Alcoa Corporation Reports Fourth Quarter and Full Year 2024 Results

Alcoa Corporation (NYSE: AA; ASX: AAI) today reported fourth quarter and full year 2024 results that demonstrate significant improvements in financial performance on continued strength in alumina and aluminum pricing and considerable advances in operational stability.

Financial Results and Highlights

Fourth Quarter 2024

• Revenue increased to $3.5 billion, a 20 percent increase sequentially
• Net income increased 124 percent sequentially to $202 million, or $0.76 per common share
• Adjusted net income increased 104 percent sequentially to $276 million, or $1.04 per common share
• Adjusted EBITDA excluding special items increased 49 percent sequentially to $677 million
• Progressed cooperation with stakeholders for the San Ciprián complex
• Paid quarterly cash dividend of $0.10 per share of stock, totaling $27 million

Full Year 2024

• Revenue increased to $11.9 billion, a 13 percent increase
• Net income increased to $60 million, or $0.26 per common share
• Adjusted net income increased to $296 million, or $1.35 per common share
• Adjusted EBITDA excluding special items increased to $1.6 billion
• Set annual production records at five smelters in the U.S., Canada and Norway
• Extended long-term agreement to supply smelter grade alumina to Aluminium Bahrain B.S.C. (Alba) over 10 years
• Delivered $645 million profitability improvement program
• Completed curtailment of Kwinana refinery in Australia
• Completed the acquisition of Alumina Limited
• Announced an agreement for the sale of 25.1% interest in the Ma'aden joint ventures
• Paid quarterly cash dividends of $0.10 per share of stock, totaling $90 million
• Finished 2024 with a cash balance of $1.1 billion, reflecting proceeds of $737 million from a green bond issuance and the repayment of Alumina Limited debt of $385 million

"Reflecting on 2024, it was a productive year for Alcoa as we delivered on strategic actions and operational improvements, including closing the acquisition of Alumina Limited, announcing the sale of our interest in the Ma'aden joint ventures, hitting production records and improving operational stability," said Alcoa President and CEO William F. Oplinger. "Looking ahead to 2025, we will continue to drive operational excellence and improve our overall competitiveness."

Fourth Quarter 2024 Results

• Production: Alumina production decreased 2 percent sequentially to 2.39 million metric tons. In the Aluminum segment, production increased 2 percent sequentially to 571,000 metric tons primarily due to continued progress on the Alumar, Brazil smelter restart.
  
  
• Shipments: In the Alumina segment, third-party shipments of alumina increased 12 percent sequentially primarily due to increased trading. In Aluminum, total shipments were flat sequentially at 641,000 metric tons.
  
  
• Revenue: The Company's total third-party revenue of $3.5 billion increased 20 percent sequentially. In the Alumina segment, third-party revenue increased 46 percent on an increase in average realized third-party price and higher shipments. In the Aluminum segment, third-party revenue increased 5 percent on an increase in average realized third-party price.
  
  
• Net income attributable to Alcoa Corporation was $202 million, or $0.76 per common share. Sequentially, the results reflect increased alumina and aluminum prices and higher alumina shipments, partially offset by increased restructuring charges (see below) and increased production costs. The production cost increase was primarily due to a charge to write down certain inventories to their net realizable value, partially offset by benefits from the Advanced Manufacturing Tax Credit on Section 45X (IRA 45X credit).
  
  In October 2024, the U.S. Treasury Department issued final regulations on the IRA 45X credit, which clarified that some direct and indirect material costs can qualify for the credit. In the fourth quarter 2024, the Company recorded the full year 2023 and 2024 benefit related to the update totaling $30 million in Cost of goods sold at the Massena smelter in New York and the Warrick smelter in Indiana.
  
  
• Adjusted net income was $276 million, or $1.04 per common share, excluding the impact from net special items of $74 million. Notable special items include a restructuring charge of $82 million related to the Kwinana refinery curtailment primarily due to an increase in water management costs, partially offset by the corresponding tax benefit.
  
