Core Viewpoint - The company reported strong Q4 2025 earnings, with adjusted EPS and revenue exceeding market expectations, driven by rising aluminum prices and CO2 compensation benefits [1] Group 1: Financial Performance - Q4 revenue reached $3.4 billion, surpassing the market consensus of $3.28 billion, and increased by 15% from the previous quarter, though slightly down from $3.5 billion year-over-year [1] - Adjusted EPS for the quarter was $1.26, significantly higher than the market estimate of $0.93 [1] - Operating cash flow improved to $537 million, up from $85 million in Q3, while free cash flow reached $294 million, compared to a negative $66 million in the previous quarter [1] Group 2: Future Outlook - For 2026, the company expects aluminum production to exceed 2025 levels, with total output projected between 2.4 million and 2.6 million tons [2] - The company warned of adverse impacts in Q1, including a $30 million hit to the alumina business due to maintenance and reduced shipments, and a $70 million impact on the aluminum business from the lack of CO2 compensation and higher restart costs [2] Group 3: Cash Position - After redeeming the remaining $141 million of 5.5% preferred notes due in 2027 by the end of 2025, the company will have a cash balance of $1.6 billion [3]

Financial Data and Key Metrics Changes - Revenue increased by 15% sequentially to $3.4 billion, with the alumina segment's third-party revenue rising by 3% and the aluminum segment's third-party revenue increasing by 21% [9][10] - Net income attributable to Alcoa was $226 million, slightly down from $232 million in the prior quarter, with earnings per share at $0.85 [9][10] - Adjusted EBITDA was $546 million, reflecting a sequential increase of $276 million primarily due to higher metal prices [11][12] Business Line Data and Key Metrics Changes - In the alumina segment, adjusted EBITDA decreased by $36 million due to lower alumina prices, despite higher shipping volumes [11] - The aluminum segment's adjusted EBITDA increased by $213 million, driven by higher metal prices and lower alumina costs [12] Market Data and Key Metrics Changes - FOB Western Australia alumina prices remained stable but slightly lower than the third quarter average, putting pressure on higher-cost refineries [21] - LME aluminum prices increased by 8% sequentially, reaching $3,200 per metric ton, supported by strong demand and constrained supply [23] Company Strategy and Development Direction - The company is focused on safety, stability, and operational excellence while advancing strategic initiatives to create value in 2026 [30] - Alcoa is working on monetizing remediation sites in the U.S. and expects to reach agreements in the first half of 2026 [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 production guidance, citing strong operational performance and ongoing smelter restarts [33][34] - The company anticipates challenges in the alumina segment due to pricing pressures but maintains a low-cost position on the cost curve [42][43] Other Important Information - The company ended the year with a strong cash balance of $1.6 billion and free cash flow of $594 million for the year [13][15] - Capital expenditures for 2026 are estimated at $750 million, with a focus on sustaining capital and potential growth opportunities [17][18] Q&A Session Summary Question: Confidence in 2026 production guidance - Management believes the 2026 guidance is attainable based on ongoing smelter restarts and strong production performance [33][34] Question: Domestic supply of alumina and gallium project updates - Alcoa is open to considering U.S.-based alumina supply to reduce transportation costs and is making progress on the gallium project in Western Australia [36][37] Question: Alumina profitability and cost reduction initiatives - Management acknowledges the current cycle's challenges and emphasizes a commitment to cost management without jeopardizing future plant viability [42][43] Question: Update on idle sites and monetization - Negotiations for a primary site are ongoing, with a focus on maximizing value through complex arrangements rather than simple land sales [45][46] Question: Current status of Alumar Smelter - Alumar Smelter faced power interruptions but is expected to maintain similar production levels in the first quarter [51][53] Question: Capital return and net debt considerations - The company aims to maintain a strong balance sheet while balancing debt repayment and potential shareholder returns [70][72]

