Alcoa Corporation (NYSE: AA) today reported fourth quarter and
full year 2021 results that included the Company’s highest annual
net income and earnings per share, driven by continued strength in
alumina and aluminum pricing and solid operational performance.
Fourth Quarter Highlights
- Increased revenue to $3.3 billion, a 7 percent sequential
increase and highest quarterly result since 4Q18
- Generated $565 million in cash from operations; finished the
quarter with a cash balance of $1.9 billion, including restricted
cash of $110 million
- Recorded quarterly net loss of $392 million and loss per share
of $2.11, which includes $1.1 billion of restructuring charges,
primarily related to pension actions
- Realized quarterly records for adjusted net income and Adjusted
EBITDA excluding special items of $475 million and $896 million,
respectively
- Returned capital to stockholders through $150 million in share
repurchases; paid the Company’s first cash dividend of $19
million
- Sold the Rockdale site in Texas for $240 million
- Reached agreement to curtail the San Ciprián smelter in Spain
for two years; announced permanent closure of Wenatchee smelter in
United States
Full Year Highlights
- Posted highest annual net income of $429 million and earnings
per share of $2.26
- Generated revenue of $12.2 billion, an increase of 31 percent
from 2020 and the highest since 2018
- Realized a 140 percent annual increase in Adjusted EBITDA
excluding special items to $2.8 billion
- Improved the balance sheet by eliminating long term debt
maturities until 2027; redeemed $750 million and $500 million in
higher interest rate notes and issued $500 million in lower
interest rate notes
- Reduced debt; finished year with total debt of $1.8 billion and
net cash of $12 million; reduced adjusted proportional net debt
from $3.4 billion at end of 2020 to $1.1 billion on December 31,
2021
- Reduced pension liabilities through annuitization actions;
gross U.S. qualified pension liabilities fell to $2.6 billion on
December 31, 2021, from $4.5 billion at year end 2020
- Generated net cash proceeds of $966 million from noncore asset
sales
- Advanced progress on five-year portfolio review of operating
capacity in the Aluminum segment
Financial Results
M, except per share amounts
4Q21
3Q21
4Q20
FY21
FY20
Revenue
$
3,340
$
3,109
$
2,392
$
12,152
$
9,286
Net (loss) income attributable to Alcoa
Corporation
$
(392
)
$
337
$
(4
)
$
429
$
(170
)
(Loss) earnings per share attributable to
Alcoa Corporation
$
(2.11
)
$
1.76
$
(0.02
)
$
2.26
$
(0.91
)
Adjusted net income (loss)
$
475
$
391
$
49
$
1,297
$
(215
)
Adjusted earnings (loss) per share
$
2.50
$
2.05
$
0.26
$
6.83
$
(1.16
)
Adjusted EBITDA excluding special
items
$
896
$
728
$
361
$
2,763
$
1,151
“We had a transformative year in 2021; we posted our highest
ever annual net income, returned cash to our stockholders and
significantly reduced our debt and pension obligations,” said Alcoa
President and Chief Executive Officer Roy Harvey. “Our performance
demonstrates that our long-term strategies are delivering value and
strengthening Alcoa, so we can be successful through all phases of
the commodity cycle.
“Thanks to the dedication and excellent performance of Alcoa
employees across the globe, we are now stronger than ever and well
positioned to realize our vision to reinvent the aluminum industry
for a sustainable future,” Harvey continued. “We have a talented
workforce, a portfolio of strategically located assets, a suite of
low-carbon products, and innovative technologies with the potential
to transform our industry.”
Fourth Quarter 2021 Results
- Revenue: Higher alumina and aluminum prices drove a 7
percent sequential increase in revenue to $3.3 billion. On a
sequential basis, the average realized third-party price of alumina
increased 30 percent and the average realized third-party price of
aluminum increased 8 percent.
- Shipments: In Aluminum, total third-party shipments
decreased 5 percent sequentially due primarily to a strike action
at the San Ciprián smelter, which blocked shipments in the fourth
quarter. The reduced shipments were partially offset by increased
shipments in the fourth quarter from other European and Canadian
smelters. Shipment volume for value add aluminum products, which
includes specific shapes and alloys such as billet, slab, foundry,
and rod, increased 9 percent sequentially, after removing the
impact of the strike at the San Ciprián smelter. In Alumina,
third-party shipments decreased 5 percent sequentially primarily
due to impacts of a strike at the San Ciprián refinery reducing
production in the fourth quarter.
- Production: Aluminum production increased 2 percent
sequentially, following the third quarter’s strong output. Alumina
segment production was up 1 percent with higher production at the
Alumar refinery, after that facility’s recovery from the outage of
a bauxite unloader in the third quarter, offsetting negative
impacts to alumina production at San Ciprián refinery during strike
actions at the facility.
- Net loss attributable to Alcoa Corporation of $392
million, or $(2.11) per share, a decline from the prior quarter’s
net income of $337 million, or $1.76 per share. The loss is
primarily due to restructuring related charges recorded in the
fourth quarter, including $921 million for noncash pension
settlement charges, $90 million for the permanent closure of the
Wenatchee aluminum smelter, and $62 million for the curtailment of
the San Ciprián aluminum smelter. The pension charges relate
primarily to the purchase of approximately $1.5 billion of annuity
contracts for certain U.S. pension plans. The fourth quarter of
2021 also includes a $97 million discrete tax expense to record a
valuation allowance on the Company’s Spanish alumina subsidiary’s
deferred tax assets. The loss was partially offset by strong
operational performance, continued strength in aluminum and alumina
prices, and gains from noncore asset sales.
