Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Alcoa Corporation    AA

ALCOA CORPORATION

(AA)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

ALCOA : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

share with twitter share with LinkedIn share with facebook
04/29/2020 | 05:30pm EDT

(dollars in millions, except per-share amounts, average realized prices, and average cost amounts; dry metric tons in millions (mdmt); metric tons in thousands (kmt))


References in this Management's Discussion and Analysis of Financial Condition
and Results of Operations to ParentCo refer to Alcoa Inc., a Pennsylvania
corporation, and its consolidated subsidiaries through October 31, 2016, at
which time it was renamed Arconic Inc. (and has since been subsequently renamed
Howmet Aerospace Inc.). On November 1, 2016 (the Separation Date), ParentCo
separated into two standalone, publicly-traded companies, Alcoa Corporation and
Arconic Inc. (the Separation Transaction). In connection with the Separation
Transaction, as of October 31, 2016, the Company and Arconic Inc. entered into
several agreements to affect the Separation Transaction, including a Separation
and Distribution Agreement and a Tax Matters Agreement. See Overview in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Part II Item 7 of Alcoa Corporation's Annual Report on Form 10-K
for the year ended December 31, 2019 for additional information regarding the
Separation Transaction.



Business Update



Coronavirus

In response to the threat of coronavirus (COVID-19), Alcoa has implemented swift
measures to protect the health of the Company's workforce, prevent infection in
our locations, and mitigate impacts from the global pandemic. Currently, all of
Alcoa's bauxite mines, alumina refineries, and aluminum manufacturing facilities
remain in operation with comprehensive measures in place for health and business
continuity. Each location has implemented extensive preparedness and response
plans which include social distancing protocols and other protective actions
aligned with guidance from the U.S. Centers for Disease Control and Prevention,
the World Health Organization, and all other relevant government agencies in
countries where we operate. Additional actions include:



• Adjusted shift schedules and other work patterns to create separation for

the workforce and ensure redundancy for critical resources;

• Developed and implemented additional hygiene protocols and cleaning

routines at each location;

• Deployed communications to our suppliers, vendors, customers, and delivery

personnel on our comprehensive actions;

• Issued global communications to educate and update employees on public

       health practices to mitigate the potential spread of the virus in our
       communities;

• Implemented access restrictions to anyone who has visited or transited

       through high-risk countries. Everyone must be free of the signs and
       symptoms of COVID-19 before entering Alcoa sites;


  • Implemented remote work procedures where practical; and,


  • Eliminated non-essential travel.




Due to the economic impacts of the COVID-19 pandemic and to comply with
restrictions in the Canadian province, the previously announced restart at the
Bécancour (Canada) smelter has been slowed, leaving the operating capacity at
approximately 85 percent of total nameplate capacity at March 31, 2020. The
restart, which was originally expected to be complete by the end of the second
quarter of 2020, may be extended past such date. Additionally, COVID-19 has
negatively impacted customer demand of value-added aluminum products, resulting
in lower margins on aluminum product sales from a shift to commodity-grade
products from value-add products.



As the impact of COVID-19 on the global economy continues to evolve, the Company
is constantly evaluating the broad impact of the pandemic on the macroeconomic
environment, including specific regions and end markets in which the Company
operates. As a result of the pandemic's impact on the macroeconomic environment,
management evaluated the future recoverability of the Company's assets,
including goodwill and long-lived assets, and the realizability of deferred tax
assets while considering the Company's current market capitalization. Management
concluded that no asset impairments existed and no additional valuation
allowances were required in the first quarter of 2020. Additionally, the
pandemic did not have a significant impact on the 2020 first quarter financial
and operating results of Alcoa Corporation.