  
• Adjusted EBITDA excluding special items was $677 million, a sequential increase of $222 million primarily due to higher alumina and aluminum prices, favorable currency impacts, and higher alumina shipments, partially offset by increased production costs.
  
  
• Cash: Alcoa ended the quarter with a cash balance of $1.1 billion. Cash provided from operations was $415 million. Cash used for financing activities was $394 million primarily related to the repayment of the Alumina Limited debt of $385 million. Cash used for investing activities was $174 million due to capital expenditures of $169 million.
  
  
• Working capital: For the fourth quarter, Receivables from customers of $1.1 billion, Inventories of $2.0 billion and Accounts payable, trade of $1.8 billion comprised DWC working capital. Alcoa reported 34 days working capital, a sequential decrease of 11 days primarily due to a decrease in inventory days on higher sales.

Full Year 2024 Results

• Production: Alumina production decreased 8 percent annually primarily due to the full curtailment of the Kwinana refinery completed in June 2024. Aluminum production increased 5 percent annually primarily due to the restart of capacity at the Warrick smelter and continued progress on the Alumar smelter restart.
  
  
• Shipments: In the Alumina segment, third-party shipments of alumina increased 4 percent primarily due to increased sales of externally sourced alumina to fulfill customer commitments and increased trading. In Aluminum, total shipments increased 4 percent annually primarily due to increased production at the Warrick and Alumar smelters.
  
  
• Revenue: The Company's total third-party revenue increased 13 percent to $11.9 billion, driven primarily by higher average realized third-party prices for alumina and aluminum and higher shipments. Annually, the average realized third-party price of alumina increased 32 percent to $472 per metric ton.
  
  
• Net income attributable to Alcoa Corporation was $60 million, or $0.26 per common share, compared with the prior year's net loss of $651 million, or $3.65 per common share. The results reflect lower raw material and energy costs and higher alumina and aluminum prices, partially offset by increased restructuring charges (see below). Additionally, the results reflect the non-recurrence of a charge to tax expense of $152 million to record a valuation allowance on Alcoa World Alumina Brasil Ltda. (AWAB) deferred tax assets in the fourth quarter 2023 and the benefit of the absence of Net income attributable to noncontrolling interest following the acquisition of Alumina Limited on August 1, 2024.
  
  
• Adjusted net income was $296 million, or $1.35 per common share, excluding the impact from net special items of $236 million. Notable special items include $287 million related to the curtailment of the Kwinana refinery, partially offset by the corresponding tax and noncontrolling interest impacts of $143 million.
  
  
• Adjusted EBITDA excluding special items increased 196 percent sequentially to $1.6 billion, mainly attributable to year-over-year higher average realized prices for alumina and aluminum and lower raw material and energy costs, partially offset by higher production costs primarily in the Alumina segment.
  
  
• Cash: Alcoa ended 2024 with a cash balance of $1.1 billion. Cash provided from operations was $622 million. Cash provided from financing activities was $201 million primarily related to the net proceeds from the debt issuance of $737 million, partially offset by the repayment of the Alumina Limited debt of $385 million. Cash used for investing activities was $608 million due to capital expenditures of $580 million.
  
  
• Working capital: The Company reported 34 days working capital, a year-over-year improvement of 5 days. The change relates to a decrease of 24 days in inventory partially offset by a decrease of 13 days in accounts payable, both primarily on higher sales, and an increase of 6 days in accounts receivable primarily due to higher pricing for alumina and aluminum.

Key Actions

• San Ciprián complex: On January 21, 2025, Alcoa announced that a memorandum of understanding (MoU) was signed between the Company, the Spanish national and Xunta regional governments, and IGNIS Equity Holdings, SL (IGNIS EQT), the entity pursuing 25% ownership of the San Ciprián complex. The MoU outlines a process for the parties to work cooperatively toward the common objective of improving the long-term outlook for the San Ciprián operations.
  
