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 Alcoa Corporation Reports Second Quarter 2017 Results
   Wednesday, July 19, 2017 4:10:00 PM ET

Alcoa Corporation (AA ):

2Q 2017 Results(1)

-- Net income of $75 million, or $0.40 per share

-- Excluding special items, adjusted net income of $116 million, or $0.62 per share

-- Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), excluding special items, of $483 million, down 9 percent sequentially on lower alumina prices

-- Revenue of $2.9 billion, up 8 percent sequentially, on higher shipments

-- $954 million cash balance and $1.4 billion of debt for net debt of $0.5 billion as of June 30, 2017

-- Company tightened its 2017 outlook for adjusted EBITDA, excluding special items, to $2.1 billion to $2.2 billion(2)

                                                            
---------------------------------------------------- -------------------- ------------------------------------------------------- ------------------------------------------ ----------------------
M, except per share amounts                                           2Q16                           1Q17                    2Q17
---------------------------------------------------- -------------------- --------------------------------   -------------------- --------------------  -------------------- --------------------
Revenue                                                     $  2,323                                 $      2,655            $      2,859
Net (loss) income attributable to Alcoa Corporation                            $    (55 )                                                  $        225                               $         75
Earnings per share attributable to Alcoa Corporation        $  (0.29 )                               $       1.21            $       0.40
---------------------------------------------------- -------------------- ------ ------ -------------------- -------------------- ---------- ---------- -------------------- ---------- ----------
Adjusted net (loss) income                                                     $    (44 )                                                  $        117                               $        116
Adjusted earnings per share                                 $  (0.23 )                               $       0.63            $       0.62
---------------------------------------------------- -------------------- ------ ------ -------------------- -------------------- ---------- ---------- -------------------- ---------- ----------
Adjusted EBITDA excluding special items                     $    310              $        533            $        483
---------------------------------------------------- -------------------- ------ ------ -------------------- -------------------- ---------- ---------- -------------------- ---------- ----------


______________________________________________________________________

(1)Alcoa Corporation became an independent, publicly traded company on November 1, 2016. Prior to November 1, 2016, Alcoa Corporation’s financial statements were prepared on a carve-out basis, as the underlying operations of the Company were previously consolidated as part of Alcoa Corporation’s former parent company’s financial statements. Accordingly, the financial results of Alcoa Corporation for the first ten months of 2016 (including the first month of fourth quarter 2016) were prepared on such basis. The carve-out financial statements of Alcoa Corporation are not necessarily indicative of Alcoa Corporation’s consolidated results of operations, financial position, and cash flows had it been a standalone company during the referenced period. See the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2016 filed with the United States Securities and Exchange Commission on March 15, 2017 for additional information.

(2)Based on actual results for 1H17, outlook for 2H17 at $1,900 LME, $305 API, and updated regional premiums and foreign currencies.

______________________________________________________________________

Alcoa Corporation (AA ), a global leader in bauxite, alumina, and aluminum products, today reported second quarter 2017 results. On a sequential basis, the Company increased revenue on higher shipments and grew its cash balance. Alcoa additionally maintained solid profitability despite lower alumina pricing.

The Company tightened its outlook for full-year adjusted 2017 EBITDA, excluding special items, to $2.1 to $2.2 billion, from $2.1 to $2.3 billion, based on current market assumptions. In addition, Alcoa now expects negative $50 million in net performance for full year 2017, as strength in the global aluminum market drives up input costs.

"Alcoa generated solid profitability in the second quarter with strong cash flow that grew our cash balance to more than $950 million," said Roy Harvey, President and Chief Executive Officer. "Through the first half of the year, our adjusted EBITDA topped $1 billion, and we expect improvements in the second half of 2017, despite higher input costs."

Harvey continued: "We are pursuing a simple set of strategic priorities to reduce complexity, drive returns and strengthen the balance sheet, and we will continue to base each of our decisions on these three key levers for the benefit of our stockholders."

In second quarter 2017, Alcoa reported net income of $75 million, or $0.40 per share. Results include the negative impact of $41 million in special items, primarily for certain tax items and additional restructuring charges related to previous actions. Second quarter 2017 results compare to first quarter 2017 net income of $225 million, or $1.21 per share, which included a $120 million gain from the sale of the Yadkin Hydroelectric Project.

Excluding the impact of special items, second quarter 2017 adjusted net income was $116 million, or $0.62 per share. In first quarter 2017, Alcoa’s adjusted net income was $117 million, or $0.63 per share, excluding special items.

Alcoa reported second quarter 2017 adjusted EBITDA excluding special items of $483 million, down 9 percent from $533 million in first quarter 2017. The decline was mainly due to lower alumina prices, which rebounded late in the quarter, partially offset by higher aluminum prices and other factors.

In second quarter 2017, Alcoa reported revenue of $2.9 billion, up 8 percent sequentially, reflecting higher shipments across its product portfolio.

The Company’s second quarter cash from operations was $311 million and free cash flow was $223 million. Alcoa ended second quarter 2017 with cash on hand of $954 million with $1.4 billion of debt for net debt of $0.5 billion. The Company reported 18 days working capital.

On July 11, 2017, Alcoa announced plans to restart three of five potlines at its Warrick Operations smelter to supply the co-located rolling mill. The Company based its decision on its ability to increase the integrated asset’s capacity utilization, the smelter’s ability to directly supply molten metal to the mill, and the mill’s anticipated production increase of flat-rolled aluminum for the food and beverage can packaging industry.

Market Update

For 2017, Alcoa continues to project relatively balanced global markets for bauxite and alumina with a modest surplus for aluminum.