Financial Data and Key Metrics Changes - Revenue increased 15% sequentially to $3.4 billion, with the alumina segment's third-party revenue up 3% and the aluminum segment's third-party revenue up 21% [9][10] - Fourth quarter net income attributable to Alcoa was $226 million, slightly down from $232 million in the prior quarter, with earnings per share at $0.85 [9][10] - Adjusted EBITDA was $546 million, with a sequential increase of $276 million primarily due to higher metal prices [11][12] - Return on equity for the year was 16.4%, the highest since 2022, and free cash flow for the year was $594 million [14][15] Business Line Data and Key Metrics Changes - In the alumina segment, adjusted EBITDA decreased by $36 million due to lower alumina prices, despite higher shipping volumes [11][12] - The aluminum segment's adjusted EBITDA increased by $213 million, driven by higher metal prices and lower alumina costs [11][12] Market Data and Key Metrics Changes - FOB Western Australia alumina prices remained under pressure, with 60% of Chinese refineries facing margin pressures due to current pricing levels [21][22] - LME aluminum prices increased 8% sequentially, reaching $3,200 per metric ton, supported by strong demand and constrained supply [23][24] - The Midwest premium rose sharply, benefiting Alcoa's U.S. production, while the Rotterdam premium increased due to demand front-loading ahead of the CBAM implementation [27][28] Company Strategy and Development Direction - The company is focused on safety, stability, and operational excellence while advancing strategic initiatives to create value in 2026 [30] - Alcoa is negotiating to monetize remediation sites in the U.S. and expects to reach agreements in the first half of 2026 [7][8] - The company is not pursuing greenfield expansions due to high capital costs but is exploring brownfield opportunities for growth [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 production guidance, citing strong operational performance and ongoing restarts of smelters [33][34] - The company anticipates challenges in the alumina segment due to pricing pressures but maintains a low-cost position on the cost curve [42][43] - The outlook for 2026 includes expected alumina production between 9.7 and 9.9 million tons and aluminum production between 2.4 and 2.6 million tons [16][17] Other Important Information - The restart of the San Ciprián smelter is progressing well, with approximately 65% of capacity operational by the end of 2025 [6][8] - The company recorded a non-cash charge of $144 million to impair goodwill in the alumina segment due to current alumina prices not supporting the valuation [10] Q&A Session Summary Question: Confidence in 2026 production guidance - Management believes the 2026 guidance is attainable based on ongoing smelter restarts and strong production performance [33][34] Question: Domestic supply of alumina and gallium project updates - Management is open to using U.S.-based alumina supply if it reduces transportation costs and is making progress on the gallium project [36][37] Question: Alumina profitability and cost reduction initiatives - Management acknowledges the current cycle's challenges and emphasizes a low-cost position while exploring cost reduction initiatives [42][43] Question: Update on idle sites and monetization - Negotiations for a primary site are ongoing, with a focus on maximizing value through complex arrangements rather than simple land sales [45][46] Question: Current status of Alumar Smelter - Alumar Smelter faced power interruptions but is expected to maintain similar production levels in the first quarter [51][53] Question: Capital return and net debt considerations - Management aims to maintain a strong balance sheet while balancing debt repayment and potential shareholder returns [68][72]

