Alcoa Corporation Announces Decisions on Smelting Assets
December 21 2017 - 4:27PM
Business Wire
Alcoa Corporation, a global leader in bauxite, alumina and
aluminum products, today announced decisions regarding smelting
assets in the United States and Italy. The actions support the
Company’s strategic priorities to reduce complexity and to
strengthen the balance sheet.
- In the United States, Alcoa intends to
permanently close its Rockdale Operations site in Texas, which has
been fully curtailed since the end of 2008. The site includes a
primary aluminum smelter and casthouse, an aluminum powder plant
and associated buildings and equipment. Alcoa’s strategic review of
these assets, announced earlier this year, concluded that these
operations have limited economic prospects. Separately, the Company
continues to market for sale more than 30,000 acres of land at the
Rockdale site.
- In Italy, Alcoa has reached an
agreement to divest the Portovesme primary aluminum smelter, fully
curtailed since 2012 and closed since 2014, to Invitalia, the
Italian government agency that manages economic development. As
part of the agreement, Alcoa and the Italian government have
settled matters related to past energy tariffs, including the
Italian Energy Authority Regulation 148/2004 matter, and a
groundwater remediation project.
“We continuously evaluate our portfolio of global assets against
many factors to optimize value,” said President and Chief Executive
Officer Roy Harvey. “Achieving a resolution on these two assets
further streamlines our Company as we continue to execute against
our strategic priorities.”
The Company will record an estimated charge of $55 million (pre-
and after-tax) in the fourth quarter of 2017 associated with the
permanent closure of Rockdale. In addition, the Company will record
an estimated $22 million (pre- and after-tax) reserve reduction in
the fourth quarter of 2017 associated with a reserve established at
the end of 2015 for the Italy matter.
The net earnings impact of the two actions is estimated to be a
negative $0.18 per share in the fourth quarter of 2017. The Company
anticipates annual adjusted EBITDA benefits of approximately $3
million upon completion of the Rockdale decommissioning in 2022,
and of approximately $4 million upon completion of the Portovesme
divestiture in 2018.
Cash outlays for the Rockdale closure are expected to be
approximately $53 million over the next five years, including
holding and demolition costs, with approximately $16 million in
2018. Cash outlays for the Italy settlement, including the
pre-existing 148/2004 matter and remediation reserves, are expected
to be between $40 million and $50 million over the next five years,
with approximately $10 million in 2018.
About Alcoa
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina
and aluminum products, with a strong portfolio of value-added cast
and rolled products and substantial energy assets. Alcoa is built
on a foundation of strong values and operating excellence dating
back nearly 130 years to the world-changing discovery that made
aluminum an affordable and vital part of modern life. Since
inventing the aluminum industry, and throughout our history, our
talented Alcoans have followed on with breakthrough innovations and
best practices that have led to efficiency, safety, sustainability
and stronger communities wherever we operate. Visit us online on
www.alcoa.com, follow @Alcoa on Twitter and on Facebook at
www.facebook.com/Alcoa.
The above website addresses are included only as inactive
textual references and are not intended to be active links to such
websites. Information contained on such websites or that can be
accessed through such websites do not constitute part of this press
release.
Dissemination of Company Information
Alcoa Corporation intends to make future announcements regarding
company developments and financial performance through its website
at www.alcoa.com.
Forward-Looking Statements
This press 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 “anticipates,” “believes,” “could,”
“estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,”
“plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,”
“would,” or other words of similar meaning. All statements that
reflect the Company’s expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and
unknown risks, uncertainties, and changes in circumstances that are
difficult to predict. Although the Company believes that the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, it can give no assurance that these
expectations will be attained and it is possible that actual
results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and
uncertainties. Additional information concerning factors that could
cause actual results to differ materially from those projected in
the forward-looking statements is contained in our filings with the
Securities and Exchange Commission. The Company 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.
Adjusted EBITDA Definition
Alcoa Corporation’s definition of Adjusted EBITDA 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 Corporation’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. Alcoa Corporation has
not provided a reconciliation of the forward-looking Adjusted
EBITDA amounts included in this release to the most directly
comparable GAAP financial measures due primarily to the variability
and complexity in making accurate forecasts and projections, as not
all of the information for a quantitative reconciliation is
available to the company without unreasonable effort.
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version on businesswire.com: http://www.businesswire.com/news/home/20171221006038/en/
Alcoa CorporationInvestor ContactJames Dwyer,
412-992-5450James.Dwyer@alcoa.comorMedia ContactJim Beck,
412-315-2909Jim.Beck@alcoa.com
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