In global alumina, Alcoa now projects the market to range from being in balance to a slight deficit of 800 thousand metric tons in 2017, an improvement from the range of balanced to slight surplus expected in the first quarter of 2017.

In global aluminum, the Company maintains its expectation for a modest global surplus between 300 thousand to 700 thousand metric tons. Alcoa has increased its 2017 forecast for global aluminum demand growth to a range of 4.75 to 5.25 percent, up from 4.5 to 5 percent in the first quarter of 2017.

Conference Call

Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern Daylight Time (EDT) on Wednesday, July 19, 2017 to present second quarter 2017 financial results, discuss the business and review market fundamentals.

The call will be webcast via the Company’s homepage on www.alcoa.com. Presentation materials for the call will be available for viewing at approximately 4:15 p.m. EDT on July 19th on the same website. 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.

About Alcoa Corporation

Alcoa (AA ) is a global industry leader in bauxite, alumina and aluminum products built on a foundation of strong values and operating excellence dating back nearly 130 years to the world-changing discovery that made aluminum an affordable and vital part of modern life. Since inventing the aluminum industry, and throughout our history, our talented Alcoans have followed on with breakthrough innovations and best practices that have led to efficiency, safety, sustainability and stronger communities wherever we operate.

Forward-Looking Statements

This press 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," "believes," "could," "estimates," "expects," "forecasts," "goal," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts concerning global demand growth for bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results or operating performance; and statements about strategies, outlook, business and financial prospects. These statements reflect beliefs and assumptions that are based on Alcoa Corporation’s perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, 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 Corporation; (d) the impact of changes in foreign currency exchange rates on costs and results; (e) increases in energy costs; (f) changes in discount rates or investment returns on pension assets; (g) the 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 anticipated from restructuring programs and productivity improvement, cash sustainability, technology advancements, and other initiatives; (h) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, restarts, expansions, or joint ventures; (i) political, economic, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (j) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (k) the impact of cyberattacks and potential information technology or data security breaches; and (l) the other risk factors discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, 2016 and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission. Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market.

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 accounting principles generally accepted in the United States of America (GAAP). Certain of these data are considered "non-GAAP financial measures" under SEC rules. Alcoa Corporation believes that the presentation of 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. 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. Alcoa Corporation has not provided a reconciliation of any forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures due primarily to the variability and complexity in making accurate forecasts and projections, as not all of the information for a quantitative reconciliation is available to the company without unreasonable effort.

                                                             
Alcoa Corporation and subsidiaries
Statement of Consolidated Operations (unaudited)
(dollars in millions, except per-share amounts)
                                                                                  
                                                                                                                                                                      Quarter ended
                                                                                 ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        June 30,                                                March 31,                                    June 30,
                                                                                                         2016(2)                                                                     2017                                                            2017
                                                                                 ---------------------------------------------------                        ---------------------------------------------------                        -------------------------------
Sales                                                                                               $       2,323                                                              $       2,655                                                              $       2,859
                                                                                                                                                                                                                                        
Cost of goods sold (exclusive of expenses below)                                                            1,941                                                                      2,043                                                                      2,309
Selling, general administrative, and other expenses                                                            90                                                                         72                                                                         72
Research and development expenses                                                                               7                                                                          7                                                                          8
Provision for depreciation, depletion, and amortization                                                       178                                                                        179                                                                        190
Restructuring and other charges                                                                                 8                                                                         10                                                                         12
Interest expense                                                                                               66                                                                         26                                                                         25
Other (income) expenses, net                                                               (23 )                                                  (100 )                                                     6
                                                                                 -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- -----------
      Total costs and expenses                                                                              2,267                                                                      2,237                                                                      2,622
                                                                                                                                                                                                                                        
Income before income taxes                                                                                     56                                                                        418                                                                        237
Provision for income taxes                                                                  68                                  110                                   99
                                                                                 -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- -----------
                                                                                                                                                                                                                                        
Net (loss) income                                                                                             (12 )                                                                      308                                                                        138
                                                                                                                                                                                                                                        
Less: Net income attributable to noncontrolling interest                                    43                                   83                                   63
                                                                                 -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- -----------
                                                                                                                                                                                                                                        
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION                                                 $         (55 )                                                            $         225                                           $          75
                                                                                 ==================== =========== ====================                      ==================== =========== ====================                      ==================== ===========
                                                                                                                                                                                                                                        
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS(1):
   Basic:
     Net (loss) income                                                                              $       (0.29 )                                                            $        1.23                                                              $        0.41
     Average number of shares                                                                         182,471,195                                                                183,816,083                                                                184,240,686
                                                                                                                                                                                                                                        
   Diluted:
     Net (loss) income                                                                              $       (0.29 )                                                            $        1.21                                                              $        0.40
     Average number of shares                                                                         182,471,195                                                                186,303,547                                                                186,385,250
(1)   The basic and diluted earnings per share for the quarter ended June
                         30, 2016 were calculated based on the 182,471,195 shares of Alcoa
                         Corporation common stock distributed on November 1, 2016 in
                         conjunction with the completion of Alcoa Corporation’s separation
                         from its former parent company and are considered pro forma in
                         nature. Prior to November 1, 2016, Alcoa Corporation did not have
                         any issued and outstanding publicly-traded common stock.
                          
(2)                      Prior to November 1, 2016, Alcoa Corporation’s financial statements
                         were prepared on a carve-out basis, as the underlying operations of
                         the Company were previously consolidated as part of Alcoa
                         Corporation’s former parent company’s financial statements.
                         Accordingly, the results of operations of Alcoa Corporation for the
                         quarter ended June 30, 2016 were prepared on such basis. The
                         carve-out financial statements of Alcoa Corporation are not
                         necessarily indicative of Alcoa Corporation’s consolidated results
                         of operations had it been a standalone company during the referenced
                         period. See the Combined Financial Statements included in Exhibit
                         99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
                         Consolidated Financial Statements included in the Company’s Annual
                         Report on Form 10-K for the period ended December 31, 2016 filed
                         with the United States Securities and Exchange Commission on October
                         11, 2016 and March 15, 2017, respectively, for additional
                         information.
                          
