• Revenue: Increased 20% sequentially to $3.5 billion.
• Alumina Segment Revenue: Third-party revenue increased 45% due to higher prices and shipments.
• Aluminum Segment Revenue: Third-party revenue increased 5% primarily due to higher prices.
• Net Income: Fourth-quarter net income attributable to Alcoa was $202 million, up from $90 million in the prior quarter.
• Earnings Per Share (EPS): Doubled to $0.76 per share.
• Adjusted Net Earnings: $276 million or $1.04 per share.
• Adjusted EBITDA: Increased by $222 million to $677 million.
• Profitability Improvement Program: Exceeded the $645 million target, achieving $675 million in improvements.
• Debt Repayment: Repaid $385 million of debt.
• Cash Balance: Ended the quarter with $1.1 billion in cash.
• Return on Equity: Positive 6.5% year-to-date.
• Days Working Capital: Decreased by 11 days to 34 days.
• Dividend: Fourth-quarter dividend added $27 million to stockholder capital returns.
• Free Cash Flow: Positive for the quarter.

• Warning! GuruFocus has detected 6 Warning Signs with AA.

Release Date: January 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alcoa Corp (NYSE:AA) achieved a 20% sequential increase in revenue, reaching $3.5 billion.
• The company exceeded its $645 million profitability improvement program ahead of schedule.
• Alcoa Corp (NYSE:AA) successfully onboarded new talent and promoted a culture of high performance and continuous improvement.
• The company expanded important customer and supplier relationships and invested in growth CapEx to enhance value-add products.
• Alcoa Corp (NYSE:AA) started delevering the company with the repayment of $385 million of debt while maintaining its quarterly dividend.

Negative Points

• Alcoa Corp (NYSE:AA) faced increased other costs primarily related to intersegment eliminations.
• The Kwinana curtailment has been slow to deliver savings due to high transition and holding costs.
• The company anticipates unfavorable performance in the Aluminum segment due to lower seasonal pricing and absence of Ma'aden offtake shipping volumes.
• Alcoa Corp (NYSE:AA) expects transformation costs to increase to $75 million, reflecting accelerated remediation activities.
• The company faces uncertainty related to the impact of potential new US tariffs, which could affect supply, demand, and trade flows.

Q & A Highlights

Q: If there are 25% tariffs on Canada, how would Alcoa handle the volume shift, and what impact would it have on the Midwest premium? A: William Oplinger, President and CEO, stated that the Midwest premium would likely increase significantly to attract volumes into the US. Alcoa might redirect Canadian metal to Europe, while Middle Eastern and Indian metal could flow into North America due to a potential 15% trade differential.

Q: Can you provide clarity on Alcoa's net debt target and how the Ma'aden equity position factors into capital returns? A: Molly Beerman, CFO, mentioned that Alcoa does not have a stated net debt target but aims to reduce its current $2.1 billion adjusted net debt. The Ma'aden transaction, valued at approximately $1.3 billion, is expected to close in the first half of the year, with a lockup period for shares.

Q: What is the current state of the bauxite market, and is there sufficient capacity for new refineries in India and China? A: William Oplinger noted that the bauxite market is very tight, with prices at $120-$130 per ton, impacting alumina costs. The tight market pressures alumina availability, and new production in India and Indonesia is needed to ease the market.

Q: What progress has been made with the San Ciprian operations, and what are the financial implications if a deal isn't reached? A: Molly Beerman explained that high API prices have reduced cash consumption, but urgency remains to finalize discussions with unions and energy suppliers. The MOU is a positive step but doesn't guarantee a deal. Closure costs without severance are estimated at $40-$50 million for the smelter and $200 million for the refinery.

Q: How does Alcoa plan to monetize idle sites given the interest from data centers? A: William Oplinger highlighted Alcoa's history of monetizing legacy assets, such as the Rockdale and Intalco sites, which were sold for significant amounts. Alcoa is in contact with developers and aims to maximize value from sites like Point Comfort and Point Henry.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.