The extent and duration of the COVID-19 pandemic is unknown. The pandemic could
have adverse future impacts on the Company's business, financial condition,
operating results, and cash flows. Specifically, if the global health threat
persists, it could adversely affect:



• Global demand for aluminum, negatively impacting our ability to generate

cash flows from operations;

• Global financial and credit markets and our ability to obtain credit or

financing upon acceptable terms or at all, which could negatively affect

       our liquidity and financial condition;


    •  The liquidity of customers, which could negatively impact the
       collectability of outstanding receivables and our cash flows;


                                       22

--------------------------------------------------------------------------------

• Commercial sustainability of key vendors within our supply chain which

could result in higher inventory costs and/or inability to fulfill customer

orders;

Alcoa's ability to fund capital expenditures and required maintenance at

our facilities, which could negatively impact our ability to operate,

results of operations, and profitability;

• The Company's ability to meet covenants in our outstanding debt and credit

facility agreements;

• The financial condition of equity method investments and key joint venture

partners, negatively impacting the results of operations, cash flows, and

recoverability of investment balances;

Alcoa's ability to generate income in certain jurisdictions, negatively

impacting the realizability of our deferred tax assets;

• Investment return on pension assets and declining interest rates, resulting

in increased required Company contributions, negatively impacting future

       cash flows;


  • The effectiveness of hedging instruments;

• The recoverability of certain long-lived and intangible assets, including

goodwill;

• Legal obligations resulting from employee claims related to health and

safety; and,

• The efficiency of production at our operating locations, negatively

       impacting the results of operations.




The preceding list of potential adverse effects of the coronavirus COVID-19
pandemic is not all-inclusive or necessarily in order of importance or
magnitude. The potential impact(s) of the pandemic on the Company's business,
financial condition, operating results, cash flows and/or market capitalization
is difficult to predict and will continue to be monitored in subsequent periods.
Further or prolonged deterioration of adverse conditions could negatively impact
our financial condition and result in asset impairment charges, including
long-lived assets or goodwill, or affect the realizability of deferred tax
assets.



In addition to utilizing all preventative and mitigation options available to ensure continuity of operations, the Company has implemented various cash preservation initiatives. These measures include:



  • Reducing non-critical capital expenditures planned for 2020 by $100;

• Deferring non-regulated environmental and asset retirement obligations

payments of $25;

• Deferring approximately $220 in pension contributions from 2020 to January

       1, 2021 in the U.S., as permitted under the Coronavirus Aid, Relief, and
       Economic Security (CARES) Act; and,

• Implementing hiring restrictions outside of critical production roles,

implementing and extending travel restrictions throughout the organization,

       and utilizing other appropriate government support programs to save or
       defer approximately $35.



Through a combination of these initiatives, the previously announced strategic actions, and the 2020 programs discussed below, the Company is targeting approximately $900 in cash actions during 2020.




Additionally, during April 2020, management took measures to improve Alcoa's
liquidity levers. These include amending the Second Amended Revolving Credit
Facility to temporarily provide a more favorable leverage ratio calculation and
amending the three-year revolving credit facility secured by certain
receivables, converting it to a Receivables Purchase Agreement which provides
the option for faster liquidation of certain customer receivables. On April 8,
2020, the Company's wholly-owned subsidiary, Alcoa Norway ANS, drew $100 against
its one-year, multicurrency revolving credit facility, and may do so from time
to time in the future, in the ordinary course of business. Interest on the drawn
$100 will be accrued at 2.93%. See Credit Facilities under the Liquidity and
Capital Resources section of Management's Discussion and Analysis for additional
detail on the amendments.



Strategic Actions

Alcoa continues to progress with its strategic actions to drive lower costs and
sustainable profitability, however, the global effects of COVID-19 may impact
the timing of the previously announced strategic actions. During 2019, Alcoa
Corporation announced the following strategic actions:



• The implementation of a new operating model that results in a leaner, more

integrated, operator-centric organization with reduced overhead costs;

• The pursuit of non-core asset sales by early 2021 expected to generate an

       estimated $500 to $1,000 in net proceeds in support of its updated
       strategic priorities; and,

• The realignment of its operating portfolio over the next five years,

placing 1.5 million metric tons of smelting capacity and 4 million metric

tons of alumina refining capacity under review. The review will consider

       opportunities for significant improvement, potential curtailments,
       closures, or divestitures.