                                                             
Alcoa Corporation and subsidiaries
Statement of Consolidated Operations (unaudited), continued
(dollars in millions, except per-share amounts)
                                                                                  
                                                                                                                                           Six months ended
                                                                                                                                               June 30,
                                                                                 -----------------------------------------------------------------------------------------------------------------------------
                                                                                                        2016(2),(3)                                                  2017
                                                                                 ------------------------------------------------------                        ---------------------------------------------------
Sales                                                                                               $          4,452                                                              $       5,514
                                                                                                                                                                
Cost of goods sold (exclusive of expenses below)                                                               3,807                                                                      4,352
Selling, general administrative, and other expenses                                                              175                                                                        144
Research and development expenses                                                                                 18                                                                         15
Provision for depreciation, depletion, and amortization                                                          355                                                                        369
Restructuring and other charges                                                                                   92                                                                         22
Interest expense                                                                                                 130                                                                         51
Other expenses (income), net                                                                   16                                  (94 )
                                                                                 -------------------- -------------- --------------------                      -------------------- ----------- --------------------
      Total costs and expenses                                                                                 4,593                                                                      4,859
                                                                                                                                                                
(Loss) income before income taxes                                                                               (141 )                                                                      655
Provision for income taxes                                                                     86                                  209  
                                                                                 -------------------- -------------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                
Net (loss) income                                                                                               (227 )                                                                      446
                                                                                                                                                                
Less: Net income attributable to noncontrolling interest                                       38                                  146  
                                                                                 -------------------- -------------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION                                                 $           (265 )                                                            $         300  
                                                                                 ==================== ============== ====================                      ==================== =========== ====================
                                                                                                                                                                
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS(1):
   Basic:
     Net (loss) income                                                                              $          (1.45 )                                                            $        1.63
     Average number of shares                                                                            182,471,195                                                                184,000,248
                                                                                                                                                                
   Diluted:
     Net (loss) income                                                                              $          (1.45 )                                                            $        1.61
     Average number of shares                                                                            182,471,195                                                                186,333,415
                                                                                                                                                                
Common stock outstanding at the end of the period                                                     -                                                                184,257,057
(1)   The basic and diluted earnings per share for the six months ended
                         June 30, 2016 were calculated based on the 182,471,195 shares of
                         Alcoa Corporation common stock distributed on November 1, 2016 in
                         conjunction with the completion of Alcoa Corporation’s separation
                         from its former parent company and are considered pro forma in
                         nature. Prior to November 1, 2016, Alcoa Corporation did not have
                         any issued and outstanding publicly-traded common stock.
                          
(2)                      Prior to November 1, 2016, Alcoa Corporation’s financial statements
                         were prepared on a carve-out basis, as the underlying operations of
                         the Company were previously consolidated as part of Alcoa
                         Corporation’s former parent company’s financial statements.
                         Accordingly, the results of operations of Alcoa Corporation for the
                         six months ended June 30, 2016 were prepared on such basis. The
                         carve-out financial statements of Alcoa Corporation are not
                         necessarily indicative of Alcoa Corporation’s consolidated results
                         of operations had it been a standalone company during the referenced
                         period. See the Combined Financial Statements included in Exhibit
                         99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
                         Consolidated Financial Statements included in the Company’s Annual
                         Report on Form 10-K for the period ended December 31, 2016 filed
                         with the United States Securities and Exchange Commission on October
                         11, 2016 and March 15, 2017, respectively, for additional
                         information.
                          
(3)                      In preparing the Statement of Combined Operations for the nine
                         months ended September 30, 2016, management discovered that the
                         amount of Research and development expenses previously reported for
                         the six months ended June 30, 2016 included an immaterial error due
                         to an over-allocation of such expenses of $10. Additionally, in
                         preparing the Statement of Consolidated Operations for the year
                         ended December 31, 2016, management discovered that the amount of
                         Cost of goods sold previously reported for the six months ended June
                         30, 2016 included an immaterial error due to an under-allocation of
                         LIFO expense of $10. As a result, management has revised Research
                         and development expenses from the $28 previously reported to $18 and
                         Cost of goods sold from the $3,797 previously reported to $3,807 for
                         the six months ended June 30, 2016.
                          
