Second Quarter Highlights
l
Managing health risks posed by the COVID-19 pandemic across global
operations; all production sites remain fully operational
l
Executed previously announced cost-saving actions with continued
progress on working capital and productivity; cash balance grew to $965
million, a sequential increase of $136 million
l
Generated $288 million in cash from operations; $211 million free cash
flow, the highest since the fourth quarter of 2018
l
Set first-half and quarterly production records for Bauxite segment;
record quarterly shipments from Juruti (Brazil)
l
Achieved a record quarterly production rate (metric tons-per-day) for
the Alumina segment
l
Continuing to progress on strategic actions, including ongoing review of
production portfolio and non-core assets; 2020 programs to improve
working capital and productivity; and cash-preservation actions related
to COVID-19
l
Increased liquidity by completing a $750 million debt issuance on July
13, 2020 at 5.5%, a coupon rate lower than any of the Company’s prior
debt issuances
2020 Outlook
The Company’s 2020 shipment outlook for Bauxite, Alumina and Aluminum
remains unchanged from the prior full-year estimates. Total annual
bauxite shipments are expected to range between 48.0 and 49.0 million
dry metric tons. Total alumina shipments are projected between 13.6 and
13.7 million metric tons. Aluminum shipments are expected to be between
2.9 and 3.0 million metric tons.
In the third quarter of 2020, Alcoa expects slightly lower quarterly
results in the Bauxite segment primarily due to lower volume. In the
Alumina segment, the Company expects lower quarterly results from higher
energy costs in Australia. In the Aluminum segment, the Company expects
improved results with lower raw material costs including energy.
Alcoa is lowering its annual outlook for depreciation, depletion and
amortization expense to $665 million from $685 million as favorable
currency rates resulted in lower expense in the first half of 2020, as
well as lower capital spending in the year. The Company is increasing
its expected interest expense for full year 2020 to approximately $150
million from a prior range of $125 to $130 million due to the debt
issuance.
As Alcoa’s profit before taxes is lower in the current economic
environment, the annual operational tax rate can fluctuate
significantly. Consequently, the Company is providing an operational tax
expense range rather than a rate; third quarter 2020 operational tax
expense is expected to approximate $150 million, based on recent
pricing.
The COVID-19 pandemic is ongoing, and its magnitude and duration
continue to be unknown. The uncertainty around its future impact on the
Company’s business, financial condition, operating results, and cash
flows could cause actual results to differ from this outlook.
T1: Segment Information (unaudited)
(dollars in millions, except realized prices; dry metric tons in
millions (mdmt); metric tons in thousands (kmt))
|
1Q19 |
2Q19 |
3Q19 |
4Q19 |
2019 |
1Q20 |
2Q20 |
Bauxite: |
|
|
|
|
|
|
|
Production(mdmt) |
11.9 |
11.3 |
12.1 |
12.1 |
47.4 |
11.6 |
12.2 |
Third-party shipments (mdmt) |
1.2 |
1.5 |
2 |
1.5 |
6.2 |
1.4 |
1.6 |
Intersegment shipments (mdmt) |
10.2 |
10.3 |
10.6 |
10.3 |
41.4 |
10.5 |
10.8 |
Third-party sales |
$65 |
$67 |
$100 |
$65 |
$297 |
$71 |
$66 |
Intersegment sales |
$236 |
$246 |
$251 |
$246 |
$979 |
$235 |
$245 |
Segment Adjusted EBITDA |
$126 |
$112 |
$134 |
$132 |
$504 |
$120 |
$131 |
Depreciation, depletion, and amortization |
$28 |
$27 |
$35 |
$30 |
$120 |
$34 |
$30 |
Alumina: |
|
|
|
|
|
|
|
Production (kmt) |
3240 |
3309 |
3380 |
3373 |
13302 |
3298 |
3371 |
Third-party shipments (kmt) |
2329 |
2299 |
2381 |
2464 |
9473 |
2365 |
2415 |
Intersegment shipments (kmt) |
972 |
1070 |
1049 |
981 |
4072 |
1075 |
987 |
Average realized third-party price per metric ton of alumina |
$385 |
$376 |
$324 |
$291 |
$343 |
$299 |
$250 |
Third-party sales |
$897 |
$864 |
$771 |
$718 |
$3,250 |
$707 |
$603 |
Intersegment sales |
$417 |
$445 |
$369 |
$330 |
$1,561 |
$336 |
$289 |
Segment Adjusted EBITDA(2) |
$372 |
$369 |
$223 |
$133 |
$1,097 |
$193 |
$88 |
Depreciation and amortization |
$48 |
$55 |
$54 |
$57 |
$214 |
$49 |
$37 |
Equity income (loss) |
$12 |
$3 |
$— |
($9) |
$6 |
($9) |
($8) |
Aluminum: |
|
|
|
|
|
|
|
Primary aluminum production (kmt) |
537 |
533 |
530 |
535 |
2135 |
564 |
581 |
Third-party aluminum shipments(3) (kmt) |
709 |
724 |
708 |
718 |
2859 |
725 |
789 |
Average realized third-party price per metric ton of primary
aluminum |
$2,219 |
$2,167 |
$2,138 |
$2,042 |
$2,141 |
$1,988 |
$1,694 |
Third-party sales |
$1,735 |
$1,757 |
$1,677 |
$1,634 |
$6,803 |
$1,598 |
$1,475 |
Intersegment sales |
$3 |
$4 |
$4 |
$6 |
$17 |
$3 |
$2 |
Segment Adjusted EBITDA(2) |
($96) |
$3 |
$43 |
$75 |
$25 |
$62 |
($34) |
Depreciation and amortization |
$89 |
$85 |
$88 |
$84 |
$346 |
$81 |
$79 |
Equity (loss) income |
($22) |
($17) |
($5) |
($5) |
($49) |
$5 |
($12) |
Source:
Alcoa |