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Core Viewpoint - Alcoa has signed a 10-year hydroelectric supply contract with the New York Power Authority and plans to invest approximately $60 million to modernize part of its aluminum smelting facility in Massena, New York [1] Investment Plans - The company will invest about $60 million for modernization efforts at its Massena aluminum smelting plant [1] - The investment is part of a new hydroelectric supply contract with the New York Power Authority [1] Import Tariffs Impact - Alcoa's CEO, William Oplinger, stated that the 50% tariff on imported aluminum has not incentivized the company to restart idle capacity at its Warwick smelting plant in Indiana [1] - Restarting the Warwick facility could cost around $100 million and take one to two years [1] - Oplinger emphasized that tariffs may change over time, indicating that the company is cautious about making significant investments based solely on current tariff conditions [1]

Core Viewpoint - Alcoa Corporation reported a significant increase in net income for Q3 2025, driven by rising domestic aluminum prices, despite facing challenges from tariffs on Canadian aluminum imports [1][3]. Financial Performance - Q3 2025 revenue reached $2.995 billion, up from $2.904 billion year-over-year [2]. - Net income attributable to Alcoa Corporation was $232 million, compared to $90 million in the same period last year, marking a nearly 158% increase [1][2]. - Adjusted net loss was $6 million, down from a profit of $135 million in the previous year [1][2]. - Adjusted EBITDA was $270 million, a decrease from $455 million year-over-year [1][2]. Production and Operations - Alumina production increased by 4% quarter-over-quarter to 2.5 million tons, attributed to reduced maintenance at Australian refineries [2]. - Aluminum segment production rose by 1% to 579,000 tons, mainly due to the successful restart of the San Ciprián smelter in Spain [2]. - Total alumina shipments remained flat at 2.2 million tons, while aluminum shipments decreased by 3% due to trade volume adjustments [2]. Major Developments - The net income of $232 million included gains from the sale of Ma'aden joint venture interests, offset by restructuring costs [3]. - The company announced a long-term energy contract with the New York Power Authority and plans to invest approximately $60 million in the Massena smelter [3]. - Alcoa received support from the U.S. and Australian governments for the joint development of a gallium plant at the Wagerup refinery [3]. Market Context - U.S. aluminum prices have outpaced international markets, with Midwest premiums soaring 113% since early June, influenced by tariffs imposed by the Trump administration [3][4]. - The company anticipates an additional $50 million increase in tariff costs for Q4 2025, indicating ongoing trade impacts [3]. Future Outlook - Alcoa expects total alumina production to remain between 9.5 million and 9.7 million tons for 2025, with aluminum production projected at 2.3 million to 2.5 million tons [4]. - Q4 2025 adjusted EBITDA for the alumina segment is expected to improve by approximately $80 million, while the aluminum segment may face a $20 million adverse impact due to operational inefficiencies [4].