                                                                                                                       
Alcoa Corporation and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
                                                                                                                                                               
                                                                                       December 31,                                                            June 30,
                                                                                                              2016                                                                  2017
                                                                                        ----------------------------------------------                        ----------------------------------------------
ASSETS
Current assets:
  Cash and cash equivalents                                                                                $    853                                                              $    954
  Receivables from customers                                                                                    668                                                                   789
  Other receivables                                                                                             166                                                                   206
  Inventories                                                                                                 1,160                                                                 1,287
  Prepaid expenses and other current assets                                                  334                             347  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current assets                                                                   3,181                           3,583  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                               
Properties, plants, and equipment                                                                            22,550                                                                22,971
Less: accumulated depreciation, depletion, and amortization                               13,225                          13,734  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
 Properties, plants, and equipment, net                                                    9,325                           9,237  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Investments                                                                                                   1,358                                                                 1,378
Deferred income taxes                                                                                           741                                                                   784
Fair value of derivative contracts                                                                              468                                                                   259
Other noncurrent assets                                                                    1,668                           1,688  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total assets                                                                                         $ 16,741                                           $ 16,929  
                                                                                        ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                               
LIABILITIES
Current liabilities:
  Accounts payable, trade                                                                                  $  1,455                                                              $  1,508
  Accrued compensation and retirement costs                                                                     456                                                                   445
  Taxes, including income taxes                                                                                 147                                                                   144
  Other current liabilities                                                                                     742                                                                   492
  Long-term debt due within one year                                                          21                              19  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current liabilities                                                              2,821                           2,608  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Long-term debt, less amount due within one year                                                               1,424                                                                 1,418
Accrued pension benefits                                                                                      1,851                                                                 1,748
Accrued other postretirement benefits                                                                         1,166                                                                 1,094
Asset retirement obligations                                                                                    604                                                                   632
Environmental remediation                                                                                       264                                                                   266
Noncurrent income taxes                                                                                         310                                                                   348
Other noncurrent liabilities and deferred credits                                            604                             616  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total liabilities                                                                     9,044                           8,730  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                               
EQUITY
Alcoa Corporation shareholders’ equity:
  Common stock                                                                                                    2                                                                     2
  Additional capital                                                                                          9,531                                                                 9,559
  Retained (deficit) earnings                                                                                  (104 )                                                                 196
  Accumulated other comprehensive loss                                                    (3,775 )                                           (3,803 )
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total Alcoa Corporation shareholders’ equity                                           5,654                           5,954  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Noncontrolling interest                                                                    2,043                           2,245  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total equity                                                                          7,697                           8,199  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total liabilities and equity                                                                         $ 16,741                                           $ 16,929  
                                                                                        ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                                           
                                                                       
Alcoa Corporation and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
                                                                                            
                                                                                                                                                      Six months ended
                                                                                                                                                          June 30,
                                                                                           --------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2016(4)                                                     2017
                                                                                           ------------------------------------------------------                        ------------------------------------------------------
CASH FROM OPERATIONS
Net (loss) income                                                                                             $           (227 )                                                            $            446
Adjustments to reconcile net (loss) income to cash from operations:
   Depreciation, depletion, and amortization                                                                               355                                                                           369
   Deferred income taxes                                                                                                   (28 )                                                                          50
   Equity income, net of dividends                                                                                          20                                                                            14
   Restructuring and other charges                                                                                          92                                                                            22
   Net gain from investing activities - asset sales                                                           (32 )                                                                        (116 )
   Net periodic pension benefit cost                                                                                        23                                                                            55
   Stock-based compensation                                                                                                 18                                                                            14
   Other                                                                                                                    15                                                                            (3 )
   Changes in assets and liabilities, excluding effects of
   acquisitions, divestitures, and foreign currency translation
   adjustments:
     (Increase) in receivables                                                                                             (24 )                                                                         (75 )
     Decrease (Increase) in inventories                                                                                     42                                                                           (86 )
     (Increase) Decrease in prepaid expenses and other current assets                                                      (11 )                                                                          52
     (Decrease) Increase in accounts payable, trade                                                                       (133 )                                                                          19
     (Decrease) in accrued expenses                                                                                       (214 )                                                                        (190 )
     (Decrease) in taxes, including income taxes                                                                          (125 )                                                                         (44 )
     Pension contributions                                                                                                 (33 )                                                                         (47 )
     (Increase) in noncurrent assets(1)                                                                                   (179 )                                                                         (46 )
     (Decrease) in noncurrent liabilities                                                    -                                     (49 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH (USED FOR) PROVIDED FROM OPERATIONS                                                         (441 )                                                      385  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
FINANCING ACTIVITIES
Net transfers from Parent Company                                                                                          335                                                                -
Cash paid to Arconic related to separation(2)                                                                   -                                                                          (247 )
Net change in short-term borrowings (original maturities of three                                                           (1 )                                                                           3
months or less)
Additions to debt (original maturities greater than three months)                                               -                                                                             3
Payments on debt (original maturities greater than three months)                                                           (10 )                                                                         (10 )
Proceeds from the exercise of employee stock options                                                            -                                                                            18
Contributions from noncontrolling interest                                                                      -                                                                            56
Distributions to noncontrolling interest                                                                                   (84 )                                                                        (155 )
Other                                                                                        -                                      (6 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES                                                240                                    (338 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
INVESTING ACTIVITIES
Capital expenditures                                                                                                      (172 )                                                                        (159 )
Proceeds from the sale of assets and businesses(3)                                                                         (13 )                                                                         243
Additions to investments                                                                                                    (3 )                                                                         (36 )
Sales of investments                                                                                                       146                                                                -
Net change in restricted cash                                                                            (1 )                                                       (4 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH (USED FOR) PROVIDED FROM INVESTING ACTIVITIES                                                (43 )                                                       44  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
                                                                                                         19                                      10  
      EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Net change in cash and cash equivalents                                                                                   (225 )                                                                         101
Cash and cash equivalents at beginning of year                                                          557                                     853  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                              $            332                                           $            954  
                                                                                           ==================== ============== ====================                      ==================== ============== ====================
(1)   The (Increase) in noncurrent assets line item for the six months
                         ended June 30, 2016 includes a $200 prepayment related to a natural
                         gas supply agreement for three alumina refineries in Western
                         Australia, which are owned by Alcoa Corporation’s majority-owned
                         subsidiary, Alcoa of Australia Limited.
                          
(2)                      On November 1, 2016, Alcoa Corporation separated from its former
                         parent company (now named Arconic Inc.) into a standalone,
                         publicly-traded company. In accordance with the terms of the related
                         Separation and Distribution Agreement, Alcoa Corporation paid to
                         Arconic Inc. the net after-tax proceeds of $243 from the sale of the
                         Yadkin Hydroelectric Project.
                          
