Alcoa Reports First Quarter Net Income of $0.13 Per Share; Income of $0.11 Per Share Excluding Special Items

Mon Apr 8, 2013 4:03pm EDT

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130408:nBw086609a

http://www.businesswire.com/news/home/20130408006609/en

Engineered Products and Solutions Delivers Record Profitability
All Segments Achieve Solid Financial Performance
Strong Liquidity Maintained
Forecast of 7 Percent Aluminum Demand Growth in 2013 Reaffirmed 

1Q 2013 Highlights

* Net income of $149 million, or $0.13 per share; excluding special items, net
income of $121 million, or $0.11 per share 
* Record after-tax operating income in Engineered Products and Solutions 
* Improved performance in Alumina and Primary Metals year-over-year, despite
lower metal prices 
* Adjusted EBITDA up 16 percent sequentially and 11 percent year-over-year 
* Record-low first quarter days working capital 
* Strong liquidity with cash on hand of $1.6 billion 
* Debt-to-capital ratio 35 percent; net debt-to-capital ratio 31 percent 
* Global end market growth remains solid; forecast of 7 percent global aluminum
demand growth in 2013 reaffirmed

NEW YORK--(Business Wire)--
Alcoa (NYSE:AA) today reported net income of $149 million, or $0.13 per share,
in first quarter 2013. Net income excluding special items was $121 million, or
$0.11 per share. 

First quarter 2013 net income compares to $242 million, or $0.21 per share, in
fourth quarter 2012 and $94 million, or $0.09 per share, in first quarter 2012.
First quarter 2013 net income excluding special items compares to $64 million,
or $0.06 per share, in fourth quarter 2012, and $105 million, or $0.10 per
share, in first quarter 2012. 

Special items in first quarter 2013 included a net discrete income tax benefit,
the positive impact of mark-to-market changes on certain energy contracts, and a
net insurance recovery related to the March 2012 fire at our Massena, N.Y.
location, all of which were slightly offset by the negative impact of
restructuring. 

Adjusted EBITDA in first quarter 2013 grew to $690 million, an increase of $93
million over fourth quarter 2012 and an increase of $66 million over first
quarter 2012. 

Alcoa`s improved net income excluding special items over fourth quarter 2012 was
driven by continued productivity improvements across all businesses, better mix,
and higher volumes in the downstream business. These results were partially
offset by higher pension and planned maintenance cost. 

First quarter 2013 revenue was $5.8 billion, a decrease of 1 percent from fourth
quarter 2012 due to fewer production days in the first quarter, and 3 percent
lower than first quarter 2012, largely on lower London Metal Exchange (LME)
aluminum prices and the impact of curtailments in Alcoa`s European primary
metals production. 

"This was a strong quarter led by record profitability in our downstream
business, improved results in our midstream business, and remarkable upstream
performance in the face of weak metal prices," said Klaus Kleinfeld, Alcoa
Chairman and Chief Executive Officer. "Our mid and downstream businesses now
account for 72 percent of our total after-tax operating income while our
upstream business continues to move down the cost curve. We achieved these
results by focusing on the things we can control and by pressing Alcoa`s
innovation edge, scale, and strength in end markets." 

Continued Growth Across End Markets

Alcoa continues to project 7 percent global aluminum demand growth in 2013 and
essentially balanced alumina and aluminum markets. However, the Company sees a
slightly tighter market as supply contracts. The Company reduced its surplus
projection for aluminum from 535,000 metric tons in the fourth quarter to
155,000 metric tons this quarter, driven by curtailments. 

Alcoa projects global growth this year across the aerospace (9-10 percent),
automotive (1-4 percent), commercial transportation (2-7 percent), packaging
(2-3 percent), building and construction (4-5 percent), and industrial gas
turbine (3-5 percent) end markets. 

Strong Execution

The Company continued to deliver excellent results in its midstream and
downstream businesses. Global Rolled Products achieved $385 in adjusted EBITDA
per metric ton, a 4 percent increase sequentially. Engineered Products and
Solutions delivered record first quarter adjusted EBITDA margin of 20.9 percent,
the third consecutive quarter a year-on-year record was established. 

The Company is successfully executing against its 2013 financial and operational
targets. Alcoa achieved $247 million in year-over-year productivity gains,
driven by process improvements and procurement savings across all businesses. 

Capital spending was $235 million in the quarter, compared to $398 million in
fourth quarter 2012. Free cash flow for the quarter was negative $305 million,
with cash used for operations of $70 million, driven by the normal build in
working capital, semi-annual interest payments, and pension contributions.
Expenditures on the Saudi Arabia joint venture project were on track at $67
million. 

Alcoa maintained its solid liquidity position, ending the quarter with cash on
hand of $1.6 billion. The Company achieved a first quarter record low of 28 days
working capital - 4 days lower than the previous first quarter record set in
2012, and 15 days lower than the fourth quarter of 2008. This is the 14th
successive quarter the Company has demonstrated year-on-year improvement.
Alcoa`s debt-to-capital ratio stood at 34.7 percent, 10 basis points lower than
the sequential quarter, while net debt-to-capital stood at 30.5 percent. 