Core Insights - Alcoa reported $3 billion in revenue for Q3 2025, a 3.1% year-over-year increase, but an EPS of -$0.02 compared to $0.57 a year ago, indicating a significant decline in profitability [1] - The revenue fell short of the Zacks Consensus Estimate of $3.02 billion, resulting in a surprise of -0.96%, while the EPS exceeded expectations by 86.67% against a consensus estimate of -$0.15 [1] Financial Performance Metrics - Average realized price per metric ton of alumina was $377.00, slightly above the estimated $376.78, while aluminum was $3,374.00, exceeding the estimate of $3,340.11 [4] - Third-party alumina shipments were 2,205.00 Kmt, surpassing the estimate of 2,194.51 Kmt, but aluminum shipments were 612.00 Kmt, below the estimate of 627.41 Kmt [4] - Total sales for aluminum reached $2.05 billion, below the estimate of $2.11 billion, but represented a year-over-year increase of 13.2% [4] - Third-party sales for bauxite were $113 million, below the estimate of $138.59 million, but showed a year-over-year increase of 21.5% [4] - Total third-party sales amounted to $2.99 billion, below the estimate of $3.06 billion, reflecting a 3.3% year-over-year increase [4] - Intersegment sales for alumina were $474 million, exceeding the estimate of $451.6 million, but showed a year-over-year decline of 16.1% [4] - Total sales for alumina were $1.43 billion, slightly above the estimate of $1.4 billion, but represented a year-over-year decrease of 14% [4] Stock Performance - Alcoa's shares have returned +18.1% over the past month, significantly outperforming the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue decreased 1% sequentially to $3 billion, with net income attributable to Alcoa increasing to $232 million from $164 million in the prior quarter, resulting in earnings per share of $0.88 [11][12] - Adjusted EBITDA was $270 million, reflecting a sequential decrease of $43 million primarily due to increased U.S. Section 232 tariff costs and unfavorable currency impacts [12][13] - Cash flow activities showed a cash balance of $1.5 billion at the end of the quarter, with cash used for operations amounting to $85 million [14][15] Business Line Data and Key Metrics Changes - In the alumina segment, third-party revenue decreased 9% due to lower volumes and bauxite prices, while the aluminum segment saw a 4% increase in third-party revenue driven by higher average realized prices [11][12] - Adjusted EBITDA for the alumina segment decreased by $72 million, while the aluminum segment's adjusted EBITDA increased by $210 million due to higher metal prices and lower alumina costs [12][13] Market Data and Key Metrics Changes - Alumina prices have declined significantly, with recent prices around $315 per metric ton, while LME aluminum prices rose approximately 7% sequentially to $2,775 per metric ton [18][20] - The Midwest premium has increased, reaching import parity, which reflects declining inventories and reduced aluminum imports following tariff increases [20][21] Company Strategy and Development Direction - The company is focused on increasing profitability through higher shipments, improved operations, and strategic investments, including a new long-term energy contract for Massena operations [8][10] - Alcoa is taking steps to strengthen its role in the critical minerals supply chain, with a gallium plant project supported by the U.S., Australian, and Japanese governments [7][8] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of safety following a tragic incident at the Alumar smelter and reiterated their commitment to providing a safe working environment [5][6] - Looking ahead, the company anticipates higher shipments and a sequential release of working capital, with expectations for improved performance in the alumina segment [6][16] Other Important Information - The company announced a $60 million investment in the anode bake furnace and secured a long-term energy contract essential for operational efficiency [8][9] - The Kwinana Refinery's permanent closure resulted in significant restructuring charges, but the company expects to recover costs through land sales [12][98] Q&A Session Summary Question: Inquiry about capital allocation and M&A opportunities - Management indicated a priority to pay down debt while evaluating returns to shareholders and potential M&A opportunities across the product line [25][30] Question: Background on the U.S.-Australia Alcoa partnership - The partnership was initiated with Japanese entities seeking gallium offtake, providing a supply chain outside of China [34] Question: Updates on Canadian-U.S. negotiations regarding tariffs - Management is providing information to both governments to facilitate understanding of trade flows, emphasizing the U.S. aluminum supply shortage [79] Question: Comments on the demand profile in the U.S. - Management noted strength in packaging and electrical sectors, while automotive demand remains weak, attributing it to tariff uncertainties [104] Question: Updates on the gallium project economics - The gallium project is not a large investment, with financing from Japanese entities and government support, and will not impact ongoing mining permit processes [52][56]

Financial Data and Key Metrics Changes - Revenue decreased 1% sequentially to $3 billion [11] - Net income attributable to Alcoa increased to $232 million from $164 million in the prior quarter, with earnings per share rising to $0.88 [11] - Adjusted EBITDA was $270 million, reflecting a sequential decrease of $43 million primarily due to increased U.S. Section 232 tariff costs and unfavorable currency impacts [12][13] - Cash flow activities showed a cash balance of $1.5 billion at the end of the quarter, with cash used for operations at $85 million [14] Business Line Data and Key Metrics Changes - In the alumina segment, third-party revenue decreased 9% due to lower volumes and bauxite prices [11] - In the aluminum segment, third-party revenue increased 4% driven by higher average realized prices, despite lower shipments [11] - Adjusted EBITDA for the alumina segment decreased by $72 million, while the aluminum segment saw an increase of $210 million due to higher metal prices [12][13] Market Data and Key Metrics Changes - Alumina prices have declined significantly, with recent prices around $315 per metric ton due to ample supply and refinery expansions [18] - LME aluminum prices rose approximately 7% sequentially, reaching $2,775 per metric ton, influenced by a weaker U.S. dollar and persistent supply tightness [20] - The Midwest premium increased, reaching import parity, reflecting declining inventories and reduced aluminum imports [20] Company Strategy and Development Direction - The company is focused on increasing profitability through higher shipments, improved operations, and strategic investments such as the Massena energy contract [10] - A new long-term energy contract for Massena operations was announced, along with a $60 million investment in anode bake furnace [8] - The company is exploring M&A opportunities across its product line, with no specific focus area currently identified [30] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of safety following a tragic incident at the Alumar smelter, reinforcing safety protocols [5] - The outlook for the fourth quarter includes expectations for improved performance in the alumina segment and potential unfavorable impacts in the aluminum segment due to restart inefficiencies [16] - Management noted that while demand remains steady in packaging and electrical sectors, the automotive sector is weak due to tariff uncertainties [21] Other Important Information - The company is progressing with the development of a gallium plant in Australia, supported by funding from the U.S. and Australian governments [7] - The Kwinana Refinery's permanent closure resulted in significant restructuring charges, but the company anticipates recovering closure costs through land sales [12][98] Q&A Session Summary Question: Capital allocation and M&A opportunities - Management indicated a priority to pay down debt while evaluating returns to shareholders and potential growth options [29][30] Question: U.S.-Australia Alcoa partnership - The partnership was initiated with Japanese entities seeking gallium offtake, providing a supply chain outside of China [34] Question: Canadian-U.S. negotiations regarding aluminum tariffs - Management is providing information to both governments to aid in decision-making regarding trade flows [41] Question: Interest in rolling business - Management confirmed no interest in re-entering the rolling business [57] Question: Gallium project economics and impact on mining permits - The gallium project will not impact ongoing mining permit processes, and the economics are still under negotiation [52] Question: Demand profile and market conditions - Management noted that demand remains stable in certain sectors, with automotive demand being weak, but not indicative of demand destruction [105]