Financial Data and Key Metrics Changes - Revenue increased 15% sequentially to $3.4 billion, with the alumina segment's third-party revenue up 3% and the aluminum segment's third-party revenue up 21% [8] - Fourth quarter net income attributable to Alcoa was $226 million, slightly down from $232 million in the prior quarter, with earnings per share at $0.85 [8] - Adjusted EBITDA was $546 million, with a sequential increase of $276 million primarily due to higher metal prices [10] Business Line Data and Key Metrics Changes - In the alumina segment, adjusted EBITDA decreased by $36 million due to lower alumina prices, despite higher shipping volumes [10] - The aluminum segment's adjusted EBITDA increased by $213 million, driven by higher metal prices and lower alumina costs [10] Market Data and Key Metrics Changes - LME aluminum prices increased 8% sequentially in the fourth quarter, reaching $3,200 per metric ton, supported by strong demand and constrained supply [22] - FOB Western Australia alumina prices remained stable but were slightly lower than the third quarter average, continuing to pressure higher-cost refineries [19] Company Strategy and Development Direction - The company is focused on safety, stability, and operational excellence while advancing strategic initiatives to create value in 2026 [28] - Alcoa is negotiating to monetize remediation sites in the U.S. and expects to reach agreements in the first half of 2026 [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 production targets, citing strong operational performance and ongoing restarts of smelters [29] - The company anticipates challenges in the alumina segment due to pricing pressures but maintains a low-cost position on the cost curve [32] Other Important Information - The company ended the year with a strong cash balance of $1.6 billion and free cash flow of $594 million for the year [12] - Capital expenditures for 2026 are estimated at $750 million, with a focus on sustaining capital and potential growth opportunities [16] Q&A Session Summary Question: Confidence in 2026 production targets - Management believes the 2026 guidance is attainable based on the progress of smelter restarts and strong production in 2025 [29] Question: Domestic supply of alumina and gallium project updates - Alcoa is open to considering U.S.-based alumina supply to reduce transportation costs and is making progress on the gallium project in Western Australia [30][31] Question: Plans to enhance alumina segment profitability - Management is focused on cost reduction and productivity improvements while maintaining plant viability [32] Question: Update on idle sites and monetization - Negotiations for monetizing idle sites are ongoing, with a focus on maximizing value through complex arrangements rather than simple land sales [34] Question: Current status of Alumar Smelter - Alumar Smelter faced power interruptions but is expected to maintain similar production levels in the first quarter [36] Question: Impact of San Ciprián restart on EBITDA - The EBITDA impact from the San Ciprián restart is included in the $70 million guidance down, with $20 million specifically related to San Ciprián [50] Question: Western Australia mine approvals timeline - The company anticipates receiving recommendations from the EPA by the end of the first half of 2026, with ministerial approvals expected by year-end [51]

Core Insights - The company reported a fourth-quarter profit of $226 million, which represents an increase from $202 million in the same quarter of the previous year [1] Financial Performance - Fourth-quarter profit increased by $24 million year-over-year, reflecting a growth of approximately 11.88% [1]

Core Viewpoint - Alcoa reported better-than-expected revenue and is projecting production increases in aluminum for 2026, indicating a strong supply-demand picture in the market [1][2]. Financial Performance - The company generated close to $550 million in EBITDA and over $500 million in cash, beating consensus estimates and marking a strong performance for 2025 [2]. - Record production was achieved at several facilities globally, contributing to a robust financial year [2]. Market Dynamics - Global aluminum prices are currently high, with a slight deficit in supply, particularly in North America and Europe, which are key markets for the company [3]. - Demand in North America remains strong across various sectors, including packaging and electrical conductors, while automotive demand shows some weakness [5]. Industry Trends - The aluminum industry is experiencing increased demand due to its use in data centers and AI infrastructure, with approximately 1,500 tons of aluminum required for every gigawatt of energy used in a data center [6]. - The potential for substituting aluminum for copper in certain applications is noted, with an estimated 800,000 tons of aluminum being used globally for this purpose [8]. Trade and Inventory Considerations - The company continues to navigate trade dynamics, with U.S. tariffs being covered by current metal prices, allowing for continued shipments from Canada to the U.S. market [9][10]. - Global aluminum inventories are at their lowest levels in 15 years, indicating a tight market, although production from Indonesia is expected to ramp up in 2026 [12]. Future Investments - The company has considered investing in smelting capabilities in Greenland, contingent on securing low-cost energy, which is essential for building new aluminum capacity [15][16]. - Infrastructure development in Greenland would be necessary, including hydro facilities, which would require time to establish [17].

4 th Quarter Earnings Alcoa Corporation 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," "intends," "may," "outlook," "potential," "plans," "projects," "reach," ...