Solid Segment Performance

Engineered Products and Solutions

After-tax operating income (ATOI) in the first quarter was $173 million, up from
$140 million (revised from $137 million*) in fourth quarter 2012, a 24 percent
improvement, and up from $157 million (revised from $155 million*) in the first
quarter of 2012. Sequentially, favorable productivity and higher volumes in the
aerospace businesses drove the improvement. The Company continues to benefit
from share gain increases in all markets led by innovation. This segment
reported a record quarterly adjusted EBITDA margin of 20.9 percent, compared to
18.0 percent and 19.4 percent, respectively, for fourth quarter 2012 and same
quarter last year. 

Global Rolled Products

ATOI in the first quarter was $81 million, up from $77 million (revised from $69
million*) in fourth quarter 2012, a 5 percent improvement, but down from $102
million (revised from $96 million*) in first quarter 2012. Sequentially,
favorable productivity and strong demand from the aerospace and automotive
markets were mostly offset by weaker pricing and product mix as well as higher
costs. The segment had a 4 percent increase in adjusted EBITDA per metric ton
over fourth quarter 2012. Days working capital improved by 6.7 days compared
with first quarter 2012. 

Alumina

ATOI in the first quarter was $58 million, up from $41 million in fourth quarter
2012, a 41 percent improvement, and up from $35 million year-on-year, a 66
percent improvement. Sequentially, the increase was driven by positive alumina
pricing along with continued productivity improvements, partially offset by
lower production due to fewer days in the quarter, costs to relocate the Myara
mine crusher in Australia, and increases in various input costs. Adjusted EBITDA
per metric ton reached $44, the highest since fourth quarter 2011 reflecting the
impact of improving operations, cost focus, and Alumina Price Index-pricing.
Days working capital improved by 8.8 days compared with first quarter 2012. 

Primary Metals

ATOI in the first quarter was $39 million, down from $316 million in fourth
quarter 2012, which included a $275 million gain on the Tapoco Hydroelectric
Project asset sale, and up from $10 million in first quarter 2012. Third-party
realized price in the first quarter was $2,398 per metric ton, up 3 percent
sequentially, but down 1 percent year-on-year. Sequentially, results were driven
by regional premium and value-added product mix improvements, continued
productivity gains, and changes to our portfolio of operating plants, partially
offset by planned power plant maintenance outages and other cost pressures.
Adjusted EBITDA per metric ton reached $205, $57 per metric ton higher than the
average for 2012 despite lower LME prices. 

Alba Update

Alcoa continues to actively negotiate with the Department of Justice (DOJ) and
the Securities and Exchange Commission (SEC) to reach a resolution of their
investigations of the Alba matter; however, we have not reached any agreement
with either agency. Given the uncertainty regarding whether a settlement can be
reached and, if reached, on what terms, we are not able to estimate a range of
reasonably possible loss with regard to any such settlement. If a settlement of
the government investigations is reached, we believe that the settlement amount
would be material to Alcoa`s results of operations for the relevant fiscal
period. If a settlement cannot be reached, Alcoa will proceed to trial with the
DOJ and the SEC and under those circumstances is unable to predict an outcome or
to estimate its reasonably possible loss. There can be no assurance that the
final outcome of the government`s investigations will not have a material
adverse effect on Alcoa. 

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on April
8, 2013 to present quarterly results. The meeting will be webcast via alcoa.com.
Call information and related details are available at www.alcoa.com under
"Invest."

About Alcoa

Alcoa is the world`s leading producer of primary and fabricated aluminum, as
well as the world`s largest miner of bauxite and refiner of alumina. In addition
to inventing the modern-day aluminum industry, Alcoa innovation has been behind
major milestones in the aerospace, automotive, packaging, building and
construction, commercial transportation, consumer electronics, and industrial
markets over the past 125 years. Among the solutions Alcoa markets are
flat-rolled products, hard alloy extrusions, and forgings, as well as Alcoa
wheels, fastening systems, precision and investment castings, and building
systems in addition to its expertise in other light metals such as titanium and
nickel-based super alloys. Sustainability is an integral part of Alcoa`s
operating practices and the product design and engineering it provides to
customers. Alcoa has been a member of the Dow Jones Sustainability Index for 11
consecutive years and approximately 75 percent of all of the aluminum ever
produced since 1888 is still in active use today. Alcoa employs approximately
61,000 people in 30 countries across the world. For more information, visit
www.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoa and follow
Alcoa on Facebook at www.facebook.com/Alcoa. 