- Adjusted net income increased 21 percent sequentially to
$475 million, or $2.50 per share, excluding the impact from net
special items of $867 million. Notable special items include
restructuring charges of $1.05 billion (primarily pension actions,
San Ciprián and Wenatchee as discussed above), the discrete tax
expense of $97 million (discussed above), partially offset by gains
from noncore asset sales of $222 million, including the sale of the
Rockdale site, and the non-controlling partner’s share of special
items of $63 million.
- Adjusted EBITDA excluding special items increased 23
percent sequentially to $896 million, primarily due to higher
aluminum and alumina prices.
- Cash: Alcoa ended the quarter with cash on hand of $1.9
billion, including restricted cash. In connection with the
agreement to temporarily curtail the San Ciprián aluminum facility
in Spain, the Company committed to restrict cash of $103 million
for capital expenditures and future restart costs. This restricted
cash is recorded within the other noncurrent assets line on the
Company’s balance sheet. Cash provided from operations was $565
million. Cash used for financing activities was $192 million,
primarily related to $150 million in share repurchases and $19
million in cash dividends on common stock. Cash provided from
investing activities was $94 million with $251 million in proceeds
from asset sales, primarily Rockdale, partially offset by $153
million in capital expenditures. Free cash flow was $412
million.
- Working capital: The Company reported 29 days working
capital, consistent with the third quarter of 2021. Changes in
sequential working capital include a three-day unfavorable impact
for the workers’ strike at San Ciprián, which blocked over 50,000
metric tons of metal shipments, fully offset by lower days on hand
inventory and favorable receivables collection terms which more
than offset higher realized aluminum and alumina sales prices.
Full Year 2021 Results
- Revenue: Higher aluminum and alumina prices, and higher
premiums for value add products, drove a 31 percent increase in
revenue in 2021 to $12.2 billion. Annually, the average realized
third-party price of primary aluminum increased 50 percent and the
average realized third-party price of alumina increased 19
percent.
- Shipments: In Aluminum, total third-party shipments were
flat on a year-over-year basis, primarily due to changes at three
smelting facilities: Aluminerie de Bécancour Inc. (ABI) smelter in
Québec, San Ciprián and Intalco. ABI had a full year of production
in 2021, after finishing a full restart in the third quarter of
2020; San Ciprian had 2021 sales of accumulated inventory from a
2020 strike action, which helped offset the reduction from the
Intalco curtailment completed in the third quarter of 2020.
Shipment volume for value add aluminum products increased 18
percent in 2021 due to higher demand and the restart of ABI. In
Alumina, third-party shipments were flat.
- Production: Aluminum production decreased 3 percent
annually, primarily due to the curtailment of the Intalco smelter
in the third quarter of 2020 more than offsetting the increase from
the ABI restart also in the third quarter of 2020. Alumina segment
production decreased 2 percent annually primarily due to lower
production at the Alumar refinery related to damage to a bauxite
unloader in the third quarter of 2021.
- Net income attributable to Alcoa Corporation of $429
million, or $2.26 per share, was an improvement from 2020 net loss
of $170 million, or $0.91 per share. The strong results are
primarily due to higher pricing for aluminum and alumina, partially
offset by $1.1 billion of restructuring charges, as well as higher
raw materials and energy costs.
- Adjusted net income increased significantly in 2021 to
$1.3 billion, or $6.83 per share, excluding the impact from net
special items of $868 million. Notable special items include
charges of $968 million for the various pension related actions,
$90 million for the permanent closure of the Wenatchee aluminum
smelter, $62 million for the curtailment of the San Ciprián
aluminum smelter, $54 million in debt redemption expenses, and $97
million to establish a deferred tax asset valuation allowance on
the Company’s Spanish alumina subsidiary. These charges were
partially offset by gains from noncore assets sales of $352
million, primarily related to the sale of the Warrick rolling mill,
the Rockdale site, and the sale of the Eastalco site, as well as
$66 million for the non-controlling partner’s share of special
items.
- Adjusted EBITDA excluding special items increased 140
percent sequentially to $2.8 billion, primarily due to higher
aluminum and alumina prices.
- Cash and debt: Alcoa ended 2021 with cash on hand of
$1.9 billion, including restricted cash of $110 million.
Significant cash uses during the year included the early redemption
of $750 million aggregate principal amount of 6.75 percent senior
notes due in 2024 and $500 million aggregate principal amount of
7.00 percent senior notes due in 2026, a contribution of $500
million to the U.S. pension plans, share repurchases of $150
million and cash dividends on common stock of $19 million.
Significant cash sources included proceeds of $966 million from
noncore asset sales and $493 million in net proceeds from the March
2021 debt issuance. The debt activity moves the Company’s total
debt to $1.8 billion and proportional adjusted net debt to $1.1
billion. The Company ended the year with positive net cash of $12
million. Cash provided from operations was $920 million. Cash used
for financing activities was $1.16 billion, primarily related to
the early debt redemptions offsetting the debt issuance and capital
returns. Cash provided from investing activities was $565 million
due to $966 million in cash proceeds from noncore asset sales
offset by $390 million of capital expenditures. Free cash flow was
$530 million.
- Working capital: The Company reported 29 days working
capital, up 9 days from the end of 2020. Working capital in 2021
increased as higher sales decreased days payable despite higher
production input costs, partially offset by a decrease in inventory
days on hand. Days receivable remained consistent with sales, on
higher aluminum and alumina prices. Both 2021 and 2020 year-end
working capital amounts include the impact of strike actions at San
Ciprián, which blocked over 50,000 metric tons of metal shipments,
representing approximately 3 days working capital in both
periods.