(3)                      Proceeds from the sale of assets and businesses for the six months
                         ended June 30, 2016 includes a cash outflow for cash paid as a
                         result of a post-closing adjustment associated with the December
                         2014 divestiture of an ownership stake in a smelter in the United
                         States.
                          
(4)                      Prior to November 1, 2016, Alcoa Corporation’s financial statements
                         were prepared on a carve-out basis, as the underlying operations of
                         the Company were previously consolidated as part of Alcoa
                         Corporation’s former parent company’s financial statements.
                         Accordingly, the cash flows of Alcoa Corporation for the six months
                         ended June 30, 2016 were prepared on such basis. The carve-out
                         financial statements of Alcoa Corporation are not necessarily
                         indicative of Alcoa Corporation’s consolidated cash flows had it
                         been a standalone company during the referenced period. See the
                         Combined Financial Statements included in Exhibit 99.1 to Alcoa
                         Corporation’s Form 10 Registration Statement and the Consolidated
                         Financial Statements included in the Company’s Annual Report on Form
                         10-K for the period ended December 31, 2016 filed with the United
                         States Securities and Exchange Commission on October 11, 2016 and
                         March 15, 2017, respectively, for additional information.
                          
                                                                                                                                                                                                                                                                                                                                                                             
Alcoa Corporation and subsidiaries
Segment Information(1),(2) (unaudited)
(dollars in millions; bauxite production and shipments in
millions of dry metric tons (mdmt); alumina and aluminum
production and shipments in thousands of metric tons (kmt))
                                                                                                                                                                                                                                                                                                                                                                             
                                                                                        1Q16                                            2Q16                                            3Q16                                                4Q16                                                 2016                                             1Q17                                            2Q17
                                                                  ---------------------------------------------   ---------------------------------------------   ---------------------------------------------   ------------------------------------------------------   ----------------------------------------------   ---------------------------------------------   ----------------------------------------------
Bauxite:
 Production(3) (mdmt)                                                                   11.3                                            10.8                                            11.1                                                     11.8                                             45.0                                            11.1                                             11.0
 Total shipments (mdmt)                                                                 11.2                                            11.8                                            11.7                                                     12.2                                             46.9                                            11.6                                             11.5
 Third-party sales                                                                   $    44                                         $    87                                         $    93                                         $             91                                         $    315                                         $    70                                         $     80
 Intersegment sales                                                                  $   175                                         $   182                                         $   192                                         $            202                                         $    751                                         $   219                                         $    208
 Adjusted EBITDA                                                                     $    77                                         $    99                                         $    97                                         $            102                                         $    375                                         $   110                                         $     98
 Depreciation, depletion, and amortization                                           $    17                      $    19                      $    21                      $             20                      $     77                      $    18                      $     19  
----------------------------------------------------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                             
Alumina:
 Production (kmt)                                                                      3,330                                           3,316                                           3,310                                                    3,295                                           13,251                                           3,211                                            3,249
 Third-party shipments (kmt)                                                           2,168                                           2,266                                           2,361                                                    2,276                                            9,071                                           2,255                                            2,388
 Intersegment shipments (kmt)                                                          1,257                                           1,137                                           1,140                                                    1,169                                            4,703                                             947                                            1,152
 Third-party sales                                                                   $   496                                         $   601                                         $   585                                         $            618                                         $  2,300                                         $   734                                         $    749
 Intersegment sales                                                                  $   292                                         $   321                                         $   317                                         $            377                                         $  1,307                                         $   361                                         $    384
 Adjusted EBITDA                                                                     $    15                                         $   114                                         $    78                                         $            171                                         $    378                                         $   297                                         $    227
 Depreciation and amortization                                                       $    45                                         $    47                                         $    47                                         $             47                                         $    186                                         $    49                                         $     53
 Equity (loss) income                                                                $   (14 )                                       $    (7 )                                       $    (9 )                                       $            (10 )                                       $    (40 )                                       $     1                      $     (6 )
----------------------------------------------------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                             
Aluminum:
 Primary aluminum production (kmt)                                                       600                                             595                                             586                                                      587                                            2,368                                             559                                              575
 Third-party aluminum shipments (kmt)                                                    764                                             770                                             761                                                      852                                            3,147                                             801                                              833
 Third-party sales                                                                   $ 1,552                                         $ 1,597                                         $ 1,600                                         $          1,782                                         $  6,531                                         $ 1,806                                         $  1,988
 Intersegment sales                                                                  $    34                                         $     2                                         $     2                                         $              4                                         $     42                                         $     4                                         $      3
 Adjusted EBITDA                                                                     $   165                                         $   180                                         $   183                                         $            152                                         $    680                                         $   206                                         $    221
 Depreciation and amortization                                                       $   103                                         $   104                                         $   103                                         $            104                                         $    414                                         $   101                                         $    108
 Equity (loss) income                                                                $    (7 )                                       $   (10 )                                       $    (7 )                                       $ -                      $    (24 )                                       $    (7 )                                       $      3  
----------------------------------------------------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                             
Reconciliation of total segment Adjusted EBITDA to consolidated
net (loss) income attributable to Alcoa Corporation:
 Total segment Adjusted EBITDA                                                       $   257                                         $   393                                         $   358                                         $            425                                         $  1,433                                         $   613                                         $    546
 Unallocated amounts:
   Impact of LIFO                                                                         18                                              (1 )                                             1                                                      (28 )                                            (10 )                                           (14 )                                             (8 )
   Metal price lag(4)                                                                      2                                               2                                               1                                                        4                                                9                                               6                                               11
   Corporate expense(5)                                                                  (36 )                                           (50 )                                           (47 )                                                    (44 )                                           (177 )                                           (34 )                                            (36 )
   Provision for depreciation, depletion, and amortization                              (177 )                                          (178 )                                          (181 )                                                   (182 )                                           (718 )                                          (179 )                                           (190 )
   Restructuring and other charges                                                       (84 )                                            (8 )                                           (17 )                                                   (209 )                                           (318 )                                           (10 )                                            (12 )
   Interest expense                                                                      (64 )                                           (66 )                                           (67 )                                                    (46 )                                           (243 )                                           (26 )                                            (25 )
   Other (expenses) income, net                                                          (39 )                                            23                                             106                                                       (1 )                                             89                                             100                                               (6 )
   Other(6)                                                           (74 )                        (59 )                        (52 )                                 (42 )                        (227 )                        (38 )                         (43 )
----------------------------------------------------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ --------------------
 Consolidated (loss) income before income taxes                                         (197 )                                            56                                             102                                                     (123 )                                           (162 )                                           418                                              237
   Provision for income taxes                                                            (18 )                                           (68 )                                           (92 )                                                     (6 )                                           (184 )                                          (110 )                                            (99 )
   Net loss (income) attributable to noncontrolling interest            5       (43 )                        (20 )                                   4        (54 )                        (83 )                         (63 )
----------------------------------------------------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ --------------------
 Consolidated net (loss) income attributable to Alcoa Corporation                    $  (210 )                                       $   (55 )                                       $   (10 )                                       $           (125 )                                       $   (400 )                                       $   225                      $     75  
================================================================= ==================== ===== ==================== ==================== ===== ==================== ==================== ===== ==================== ==================== ============== ==================== ==================== ====== ==================== ==================== ===== ==================== ==================== ====== ====================
The difference between certain segment totals and consolidated
amounts is in Corporate.
                      