Forward-Looking Statements

This release contains 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," "estimates," "expects,"
"forecasts," "intends," "outlook," "plans," "projects," "should," "targets,"
"will," or other words of similar meaning. All statements that reflect Alcoa`s
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 aluminum, end market
conditions, supply/demand balances, and growth opportunities for aluminum in
automotive, aerospace, and other applications, trend projections, targeted
financial results or operating performance, and statements about Alcoa`s
strategies, outlook, and business and financial prospects. Forward-looking
statements are subject to a number of known and unknown risks, uncertainties,
and other factors and are not guarantees of future performance. Important
factors that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: (a) material
adverse changes in aluminum industry conditions, including global supply and
demand conditions and fluctuations in London Metal Exchange-based prices for
primary aluminum, alumina, and other products, and fluctuations in indexed-based
and spot prices for alumina; (b) deterioration in global economic and financial
market conditions generally; (c) unfavorable changes in the markets served by
Alcoa, including aerospace, automotive, commercial transportation, building and
construction, distribution, packaging, defense, and industrial gas turbine; (d)
the impact of changes in foreign currency exchange rates on costs and results,
particularly the Australian dollar, Brazilian real, Canadian dollar, euro, and
Norwegian kroner; (e) increases in energy costs, including electricity, natural
gas, and fuel oil, or the unavailability or interruption of energy supplies; (f)
increases in the costs of other raw materials, including calcined petroleum
coke, caustic soda, and liquid pitch; (g) Alcoa`s inability to achieve the level
of revenue growth, cash generation, cost savings, improvement in profitability
and margins, fiscal discipline, or strengthening of competitiveness and
operations (including moving its alumina refining and aluminum smelting
businesses down on the industry cost curves and increasing revenues in its
Global Rolled Products and Engineered Products and Solutions segments)
anticipated from its restructuring programs, productivity improvement, cash
sustainability, and other initiatives; (h) Alcoa`s inability to realize expected
benefits, in each case as planned and by targeted completion dates, from sales
of non-core assets, or from newly constructed, expanded, or acquired facilities,
such as the upstream operations in Brazil and investments in hydropower projects
in Brazil, or from international joint ventures, including the joint venture in
Saudi Arabia; (i) political, economic, and regulatory risks in the countries in
which Alcoa operates or sells products, including unfavorable changes in laws
and governmental policies, civil unrest, or other events beyond Alcoa`s control;
(j) the outcome of contingencies, including legal proceedings, government
investigations, and environmental remediation; (k) the business or financial
condition of key customers, suppliers, and business partners; (l) adverse
changes in tax rates or benefits; (m) adverse changes in discount rates or
investment returns on pension assets; (n) the impact of cyber attacks and
potential information technology or data security breaches; and (o) the other
risk factors summarized in Alcoa`s Form 10-K for the year ended December 31,
2012, and other reports filed with the Securities and Exchange Commission. Alcoa
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. 

Non-GAAP Financial Measures

Some of the information included in this release is derived from Alcoa`s
consolidated financial information but is not presented in Alcoa`s financial
statements prepared in accordance with U.S. generally accepted accounting
principles (GAAP). Certain of these data are considered "non-GAAP financial
measures" under SEC rules. These non-GAAP financial measures supplement our GAAP
disclosures and should not be considered an alternative to the GAAP measure.
Reconciliations to the most directly comparable GAAP financial measures and
management`s rationale for the use of the non-GAAP financial measures can be
found in the schedules to this release and on our website at www.alcoa.com under
the "Invest" section. 

* On January 1, 2013, the Company revised the inventory-costing method used by
certain locations within the Global Rolled Products and Engineered Products and
Solutions segments in order to improve internal consistency and enhance industry
comparability. This revision does not impact the consolidated results of Alcoa.
Segment information for all prior periods presented was revised to reflect this
change.

                                                                                                                                                             
 Alcoa and subsidiaries                                                                                                                                      
 Statement of Consolidated Operations (unaudited)                                                                                                            
 (in millions, except per-share, share, and metric ton amounts)                                                                                              
                                                                                                                                                             
                                                                  Quarter ended                                                                              
                                                                  March 31,                      December 31,                     March 31,                  
                                                                  2012                           2012                             2013                       
 Sales                                                            $     6,006                    $      5,898                     $     5,833                
                                                                                                                                                             
 Cost of goods sold (exclusive of expenses below)                       5,098                           4,968                           4,847                
 Selling, general administrative, and other expenses                    241                             277                             251                  
 Research and development expenses                                      43                              56                              45                   
 Provision for depreciation, depletion, and amortization                369                             362                             361                  
 Restructuring and other charges                                        10                              60                              7                    
 Interest expense                                                       123                             120                             115                  
 Other income, net                                                      (16            )                (345           )                (27            )     
 Total costs and expenses                                               5,868                           5,498                           5,599                
                                                                                                                                                             
 Income before income taxes                                             138                             400                             234                  
 Provision for income taxes                                             39                              143                             64                   
                                                                                                                                                             
 Net income                                                             99                              257                             170                  
                                                                                                                                                             
 Less: Net income attributable to noncontrolling interests              5                               15                              21                   
                                                                                                                                                             