Portfolio Review In 2021, Alcoa continued to make
progress against its five-year review of its operating portfolio.
First announced in October of 2019, the portfolio review considers
options for improvement, curtailment, closure or divestiture. The
Company has now achieved approximately 75 percent of its 1.5
million metric ton goal in its smelting portfolio review through
announced actions that include: The permanent closure of the
Wenatchee smelter in the United States, announced energy
improvements and restarts at Portland Aluminium in Australia and
Alumar in Brazil, the curtailment of the Intalco smelter in
Washington State, and the planned, two-year curtailment for the San
Ciprián aluminum smelter in Spain.
On December 29, 2021, Alcoa reached an agreement with the
workers’ representatives at the San Ciprián aluminum smelter in
Spain to fully curtail for two years the site’s 228,000 metric tons
of annual capacity. As part of the agreement, the Company has
agreed to restart of the smelter in January 2024 and will seek
competitive, long-term power purchase agreements that would begin
in 2024. During the curtailment, the casthouse and the San Ciprián
alumina refinery will continue to operate.
Advancing Sustainably In November 2021, Alcoa hosted a
virtual Investor Day and announced a technology roadmap that
supports the Company’s vision to reinvent the aluminum industry for
a sustainable future. The roadmap includes a series of research and
development programs that have the potential to drive value by
reducing costs, improving efficiency, and reducing carbon emissions
in both alumina refining and aluminum smelting.
The technology roadmap also supports Alcoa’s pathway to achieve
its ambition for net zero greenhouse gas (GHG) emissions by 2050
across global operations, including Scope 1 and Scope 2 emissions.
The net zero ambition, which the Company announced in October of
2021, aligns with Alcoa’s strategic priority to advance
sustainability.
Alcoa continues to pursue additional certifications from the
Aluminum Stewardship Initiative (ASI), the aluminum industry’s most
comprehensive third-party program to validate responsible
production practices. The Company, which is consistently recognized
via the Dow Jones Sustainability Indices, currently has 15 global
sites certified to ASI and has also earned ASI’s Chain of Custody
certification, which allows Alcoa to continue marketing globally
ASI-certified bauxite, alumina and aluminum.
2022 Outlook
In 2022, the Company projects total bauxite shipments to range
between 48.0 and 49.0 million dry metric tons, consistent with
2021. Total alumina shipments are expected to be between 14.2 and
14.4 million metric tons, an increase from 2021 with the resolution
of the San Ciprián strike and recovery from the outage of a bauxite
unloader at Alumar. The Aluminum segment is expected to ship
between 2.5 and 2.6 million metric tons, a net decrease from 2021
primarily related to the divestiture of the Warrick Rolling Mill
and changes in the smelting portfolio.
Alcoa anticipates Adjusted EBITDA and Adjusted net income levels
for the first quarter of 2022 to be similar to the fourth quarter
of 2021 based on current pricing. Alcoa expects that current metal
index price benefits will roughly offset the raw materials and
energy challenges, and that improvements from portfolio actions and
sales contract pricing will mitigate other seasonal changes and
headwinds.
Outside of the market changes, in the first quarter of 2022,
Alcoa anticipates lower quarterly performance results in the
Bauxite segment due primarily to seasonally lower volumes and
higher maintenance, and favorable annual true ups that do not recur
in the first quarter. In the Alumina and Aluminum segments, the
Company expects improvements related to the San Ciprián strike
resolution and smelter curtailment, as well as higher raw materials
and energy costs and the non-recurrence of value added tax credits
(Brazil).
Based on current alumina and aluminum market conditions, the
Company expects first quarter tax expense to approximate $165
million to $170 million, which may vary with market conditions and
jurisdictional profitability.
The COVID-19 pandemic is ongoing, and its magnitude and duration
continue to be unknown. The Company continues to take appropriate
measures to protect its employees and business from the risks of
the pandemic by following all appropriate health-based protocols.
Uncertainty around the pandemic’s impact on the Company’s business,
financial condition, operating results, and cash flows could cause
actual results to differ from this outlook.
Conference Call Alcoa will hold its quarterly conference
call at 5:00 p.m. Eastern Standard Time (EST) on Wednesday January
19, 2022, to present first quarter 2022 financial results and
discuss the business, developments, and market conditions.
The call will be webcast via the Company’s homepage on
www.alcoa.com. Presentation materials for the call will be
available for viewing on the same website at approximately 4:15
p.m. EDT on January 19, 2022. Call information and related details
are available under the “Investors” section of www.alcoa.com.
Dissemination of Company Information Alcoa intends to
make future announcements regarding company developments and
financial performance through its website, www.alcoa.com, as well
as through press releases, filings with the Securities and Exchange
Commission, conference calls and webcasts. The Company does not
incorporate the information contained on, or accessible through,
its corporate website into this press release.
About Alcoa Corporation Alcoa (NYSE: AA) is a global
industry leader in bauxite, alumina and aluminum products with a
vision to reinvent the aluminum industry for a sustainable future.
Our purpose is to turn raw potential into real progress,
underpinned by Alcoa Values that encompass integrity, operating
excellence, care for people and courageous leadership. Since
developing the process that made aluminum an affordable and vital
part of modern life, our talented Alcoans have developed
breakthrough innovations and best practices that have led to
improved safety, sustainability, efficiency, and stronger
communities wherever we operate.
Discover more by visiting www.alcoa.com. Follow us on our social
media channels: Facebook, Instagram, Twitter, YouTube and
LinkedIn.