                                       23

--------------------------------------------------------------------------------

The new operating model has been implemented and the Company is substantially complete with the transition of eliminated roles. At March 31, 2020, approximately 210 of the 260 employees were separated. In addition to the employees separated under severance programs, the Company eliminated 60 positions as open roles or retirements were not replaced.




In January 2020, the Company announced the sale of Elemental Environmental
Solutions LLC (EES), a wholly-owned Alcoa subsidiary that operated the waste
processing facility in Gum Springs, Arkansas, to a global environmental firm in
a transaction valued at $250. The transaction closed as of January 31, 2020
whereby the Company received $200 with another $50 held in escrow to be paid to
Alcoa if certain post-closing conditions are satisfied. As a result of the
transaction, the Company recognized a gain of $180 (pre- and after-tax) in the
first quarter of 2020 and anticipates annual net income improvement of
approximately $10.



On April 22, 2020, Alcoa announced that it will curtail the remaining 230,000
metric tons of uncompetitive smelting capacity at its Intalco smelter in
Ferndale, Washington amid declining market conditions. The full curtailment of
279,000 metric tons, which includes 49,000 metric tons of earlier-curtailed
capacity, is expected to be complete by the end of July 2020. The smelter
recorded a net loss of $24 in the first quarter of 2020. This action will bring
Alcoa's total curtailed smelting capacity to 880,000 metric tons, or
approximately 30 percent of its total global smelting capacity.



The Company will record estimated restructuring charges of approximately $25
(pre- and after-tax) in the second quarter of 2020 associated with the
curtailment, for employee-related costs and contract termination costs, which
are all cash-based charges expected to be paid primarily in the third quarter of
2020. Intalco employs approximately 700 people, and the workforce will be
significantly reduced due to the curtailment.



In December 2019, the Company announced the permanent closure of its alumina
refinery in Point Comfort, Texas as its first action of the multi-year portfolio
review. The site's 2.3 million metric tons of refining capacity had been fully
curtailed since 2016. As a result of the decision to close the refinery, a $274
charge was recorded to Restructuring and other charges, net (see Note D to the
Consolidated Financial Statements in Part II Item 8 of Alcoa Corporation's
Annual Report on Form 10-K for the year ended December 31, 2019). Beginning in
2020, the closure is expected to result in annual net income improvement of
approximately $15 (after-tax and noncontrolling interest) and cash savings of
approximately $10 (Alcoa's share) when compared to the ongoing spend for
curtailment, exclusive of closure costs.



2020 Programs


In February 2020, Alcoa announced 2020 programs to drive leaner working capital
and improved productivity. First, by utilizing a holistic solution for managing
the supply chain across procurement, operations, and the commercial team, the
Company is targeting a working capital benefit between $75 to $100 during 2020
to improve its operating cash flows. Secondly, the Company is expecting greater
productivity and lower costs of approximately $100 which will be achieved
through efficiency programs and specific initiatives taken throughout 2020.

Results of Operations

Selected Financial Data:



                                                              First quarter ended
                                                                   March 31,
                                                               2020           2019
Sales                                                       $    2,381$ 2,719
Net income (loss) attributable to Alcoa Corporation         $       80$  (199 )
Diluted earnings (loss) per share attributable to Alcoa
  Corporation common shareholders                           $     0.43$ (1.07 )
Third-party shipments of alumina (kmt)                           2,365      

2,329

Third-party shipments of aluminum products (kmt)                   725      

709

Average realized price per metric ton of alumina            $      299$   385
Average realized price per metric ton of primary aluminum   $    1,988$ 2,219

Overview-Net income attributable to Alcoa Corporation was $80 in the first quarter of 2020 compared with a Net loss attributable to Alcoa Corporation of $199 in the first quarter of 2019. The improvement in results of $279 was principally related to:

• A gain on the divestiture of a waste processing facility in Gum Springs,

Arkansas;

• Favorable currency impacts, mainly due to changes in the Australian dollar

       and Brazilian real;


  • Lower raw material and energy costs;


  • Lower Net income attributable to non-controlling interest; and,


                                       24

--------------------------------------------------------------------------------

• Lower Provision for income taxes.