 NET INCOME ATTRIBUTABLE TO ALCOA                                 $     94                       $      242                       $     149                  
                                                                                                                                                             
 EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA COMMON SHAREHOLDERS:                                                                                               
 Basic:                                                                                                                                                      
 Net income                                                       $     0.09                     $      0.23                      $     0.14                 
 Average number of shares                                               1,065,810,615                   1,067,197,166                   1,068,814,403        
                                                                                                                                                             
 Diluted:                                                                                                                                                    
 Net income                                                       $     0.09                     $      0.21                      $     0.13                 
 Average number of shares                                               1,164,213,063                   1,167,549,803                   1,168,961,421        
                                                                                                                                                             
 Common stock outstanding at the end of the period                      1,066,594,279                   1,067,211,953                   1,069,377,561        
                                                                                                                                                             
 Shipments of aluminum products (metric tons)                           1,295,000                       1,280,000                       1,224,000            
                                                                                                                                                             


 Alcoa and subsidiaries                                                                                                    
 Consolidated Balance Sheet (unaudited)                                                                                    
 (in millions)                                                                                                             
                                                                                                                           
                                                                               December 31,            March 31,           
                                                                               2012                    2013                
 ASSETS                                                                                                                    
 Current assets:                                                                                                           
 Cash and cash equivalents                                                     $      1,861            $     1,555         
 Receivables from customers, less allowances of $39 in 2012 and $35 in 2013           1,399                  1,680         
 Other receivables                                                                    340                    338           
 Inventories                                                                          2,825                  2,982         
 Prepaid expenses and other current assets                                            1,275                  1,213         
 Total current assets                                                                 7,700                  7,768         
                                                                                                                           
 Properties, plants, and equipment                                                    38,137                 38,378        
 Less: accumulated depreciation, depletion, and amortization                          19,190                 19,422        
 Properties, plants, and equipment, net                                               18,947                 18,956        
 Goodwill                                                                             5,170                  5,123         
 Investments                                                                          1,860                  1,862         
 Deferred income taxes                                                                3,790                  3,717         
 Other noncurrent assets                                                              2,712                  2,680         
 Total assets                                                                  $      40,179           $     40,106        
                                                                                                                           
 LIABILITIES                                                                                                               
 Current liabilities:                                                                                                      
 Short-term borrowings                                                         $      53               $     51            
 Commercial paper                                                                     -                      104           
 Accounts payable, trade                                                              2,702                  2,860         
 Accrued compensation and retirement costs                                            1,058                  932           
 Taxes, including income taxes                                                        366                    438           
 Other current liabilities                                                            1,298                  1,090         
 Long-term debt due within one year                                                   465                    1,025         
 Total current liabilities                                                            5,942                  6,500         
 Long-term debt, less amount due within one year                                      8,311                  7,745         
 Accrued pension benefits                                                             3,722                  3,626         
 Accrued other postretirement benefits                                                2,603                  2,578         
 Other noncurrent liabilities and deferred credits                                    3,078                  2,883         
 Total liabilities                                                                    23,656                 23,332        
                                                                                                                           
 EQUITY                                                                                                                    
 Alcoa shareholders` equity:                                                                                               
 Preferred stock                                                                      55                     55            
 Common stock                                                                         1,178                  1,178         
 Additional capital                                                                   7,560                  7,508         
 Retained earnings                                                                    11,689                 11,805        
 Treasury stock, at cost                                                              (3,881  )              (3,816  )     
 Accumulated other comprehensive loss                                                 (3,402  )              (3,309  )     
 Total Alcoa shareholders' equity                                                     13,199                 13,421        
 Noncontrolling interests                                                             3,324                  3,353         
 Total equity                                                                         16,523                 16,774        
 Total liabilities and equity                                                  $      40,179           $     40,106        
                                                                                                                           


                                                                                                                                                                           
 Alcoa and subsidiaries                                                                                                                                                    
 Statement of Consolidated Cash Flows (unaudited)                                                                                                                          
 (in millions)                                                                                                                                                             
                                                                                                                                    Three months ended                     
                                                                                                                                    March 31,                              
                                                                                                                                    2012                  2013             
 CASH FROM OPERATIONS                                                                                                                                                      
 Net income                                                                                                                         $    99               $    170         
 Adjustments to reconcile net income to cash from operations:                                                                                                              
 Depreciation, depletion, and amortization                                                                                               369                   361         
 Deferred income taxes                                                                                                                   (100   )              (13    )    
 Equity (income) loss, net of dividends                                                                                                  (8     )              13          
 Restructuring and other charges                                                                                                         10                    7           
 Net loss (gain) from investing activities - asset sales                                                                                 2                     (5     )    
 Stock-based compensation                                                                                                                19                    23          
 Excess tax benefits from stock-based payment arrangements                                                                               (1     )              -           
 Other                                                                                                                                   19                    -           
 Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:                                         
 (Increase) in receivables                                                                                                               (139   )              (321   )    
 (Increase) in inventories                                                                                                               (153   )              (182   )    
 (Increase) decrease in prepaid expenses and other current assets                                                                        (11    )              25          
 Increase in accounts payable, trade                                                                                                     3                     180         
 (Decrease) in accrued expenses                                                                                                          (236   )              (372   )    
 Increase in taxes, including income taxes                                                                                               57                    61          
 Pension contributions                                                                                                                   (213   )              (83    )    
 (Increase) in noncurrent assets                                                                                                         (39    )              (26    )    
 Increase in noncurrent liabilities                                                                                                      88                    92          
 (Increase) in net assets held for sale                                                                                                  (2     )              -           
 CASH USED FOR OPERATIONS                                                                                                                (236   )              (70    )    
                                                                                                                                                                           