Forward-Looking Statements This news 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,” “endeavors,” “working,” “potential,” “ambition,”
“develop,” “reach,” “believes,” “could,” “estimates,” “expects,”
“forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,”
“projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,”
or other words of similar meaning. All statements by Alcoa
Corporation that reflect expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements, including, without limitation,
forecasts concerning global demand growth for bauxite, alumina, and
aluminum, and supply/demand balances; statements, projections or
forecasts of future or targeted financial results, or operating or
sustainability performance; statements about strategies, outlook,
and business and financial prospects; and statements about capital
allocation and return of capital. These statements reflect beliefs
and assumptions that are based on Alcoa Corporation’s perception of
historical trends, current conditions, and expected future
developments, as well as other factors that management believes are
appropriate in the circumstances. 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 Alcoa Corporation 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. Such risks and uncertainties include, but are not
limited to: (a) current and potential future impacts of the
coronavirus (COVID-19) pandemic and related regulatory developments
on the global economy and our business, financial condition,
results of operations, or cash flows and judgments and assumptions
used in our estimates; (b) material adverse changes in aluminum
industry conditions, including global supply and demand conditions
and fluctuations in London Metal Exchange-based prices and
premiums, as applicable, for primary aluminum and other products,
and fluctuations in indexed-based and spot prices for alumina; (c)
deterioration in global economic and financial market conditions
generally and which may also affect Alcoa Corporation’s ability to
obtain credit or financing upon acceptable terms or at all; (d)
unfavorable changes in the markets served by Alcoa Corporation; (e)
the impact of changes in foreign currency exchange and tax rates on
costs and results; (f) increases in energy or raw material costs or
uncertainty of energy supply or raw materials; (g) declines in the
discount rates used to measure pension and other postretirement
benefit liabilities or lower-than-expected investment returns on
pension assets, or unfavorable changes in laws or regulations that
govern pension plan funding; (h) the inability to achieve
improvement in profitability and margins, cost savings, cash
generation, revenue growth, fiscal discipline, sustainability
targets, or strengthening of competitiveness and operations
anticipated from portfolio actions, operational and productivity
improvements, technology advancements, and other initiatives; (i)
the inability to realize expected benefits, in each case as planned
and by targeted completion dates, from acquisitions, divestitures,
restructuring activities, facility closures, curtailments,
restarts, expansions, or joint ventures; (j) political, economic,
trade, legal, public health and safety, and regulatory risks in the
countries in which Alcoa Corporation operates or sells products;
(k) labor disputes and/or work stoppages and strikes; (l) the
outcome of contingencies, including legal and tax proceedings,
government or regulatory investigations, and environmental
remediation; (m) the impact of cyberattacks and potential
information technology or data security breaches; (n) risks
associated with long-term debt obligations; (o) the timing and
amount of future cash dividends and share repurchases; and (p) the
other risk factors discussed in Part I Item 1A of Alcoa
Corporation’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2020 and other reports filed by Alcoa Corporation with
the U.S. Securities and Exchange Commission. Alcoa Corporation
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. Market
projections are subject to the risks described above and other
risks in the market.
Non-GAAP Financial Measures Some of the information
included in this release is derived from Alcoa Corporation’s
consolidated financial information but is not presented in Alcoa
Corporation’s financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America (GAAP). Certain of these data are considered “non-GAAP
financial measures” under SEC regulations. Alcoa Corporation
believes that the presentation of non-GAAP financial measures is
useful to investors because such measures provide both additional
information about the operating performance of Alcoa Corporation
and insight on the ability of Alcoa Corporation to meet its
financial obligations by adjusting the most directly comparable
GAAP financial measure for the impact of, among others, “special
items” as defined by the Company, non-cash items in nature, and/or
nonoperating expense or income items. The presentation of non-GAAP
financial measures is not intended to be a substitute for, and
should not be considered in isolation from, the financial measures
reported in accordance with GAAP. Reconciliations to the most
directly comparable GAAP financial measures and management’s
rationale for the use of the non-GAAP financial measures can be
found in the schedules to this release.
