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 Alcoa Corporation Reports Fourth Quarter and Full-Year 2017 Results
   Wednesday, January 17, 2018 4:10:00 PM ET

--Fourth Quarter 2017

--Net loss of $196 million, or $1.06 per share, includes the financial impacts of previously announced actions taken in line with the Company’s strategic priorities

--Excluding special items, adjusted net income of $195 million, or $1.04 per share, up 44 percent sequentially

--$775 million of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) excluding special items, up 38 percent sequentially, on higher alumina pricing

--$3.2 billion revenue, up 7 percent sequentially, driven mostly by improved alumina pricing

--$1.36 billion cash balance and $1.41 billion of debt, for net debt of $0.05 billion, as of December 31, 2017

--Full Year 2017

--Full-year 2017 net income of $217 million, or $1.16 per share and adjusted net income of $563 million, or $3.01 per share



--Adjusted EBITDA excluding special items of $2.35 billion, more than double full-year 2016

--$11.7 billion revenue, up 25 percent from 2016, on higher alumina and aluminum pricing

--$1.2 billion cash from operations; $0.8 billion free cash flow

--Company announces freeze of U.S. and Canada salaried defined benefit pension plans, effective January 1, 2021

--Continuing progress on strategic priorities to reduce complexity, drive returns and strengthen the balance sheet

Alcoa Corporation (AA ), a global leader in bauxite, alumina and aluminum products, today reported fourth quarter and full-year 2017 results.

                                                                                                                    
---------------------------------------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------------------------------------------------- --------------------
M, except per share amounts                                              4Q16(1)                           3Q17                              4Q17                                       FY16(1)                           FY17
---------------------------------------------------- -------------------- ----------------------------------------  -------------------- -------------------- -------------------- ----------------------------------------  -------------------- ----------------------------------------  -------------------- --------------------
Revenue                                                              $2,537                                      $2,964                 $3,174                                      $9,318                                     $11,652
Net (loss) income attributable to Alcoa Corporation                                      $(125 )                                                         $113                                     $(196 )                                                        $(400 )                                                         $217
Earnings per share attributable to Alcoa Corporation                 $(0.68 )                                     $0.60                 $(1.06 )                                    $(2.19 )                                     $1.16
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted net income (loss)                                                                 $26                                                           $135                                      $195                                                          $(227 )                                                         $563
Adjusted earnings per share                                           $0.14                    $0.72                  $1.04                   $(1.24 )                                     $3.01
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted EBITDA excluding special items                                $335                     $561                   $775                   $1,108                   $2,352
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                           
---------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------

The quarter and the full-year reflect ongoing strength in alumina and aluminum pricing as management continued to execute on its strategic priorities to reduce complexity, drive returns and strengthen the balance sheet.

The Company closed the year with $1.36 billion cash, up $239 million sequentially and $505 million year-over-year.

Based on January 2018 market assumptions(2), Alcoa is projecting full-year 2018 adjusted EBITDA, excluding special items, to range between $2.6 billion and $2.8 billion.

"Solid market fundamentals allowed us to deliver our strongest adjusted EBITDA quarter since our launch as an independent, publicly-traded company," said Roy Harvey, President and Chief Executive Officer. "With a series of operating and asset decisions, we also purposefully delivered against our strategic priorities. Our first full year has been truly remarkable. By continuously focusing on our strategic priorities, and supported by favorable markets, we’ve been able to accelerate our plan to strengthen Alcoa’s foundation for an even brighter tomorrow. As we enter 2018, we will continue to execute on our objectives and look forward to delivering more in the new year."

Harvey also announced new actions: "In our continuous drive to strengthen the balance sheet, today we informed salaried employees in the United States and Canada of upcoming changes to their retirement benefits. The decisions were difficult and affect current employees who have been part of our Alcoa family the longest. But to reduce our liabilities, change is necessary; it will enable us to better prepare for an uncertain and cyclical environment as we position our Company for the future."