 FINANCING ACTIVITIES                                                                                                                                                      
 Net change in short-term borrowings (original maturities of three months or less)                                                       (10    )              -           
 Net change in commercial paper                                                                                                          51                    104         
 Additions to debt (original maturities greater than three months)                                                                       730                   625         
 Debt issuance costs                                                                                                                     (3     )              -           
 Payments on debt (original maturities greater than three months)                                                                        (414   )              (639   )    
 Proceeds from exercise of employee stock options                                                                                        8                     -           
 Excess tax benefits from stock-based payment arrangements                                                                               1                     -           
 Dividends paid to shareholders                                                                                                          (33    )              (33    )    
 Distributions to noncontrolling interests                                                                                               (26    )              (25    )    
 Contributions from noncontrolling interests                                                                                             90                    15          
 CASH PROVIDED FROM FINANCING ACTIVITIES                                                                                                 394                   47          
                                                                                                                                                                           
 INVESTING ACTIVITIES                                                                                                                                                      
 Capital expenditures                                                                                                                    (270   )              (235   )    
 Proceeds from the sale of assets and businesses                                                                                         11                    2           
 Additions to investments                                                                                                                (104   )              (121   )    
 Sales of investments                                                                                                                    11                    -           
 Net change in restricted cash                                                                                                           (9     )              59          
 Other                                                                                                                                   11                    10          
 CASH USED FOR INVESTING ACTIVITIES                                                                                                      (350   )              (285   )    
                                                                                                                                                                           
 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                                                                            2                     2           
 Net change in cash and cash equivalents                                                                                                 (190   )              (306   )    
 Cash and cash equivalents at beginning of year                                                                                          1,939                 1,861       
 CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                                                         $    1,749            $    1,555       
                                                                                                                                                                           


                                                                                                                                                                                       
 Alcoa and subsidiaries                                                                                                                                                                
 Segment Information (unaudited)                                                                                                                                                       
 (dollars in millions, except realized prices; production and shipments in thousands of metric tons [kmt])                                                                             
                                                                                                                                                                                       
                                                                                  1Q12             2Q12             3Q12             4Q12             2012              1Q13           
 Alumina:                                                                                                                                                                              
 Alumina production (kmt)                                                             4,153            4,033            4,077            4,079            16,342            3,994      
 Third-party alumina shipments (kmt)                                                  2,293            2,194            2,368            2,440            9,295             2,457      
 Third-party sales                                                                $   775          $   750          $   764          $   803          $   3,092         $   826        
 Intersegment sales                                                               $   617          $   576          $   575          $   542          $   2,310         $   595        
 Equity income                                                                    $   1            $   1            $   2            $   1            $   5             $   1          
 Depreciation, depletion, and amortization                                        $   114          $   114          $   120          $   107          $   455           $   109        
 Income taxes                                                                     $   (1     )     $   (6     )     $   (22    )     $   2            $   (27     )     $   14         
 After-tax operating income (ATOI)                                                $   35           $   23           $   (9     )     $   41           $   90            $   58         
                                                                                                                                                                                       
 Primary Metals:                                                                                                                                                                       
 Aluminum production (kmt)                                                            951              941              938              912              3,742             891        
 Third-party aluminum shipments (kmt)                                                 771              749              768              768              3,056             705        
 Alcoa`s average realized price per metric ton of aluminum                        $   2,433        $   2,329        $   2,222        $   2,325        $   2,327         $   2,398      
 Third-party sales                                                                $   1,944        $   1,804        $   1,794        $   1,890        $   7,432         $   1,758      
 Intersegment sales                                                               $   761          $   782          $   691          $   643          $   2,877         $   727        
 Equity loss                                                                      $   (2     )     $   (9     )     $   (5     )     $   (11    )     $   (27     )     $   (9     )   
 Depreciation, depletion, and amortization                                        $   135          $   133          $   130          $   134          $   532           $   135        
 Income taxes                                                                     $   (13    )     $   (19    )     $   (19    )     $   157          $   106           $   1          
 ATOI                                                                             $   10           $   (3     )     $   (14    )     $   316          $   309           $   39         
                                                                                                                                                                                       
