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Alcoa's Profits Grow Sequentially on Stronger Alumina and Aluminum Pricing in First Quarter 2017

1Q 2017 Results

  • Net income of $225 million, or $1.21 per share
  • Excluding special items, adjusted net income of $117 million, or $0.63 per share
  • Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), excluding special items of $533 million, up 59 percent sequentially driven by higher alumina and aluminum pricing
  • Revenue of $2.7 billion, up 5 percent sequentially, reflecting increased alumina and aluminum pricing
  • $804 million cash balance and $1.45 billion of debt, for net debt of $0.65 billion, as of March 31, 2017
  • Company continues to expect full-year 2017 adjusted EBITDA, excluding special items, between $2.1 billion and $2.3 billion

Alcoa Corporation (NYSE: AA), a global leader in bauxite, alumina, and aluminum products, today reported that first quarter 2017 profits grew sequentially on stronger alumina and aluminum pricing and that it maintained a solid cash position.

In addition, the Company reiterated its expectations of full-year 2017 adjusted EBITDA, excluding special items, between $2.1 billion and $2.3 billion, based on April 2017 market assumptions, and net performance of $50 million for the year.

"Alcoa is off to a strong start with our first full quarter as an independent company," said Roy Harvey, Chief Executive Officer of Alcoa. "In our Bauxite segment, our third-party business remained strong and we continued to grow profits, while our Alumina and Aluminum segments captured the benefits of improved market pricing to increase earnings substantially."

Harvey continued: "Over the last few months, we also remained focused on our strategic priorities. To reduce complexity, we consolidated our business units and administrative locations; we began to put our return seeking capital to work across our businesses to drive returns, and we continued to strengthen the balance sheet by maintaining a healthy level of cash on hand. As we look forward to the rest of 2017, we are well positioned to deliver value to our stockholders."

In first quarter 2017, Alcoa reported net income of $225 million, or $1.21 per share. Results include $108 million of special items largely due to gains from the sale of the Yadkin Hydroelectric Project. First quarter 2017 results compare to a net loss of $125 million, or $(0.68) per share, in fourth quarter 2016, which included costs to streamline the portfolio.

Excluding the impact of special items, first quarter 2017 adjusted net income was $117 million, or $0.63 per share. In fourth quarter 2016, Alcoa's adjusted net income was $26 million, or $0.14 per share, excluding special items.

Alcoa reported first quarter 2017 adjusted EBITDA excluding special items of $533 million, up 59 percent from $335 million in fourth quarter 2016. In first quarter 2017, Alcoa reported revenue of $2.7 billion, up 5 percent sequentially. Both revenue and adjusted EBITDA excluding special items increased on higher alumina and aluminum pricing.

In the first quarter, the Company's cash from operations was $74 million and free cash flow was $3 million. Alcoa ended the first quarter of 2017 with cash on hand of $804 million after transferring the net proceeds received from the Yadkin sale to former parent Arconic Inc. according to terms of the separation agreement. The Company reported 19 days working capital.

In an ongoing effort to reduce complexity, in the first quarter Alcoa streamlined its business segments into three, focused on bauxite, alumina and aluminum. Earlier this month, the Company also announced a consolidation of its administrative locations.

Market Update

For 2017, Alcoa is projecting 2017 global aluminum demand growth of 4.5 to 5 percent over 2016. The Company continues to project relatively balanced global bauxite and alumina markets and a modest global aluminum surplus of 300 thousand to 700 thousand metric tons.


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