Cash Flow Calculation (in millions) | Description | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Cash provided from (used for) operations | $287 | $(223) | | Capital expenditures | $(164) | $(101) | | **Free cash flow** | **$123** | **$(324)** | Net Debt Calculation (in millions) | Description | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total debt | $2,579 | $1,867 | | Less: Cash and cash equivalents | $1,396 | $944 | | **Net debt** | **$1,183** | **$923** | [Working Capital](index=14&type=section&id=Working%20Capital) The company's liquidity management efficiency improved in Q2 2024, as evidenced by a reduction in Days Working Capital (DWC) to 41 days from 47 days in the previous quarter, primarily due to better inventory management Days Working Capital (DWC) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | DWC working capital (M) | $1,295 | $1,331 | $1,611 | | **Days working capital** | **41** | **47** | **55** |