Partially offset by:

  • Lower alumina and aluminum prices.



Sales-Sales were $2,381 in the first quarter of 2020 compared with sales of $2,719 in the first quarter of 2019. The decline of $338, or 12%, was principally related to:

• Lower alumina and aluminum prices;

• Lower revenue from flat-rolled aluminum products due to lower shipments; and,

• Lower revenue resulting from the divestiture of two Spanish facilities in

       July 2019.


Partially offset by:

• Higher sales resulting from the restart of the Aluminerie De Bécancour

       (Bécancour) smelter in Quebec; and,


  • Higher shipments in Bauxite and Alumina.




Cost of goods sold- As a percentage of Sales, Cost of goods sold was 85% in the
first quarter of 2020 compared with 80% in the first quarter of 2019. The first
quarter of 2020 percentage was negatively impacted by a lower average realized
price for both alumina and primary aluminum partially offset by lower raw
material costs, particularly petroleum coke and caustic soda, and lower alumina
prices.



Selling, general administrative, and other expenses- Selling, general
administrative, and other expenses decreased by $24, or 29% in the first quarter
of 2020 compared with the first quarter of 2019, due primarily to the absence of
a $20 charge to bad debt expense in the first quarter of 2019, the absence of
Spain collective dismissal costs, cost savings from the new operating model, and
favorable foreign currency impacts.



Provision for depreciation, depletion, and amortization- Provision for depreciation, depletion, and amortization decreased $2, or 1%, in the first quarter of 2020 compared with the first quarter of 2019 primarily due to currency impacts of the Australian dollar and Brazil real.




Restructuring and other charges, net- In the first quarter of 2020, Alcoa
Corporation recorded Restructuring and other charges, net, of $2 which was
comprised of several insignificant items, including pension curtailment charges
of $3 as discussed in Note J to the Consolidated Financial Statements in Part I
Item 1 of this Form 10-Q.



In the first quarter of 2019, Alcoa Corporation recorded Restructuring and other
charges, net, of $113, which were comprised primarily of $103 for exit costs
related to the collective dismissal process and curtailment of the Avilés and La
Coruña Spanish smelters and $7 for closure costs related to a coal mine.



See Note D to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q for additional detail on the above net charges.




Other (income) expenses, net- Other (income) expenses, net was ($132) in the
first quarter of 2020 compared with $41 in the first quarter of 2019. The
favorable change of $173 in the first quarter of 2020 was largely attributable
to the gain on the divestiture of a waste processing facility in Gum Springs,
Arkansas, partially offset by mark-to-market losses on derivative instruments.



Noncontrolling interest- Net income attributable to noncontrolling interest was
$59 in the first quarter of 2020, compared with $141 in the first quarter of
2019. These amounts are entirely related to Alumina Limited's 40% ownership
interest in several affiliated operating entities. See Note A to the
Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.



In the first quarter of 2020 these combined entities, particularly the Alumina
segment entities, generated lower net income compared with the first quarter of
2019. The unfavorable change in earnings was mostly driven by lower alumina
prices (see Alumina under Segment Information below).

                                       25

--------------------------------------------------------------------------------

Segment Information

Bauxite



                                               First quarter ended
                                                    March 31,
                                                2020           2019
Production (mdmt)                                  11.6          11.9
Third-party shipments (mdmt)                        1.4           1.2
Intersegment shipments (mdmt)                      10.5          10.2
Total shipments (mdmt)                             11.9          11.4
Third-party sales                            $       71$    65
Intersegment sales                                  235           236
Total sales                                  $      306$   301
Segment Adjusted EBITDA                      $      120$   126
Operating costs                              $      213$   195

Average cost per dry metric ton of bauxite $ 18$ 17





Production in the above table can vary from Total shipments due primarily to
differences between the equity allocation of production and off-take agreements
with the respective equity investment. Operating costs in the table above
includes all production-related costs: conversion costs, such as labor,
materials, and utilities; depreciation, depletion, and amortization; and plant
administrative expenses.



