• Revenue: $3.4 billion, down 3% sequentially.
• Net Income: $548 million, up from $202 million in the prior quarter.
• Earnings Per Share (EPS): $2.07, more than doubling from the previous quarter.
• Adjusted Net Income: $568 million, or $2.15 per share.
• Adjusted EBITDA: $855 million, an increase of $178 million.
• Cash Balance: $1.2 billion at the end of the first quarter.
• Free Cash Flow: Positive, with contributions from net non-controlling interest.
• Return on Equity: 39.1% year-to-date.
• Days Working Capital: Increased to 47 days, up 13 days sequentially.
• Debt Issuance: $1 billion in Australia, with $890 million tendered for 2027 and 2028 notes.
• Adjusted Net Debt: $2.1 billion at the end of the first quarter.
• Dividend: $26 million added to stockholder capital returns.
• US Section 232 Tariffs: Estimated annual cost of $400 million to $425 million, with a net negative impact of approximately $100 million.

• Warning! GuruFocus has detected 8 Warning Signs with AA.

Release Date: April 16, 2025

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

Positive Points

• Alcoa Corp (NYSE:AA) reported strong first-quarter financial and production results, with no fatal or serious injuries, highlighting a strong safety culture.
• The company completed a $1 billion debt offering in Australia, extending maturities at a lower after-tax interest expense.
• Alcoa Corp (NYSE:AA) formed a joint venture with IGNIS EQT for the San Ciprian operations, resuming production at the smelter.
• First-quarter net income attributable to Alcoa was $548 million, with earnings per share more than doubling to $2.07.
• The company ended the first quarter with a cash balance of $1.2 billion, supported by strong EBITDA and positive cash flow from operations.

Negative Points

• Revenue decreased by 3% sequentially to $3.4 billion, with a notable decline in the aluminum segment due to lower average realized prices and shipments.
• The US Section 232 tariffs on Canadian aluminum imports increased to 25%, resulting in an estimated annual negative impact of $100 million on Alcoa's business.
• The Alumina segment's adjusted EBITDA decreased by $52 million due to lower alumina prices and unfavorable currency impacts.
• The Aluminum segment's adjusted EBITDA decreased by $60 million, impacted by higher alumina costs and increased production, energy, and raw material costs.
• Working capital increased significantly in the first quarter, driven by higher raw material prices and volumes, leading to elevated inventory levels.

Q & A Highlights

Q: Can you clarify the impact of tariffs on Alcoa's financials, particularly the $105 million quarterly hit and the $100 million annual impact? A: (Molly Beerman, CFO) The $100 million annual impact is net of the higher Midwest premium and Canadian metal sales into the US, offset by the $400 million cost of the Canadian tariff. The $105 million is a quarterly figure based on an LME of $2,400 and a Midwest premium of $0.39. The Midwest premium has not responded as expected due to negative market sentiment and inventory stockpiling in the US.

Q: What are your thoughts on the stickiness of the tariffs, and would you consider restarting the Warwick smelter if they persist? A: (William Oplinger, CEO) It's difficult to make a restart decision based on tariffs that can change. We can't comment on their stickiness due to the volatility of discussions around tariffs. We wouldn't restart capacity solely based on tariffs as they are subject to change.

Q: Can you provide more details on Alcoa's engagement with governments regarding tariffs? A: (William Oplinger, CEO) We are engaging with both the US and Canadian governments, as well as through the US Aluminum Association. We've met with President Trump's direct reports and Canadian officials, including Prime Minister Trudeau and Prime Minister Carney. The message is that the US needs economic upstream aluminum production to support downstream jobs, preferably through Canadian imports.

Q: Regarding San Ciprian, what is the expected financial impact of the smelter restart, and how do hedges help mitigate risks? A: (Molly Beerman, CFO) We expect to lose $70 million to $90 million in EBITDA in 2025 due to restart inefficiencies. Hedges have been put in place to manage costs. The cash used by operations will be about $90 million to $110 million. We haven't released 2026 numbers yet, but losses are expected to be lower as restart inefficiencies decrease.

Q: With 80% of Chinese aluminum refineries unprofitable, what would it take for them to curtail output? A: (William Oplinger, CEO) The Chinese are quick to react to negative economic scenarios, and we are already seeing extended maintenance outages. They are likely to react quickly to loss-making sites.

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