Alcoa Earnings 2021-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

aa-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to _____

Commission File Number 1-37816

ALCOA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

81-1789115

(I.R.S. Employer

Identification No.)

201 Isabella Street, Suite 500,

Pittsburgh, Pennsylvania

(Address of principal executive offices)

15212-5858

(Zip Code)

412-315-2900

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2021, 186,724,745 shares of common stock, par value $0.01 per share, of the registrant were outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION		40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 4.	Mine Safety Disclosures	40

Item 6.	Exhibits	41

SIGNATURES		42

Forward-Looking Statements

This report may contain 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,” “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 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; (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; and (o) 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.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Alcoa Corporation and Subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)

	First quarter ended March 31,
	2021			2020
Sales (E)	$	2,870		$	2,381
Cost of goods sold (exclusive of expenses below)		2,292			2,025
Selling, general administrative, and other expenses		52			60
Research and development expenses		7			7
Provision for depreciation, depletion, and amortization		182			170
Restructuring and other charges, net (D)		7			2
Interest expense		42			30
Other income, net (Q)		(24	)		(132	)
Total costs and expenses		2,558			2,162
Income before income taxes		312			219
Provision for income taxes		93			80
Net income		219			139
Less: Net income attributable to noncontrolling interest		44			59
NET INCOME ATTRIBUTABLE TO ALCOA CORPORATION	$	175		$	80
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON SHAREHOLDERS (F):
Basic	$	0.94		$	0.43
Diluted	$	0.93		$	0.43

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and Subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(in millions)

	Alcoa Corporation						Noncontrolling interest						Total
	First quarter ended March 31,						First quarter ended March 31,						First quarter ended March 31,
	2021			2020			2021			2020			2021			2020
Net income	$	175		$	80		$	44		$	59		$	219		$	139
Other comprehensive (loss) income, net of tax (G):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits		131			38			1			—			132			38
Foreign currency translation adjustments		(176	)		(663	)		(60	)		(245	)		(236	)		(908	)
Net change in unrecognized gains/losses on cash flow hedges		(204	)		701			(3	)		(20	)		(207	)		681
Total Other comprehensive (loss) income, net of tax		(249	)		76			(62	)		(265	)		(311	)		(189	)
Comprehensive (loss) income	$	(74	)	$	156		$	(18	)	$	(206	)	$	(92	)	$	(50	)

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and Subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)

	March 31, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents (M)	$	2,544		$	1,607
Receivables from customers (I)		587			471
Other receivables		90			85
Inventories (J)		1,417			1,398
Fair value of derivative instruments (M)		15			21
Assets held for sale (C)		—			648
Prepaid expenses and other current assets		238			290
Total current assets		4,891			4,520
Properties, plants, and equipment		20,199			20,522
Less: accumulated depreciation, depletion, and amortization		13,269			13,332
Properties, plants, and equipment, net		6,930			7,190
Investments (H)		1,055			1,051
Deferred income taxes		653			655
Other noncurrent assets		1,402			1,444
Total assets	$	14,931		$	14,860
LIABILITIES
Current liabilities:
Accounts payable, trade	$	1,284		$	1,403
Accrued compensation and retirement costs		365			395
Taxes, including income taxes		92			91
Fair value of derivative instruments (M)		181			103
Liabilities held for sale (C)		—			242
Other current liabilities		554			525
Long-term debt due within one year (K & M)		745			2
Total current liabilities		3,221			2,761
Long-term debt, less amount due within one year (K & M)		2,214			2,463
Accrued pension benefits (L)		1,393			1,492
Accrued other postretirement benefits (L)		671			744
Asset retirement obligations		596			625
Environmental remediation (P)		278			293
Fair value of derivative instruments (M)		923			742
Noncurrent income taxes		204			209
Other noncurrent liabilities and deferred credits		558			515
Total liabilities		10,058			9,844
CONTINGENCIES AND COMMITMENTS (P)
EQUITY
Alcoa Corporation shareholders’ equity:
Common stock		2			2
Additional capital		9,674			9,663
Accumulated deficit		(550	)		(725	)
Accumulated other comprehensive loss (G)		(5,878	)		(5,629	)
Total Alcoa Corporation shareholders’ equity		3,248			3,311
Noncontrolling interest		1,625			1,705
Total equity		4,873			5,016
Total liabilities and equity	$	14,931		$	14,860

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and Subsidiaries

Statement of Consolidated Cash Flows (unaudited)

(in millions)