Alcoa Corporation and subsidiaries
Statement of Consolidated Operations
(unaudited)
(dollars in millions, except per-share
amounts)
Quarter Ended
December 31, 2021
September 30, 2021
December 31, 2020
Sales
$
3,340
$
3,109
$
2,392
Cost of goods sold (exclusive of expenses
below)
2,383
2,322
1,974
Selling, general administrative, and other
expenses
68
53
55
Research and development expenses
10
8
9
Provision for depreciation, depletion, and
amortization
165
156
170
Restructuring and other charges, net
1,055
33
60
Interest expense
28
58
43
Other (income) expenses, net
(298
)
(18
)
44
Total costs and expenses
3,411
2,612
2,355
(Loss) income before income taxes
(71
)
497
37
Provision for income taxes
298
127
20
Net (loss) income
(369
)
370
17
Less: Net income attributable to
noncontrolling interest
23
33
21
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA
CORPORATION
$
(392
)
$
337
$
(4
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net (loss) income
$
(2.11
)
$
1.80
$
(0.02
)
Average number of shares
185,663,439
186,942,851
185,945,762
Diluted:
Net (loss) income
$
(2.11
)
$
1.76
$
(0.02
)
Average number of shares
185,663,439
190,823,143
185,945,762
Alcoa Corporation and subsidiaries
Statement of Consolidated Operations
(unaudited), continued
(dollars in millions, except per-share
amounts)
Year ended
December 31, 2021
December 31, 2020
Sales
$
12,152
$
9,286
Cost of goods sold (exclusive of expenses
below)
9,153
7,969
Selling, general administrative, and other
expenses
227
206
Research and development expenses
31
27
Provision for depreciation, depletion, and
amortization
664
653
Restructuring and other charges, net
1,128
104
Interest expense
195
146
Other (income) expenses, net
(445
)
8
Total costs and expenses
10,953
9,113
Income before income taxes
1,199
173
Provision for income taxes
629
187
Net income (loss)
570
(14
)
Less: Net income attributable to
noncontrolling interest
141
156
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA
CORPORATION
$
429
$
(170
)
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA
CORPORATION COMMON SHAREHOLDERS:
Basic:
Net income (loss)
$
2.30
$
(0.91
)
Average number of shares
186,377,853
185,875,964
Diluted:
Net income (loss)
$
2.26
$
(0.91
)
Average number of shares
189,907,737
185,875,964
Common stock outstanding at the end of the
period
184,099,748
185,978,069
Alcoa Corporation and subsidiaries
Consolidated Balance Sheet
(unaudited)
(in millions)
December 31, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,814
$
1,607
Receivables from customers
757
471
Other receivables
127
85
Inventories
1,956
1,398
Fair value of derivative instruments
14
21
Assets held for sale
—
648
Prepaid expenses and other current
assets(1)
358
290
Total current assets
5,026
4,520
Properties, plants, and equipment
19,753
20,522
Less: accumulated depreciation, depletion,
and amortization
13,130
13,332
Properties, plants, and equipment, net
6,623
7,190
Investments
1,199
1,051
Deferred income taxes
504
655
Fair value of derivative instruments
7
—
Other noncurrent assets(2)
1,644
1,444
Total assets
$
15,003
$
14,860
LIABILITIES
Current liabilities:
Accounts payable, trade
$
1,674
$
1,403
Accrued compensation and retirement
costs
383
395
Taxes, including income taxes
374
91
Fair value of derivative instruments
274
103
Liabilities held for sale
—
242
Other current liabilities
517
525
Long-term debt due within one year
1
2
Total current liabilities
3,223
2,761
Long-term debt, less amount due within one
year
1,726
2,463
Accrued pension benefits
431
1,492
Accrued other postretirement benefits
650
744
Asset retirement obligations
622
625
Environmental remediation
265
293
Fair value of derivative instruments
1,048
742
Noncurrent income taxes
190
209
Other noncurrent liabilities and deferred
credits
599
515
Total liabilities
8,754
9,844
EQUITY
Alcoa Corporation shareholders’
equity:
Common stock
2
2
Additional capital
9,577
9,663
Accumulated deficit
(315
)
(725
)
Accumulated other comprehensive loss
(4,626
)
(5,629
)
Total Alcoa Corporation shareholders’
equity
4,638
3,311
Noncontrolling interest
1,611
1,705
Total equity
6,249
5,016
Total liabilities and equity
$
15,003
$
14,860
(1)
This line item includes $4 and $3
of restricted cash December 31, 2021 and December 31, 2020,
respectively.
(2)
This line item includes $106 of
noncurrent restricted cash as of December 31, 2021.
Alcoa Corporation and subsidiaries
Statement of Consolidated Cash Flows
(unaudited)
(in millions)
Year Ended December
31,
2021
2020
CASH FROM OPERATIONS
Net income (loss)
$
570
$
(14
)
Adjustments to reconcile net income (loss)
to cash from operations:
Depreciation, depletion, and
amortization
664
653
Deferred income taxes
147
(26
)
Equity earnings, net of dividends
(138
)
20
Restructuring and other charges, net
1,128
104
Net gain from investing activities – asset
sales
(354
)
(173
)
Net periodic pension benefit cost
47
138
Stock-based compensation
39
25
Provision for bad debt expense
1
2
Premium paid on early redemption of
debt
43
—
Other
24
32
Changes in assets and liabilities,
excluding effects of divestitures and foreign currency translation
adjustments:
(Increase) decrease in receivables
(414
)
16
(Increase) decrease in inventories
(639
)
122
(Increase) decrease in prepaid expenses
and other current assets
(41
)
17
Increase in accounts payable, trade
354
25
(Decrease) in accrued expenses
(38
)
(153
)
Increase in taxes, including income
taxes