(1)                                       Effective in the first quarter of 2017, management elected to change
                                          the profit and loss measure of Alcoa Corporation’s reportable
                                          segments from After-tax operating income (ATOI) to Adjusted EBITDA
                                          (Earnings before interest, taxes, depreciation, and amortization)
                                          for internal reporting and performance measurement purposes. This
                                          change was made to enhance the transparency and visibility of the
                                          underlying operating performance of each segment. Alcoa Corporation
                                          calculates Adjusted EBITDA as Total sales (third-party and
                                          intersegment) minus the following items: Cost of goods sold;
                                          Selling, general administrative, and other expenses; and Research
                                          and development expenses. Previously, Alcoa Corporation calculated
                                          ATOI as Adjusted EBITDA minus (plus) the following items: Provision
                                          for depreciation, depletion, and amortization; Equity loss (income);
                                          Loss (gain) on certain asset sales; and Income taxes. Alcoa
                                          Corporation’s Adjusted EBITDA may not be comparable to similarly
                                          titled measures of other companies.
                                           
                                          Also effective in the first quarter of 2017, management combined
                                          Alcoa Corporation’s aluminum smelting, casting, and rolling
                                          businesses, along with the majority of the energy business, into a
                                          new Aluminum business unit. This new business unit is managed as a
                                          single operating segment. Prior to this change, each of these
                                          businesses were managed as individual operating segments and
                                          comprised the Aluminum, Cast Products, Energy, and Rolled Products
                                          segments. As a result, Alcoa Corporation’s operating and reportable
                                          segments are Bauxite, Alumina, and Aluminum.
                                           
                                          Segment information for all prior periods presented was revised to
                                          reflect the new segment structure, as well as the new measure of
                                          profit and loss.
                                           
(2)                                       Prior to November 1, 2016, Alcoa Corporation’s financial statements
                                          were prepared on a carve-out basis, as the underlying operations of
                                          the Company were previously consolidated as part of Alcoa
                                          Corporation’s former parent company’s financial statements.
                                          Accordingly, the financial results of Alcoa Corporation for all
                                          periods prior to fourth quarter 2016 were prepared on such basis.
                                          Additionally, the financial results of Alcoa Corporation for the
                                          first month of fourth quarter 2016 were also prepared on a carve-out
                                          basis. The carve-out financial statements of Alcoa Corporation are
                                          not necessarily indicative of Alcoa Corporation’s consolidated
                                          results of operations, financial position, and cash flows had it
                                          been a standalone company during the referenced periods. See the
                                          Combined Financial Statements included in Exhibit 99.1 to Alcoa
                                          Corporation’s Form 10 Registration Statement and the Consolidated
                                          Financial Statements included in the Company’s Annual Report on Form
                                          10-K for the period ended December 31, 2016 filed with the United
                                          States Securities and Exchange Commission on October 11, 2016 and
                                          March 15, 2017, respectively, for additional information.
                                           
(3)                                       The production amounts do not include additional bauxite
                                          (approximately 3 million metric tons per annum) that Alcoa
                                          Corporation is entitled to receive (i.e. an amount in excess of its
                                          equity ownership interest) from certain other partners at the mine
                                          in Guinea.
                                           
(4)                                       Metal price lag describes the timing difference created when the
                                          average price of metal sold differs from the average cost of the
                                          metal when purchased by Alcoa Corporation’s rolled aluminum
                                          operations. In general, when the price of metal increases, metal
                                          price lag is favorable, and when the price of metal decreases, metal
                                          price lag is unfavorable.
                                           
(5)                                       Corporate expense is primarily composed of general administrative
                                          and other expenses of operating the corporate headquarters and other
                                          global administrative facilities.
                                           
(6)                                       Other includes, among other items, the Adjusted EBITDA of previously
                                          closed operations as applicable, pension and other postretirement
                                          benefit expenses associated with closed and sold operations, and
                                          intersegment profit elimination.
                                           