  
• Alumina Limited Revolving Credit Facility: On November 29, 2024, Alcoa voluntarily repaid $385 million drawn under the Alumina Limited Revolving Credit Facility. In connection with the acquisition of Alumina Limited, the Company assumed $385 million of indebtedness as of August 1, 2024.
  
  
• Profitability improvement program: In January 2024, the Company shared a series of actions to improve its profitability by $645 million by year end 2025 in comparison to the base year 2023. Through the fourth quarter 2024, the Company had implemented numerous improvements to exceed its target, actioning $675 million of improvements year over year.

2025 Outlook

The following outlook does not include reconciliations of the forward-looking non-GAAP financial measures Adjusted EBITDA and Adjusted Net Income, including transformation, intersegment eliminations and other corporate Adjusted EBITDA; operational tax expense; and other expense; each excluding special items, to the most directly comparable forward-looking GAAP financial measures because it is impractical to forecast certain special items, such as restructuring charges and mark-to-market contracts, without unreasonable efforts due to the variability and complexity associated with predicting the occurrence and financial impact of such special items. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Alcoa expects 2025 total Alumina segment production to range between 9.5 to 9.7 million metric tons, a decrease from 2024 due to the curtailment of the Kwinana refinery. In 2025, alumina shipments are expected to be between 13.1 and 13.3 million metric tons, consistent with 2024. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery.

Alcoa expects 2025 total Aluminum segment production to range between 2.3 and 2.5 million metric tons, an increase from 2024 due to smelter restarts. In 2025, aluminum shipments are expected to range between 2.6 and 2.8 million metric tons.

Within the first quarter 2025 Alumina Segment Adjusted EBITDA, the Company expects sequential favorable impacts of $30 million due to the absence of a charge to write down certain inventories to their net realizable value, partially offset by the typical first quarter impacts from the beginning of maintenance cycles and lower shipments.

For the first quarter 2025, the Aluminum Segment expects sequential unfavorable impacts of $60 million due to the non-recurrence of the fourth quarter 2024 benefit from the IRA 45X credit, lower seasonal pricing at Brazil hydro-electric facilities, and the absence of Ma'aden offtake volumes due to the announced transaction.

Within Other expenses, contributions to ELYSIS^TM in the first quarter of 2025 are expected to increase by $25 million which triggers loss recognition.

Based on current alumina and aluminum market conditions, Alcoa expects first quarter 2025 operational tax expense to approximate $120 million to $130 million, which may vary with market conditions and jurisdictional profitability.

Conference Call

Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern Standard Time (EST) / 9:00 a.m. Australian Eastern Daylight Time (AEDT) on Wednesday, January 22, 2025 / Thursday, January 23, 2025, to present fourth quarter and full year 2024 financial results and discuss the business, developments, and market conditions.

The call will be webcast via the Company's homepage on www.alcoa.com. Presentation materials for the call will be available for viewing on the same website at approximately 4:15 p.m. EST on January 22, 2025 / 8:15 a.m. AEDT on January 23, 2025. Call information and related details are available under the "Investors" section of www.alcoa.com.

Dissemination of Company Information

Alcoa intends to make future announcements regarding company developments and financial performance through its website, www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, media broadcasts, and webcasts. The Company does not incorporate the information contained on, or accessible through, its corporate website or such other websites or platforms referenced herein into this press release.

About Alcoa Corporation

Alcoa (NYSE: AA; ASX: AAI) is a global industry leader in bauxite, alumina and aluminum products with a vision to reinvent the aluminum industry for a sustainable future. Our purpose is to turn raw potential into real progress, underpinned by Alcoa Values that encompass integrity, operating excellence, care for people and courageous leadership. Since developing the process that made aluminum an affordable and vital part of modern life, our talented Alcoans have developed breakthrough innovations and best practices that have led to improved safety, sustainability, efficiency, and stronger communities wherever we operate.