Financial Performance - Revenue for Q4 2025 increased to $3.4 billion, a 15% sequential increase, and full year revenue reached $12.8 billion, an 8% increase year-over-year [5][8]. - Net income for Q4 2025 was $226 million, or $0.85 per share, compared to $1.2 billion, or $4.42 per share for the full year 2025, up from $60 million in FY24 [3][8]. - Adjusted net income for Q4 2025 was $335 million, or $1.26 per share, with full year adjusted net income at $1.0 billion, or $3.77 per share [3][8]. - Adjusted EBITDA excluding special items for Q4 2025 was $546 million, a sequential increase of $276 million, while full year adjusted EBITDA reached $2.0 billion, a 25% increase year-over-year [3][8]. - For the quarter ended December 31, 2025, Alcoa reported sales of $3,449 million, an increase from $2,995 million in the previous quarter [25]. - The net income attributable to Alcoa Corporation for the quarter was $226 million, compared to $232 million in the prior quarter [25]. - For the year ended December 31, 2025, total sales reached $12,831 million, up from $11,895 million in 2024, representing a growth of approximately 7.9% [26]. - Alcoa Corporation reported a net income of $1,132 million for the year ended December 31, 2025, a significant increase from $24 million in 2024 [28]. - Cash provided from operations increased to $1,185 million in 2025, compared to $622 million in 2024, reflecting improved operational efficiency [28]. - Total segment adjusted EBITDA for 2025 was $1,959 million, up from $910 million in 2024, indicating strong performance across segments [29]. - For the year ended December 31, 2025, Alcoa reported a net income of $1,170 million, a significant increase from $60 million in 2024 [34]. Production and Operations - Alumina production for Q4 2025 increased 1% sequentially to 2.48 million metric tons, while aluminum production increased 4% to 604,000 metric tons [7]. - The company expects 2026 alumina production to range between 9.7 and 9.9 million metric tons, and aluminum production to range between 2.4 and 2.6 million metric tons [12][13]. - Aluminum production for 2025 reached 2,319 kmt, while total aluminum shipments were 2,522 kmt, showing a robust output [29]. - Third-party alumina shipments totaled 8,829 kmt in 2025, a decrease from 9,005 kmt in 2024, suggesting a need for market adjustment [29]. Financial Position - Total assets increased to $16,212 million as of December 31, 2025, compared to $14,064 million a year earlier, reflecting a growth of approximately 15.3% [27]. - Current liabilities rose to $3,765 million in 2025 from $3,395 million in 2024, indicating an increase of about 10.9% [27]. - Alcoa's total equity increased to $6,133 million in 2025 from $5,157 million in 2024, representing a growth of about 18.9% [27]. - The total debt as of December 31, 2025, was $2,448 million, down from $2,595 million as of December 31, 2024, while net debt decreased to $851 million from $1,457 million [43]. - Alcoa's adjusted net debt as of December 31, 2025, was $1,462 million, down from $2,057 million as of December 31, 2024 [43]. Cash Flow and Investments - Cash from operations for Q4 2025 was $537 million, with a full year total of $1.2 billion, and free cash flow for the year was $567 million [5][8]. - Capital expenditures for 2025 were $618 million, slightly higher than $580 million in 2024, indicating ongoing investment in growth [28]. - The company experienced a net change in cash and cash equivalents of $458 million in 2025, up from $187 million in 2024, enhancing liquidity [28]. Market and Pricing - The average realized third-party price per metric ton of aluminum increased to $3,376 in 2025, compared to $3,006 in 2024, reflecting favorable market conditions [29]. - The average realized third-party price per metric ton of alumina was $415 in 2025, down from $636 in 2024, indicating pricing pressures in the alumina market [29]. Restructuring and Charges - The company incurred a goodwill impairment of $144 million in 2025, while there was no such impairment in 2024 [26]. - Restructuring and other charges increased to $918 million in 2025 from $341 million in 2024, reflecting strategic changes within the company [28]. - The company incurred restructuring and other charges of $14 million in the quarter ended December 31, 2025, compared to $885 million in the previous quarter [40]. Working Capital Management - DWC working capital for Q4 2025 is $1,303 million, an increase from $1,289 million in Q4 2024 [45]. - Days working capital improved to 35 days in Q4 2025, down from 50 days in Q3 2025 [45]. - Receivables from customers increased to $1,064 million in Q4 2025, up from $1,096 million in Q4 2024 [45]. - Inventories decreased slightly to $2,177 million in Q4 2025 from $1,998 million in Q4 2024 [45]. - Accounts payable, trade rose to $1,938 million in Q4 2025, compared to $1,805 million in Q4 2024 [45]. - Management emphasizes the importance of DWC working capital as a measure of liquidity management efficiency [46].