301
119
Pension contributions
(579
)
(343
)
(Increase) in noncurrent assets
(160
)
(82
)
(Decrease) in noncurrent liabilities
(35
)
(88
)
CASH PROVIDED FROM OPERATIONS
920
394
FINANCING ACTIVITIES
Additions to debt (original maturities
greater than three months)
495
739
Payments on debt (original maturities
greater than three months)
(1,294
)
(1
)
Proceeds from the exercise of employee
stock options
25
1
Repurchase of common stock
(150
)
—
Dividends paid on Alcoa common stock
(19
)
—
Financial contributions for the
divestiture of businesses
(17
)
(38
)
Contributions from noncontrolling
interest
21
24
Distributions to noncontrolling
interest
(215
)
(207
)
Other
(4
)
(4
)
CASH (USED FOR) PROVIDED FROM FINANCING
ACTIVITIES
(1,158
)
514
INVESTING ACTIVITIES
Capital expenditures
(390
)
(353
)
Proceeds from the sale of assets
966
198
Additions to investments
(11
)
(12
)
CASH PROVIDED FROM (USED FOR) INVESTING
ACTIVITIES
565
(167
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH
(13
)
(14
)
Net change in cash and cash equivalents
and restricted cash
314
727
Cash and cash equivalents and restricted
cash at beginning of year
1,610
883
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AT END OF PERIOD
$
1,924
$
1,610
Alcoa Corporation and subsidiaries
Segment Information (unaudited)
(dollars in millions, except realized
prices; dry metric tons in millions (mdmt); metric tons in
thousands (kmt))
4Q20
2020
1Q21
2Q21
3Q21
4Q21
2021
Bauxite:
Production(1) (mdmt)
12.2
48.0
11.9
12.2
11.7
11.8
47.6
Third-party shipments (mdmt)
1.9
6.5
1.5
1.1
1.5
1.6
5.7
Intersegment shipments (mdmt)
10.4
42.2
10.5
10.8
10.5
10.6
42.4
Third-party sales
$
79
$
272
$
58
$
39
$
56
$
83
$
236
Intersegment sales
$
225
$
941
$
185
$
179
$
172
$
175
$
711
Segment Adjusted EBITDA(2)
$
120
$
495
$
59
$
41
$
23
$
49
$
172
Depreciation, depletion, and
amortization
$
38
$
135
$
57
$
32
$
30
$
34
$
153
Alumina:
Production (kmt)
3,371
13,475
3,327
3,388
3,253
3,291
13,259
Third-party shipments (kmt)
2,312
9,641
2,472
2,437
2,426
2,294
9,629
Intersegment shipments (kmt)
1,046
4,243
1,101
1,054
1,011
1,121
4,287
Average realized third-party price per
metric ton of alumina
$
268
$
273
$
308
$
282
$
312
$
407
$
326
Third-party sales
$
620
$
2,627
$
760
$
688
$
756
$
935
$
3,139
Intersegment sales
$
314
$
1,268
$
364
$
343
$
349
$
530
$
1,586
Segment Adjusted EBITDA(2)
$
97
$
497
$
227
$
124
$
148
$
503
$
1,002
Depreciation and amortization
$
45
$
172
$
46
$
50
$
47
$
55
$
198
Equity (loss) income
$
(2
)
$
(23
)
$
(5
)
$
(1
)
$
(1
)
$
11
$
4
Aluminum:
Primary aluminum production (kmt)
559
2,263
548
546
545
554
2,193
Third-party aluminum shipments(3)
(kmt)
735
3,016
831
767
722
687
3,007
Average realized third-party price per
metric ton of primary aluminum
$
2,094
$
1,915
$
2,308
$
2,753
$
3,124
$
3,382
$
2,879
Third-party sales
$
1,685
$
6,365
$
2,047
$
2,102
$
2,295
$
2,322
$
8,766
Intersegment sales
$
5
$
12
$
2
$
3
$
8
$
5
$
18
Segment Adjusted EBITDA(2)
$
181
$
325
$
283
$
460
$
613
$
523
$
1,879
Depreciation and amortization
$
82
$
322
$
73
$
73
$
72
$
71
$
289
Equity income (loss)
$
6
$
(7
)
$
13
$
28
$
38
$
37
$
116
Reconciliation of total segment
Adjusted EBITDA to consolidated net (loss) income attributable to
Alcoa Corporation:
Total segment Adjusted EBITDA(2)
$
398
$
1,317
$
569
$
625
$
784
$
1,075
$
3,053
Unallocated amounts:
Transformation(4)
(8
)
(45
)
(11
)
(13
)
(10
)
(10
)
(44
)
Intersegment eliminations
5
(8
)
(7
)
35
(8
)
(121
)
(101
)
Corporate expenses(5)
(30
)
(102
)
(26
)
(28
)
(30
)
(45
)
(129
)
Provision for depreciation, depletion, and
amortization
(170
)
(653
)
(182
)
(161
)
(156
)
(165
)
(664
)
Restructuring and other charges, net
(60
)
(104
)
(7
)
(33
)
(33
)
(1,055
)
(1,128
)
Interest expense
(43
)
(146
)
(42
)
(67
)
(58
)
(28
)
(195
)
Other (expenses) income, net
(44
)
(8
)
24
105
18
298
445
Other(6)
(11
)
(78
)
(6
)
(2
)
(10
)
(20
)
(38
)
Consolidated income (loss) before income
taxes
37
173
312
461
497
(71
)
1,199
Provision for income taxes
(20
)
(187
)
(93
)
(111
)
(127
)
(298
)
(629
)
Net income attributable to noncontrolling
interest
(21
)
(156
)
(44
)
(41
)
(33
)
(23
)
(141
)
Consolidated net (loss) income
attributable to Alcoa Corporation
$
(4
)
$
(170
)
$
175
$
309
$
337
$
(392
)
$
429
The difference between segment
totals and consolidated amounts is in Corporate.
(1)
The production amounts can vary
from total shipments due primarily to differences between the
equity allocation of production and off-take agreements with the
respective equity investment.
(2)
Alcoa Corporation’s definition of
Adjusted EBITDA (Earnings before interest, taxes, depreciation, and
amortization) 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. The Adjusted EBITDA presented may not be comparable
to similarly titled measures of other companies.
(3)
Until the sale of the Warrick
Rolling Mill on March 31, 2021, the Aluminum segment’s third-party
aluminum shipments were composed of both primary aluminum and
flat-rolled aluminum. Beginning April 1, 2021, the segment’s
third-party aluminum shipments include only primary aluminum.
(4)
Transformation includes, among
other items, the Adjusted EBITDA of previously closed
operations.
(5)
Corporate expenses are composed
of general administrative and other expenses of operating the
corporate headquarters and other global administrative facilities,
as well as research and development expenses of the corporate
technical center.