Discover more by visiting www.alcoa.com. Follow us on our social media channels: Facebook, Instagram, X, YouTube and LinkedIn.

Cautionary Statement on Forward-Looking Statements

This news 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 "aims," "ambition," "anticipates," "believes," "could," "develop," "endeavors," "estimates," "expects," "forecasts," "goal," "intends," "may," "outlook," "potential," "plans," "projects," "reach," "seeks," "sees," "should," "strive," "targets," "will," "working," "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, statements regarding 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 performance (including our ability to execute on strategies related to environmental, social and governance matters, such as our Green Finance Framework); 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: (1) the impact of global economic conditions on the aluminum industry and aluminum end-use markets; (2) volatility and declines in aluminum and alumina demand and pricing, including global, regional, and product-specific prices, or significant changes in production costs which are linked to London Metal Exchange (LME) or other commodities; (3) the disruption of market-driven balancing of global aluminum supply and demand by non-market forces; (4) competitive and complex conditions in global markets; (5) our ability to obtain, maintain, or renew permits or approvals necessary for our mining operations; (6) rising energy costs and interruptions or uncertainty in energy supplies; (7) unfavorable changes in the cost, quality, or availability of raw materials or other key inputs, or by disruptions in the supply chain; (8) our ability to execute on our strategy to be a lower cost, competitive, and integrated aluminum production business and to realize the anticipated benefits from announced plans, programs, initiatives relating to our portfolio, capital investments, and developing technologies; (9) our ability to integrate and achieve intended results from joint ventures, other strategic alliances, and strategic business transactions; (10) economic, political, and social conditions, including the impact of trade policies and adverse industry publicity; (11) fluctuations in foreign currency exchange rates and interest rates, inflation and other economic factors in the countries in which we operate; (12) changes in tax laws or exposure to additional tax liabilities; (13) global competition within and beyond the aluminum industry; (14) our ability to obtain or maintain adequate insurance coverage; (15) disruptions in the global economy caused by ongoing regional conflicts; (16) legal proceedings, investigations, or changes in foreign and/or U.S. federal, state, or local laws, regulations, or policies; (17) climate change, climate change legislation or regulations, and efforts to reduce emissions and build operational resilience to extreme weather conditions; (18) our ability to achieve our strategies or expectations relating to environmental, social, and governance considerations; (19) claims, costs, and liabilities related to health, safety and environmental laws, regulations, and other requirements in the jurisdictions in which we operate; (20) liabilities resulting from impoundment structures, which could impact the environment or cause exposure to hazardous substances or other damage; (21) our ability to fund capital expenditures; (22) deterioration in our credit profile or increases in interest rates; (23) restrictions on our current and future operations due to our indebtedness; (24) our ability to continue to return capital to our stockholders through the payment of cash dividends and/or the repurchase of our common stock; (25) cyber attacks, security breaches, system failures, software or application vulnerabilities, or other cyber incidents; (26) labor market conditions, union disputes and other employee relations issues; (27) a decline in the liability discount rate or lower-than-expected investment returns on pension assets; and (28) the other risk factors discussed in Alcoa's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and other reports filed by Alcoa with the SEC. Alcoa cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. 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. Market projections are subject to the risks described above and other risks in the market. Neither Alcoa nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements and none of the information contained herein should be regarded as a representation that the forward-looking statements contained herein will be achieved.

Non-GAAP Financial Measures

This news release contains reference to certain financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States (GAAP). Alcoa Corporation believes that the presentation of these non-GAAP financial measures is useful to investors because such measures provide both additional information about the operating performance of Alcoa Corporation and insight on the ability of Alcoa Corporation to meet its financial obligations by adjusting the most directly comparable GAAP financial measure for the impact of, among others, "special items" as defined by the Company, non-cash items in nature, and/or nonoperating expense or income items. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. Certain definitions, reconciliations to the most directly comparable GAAP financial measures and additional details regarding management's rationale for the use of the non-GAAP financial measures can be found in the schedules to this release.