Market Overview - The U.S. equity markets experienced a significant downturn due to geopolitical threats from President Donald Trump, particularly regarding the acquisition of Greenland, which has led to military support from several EU countries [1] - The U.S. government has threatened to impose substantial tariffs on EU nations, prompting discussions of a potential 'trade bazooka' as a deterrent [1][2] Earnings Season and Investment Strategies - The ongoing unrest in Iran has contributed to a decline in equity markets, which may negatively impact the earnings season that has started modestly with banking stocks [2] - Investors are turning to momentum stocks, such as Kohl's Corporation (KSS), Albemarle Corporation (ALB), and Alcoa Corporation (AA), as a strategy to achieve sustained profits amid market volatility [2] Momentum Investing - Momentum investing is characterized by the strategy of "buying high and selling higher," based on the belief that established trends are likely to continue [3] - This investment approach capitalizes on the human tendency to project current trends into the future before mean reversion occurs [3] Screening Parameters for Momentum Stocks - The screening process identifies the top 50 stocks with the best percentage price change over the last 52 weeks, ensuring selection of stocks that have appreciated steadily [5] - From these, the bottom 10 performers over a one-week period are chosen to identify those experiencing short-term pullbacks [6] - Stocks with a Zacks Rank 1 (Strong Buy) and a Momentum Style Score of B or better are prioritized, indicating a higher probability of success [7] Selected Stocks - Kohl's Corporation (KSS) has seen a price increase of 43.2% over the past year but experienced a 5.7% decline in the past week, holding a Momentum Score of A [10][11] - Albemarle Corporation (ALB) has risen by 67.2% in the last year but faced a 3.7% drop in the past week, also with a Momentum Score of A [11][12] - Alcoa Corporation (AA) has increased by 52% over the past year but saw an 8.5% decline in the past week, maintaining a Momentum Score of A [12]

Core Viewpoint - Alcoa Corporation is set to report its fourth-quarter 2025 results on January 22, with earnings estimates showing an 18.8% increase over the past 60 days, but a projected decline of 8.7% year-over-year in earnings and a 7% decline in revenues [1][7]. Earnings Estimates - The Zacks Consensus Estimate for earnings is currently at 95 cents per share, with revenues expected to be $3.24 billion [1]. - The earnings surprise history shows that Alcoa has consistently outperformed estimates, with an average surprise of 39.3% over the last four quarters [2]. Earnings Prediction - Alcoa has an Earnings ESP of +0.53%, with the Most Accurate Estimate at 96 cents per share, indicating a favorable outlook for an earnings beat [4][3]. Segment Performance - The Aluminum segment is projected to see total sales of $2.45 billion, reflecting a 29% increase year-over-year, driven by demand in electrical and packaging markets [5]. - Conversely, the Alumina segment is expected to report total sales of $1.32 billion, indicating a 46% decline from the previous year due to lower shipments and trading activity [6]. Strategic Developments - Recent partnerships and acquisitions, including a joint venture for the San Ciprián site and the acquisition of Alumina Limited, are expected to enhance Alcoa's production capacity and market position [8][5]. Market Performance - Alcoa's shares have increased by 54.2% over the past three months, outperforming both the Zacks Metal Products - Distribution industry and the S&P 500 [10]. Valuation Metrics - The stock is currently trading at a forward P/E ratio of 12.50X, slightly below the industry average of 12.82X, suggesting potential upside [13]. Investment Thesis - Alcoa's diversified product portfolio and strategic collaborations position it well for growth, particularly in the context of increasing demand for energy-efficient products and the impact of higher tariffs on aluminum imports [15][16].