Financial Data and Key Metrics Changes - Revenue decreased 1% sequentially to $3 billion, with net income attributable to Alcoa increasing to $232 million from $164 million in the prior quarter, resulting in earnings per share of $0.88 [10][11] - Adjusted EBITDA was $270 million, reflecting a sequential decrease of $43 million primarily due to increased U.S. Section 232 tariff costs and lower alumina prices [11][12] - The year-to-date return on equity was 14.5%, with cash flow activities showing $1.5 billion in cash at the end of the quarter [13][14] Business Line Data and Key Metrics Changes - In the alumina segment, third-party revenue decreased 9% due to lower volumes and bauxite prices, while the aluminum segment saw a 4% increase in revenue driven by higher average realized prices [10][12] - Adjusted EBITDA for the alumina segment decreased by $72 million, while the aluminum segment's adjusted EBITDA increased by $210 million due to higher metal prices and lower alumina costs [11][12] Market Data and Key Metrics Changes - Alumina prices have declined significantly, with recent prices around $315 per metric ton, while LME prices for aluminum rose approximately 7% sequentially to $2,775 per metric ton [17][18] - The Midwest premium has increased, reaching import parity, which reflects declining inventories and reduced aluminum imports [18][19] Company Strategy and Development Direction - The company is focused on safety, operational stability, and strategic investments, including a new long-term energy contract for Massena operations and a $60 million investment in anode bake furnace [7][9] - Alcoa is also developing a gallium plant in Australia, supported by U.S. and Australian governments, which will enhance its role in the critical minerals supply chain [6][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of safety following a workplace fatality and emphasized the commitment to improving operational performance and profitability [4][9] - The outlook for the fourth quarter includes expectations for higher shipments and improved performance in the alumina segment, while anticipating increased tariff costs [15][16] Other Important Information - The company announced the permanent closure of the Kwinana Refinery, which will impact asset retirement obligations and restructuring charges [11][14] - The approvals process for Australian mining operations is progressing, with expectations for ministerial approvals by the end of 2026 [8][9] Q&A Session Summary Question: Capital allocation and M&A opportunities - Management indicated a priority to pay down debt while evaluating returns to shareholders and potential M&A opportunities across the product line [23][25][27] Question: U.S.-Australia Alcoa partnership - The partnership was initiated with Japanese entities and aims to establish a gallium supply chain outside of China, with first production targeted by the end of 2026 [29][30] Question: Canadian-U.S. negotiations regarding tariffs - Management is providing information to both governments to facilitate understanding of trade flows, emphasizing the U.S. aluminum supply shortage [34][58] Question: Demand dynamics in the U.S. market - Management noted steady demand in packaging and electrical sectors, with weakness in automotive attributed to tariff uncertainties and potential substitution by electric vehicles [80] Question: Updates on aluminum safeguards in Europe - Management mentioned that the next significant regulations in Europe will be CBAM, expected to positively impact Alcoa by raising European premiums [82]