(6)
Other includes certain items that
impact Cost of goods sold and other expenses on Alcoa Corporation’s
Statement of Consolidated Operations that are not included in the
Adjusted EBITDA of the reportable segments.
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited)
(in millions, except per-share
amounts)
Adjusted Income
Income (Loss)
Income (Loss)
Quarter ended
Year ended
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Net (loss) income attributable to Alcoa
Corporation
$
(392
)
$
337
$
(4
)
$
429
$
(170
)
Special items:
Restructuring and other charges, net
1,055
33
60
1,128
104
Other special items(1)
(232
)
26
5
(301
)
(103
)
Discrete tax items and interim tax
impacts(2)
102
1
(6
)
101
(26
)
Tax impact on special items(3)
5
(2
)
(1
)
6
(13
)
Noncontrolling interest impact(3)
(63
)
(4
)
(5
)
(66
)
(7
)
Subtotal
867
54
53
868
(45
)
Net income (loss) attributable to Alcoa
Corporation – as adjusted
$
475
$
391
$
49
$
1,297
$
(215
)
Diluted EPS(4):
Net (loss) income attributable to Alcoa
Corporation common shareholders
$
(2.11
)
$
1.76
$
(0.02
)
$
2.26
$
(0.91
)
Net income (loss) attributable to Alcoa
Corporation common shareholders - as adjusted
$
2.50
$
2.05
$
0.26
$
6.83
$
(1.16
)
Net income (loss) attributable to Alcoa Corporation – as
adjusted is a non-GAAP financial measure. Management believes this
measure is meaningful to investors because management reviews the
operating results of Alcoa Corporation excluding the impacts of
restructuring and other charges, various tax items, and other
special items (collectively, “special items”). There can be no
assurances that additional special items will not occur in future
periods. To compensate for this limitation, management believes it
is appropriate to consider both Net (loss) income attributable to
Alcoa Corporation determined under GAAP as well as Net income
(loss) attributable to Alcoa Corporation – as adjusted.
(1)
Other special items include the
following:
•
for the quarter ended December
31, 2021, net gains on asset sales ($222), primarily related to the
former Rockdale site sale, a net favorable change in certain
mark-to-market energy derivative instruments ($27), costs related
to the closure of the Wenatchee, Washington smelter ($10), costs
related to the restart process at the Alumar, Brazil smelter ($6),
and a charge for other special items ($1);
•
for the quarter ended September
30, 2021, a charge for debt redemption expenses ($22), a net
unfavorable change in certain mark-to-market energy derivative
instruments ($9), net gains on asset sales ($8), and charges for
other special items ($3);
•
for the quarter ended December
31, 2020, external costs related to portfolio actions ($4), a net
favorable change in certain mark-to-market energy derivative
instruments ($2), and charges for other special items ($3);
•
for the year ended December 31,
2021, net gains on asset sales ($352), primarily related to the
former Rockdale site sale and the former Eastalco site sale, a
charge for debt redemption expenses ($54), a net favorable change
in certain mark-to-market energy derivative instruments ($25),
costs related to the closure of the Wenatchee, Washington smelter
($10), costs related to the restart process at the Alumar, Brazil
smelter ($6), and net charges for other special items ($6);
and,
•
for the year ended December 31,
2020, costs related to the restart process at the Bécancour, Canada
smelter ($56), external costs related to portfolio actions ($8), a
net unfavorable change in certain mark-to-market energy derivative
instruments ($10), a gain on the sale of a waste treatment facility
in Gum Springs, Arkansas ($180), and charges for other special
items ($3).
(2)
Discrete tax items and interim
tax impacts are the result of discrete transactions and interim
period tax impacts based on full-year assumptions and include the
following:
•
for the quarter ended December
31, 2021, a charge to record a valuation allowance on the Company’s
Spanish alumina subsidiary’s deferred tax assets ($97), and a net
charge for several other items ($5);
•
for the quarter ended September
30, 2021, a net charge for discrete tax items ($1);
•
for the quarter ended December
31, 2020, a net charge for interim tax impacts ($19), a benefit
related to the favorable ruling of a Spanish tax matter ($32), and
a net charge for several other items ($7);
•
for the year ended December 31,
2021, a charge to record a valuation allowance on the Company’s
Spanish alumina subsidiary’s deferred tax assets ($97), and a net
charge for several other items ($4); and,
•
for the year ended December 31,
2020, a benefit related to the favorable ruling of a Spanish tax
matter ($32), and a net charge for several other items ($6).
(3)
The tax impact on special items
is based on the applicable statutory rates in the jurisdictions
where the special items occurred. The noncontrolling interest
impact on special items represents Alcoa’s partner’s share of
certain special items.
(4)
In any period with a Net loss
attributable to Alcoa Corporation (GAAP or as adjusted), the
average number of shares applicable to diluted earnings per share
exclude certain share equivalents as their effect is
anti-dilutive.
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted EBITDA
Quarter ended
Year ended
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Net (loss) income attributable to Alcoa
Corporation
$
(392
)
$
337
$
(4
)
$
429
$
(170
)
Add:
Net income attributable to noncontrolling
interest
23
33
21
141
156
Provision for income taxes
298
127
20
629
187
Other (income) expenses, net
(298
)
(18
)
44
(445
)
8
Interest expense
28
58
43
195
146
Restructuring and other charges, net
1,055
33
60
1,128
104
Provision for depreciation, depletion, and
amortization
165
156
170
664
653
Adjusted EBITDA
879
726
354
2,741
1,084
Special items(1)
17
2
7
22
67
Adjusted EBITDA, excluding special
items
$
896
$
728
$
361
$
2,763
$
1,151
Alcoa’s Corporation’s definition of Adjusted EBITDA (Earnings
before interest, taxes, depreciation, and amortization) 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 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.