	Three months ended March 31,
	2021			2020
CASH FROM OPERATIONS
Net income	$	219		$	139
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion, and amortization		182			170
Deferred income taxes		18			23
Equity earnings, net of dividends		(11	)		—
Restructuring and other charges, net (D)		7			2
Net gain from investing activities – asset sales (Q)		(27	)		(177	)
Net periodic pension benefit cost (L)		12			33
Stock-based compensation		8			8
Provision for bad debt expense		—			2
Other		(1	)		4
Changes in assets and liabilities, excluding effects of divestitures and foreign currency translation adjustments:
(Increase) in receivables		(212	)		(70	)
(Increase) Decrease in inventories		(68	)		41
Decrease in prepaid expenses and other current assets		57			11
(Decrease) in accounts payable, trade		(64	)		(121	)
Increase (Decrease) in accrued expenses		3			(85	)
(Decrease) in taxes, including income taxes		(1	)		(11	)
Pension contributions (L)		(63	)		(48	)
(Increase) Decrease in noncurrent assets		(22	)		32
(Decrease) in noncurrent liabilities		(31	)		(43	)
CASH PROVIDED FROM (USED FOR) OPERATIONS		6			(90	)
FINANCING ACTIVITIES
Additions to debt (original maturities greater than three months)		495			—
Proceeds from the exercise of employee stock options		4			—
Financial contributions for the divestiture of businesses (D)		(6	)		(12	)
Distributions to noncontrolling interest		(62	)		(31	)
Other		(3	)		(1	)
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES		428			(44	)
INVESTING ACTIVITIES
Capital expenditures		(75	)		(91	)
Proceeds from the sale of assets		591			199
Additions to investments		(2	)		(1	)
CASH PROVIDED FROM INVESTING ACTIVITIES		514			107
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(11	)		(24	)
Net change in cash and cash equivalents and restricted cash		937			(51	)
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	$	2,547		$	832

The accompanying notes are an integral part of the consolidated financial statements.

Alcoa Corporation and Subsidiaries

Statement of Changes in Consolidated Equity (unaudited)

(in millions)

	Alcoa Corporation shareholders
First quarter ended March 31, 2020	Common stock		Additional capital		Accumulated deficit			Accumulated other comprehensive loss			Non- controlling interest			Total equity
Balance at December 31, 2019	$	2	$	9,639	$	(555	)	$	(4,974	)	$	1,774		$	5,886
Net income		—		—		80			—			59			139
Other comprehensive income (loss) (G)		—		—		—			76			(265	)		(189	)
Stock-based compensation		—		8		—			—			—			8
Distributions		—		—		—			—			(31	)		(31	)
Other		—		—		(1	)		—			(1	)		(2	)
Balance at March 31, 2020	$	2	$	9,647	$	(476	)	$	(4,898	)	$	1,536		$	5,811

First quarter ended March 31, 2021
Balance at December 31, 2020	$	2	$	9,663	$	(725	)	$	(5,629	)	$	1,705		$	5,016
Net income		—		—		175			—			44			219
Other comprehensive loss (G)		—		—

Price	21.49	EPS	-4
Shares	186	P/E	-5
MCap	3,988	P/FCF	6
Net Debt	917	EBIT	-265
TEV	4,905	TEV/EBIT	-19
TTM 2019-12-31, in MM, except price, ratios

10-Q	2021-03-31	Filed 2021-05-05
10-K	2020-12-31	Filed 2021-02-25
10-Q	2020-09-30	Filed 2020-10-30
10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-21
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-07-31
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-02
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-02-26
10-Q	2017-09-30	Filed 2017-10-27
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-10
S-1	2017-01-18	Public Filing
10-K	2016-12-31	Filed 2017-03-15
S-1	2016-10-26	Public Filing
10-Q	2016-09-30	Filed 2016-12-01

8-K	2020-11-30
8-K	2020-10-14
8-K	2020-10-09
8-K	2020-09-29
8-K	2020-07-15
8-K	2020-07-13
8-K	2020-07-08
8-K	2020-07-08
8-K	2020-07-07
8-K	2020-06-24
8-K	2020-05-06
8-K	2020-04-21
8-K	2020-02-03
8-K	2020-01-15
8-K	2019-12-16
8-K	2019-12-11
8-K	2019-12-04
8-K	2019-10-16
8-K	2019-09-20
8-K	2019-09-07
8-K	2019-07-17
8-K	2019-07-03
8-K	2019-07-02
8-K	2019-06-26
8-K	2019-05-08
8-K	2019-04-17
8-K	2019-01-16
8-K	2018-11-21
8-K	2018-10-11
8-K	2018-09-11
8-K	2018-08-08
8-K	2018-07-18
8-K	2018-06-18
8-K	2018-05-17
8-K	2018-05-14
8-K	2018-05-14
8-K	2018-05-09
8-K	2018-04-18
8-K	2018-04-03
8-K	2018-01-17

EX-31.1	aa-ex311_7.htm
EX-31.2	aa-ex312_10.htm
EX-32.1	aa-ex321_11.htm
EX-32.2	aa-ex322_6.htm
EX-95.1	aa-ex951_9.htm

AA 10Q Quarterly Report

Alcoa Earnings 2021-03-31