Financial Data and Key Metrics Changes - Revenue decreased 1% sequentially to $3 billion, with the Alumina segment seeing a 9% decrease in third-party revenue due to lower volumes and bauxite prices [16] - Net income attributable to Alcoa was $232 million, up from $164 million in the prior quarter, with earnings per share increasing to $0.88 [17] - Adjusted EBITDA was $270 million, reflecting a sequential decrease of $43 million primarily due to increased U.S. Section 232 tariff costs [18][19] - Year-to-date return on equity was 14.5%, and cash flow activities included a tax refund of $69 million from the Australian Tax Office [21][22] Business Line Data and Key Metrics Changes - In the Alumina segment, third-party revenue decreased 9% due to lower volumes and prices, while the Aluminum segment saw a 4% increase in revenue driven by higher average realized prices [16] - Adjusted EBITDA for the Alumina segment decreased by $72 million, while the Aluminum segment's adjusted EBITDA increased by $210 million due to higher metal prices and lower alumina costs [19] Market Data and Key Metrics Changes - Alumina prices have declined significantly, with recent prices around $315 per metric ton due to ample spot availability and refinery expansions in Indonesia and China [26] - LME prices rose approximately 7% sequentially, recently reaching $2,775 per metric ton, reflecting a combination of factors including a weaker U.S. dollar and persistent supply tightness [29] - The Midwest premium increased during the third quarter, reaching import parity, which reflects declining inventories and reduced aluminum imports [30] Company Strategy and Development Direction - The company is focused on increasing profitability through higher shipments, improved operations, and key investments such as the Messina Energy contract and anode bake furnace [14] - A new long-term energy contract for Messina operations was announced, along with a $60 million investment in the anode bake furnace to enhance operational efficiency [12] - The company is evaluating M&A opportunities across the product line but does not have a specific focus at this time [41] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of safety following a workplace fatality and reiterated their commitment to providing a safe working environment [5][6] - The outlook for the Alumina segment is expected to improve by approximately $80 million in 2025, while the Aluminum segment anticipates unfavorable impacts of about $20 million due to restart inefficiencies [23][24] - Management noted that demand remains steady across Europe and North America, with healthy growth in packaging and electrical sectors, while the automotive sector is weak [31][32] Other Important Information - The company announced a partnership with the U.S. and Australian governments to develop a gallium plant at the Wagerup alumina refinery, which is expected to provide strategic benefits [10][11] - The Kwinana refinery's permanent closure resulted in significant asset retirement obligations, impacting the financial results [8][17] Q&A Session Summary Question: Capital allocation and M&A opportunities - Management indicated that they are close to their net debt target and will prioritize debt repayment while evaluating returns to shareholders and growth options [40][41] Question: U.S.-Australia Alcoa partnership - The partnership was initiated with Japanese entities and aims to establish a gallium supply chain outside of China, with first production expected by 2026 [45][48] Question: Canadian negotiations and domestic capacity expansion - Management is providing information to both U.S. and Canadian governments regarding trade flows and noted that competitive energy prices for long-term contracts in the U.S. are still lacking [54][55] Question: Gallium project economics and mining permitting - The gallium project is not a large investment and will be financed by several governments, with no impact on the ongoing mining permitting process [66][67] Question: Interest in idled assets and data centers - Management confirmed ongoing interest in data centers and AI centers, with significant efforts to market sites with existing electrical infrastructure [120] Question: Demand profile and market conditions - Management does not see significant demand destruction but noted weakness in the automotive sector, attributing it to potential substitution by electric vehicles from China [122]

Joining us now before the earnings call first on CNBC is Alcoa CEO William Opinger. Uh Bill, it's great to have you back on the show. Welcome.>> Thanks, Morgan. How are you. >> Uh doing great.Want to talk to you about what you saw in the quarter and how that sets you up set you up sets you up for the rest of the year. Yo, the year though, especially since it looks like aluminina and aluminum production both increased. Uh but there is some noise because of trade dynamics.>> So let me let me talk about the qu ...

Core Insights - Alcoa reported a revenue miss due to shipments in transit at the end of the quarter, but production records were achieved in several facilities, indicating solid operational performance [2] - Earnings met consensus estimates, attributed to tight cost control and execution of strategic initiatives, including a significant gallium investment announcement [3][4] - A long-term power contract was secured in Msina, New York, which is expected to support future operations [4] Production and Market Dynamics - Alcoa's production of alumina and aluminum increased, although trade dynamics introduced some noise in the results [1] - The company is not planning to shut down any refining capacity, as its cost position allows it to operate in a low-price environment despite a significant portion of the Chinese market being underwater [7][8] Gallium Investment - Alcoa announced an investment in a facility in Western Australia to extract approximately 10% of the world's gallium, which is currently dominated by China [5] - This investment strengthens relationships with the US, Japanese, and Australian governments, and production is expected to commence by the end of 2026 [6]