                                                                                                                                                                                                                                                            
Alcoa Corporation and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions, except per-share amounts)
                                                                                                                                                                                                                                                                                                                       
Adjusted (Loss) Income                                                                                                                                                            (Loss) Income                                                                                                                                                              Diluted EPS
                                                                                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------
                                                                                                                                                             Quarter ended                                                                                                                                                                  Quarter ended
                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------
                                                                                                       June 30,                                      March 31,                           June 30,                                                                     June 30,               March 31,      June 30,
                                                                                                        2016(1)                                                           2017                                                   2017                                                                      2016(1),(2)                                  2017                              2017
                                                                               ------------------------------------------------------                        ---------------------------                        ------------------------------------                                             ----------------------------                        --------                       --------------
                                                                                                                                                                                                                                                                                                                                                                                          
Net (loss) income attributable to Alcoa Corporation                                                                    $            (55 )                                           $  225                                            $             75                                                                  $ (0.29 )                            $                 1.21               $       0.40
                                                                                                                                                                                                                                                                                                                                                                                          
Special items:
                                                                                                                                      8                                                 10                                                          12
 Restructuring and other charges
 Discrete tax items(3)                                                                                                   -                                                 (2 )                                            -
 Other special items(4)                                                                                                             (10 )                                             (124 )                                                        48
 Tax impact(5)                                                                                                                        8                                                  5                                                         (11 )
                                                                                                                   5            3                    (8 )
 Noncontrolling interest impact(5)
                                                                                                    -------------------- -------------- --------------------     -------------------- ---- --------------------    -------------------- -------------- --------------------
    Subtotal                                                                                                      11         (108 )                                     41  
                                                                                                    -------------------- -------------- --------------------     -------------------- ---- --------------------    -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                          
Net (loss) income attributable to Alcoa Corporation - as adjusted                                         $            (44 )                                           $  117                         $            116                                                 (0.23 )                                              0.63                       0.62
                                                                                                    ==================== ============== ====================     ==================== ==== ====================    ==================== ============== ====================
Net (loss) income attributable to Alcoa Corporation - 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 Corporation 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 (loss) income attributable to Alcoa
Corporation determined under GAAP as well as Net (loss) income
attributable to Alcoa Corporation - as adjusted.
 
(1)                                                          Prior to November 1, 2016, Alcoa Corporation’s financial statements
                                                                                were prepared on a carve-out basis, as the underlying operations of
                                                                                the Company were previously consolidated as part of Alcoa
                                                                                Corporation’s former parent company’s financial statements.
                                                                                Accordingly, the results of operations of Alcoa Corporation for the
                                                                                quarter ended June 30, 2016 were prepared on such basis. The
                                                                                carve-out financial statements of Alcoa Corporation are not
                                                                                necessarily indicative of Alcoa Corporation’s consolidated results
                                                                                of operations had it been a standalone company during the referenced
                                                                                period. See the Combined Financial Statements included in Exhibit
                                                                                99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
                                                                                Consolidated Financial Statements included in the Company’s Annual
                                                                                Report on Form 10-K for the period ended December 31, 2016 filed
                                                                                with the United States Securities and Exchange Commission on October
                                                                                11, 2016 and March 15, 2017, respectively, for additional
                                                                                information.
                                                                                 
(2)                                                                             Prior to November 1, 2016, Alcoa Corporation did not have any issued
                                                                                and outstanding publicly-traded common stock. As such, the
                                                                                respective basic and diluted EPS related to both Net loss
                                                                                attributable to Alcoa Corporation and Net loss attributable to Alcoa
                                                                                Corporation - as adjusted for the quarter ended June 30, 2016 were
                                                                                calculated based on the 182,471,195 shares of Alcoa Corporation
                                                                                common stock distributed on November 1, 2016 in conjunction with the
                                                                                completion of Alcoa Corporation’s separation from its former parent
                                                                                company and are considered pro forma in nature.
                                                                                 
(3)                                                                             Discrete tax items for the quarter ended March 31, 2017 represent a
                                                                                net benefit for several small items.
                                                                                 
(4)                                                                             Other special items include the following:
                         ?                                         for the quarter ended June 30, 2016, a gain on the sale of an
                                                                                equity investment in a natural gas pipeline in Australia ($27),
                                                                                costs associated with the then-planned separation of Alcoa
                                                                                Corporation from its former parent company ($22), a benefit for an
                                                                                arbitration recovery related to a 2010 fire at the Iceland smelter
                                                                                ($14), a net unfavorable change in certain mark-to-market energy
                                                                                derivative contracts ($6), and a write-down of inventory related
                                                                                to two previously curtailed facilities ($3);
                         ?                                         for the quarter ended March 31, 2017, a gain on the sale of the
                                                                                Yadkin Hydroelectric Project in the United States ($120) and a net
                                                                                favorable change in certain mark-to-market energy derivative
                                                                                contracts ($4); and
                         ?                                         for the quarter ended June 30, 2017, an unfavorable tax impact
                                                                                related to the interim period treatment of operational losses in
                                                                                certain jurisdictions for which no tax benefit was recognized ($28),
                                                                                a net unfavorable change in certain mark-to-market energy derivative
                                                                                contracts ($17), an unfavorable impact due to the near-term power
                                                                                market exposure as a result of renegotiating a hedging contract
                                                                                related to forecasted future spot market power purchases for the
                                                                                Portland smelter ($13), and a favorable tax impact resulting from
                                                                                the difference between Alcoa’s consolidated estimated annual
                                                                                effective tax rate and the statutory rates applicable to special
                                                                                items ($10).
                                                                                 