 Global Rolled Products:                                                                                                                                                               
 Third-party aluminum shipments (kmt)                                                 452              484              483              448              1,867             450        
 Third-party sales                                                                $   1,845        $   1,913        $   1,849        $   1,771        $   7,378         $   1,779      
 Intersegment sales                                                               $   44           $   44           $   42           $   33           $   163           $   51         
 Equity loss                                                                      $   (1     )     $   (2     )     $   (1     )     $   (2     )     $   (6      )     $   (4     )   
 Depreciation, depletion, and amortization                                        $   57           $   57           $   57           $   58           $   229           $   57         
 Income taxes*                                                                    $   51           $   34           $   39           $   35           $   159           $   39         
 ATOI*                                                                            $   102          $   78           $   89           $   77           $   346           $   81         
                                                                                                                                                                                       
 Engineered Products and Solutions:                                                                                                                                                    
 Third-party aluminum shipments (kmt)                                                 58               59               53               52               222               55         
 Third-party sales                                                                $   1,390        $   1,420        $   1,367        $   1,348        $   5,525         $   1,423      
 Depreciation, depletion, and amortization                                        $   40           $   39           $   39           $   40           $   158           $   40         
 Income taxes*                                                                    $   73           $   76           $   77           $   71           $   297           $   84         
 ATOI*                                                                            $   157          $   157          $   158          $   140          $   612           $   173        
                                                                                                                                                                                       
 Reconciliation of ATOI to consolidated net income (loss) attributable to Alcoa:                                                                                                       
 Total segment ATOI*                                                              $   304          $   255          $   224          $   574          $   1,357         $   351        
 Unallocated amounts (net of tax):                                                                                                                                                     
 Impact of LIFO                                                                       -                19               (7     )         8                20                (2     )   
 Interest expense                                                                     (80    )         (80    )         (81    )         (78    )         (319    )         (75    )   
 Noncontrolling interests                                                             (5     )         17               32               (15    )         29                (21    )   
 Corporate expense                                                                    (64    )         (69    )         (62    )         (87    )         (282    )         (67    )   
 Restructuring and other charges                                                      (7     )         (10    )         (2     )         (56    )         (75     )         (5     )   
 Other*                                                                               (54    )         (134   )         (247   )         (104   )         (539    )         (32    )   
 Consolidated net income (loss) attributable to Alcoa                             $   94           $   (2     )     $   (143   )     $   242          $   191           $   149        


 The difference between certain segment totals and consolidated amounts is in Corporate.                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                          
 *  On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products and Engineered Products and Solutions segments in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change.  


                                                                                                                               
 Alcoa and subsidiaries                                                                                                        
 Calculation of Financial Measures (unaudited)                                                                                 
 (dollars in millions)                                                                                                         
                                                                                                                               
 Adjusted EBITDA Margin                                     Quarter ended                                                      
                                                            March 31,              December 31,             March 31,          
                                                            2012                   2012                     2013               
                                                                                                                               
 Net income attributable to Alcoa                           $     94               $      242               $     149          
                                                                                                                               
 Add:                                                                                                                          
 Net income attributable to noncontrolling interests              5                       15                      21           
 Provision for income taxes                                       39                      143                     64           
 Other income, net                                                (16    )                (345   )                (27    )     
 Interest expense                                                 123                     120                     115          
 Restructuring and other charges                                  10                      60                      7            
 Provision for depreciation, depletion, and amortization          369                     362                     361          
                                                                                                                               
 Adjusted EBITDA                                            $     624              $      597               $     690          
                                                                                                                               
 Sales                                                      $     6,006            $      5,898             $     5,833        
                                                                                                                               
 Adjusted EBITDA Margin                                           10.4   %                10.1   %                11.8   %     
                                                                                                                               


Alcoa`s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation,
depletion, and amortization. Net margin is equivalent to Sales minus the
following items: Cost of goods sold; Selling, general administrative, and other
expenses; Research and development expenses; and Provision for depreciation,
depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because
Adjusted EBITDA provides additional information with respect to Alcoa`s
operating performance and the Company`s ability to meet its financial
obligations. The Adjusted EBITDA presented may not be comparable to similarly
titled measures of other companies.

                                                                                          
 Free Cash Flow          Quarter ended                                                    
                         March 31,             December 31,             March 31,         
                         2012                  2012                     2013              
                                                                                          
 Cash from operations    $     (236  )         $      933               $     (70   )     
                                                                                          
 Capital expenditures          (270  )                (398   )                (235  )     
                                                                                          
                                                                                          
 Free cash flow          $     (506  )         $      535               $     (305  )     
                                                                                          


Free Cash Flow is a non-GAAP financial measure. Management believes that this
measure is meaningful to investors because management reviews cash flows
generated from operations after taking into consideration capital expenditures
due to the fact that these expenditures are considered necessary to maintain and
expand Alcoa`s asset base and are expected to generate future cash flows from
operations. It is important to note that Free Cash Flow does not represent the
residual cash flow available for discretionary expenditures since other
non-discretionary expenditures, such as mandatory debt service requirements, are
not deducted from the measure.