(1)
Special items include the
following (see reconciliation of Adjusted Income above for
additional information):
•
for the quarter ended December
31, 2021, costs related to the closure of the Wenatchee, Washington
smelter ($10), costs related to the restart process at the Alumar,
Brazil smelter ($6), and a charge for other special items ($1);
•
for the quarter ended September
30, 2021, charges for other special items ($2);
•
for the quarter ended December
31, 2020, external costs related to portfolio actions ($4) and
charges for other special items ($3);
•
for the year ended December 31,
2021, costs related to the closure of the Wenatchee, Washington
smelter ($10), costs related to the restart process at the Alumar,
Brazil smelter ($6), and net charges for other special items ($6);
and,
•
for the year ended December 31,
2020, costs related to the restart process at the Bécancour, Canada
smelter ($56), external costs related to portfolio actions ($8),
and charges for other special items ($3).
Alcoa Corporation and subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Free Cash Flow
Quarter ended
Year ended
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Cash from operations(1)
$
565
$
435
$
38
$
920
$
394
Capital expenditures
(153
)
(83
)
(111
)
(390
)
(353
)
Free cash flow
$
412
$
352
$
(73
)
$
530
$
41
Free Cash Flow is a non-GAAP financial measure. Management
believes this measure is meaningful to investors because management
reviews cash flows generated from operations after taking into
consideration capital expenditures, which are both necessary to
maintain and expand Alcoa Corporation’s asset base and expected to
generate future cash flows from operations. It is important to note
that Free Cash Flow does not represent the residual cash flow
available for discretionary expenditures since other
non-discretionary expenditures, such as mandatory debt service
requirements, are not deducted from the measure.
(1)
Cash provided from operations for
the year ended December 31, 2021 includes a $500 cash outflow for
unscheduled contributions to certain U.S. defined benefit pension
plans. The $500 was funded with the net proceeds of 4.125% senior
notes due 2029, together with cash on hand.
Net Debt
December 31, 2021
December 31, 2020
Short-term borrowings
$
75
$
77
Long-term debt due within one year
1
2
Long-term debt, less amount due within one
year
1,726
2,463
Total debt
1,802
2,542
Less: Cash and cash equivalents
1,814
1,607
(Net cash) net debt
$
(12
)
$
935
Net debt is a non-GAAP financial measure. Management believes
this measure is meaningful to investors because management assesses
Alcoa Corporation’s leverage position after considering available
cash that could be used to repay outstanding debt. When cash
exceeds total debt, the measure is expressed as net cash.
Alcoa Corporation and
subsidiaries
Calculation of Financial Measures
(unaudited), continued
(in millions)
Adjusted Net Debt and Proportional
Adjusted Net Debt
December 31, 2021
December 31, 2020
Consolidated
NCI
Alcoa Proportional
Consolidated
NCI
Alcoa Proportional
Short-term borrowings
$
75
$
30
$
45
$
77
$
31
$
46
Long-term debt due within one year
1
—
1
2
—
2
Long-term debt, less amount due within one
year
1,726
—
1,726
2,463
—
2,463
Total debt
1,802
30
1,772
2,542
31
2,511
Less: Cash and cash equivalents
1,814
177
1,637
1,607
176
1,431
(Net cash) net debt
(12
)
(147
)
135
935
(145
)
1,080
Plus: Net pension / OPEB liability
1,007
17
990
2,395
(1)
52
2,343
Adjusted net debt
$
995
$
(130
)
$
1,125
$
3,330
$
(93
)
$
3,423
Net debt is a non-GAAP financial measure. Management believes
that this measure is meaningful to investors because management
assesses Alcoa Corporation’s leverage position after considering
available cash that could be used to repay outstanding debt. When
cash exceeds total debt, the measure is expressed as net cash.
Adjusted net debt and proportional adjusted net debt are also
non-GAAP financial measures. Management believes that these
additional measures are meaningful to investors because management
also assesses Alcoa Corporation’s leverage position after
considering available cash that could be used to repay outstanding
debt and net pension/OPEB liability, net of the portion of those
items attributable to noncontrolling interest (NCI).
(1)
Includes OPEB liabilities of
approximately $83 million related to the Warrick rolling mill sale
which was a negotiated estimate as of December 31, 2020 and
subsequently trued up in 2021. Recorded in Liabilities held for
sale.
Days Working Capital
Quarter ended
December 31, 2021
September 30, 2021
December 31, 2020
Accounts receivable
$
757
$
769
$
471
Add: Inventory
1,956
1,702
1,398
Less: Accounts Payable
(1,674
)
(1,482
)
(1,403
)
DWC working capital
$
1,039
$
989
$
466
Sales(1)
3,340
3,109
2,105
Number of days in the quarter
92
92
92
Days working capital(2)
$
29
$
29
$
20
Days working capital is a non-GAAP financial measure. Management
believes that this measure is meaningful to investors because
management uses its working capital position to assess Alcoa
Corporation’s efficiency in liquidity management.
(1)
Excludes Sales of approximately
$287 million related to the Warrick rolling mill for the quarter
ended December 31, 2020.
(2)
Days working capital is
calculated as DWC working capital divided by the quotient of Sales
and number of days in the quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220118005957/en/
Investor Contact: James Dwyer +1 412 992 5450
James.Dwyer@alcoa.com
Media Contact: Jim Beck +1 412 315 2909
Jim.Beck@alcoa.com
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