(5)                                                                             The tax impact on special items is based on the applicable statutory
                                                                                rates in the jurisdictions where the special items occurred. The
                                                                                noncontrolling interest impact on special items represents Alcoa’s
                                                                                partner’s share of certain special items.
                                                                                 
                                                          
Alcoa Corporation and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
                                                                               
Adjusted EBITDA                                                                                                                                  Quarter ended
                                                                              ----------------------------------------------------------------------------------------------------------------------------------------
                                                                            June 30,                                      March 31,                           June 30,
                                                                             2016(1)                                                           2017                                                   2017
                                                         --------------------------------------------                        --------------------------------------                        ------------------------
                                                                                                                                                                                                 
Net (loss) income attributable to Alcoa Corporation                                              $  (55 )                                            $            225                                              $         75
                                                                                                                                                                                                 
Add:
 Net income attributable to noncontrolling interest                                                  43                                                            83                                                        63
 Provision for income taxes                                                                          68                                                           110                                                        99
 Other (income) expenses, net                                                                       (23 )                                                        (100 )                                                       6
 Interest expense                                                                                    66                                                            26                                                        25
 Restructuring and other charges                                                                      8                                                            10                                                        12
 Provision for depreciation, depletion, and amortization                         178                     179                 190
                                                                              -------------------- ---- --------------------      -------------------- -------------- --------------------      -------------------- ----------
                                                                                                                                                                                                 
Adjusted EBITDA                                                                                  $  285                           $            533                           $        470
                                                                              -------------------- ---- --------------------      -------------------- -------------- --------------------      -------------------- ----------
                                                                                                                                                                                                 
Special items(2)                                                                  25          -                  13
                                                                              -------------------- ---- --------------------      -------------------- -------------- --------------------      -------------------- ----------
                                                                                                                                                                                                 
Adjusted EBITDA, excluding special items                                                         $  310                           $            533                           $        483
                                                                              ==================== ==== ====================      ==================== ============== ====================      ==================== ==========
Alcoa’s Corporation’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 Corporation’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.
 
(1)                                                            Prior to November 1, 2016, Alcoa Corporation’s financial statements
                                                                                  were prepared on a carve-out basis, as the underlying operations of
                                                                                  the Company were previously consolidated as part of Alcoa
                                                                                  Corporation’s former parent company’s financial statements.
                                                                                  Accordingly, the results of operations of Alcoa Corporation for the
                                                                                  quarter ended June 30, 2016 were prepared on such basis. The
                                                                                  carve-out financial statements of Alcoa Corporation are not
                                                                                  necessarily indicative of Alcoa Corporation’s consolidated results
                                                                                  of operations had it been a standalone company during the referenced
                                                                                  period. See the Combined Financial Statements included in Exhibit
                                                                                  99.1 to Alcoa Corporation’s Form 10 Registration Statement and the
                                                                                  Consolidated Financial Statements included in the Company’s Annual
                                                                                  Report on Form 10-K for the period ended December 31, 2016 filed
                                                                                  with the United States Securities and Exchange Commission on October
                                                                                  11, 2016 and March 15, 2017, respectively, for additional
                                                                                  information.
                                                                                   
(2)                                                                               Special items include the following (see reconciliation of Adjusted
                                                                                  (Loss) Income above for additional information):
                          ?                                          for the quarter ended June 30, 2016, costs associated with the
                                                                                  then-planned separation of Alcoa Corporation from its former parent
                                                                                  company ($22) and a write-down of inventory related to two
                                                                                  previously curtailed facilities ($3); and
                          ?                                          for the quarter ended June 30, 2017, an unfavorable impact due to
                                                                                  the near-term power market exposure as a result of renegotiating a
                                                                                  hedging contract related to forecasted future spot market power
                                                                                  purchases for the Portland smelter.
                                                                                   
                      
Alcoa Corporation and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
                                           
Free Cash Flow                                                                          Quarter ended
                                          ---------------------------------------------------------------------------------------------------------
                                         March 31,                                   June 30,
                                           2017                                                           2017
                     ----------------------------------------------                        --------------------------------
                                                                                                   
Cash from operations                                         $     74                                                $    311
                                                                                                   
Capital expenditures                           (71 )                                (88 )
                                          -------------------- ------ --------------------        -------------------- ------ --------------------
                                                                                                   
                                                                                                   
Free cash flow                                               $      3                             $    223  
                                          ==================== ====== ====================        ==================== ====== ====================
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, which are both necessary to
maintain and expand Alcoa Corporation’s asset base and 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.
 
                                                                              
Net Debt                                                                      March 31,                                          June 30,
                                                                                2017                                               2017
                                                                     -------------------------                       ------------------------------
                                                                                                                      
Short-term borrowings                                                                   $     3                                         $          4
Long-term debt due within one year                                                           20                                                   19
Long-term debt, less amount due within one year                        1,431                             1,418
                                                                     -------------------- -----                      -------------------- ----------
Total debt                                                                              $ 1,454                                         $      1,441
                                                                                                                      
Less: Cash and cash equivalents                                          804                               954
                                                                     -------------------- -----                      -------------------- ----------
                                                                                                                      
Net debt                                                                                $   650                                         $        487
                                                                     ==================== =====                      ==================== ==========
Net debt is a non-GAAP financial measure. Management believes that
this measure is meaningful to investors because management assesses
Alcoa Corporation’s leverage position after considering available
cash that could be used to repay outstanding debt.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170719006295r1&sid=cmtx6&distro=nx&

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SOURCE: Alcoa Corporation

Alcoa Corporation 
Investor Contact: 
James Dwyer, +1 212-518-5450 
James.Dwyer@alcoa.com 
or 
Media Contact: 
Monica Orbe, +1 212-518-5455 
Monica.Orbe@alcoa.com


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