Alcoa's Q4 Earnings Surpass Estimates, Revenues Increase Y/Y

Core Viewpoint - Alcoa Corporation reported strong fourth-quarter 2024 results, with both adjusted earnings and total revenues exceeding expectations, indicating a positive financial performance compared to the previous year [1]. Financial Performance - Adjusted earnings were $1.04 per share, surpassing the consensus estimate of 93 cents, and improved from an adjusted loss of 56 cents per share in the prior-year quarter [1]. - Total revenues reached $3.5 billion, exceeding the Zacks Consensus Estimate of $3.4 billion, and reflecting a 20% increase from the year-ago quarter [1][4]. Segmental Performance - Alumina production decreased by 2% sequentially to 2.39 million tons, while Aluminum production increased by 2% sequentially to 571,000 metric tons, driven by the Alumar smelter restart in Brazil [3]. - Third-party revenues for the Alumina segment rose by 46% due to higher average realized prices and increased shipments, while the Aluminum segment's revenues increased by 5% from higher average realized prices [4]. Costs and Expenses - Total cost of sales was $2.7 billion, up 11.9% year over year, with selling, general and administrative expenses rising by 25% to $80 million [5]. - Interest expense increased to $45 million from $28 million a year ago, while adjusted net income for the fourth quarter was $276 million, up 104% sequentially [5]. Balance Sheet and Cash Flow - Cash and cash equivalents stood at $1.1 billion, up from $944 million at the end of December 2023, while long-term debt increased to $2.5 billion from $1.7 billion [6]. - The company generated net cash of $622 million from operating activities, a significant increase from $91 million in the prior year, with capital expenditure totaling $580 million compared to $531 million a year ago [6]. Free Cash Flow - Free cash flow was reported at $42 million for the year, a notable recovery from a cash outflow of $440 million in the previous year [7]. Guidance - For 2025, Alcoa anticipates alumina production between 9.5-9.7 million metric tons and shipments between 13.1-13.3 million metric tons, with Aluminum segment production expected to be in the range of 2.3-2.5 million metric tons and shipments between 2.6-2.8 million metric tons [8]. Zacks Rank - Alcoa currently holds a Zacks Rank of 1 (Strong Buy), indicating strong market confidence in the company's performance [9].