Bauxite production decreased 3% in the first quarter of 2020 compared with the
first quarter of 2019, primarily due to lower production at the Australian
mines. Third-party sales for the Bauxite segment increased 9% in the first
quarter of 2020 compared with the first quarter of 2019, caused primarily by the
increase in shipments. Intersegment sales were flat for the first quarter of
2020 compared with the first quarter of 2019 as a result of increased
intersegment shipments offsetting the lower average realized price on
intersegment sales.



Segment Adjusted EBITDA decreased $6 in first quarter of 2020 compared with the
first quarter of 2019, primarily due to the previously mentioned lower average
realized price on intersegment sales.



For the second quarter of 2020 in comparison with the second quarter of 2019, a lower average realized price for intersegment sales is expected.



Alumina



                                                              First quarter ended
                                                                   March 31,
                                                            2020                2019
Production (kmt)                                                3,298              3,240
Third-party shipments (kmt)                                     2,365              2,329
Intersegment shipments (kmt)                                    1,075                972
Total shipments (kmt)                                           3,440              3,301
Third-party sales                                                 707       $        897
Intersegment sales                                                336                417
Total sales                                             $       1,043$      1,314
Segment Adjusted EBITDA                                 $         193      

$ 372 Average realized third-party price per metric ton of alumina

                                                 $         299       $        385
Operating costs                                         $         844       $        923
Average cost per metric ton of alumina                  $         245       $        279






Total shipments include metric tons that were not produced by the Alumina
segment. Such alumina was purchased to satisfy certain customer commitments. The
Alumina segment bears the risk of loss of the purchased alumina until control of
the product has been transferred to this segment's customer. Additionally,
operating costs in the table above includes all production-related costs: raw
materials consumed; conversion costs, such as labor, materials, and utilities;
depreciation and amortization; and plant administrative expenses.



                                       26

--------------------------------------------------------------------------------
At March 31, 2020, the Alumina segment had base capacity of 12,759 kmt with 214
kmt of curtailed refining capacity compared with a base capacity of 15,064 kmt
and curtailed refining capacity of 2,519 kmt of at March 31, 2019. The decrease
in base and curtailed was due to the permanent closure of the previously
curtailed Point Comfort alumina refinery.



Alumina production increased by 2% in the first quarter of 2020 compared with
the first quarter of 2019, principally due to continued stabilization of
operations across the refining system. Third-party sales for the Alumina segment
decreased 21% in the first quarter of 2020 compared with the first quarter of
2019, primarily due to a decline in average realized price which was principally
driven by a lower average alumina index price (on 30-day lag), partially offset
by a 2% increase in shipments.



Intersegment sales declined 19% in the first quarter of 2020 compared with the
first quarter of 2019, primarily due to a lower average realized price partially
offset by increased demand from the Aluminum segment. The increased demand from
the Aluminum segment was primarily driven by the restart at the Bécancour
(Canada) smelter (see Aluminum below).



Segment Adjusted EBITDA decreased $179 in the first quarter of 2020 compared
with the first quarter of 2019. The decline is largely attributed to the decline
in average realized price of alumina. This decrease was partially offset by net
favorable foreign currency movements due to a stronger U.S. dollar (particularly
against the Australian dollar and Brazilian real), lower unit costs for bauxite
and caustic soda, and increased shipments.



For the second quarter of 2020 in comparison with the second quarter of 2019,
lower unit costs for bauxite and caustic soda and an improvement in maintenance
activities are expected.



Aluminum



                                                      First quarter ended
                                                           March 31,
Total Aluminum information                             2020           2019
Third-party aluminum shipments (kmt)                       725           709
Third-party sales                                   $    1,598$ 1,735
Intersegment sales                                           3             3
Total sales                                         $    1,601$ 1,738
Segment Adjusted EBITDA                             $       62$   (96 )

Primary aluminum information                           2020           2019
Production (kmt)                                           564           

537

Third-party shipments (kmt)                                652           

628

Third-party sales                                   $    1,297       $ 

1,394

Average realized third-party price per metric ton   $    1,988$ 2,219
Total shipments (kmt)                                      663           639
Operating costs                                     $    1,327$ 1,568
Average cost per metric ton                         $    2,002$ 2,454