                                                                                                                                                                        
 Alcoa and subsidiaries                                                                                                                                                 
 Calculation of Financial Measures (unaudited), continued                                                                                                               
 (dollars in millions, except per-share amounts)                                                                                                                        
                                                                                                                                                                        
 Adjusted Income                                   Income                                                         Diluted EPS                                           
                                                   Quarter ended                                                  Quarter ended                                         
                                                   March 31,         December 31,             March 31,           March 31,         December 31,          March 31,     
                                                   2012              2012                     2013                2012              2012                  2013          
                                                                                                                                                                        
 Net income attributable to Alcoa                  $      94         $      242               $     149           $      0.09       $        0.21         $      0.13   
                                                                                                                                                                        
 Restructuring and other charges                          7                 54                      5                                                                   
                                                                                                                                                                        
 Discrete tax items*                                      -                 (58    )                (19   )                                                             
                                                                                                                                                                        
 Other special items**                                    4                 (174   )                (14   )                                                             
                                                                                                                                                                        
 Net income attributable to Alcoa - as adjusted    $      105        $      64                $     121                  0.10                0.06                0.11   
                                                                                                                                                                        


Net income attributable to Alcoa - as adjusted is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors because
management reviews the operating results of Alcoa excluding the impacts of
restructuring and other charges, discrete tax items, and other special items
(collectively, "special items"). There can be no assurances that additional
special items will not occur in future periods. To compensate for this
limitation, management believes that it is appropriate to consider both Net
income attributable to Alcoa determined under GAAP as well as Net income
attributable to Alcoa - as adjusted. 

* Discrete tax items include the following:

* for the quarter ended March 31, 2013, a benefit related to the reinstatement
under the American Taxpayer Relief Act of 2012 of two tax provisions that will
be applied in 2013 to Alcoa`s U.S. income tax return for calendar year 2012
($19); and 
* for the quarter ended December 31, 2012, a benefit related to the interim
period treatment of losses in jurisdictions for which no tax benefit was
recognized during the nine months ended September 30, 2012 ($39); a benefit for
a change in the legal structure of an investment ($13); and a net benefit for
other miscellaneous items ($6).

** Other special items include the following:

* for the quarter ended March 31, 2013, a net favorable change in certain
mark-to-market energy derivative contracts ($9) and a net insurance recovery
related to the March 2012 cast house fire at the Massena, NY location ($5); 
* for the quarter ended December 31, 2012, a gain on the sale of the Tapoco
Hydroelectric Project ($161: $275 is included in the Primary Metals segment and
$(114) is included in Corporate); a net favorable change in certain
mark-to-market energy derivative contracts ($12); interest income on an escrow
deposit ($8); and uninsured losses related to fire damage to the cast house at
the Massena, NY location ($7); and 
* for the quarter ended March 31, 2012, a net unfavorable change in certain
mark-to-market energy derivative contracts.

                                                                                                                   
 Alcoa and subsidiaries                                                                                            
 Calculation of Financial Measures (unaudited), continued                                                          
 (dollars in millions)                                                                                             
                                                                                                                   
 Days Working Capital                                        Quarter ended                                         
                                                             March 31,         December 31,          March 31,     
                                                             2012              2012                  2013          
                                                                                                                   
 Receivables from customers, less allowances                 $      1,526      $        1,399        $      1,680  
 Add: Deferred purchase price receivable*                           254                 18                  14     
 Receivables from customers, less allowances, as adjusted           1,780               1,417               1,694  
 Add: Inventories                                                   3,097               2,825               2,982  
 Less: Accounts payable, trade                                      2,734               2,702               2,860  
 Working Capital                                             $      2,143      $        1,540        $      1,816  
                                                                                                                   
 Sales                                                       $      6,006      $        5,898        $      5,833  
                                                                                                                   
 Days Working Capital                                               32                  24                  28     
                                                                                                                   


 Days Working Capital = Working Capital divided by (Sales/number of days in the quarter).                                                                                                                                                                  
                                                                                                                                                                                                                                                           
 *  The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to a financial institution on a recurring basis. Alcoa is adding back this receivable for the purposes of the Days Working Capital calculation.  


                                                                                                                      
 Net Debt-to-Capital                                March 31, 2013                                                    
                                                    Debt-to-              Cash and              Net Debt-to-          
                                                    Capital               Cash                  Capital               
                                                                          Equivalents                                 
                                                                                                                      
 Total Debt                                                                                                           
 Short-term borrowings                              $    51                                                           
 Commercial paper                                        104                                                          
 Long-term debt due within one year                      1,025                                                        
 Long-term debt, less amount due within one year         7,745                                                        
 Numerator                                          $    8,925            $        1,555        $      7,370          
                                                                                                                      
 Total Capital                                                                                                        
 Total debt                                         $    8,925                                                        
 Total equity                                            16,774                                                       
 Denominator                                        $    25,699           $        1,555        $      24,144         
                                                                                                                      
                                                                                                                      
 Ratio                                                   34.7    %                                     30.5    %      
                                                                                                                      


Net debt-to-capital is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because management assesses Alcoa`s
leverage position after factoring in available cash that could be used to repay
outstanding debt.