Total aluminum third-party shipments and total primary aluminum shipments
include metric tons that were not produced by the Aluminum segment. Such
aluminum was purchased by this segment to satisfy certain customer commitments.
The Aluminum segment bears the risk of loss of the purchased aluminum until
control of the product has been transferred to this segment's customer. Total
aluminum information incudes flat-rolled aluminum while Primary aluminum
information does not. Operating costs includes all production-related costs: raw
materials consumed; conversion costs, such as labor, materials, and utilities;
depreciation and amortization; and plant administrative expenses.



The average realized third-party price per metric ton of primary aluminum
includes three elements: a) the underlying base metal component, based on quoted
prices from the LME; b) the regional premium, which represents the incremental
price over the base LME component that is associated with the physical delivery
of metal to a particular region (e.g., the Midwest premium for metal sold in the
United States); and c) the product premium, which represents the incremental
price for receiving physical metal in a particular shape (e.g., billet, slab,
rod, etc.) or alloy.



                                       27

--------------------------------------------------------------------------------

The following table provides annual consolidated base and idle capacity (each in kmt) for each smelter owned by Alcoa Corporation:



                                      March 31, 2020                          March 31, 2019
Facility        Country      Base Capacity       Idle Capacity       Base Capacity       Idle Capacity       Base Change       Idle Change
Portland (1)    Australia               197                  30                 197                  30                 -                 -
São Luís
(Alumar) (1)    Brazil                  268                 268                 268                 268                 -                 -
Baie Comeau     Canada                  280                   -                 280                   -                 -                 -
Bécancour (1)   Canada                  310                  49                 310                 259                 -              (210 )
Deschambault    Canada                  260                   -                 260                   -                 -                 -
Fjarðaál        Iceland                 344                   -                 344                   -                 -                 -
Lista           Norway                   94                   -                  94                   -                 -                 -
Mosjøen         Norway                  188                   -                 188                   -                 -                 -
San Ciprián     Spain                   228                   -                 228                   -                 -                 -
Avilés          Spain                     -                   -                  93                  93               (93 )             (93 )
La Coruña       Spain                     -                   -                  87                  87               (87 )             (87 )
Intalco (2)     U.S.                    279                  49                 279                  49                 -                 -
Massena West    U.S.                    130                   -                 130                   -                 -                 -
Warrick         U.S.                    269                 108                 269                 108                 -                 -
Wenatchee       U.S.                    146                 146                 146                 146                 -                 -
                                      2,993                 650               3,173               1,040              (180 )            (390 )



(1) These figures represent Alcoa Corporation's share of the facility capacity

based on its ownership interest in the respective smelter.

(2) On April 22, 2020, Alcoa announced the curtailment of the remaining 230,000

metric tons of smelting capacity at the Intalco smelter. The full

curtailment of 279,000 metric tons, which includes 49,000 metric tons of

earlier-curtailed capacity, is expected to be complete by the end of July

     2020.




Idle capacity at the Bécancour smelter decreased by 210 kmt from the first
quarter 2019 to the first quarter 2020 as a result of the restart process. Due
to the economic impacts of the COVID-19 pandemic, the restart at the Bécancour
(Canada) smelter has been slowed, leaving the operating capacity at
approximately 85 percent of total nameplate capacity at March 31, 2020. The
restart, which was originally expected to be complete by the end of the second
quarter of 2020, may be extended past such date.



Base and idle capacity at the Avilés and La Coruña facilities decreased from the
first quarter of 2019 to the first quarter of 2020 as a result of the
curtailment (February 2019) and subsequent divestiture (July 2019) of these
smelters. In addition to the smelters at these locations, the casthouse at each
facility and the paste plant at La Coruña were also divested.



Primary aluminum production increased 5% in the first quarter of 2020 compared with the first quarter of 2019, principally due to the capacity changes discussed above.




Third-party sales for the Aluminum segment decreased 8% in the first quarter of
2020 compared with the first quarter of 2019, primarily due to a reduction in
metal price. The change in average realized price of primary aluminum was mainly
driven by a 7% lower average LME price (on 15-day lag) combined with a decrease
in regional premiums. Additionally, higher overall shipments were primarily the
result of the Bécancour smelter restart process, partially offset by lower
trading activity.



Segment Adjusted EBITDA increased $158 in the first quarter of 2020 compared
with the first quarter of 2019. The increase is mainly the result of lower costs
for alumina and carbon materials, favorable impacts from the divestiture of the
Avilés and La Coruña facilities, and state grant revenue recognized at the
Portland (Australia) facility. These favorable impacts were partially offset by
lower metal prices, an unfavorable mix of value-added products, and unfavorable
production costs related to rolling operations.



For the second quarter of 2020 compared with the second quarter of 2019, favorable impacts from the Bécancour smelter restart process and lower raw materials costs are expected to be partially offset by lower margins from decreased demand of value-added products (as discussed in the Business Update).

                                       28

--------------------------------------------------------------------------------

Reconciliation of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales



                                    First quarter ended
                                         March 31,
                                     2020           2019
Bauxite                           $       71$    65
Alumina                                  707           897
Aluminum:
Primary aluminum                       1,297         1,394
Other(1)                                 301           341
Total segment third-party sales        2,376         2,697
Other                                      5            22
Consolidated sales                $    2,381$ 2,719

(1) Other includes third-party sales of flat-rolled aluminum and energy, as well

as realized gains and losses related to embedded derivative instruments

     designated as cash flow hedges of forward sales of aluminum.






Reconciliation of Total Segment Operating Costs to Consolidated Cost of Goods
Sold



                                                           First quarter ended
                                                                March 31,
                                                            2020           2019
Bauxite                                                  $      213$   195
Alumina                                                         844           923
Primary aluminum                                              1,327         1,568
Other(1)                                                        314           365
Total segment operating costs                                 2,698         3,051
Eliminations(2)                                                (566 )        (742 )
Provision for depreciation, depletion, amortization(3)         (163 )        (164 )
Other(4)                                                         56         

35

Consolidated cost of goods sold                          $    2,025$ 2,180

(1) Other largely relates to the Aluminum segment's flat-rolled aluminum product

division.

(2) This line item represents the elimination of cost of goods sold related to

     intersegment sales between Bauxite and Alumina and between Alumina and
     Aluminum.

(3) Depreciation, depletion, and amortization is included in the operating costs

used to calculate average cost for each of the bauxite, alumina, and primary

aluminum product divisions (see Bauxite, Alumina, and Aluminum above).

However, for financial reporting purposes, depreciation, depletion, and

amortization is presented as a separate line item on Alcoa Corporation's

Statement of Consolidated Operations.

(4) Other includes costs related to Transformation and certain other items that

impact Cost of goods sold on Alcoa Corporation's Statement of Consolidated

Operations that are not included in the operating costs of segments (see

footnotes 1 and 3 in the Reconciliation of Total Segment Adjusted EBITDA to

Consolidated Net Income (Loss) Attributable to Alcoa Corporation below).



                                       29

--------------------------------------------------------------------------------

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
Latest news on ALCOA CORPORATION
07/10ALCOA CORPORATION : half-yearly earnings release
07/08Industrials Down As Investors Hedge On Reopening Outlook -- Industrials Round..
DJ
07/08NEWS HIGHLIGHTS : Top Company News of the Day
DJ
07/08ALCOA CORP : Regulation FD Disclosure, Financial Statements and Exhibits (form 8..
AQ
07/08ALCOA CORPORATION : Announces Pricing of Debt Offering
BU
07/08NEWS HIGHLIGHTS : Top Company News of the Day
DJ
07/08NEWS HIGHLIGHTS : Top Company News of the Day
DJ
07/08ALCOA : Counters Weak Demand With Cost Cuts
DJ
07/08ALCOA CORP : Results of Operations and Financial Condition, Regulation FD Disclo..
AQ
07/08ALCOA CORPORATION : Announces Proposed Debt Offering
BU
More news