                                                          
 Alcoa and subsidiaries                                   
 Calculation of Financial Measures (unaudited),continued  
 (dollars in millions, except per metric ton amounts)     


 Segment Measures                                   Alumina                                                             Primary Metals                                                                                           
 Adjusted EBITDA                                    Quarter ended                                                                                                                                                                
                                                    March 31,             December 31,            March 31,             March 31,            June 30,          September 30,           December 31,            March 31,         
                                                    2012                  2012                    2013                  2012                 2012              2012                    2012                    2013              
                                                                                                                                                                                                                                 
 After-tax operating income (ATOI)                  $     35              $      41               $     58              $     10             $    (3   )       $      (14    )         $      316              $     39          
                                                                                                                                                                                                                                 
 Add:                                                                                                                                                                                                                            
 Depreciation, depletion, and amortization                114                    107                    109                   135                 133                 130                     134                    135         
 Equity (income) loss                                     (1     )               (1     )               (1     )              2                   9                   5                       11                     9           
 Income taxes                                             (1     )               2                      14                    (13   )             (19  )              (19    )                157                    1           
 Other                                                    -                      (4     )               (3     )              -                   (1   )              2                       (423   )               (1    )     
                                                                                                                                                                                                                                 
 Adjusted EBITDA                                    $     147             $      145              $     177             $     134            $    119          $      104              $      195              $     183         
                                                                                                                                                                                                                                 
 Production (thousand metric tons) (kmt)                  4,153                  4,079                  3,994                 951                 941                 938                     912                    891         
                                                                                                                                                                                                                                 
 Adjusted EBITDA / Production ($ per metric ton)    $     35              $      36               $     44              $     141            $    126          $      111              $      214              $     205         
                                                                                                                                                                                                                                 


Alcoa`s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation,
depletion, and amortization. Net margin is equivalent to Sales minus the
following items: Cost of goods sold; Selling, general administrative, and other
expenses; Research and development expenses; and Provision for depreciation,
depletion, and amortization. The Other line in the table above includes
gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a
non-GAAP financial measure. Management believes that this measure is meaningful
to investors because Adjusted EBITDA provides additional information with
respect to Alcoa`s operating performance and the Company`s ability to meet its
financial obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.

                                                           
 Alcoa and subsidiaries                                    
 Calculation of Financial Measures (unaudited), continued  
 (dollars in millions, except per metric ton amounts)      


 Segment Measures                                      Global Rolled Products*                                        Engineered Products and Solutions*                                     
 Adjusted EBITDA                                       Quarter ended                                                                                                                         
                                                       March 31,          December 31,           March 31,            March 31,                December 31,               March 31,          
                                                       2012               2012                   2013                 2012                     2012                       2013               
                                                                                                                                                                                             
 After-tax operating income (ATOI)                     $      102         $        77            $     81             $     157                $      140                 $     173          
                                                                                                                                                                                             
 Add:                                                                                                                                                                                        
 Depreciation, depletion, and amortization                    57                   58                  57                   40                        40                        40           
 Equity loss                                                  1                    2                   4                    -                         -                         -            
 Income taxes                                                 51                   35                  39                   73                        71                        84           
 Other                                                        -                    -                   (1    )              -                         (9     )                  -            
                                                                                                                                                                                             
 Adjusted EBITDA                                       $      211         $        172           $     180            $     270                $      242                 $     297          
                                                                                                                                                                                             
 Total shipments (thousand metric tons) (kmt)                 472                  465                 468                                                                                   
                                                                                                                                                                                             
 Adjusted EBITDA/Total shipments ($ per metric ton)    $      447         $        370           $     385                                                                                   
                                                                                                                                                                                             
 Third-party sales                                                                                                    $     1,390              $      1,348               $     1,423        
                                                                                                                                                                                             
 Adjusted EBITDA Margin                                                                                                     19     %                  18     %                  21     %     


Alcoa`s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation,
depletion, and amortization. Net margin is equivalent to Sales minus the
following items: Cost of goods sold; Selling, general administrative, and other
expenses; Research and development expenses; and Provision for depreciation,
depletion, and amortization. The Other line in the table above includes
gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a
non-GAAP financial measure. Management believes that this measure is meaningful
to investors because Adjusted EBITDA provides additional information with
respect to Alcoa`s operating performance and the Company`s ability to meet its
financial obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.

 *  On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products and Engineered Products and Solutions segments in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change.  


Alcoa
Investor Contact:
Kelly Pasterick, 212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact:
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com

Copyright Business Wire 2013

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.