Fourth Quarter 2017 Results

In fourth quarter 2017, Alcoa reported a net loss of $196 million, or $1.06 per share, compared to net income of $113 million, or $0.60 per share, in third quarter 2017. The 2017 fourth quarter results include $391 million of special items primarily due to previously announced actions relating to the Rockdale Operations and the Portovesme smelter that are aligned with the Company’s strategic priorities to streamline and strengthen Alcoa.

     
(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 year ended December 31, 2016 filed
                         with the United States Securities and Exchange Commission on March
                         15, 2017 for additional information.
(2)                      Based on unpriced sales at $2,200 LME and $390 API, and updated
                         regional premiums and foreign currencies.
                          

Other special items included charges for income tax valuation allowance and tax rate change adjustments, as well as certain impacts from new U.S. income tax legislation (see U.S. Tax Cuts and Jobs Act of 2017 below), and costs for the partial restart of the Warrick smelter in Indiana. These items were slightly offset by the reduction in a previously established reserve due to the settlement of an Italian energy tariff dispute.

Excluding the impact of special items, fourth quarter 2017 adjusted net income was $195 million, or $1.04 per share, up 44 percent sequentially from $135 million, or $0.72 per share. Adjusted EBITDA excluding special items rose 38 percent to $775 million in fourth quarter 2017 from $561 million in third quarter 2017. The improvement was primarily driven by increased pricing for both alumina and aluminum, somewhat offset by higher energy costs.

Alcoa reported fourth quarter 2017 revenue of $3.2 billion, up 7 percent sequentially, largely due to improved alumina and aluminum prices and increased alumina shipments.

Cash from operations in fourth quarter 2017 was $455 million and free cash flow was $305 million. Cash used for financing activities and investing activities was $53 million and $170 million, respectively, in the fourth quarter of 2017.

Alcoa ended fourth quarter 2017 with cash on hand of $1.36 billion with $1.41 billion of debt, for net debt of $0.05 billion. The Company reported 11 days working capital, a 3-day improvement year-over-year.

2017 Full-Year Results

For full year 2017, Alcoa reported net income of $217 million, or $1.16 per share, compared to a $400 million net loss, or $2.19 per share, for full-year 2016. Excluding special items, the Company reported adjusted net income of $563 million, or $3.01 per share, compared to a $227 million adjusted net loss, or $1.24 per share, in 2016.

Adjusted EBITDA excluding special items was $2.35 billion (Company’s projection was approximately $2.4 billion(3)), more than double the $1.11 billion earned in 2016. Strong alumina and aluminum pricing drove the increase, which was slightly offset by higher costs for energy and raw materials and unfavorable movements in foreign currency exchange rates.

Revenue in 2017 was $11.7 billion, up 25 percent from 2016, reflecting higher alumina and aluminum pricing.

Cash from operations in 2017 was $1.2 billion and free cash flow was $0.8 billion. In 2017, cash used for financing activities and investing activities was $506 million and $226 million, respectively. Alcoa invested $118 million in return-seeking capital projects and controlled sustaining capital expenditures to $287 million in 2017.

Market Update

For 2018, the Company projects balanced global bauxite and alumina markets and a global aluminum deficit of 300 thousand to 700 thousand metric tons. Alcoa is projecting 2018 global aluminum demand growth of 4.25 to 5.25 percent, following the Company’s final 2017 global demand growth rate of 5.25 percent.

Pension and OPEB

Alcoa today announces changes to its U.S. and Canada defined benefit pension plans, and to certain U.S. other post-employment benefits (OPEB), to support the Company’s strategic priority to strengthen the balance sheet by reducing its liabilities.

     
(3)                      Projection as of October 18, 2017 based on: actual results for
                         September 2017 YTD, outlook for unpriced sales for 4Q17 at $2,100
                         LME, $470 API, and updated regional premiums and foreign
                         currencies.
                          

Effective January 1, 2021:

-- Salaried employees in the United States and Canada, where the Company’s largest portion of liabilities for pension plans and OPEB reside, will cease accruing retirement benefits for future service under defined benefit pension plans.

-- In connection with this change, approximately 800 affected employees will be transitioned to country-specific defined contribution plans.

-- The Company will contribute 3 percent of affected participants’ eligible earnings to defined contribution plans in addition to its existing employer savings match.

Benefits earned from these defined benefit pension plans through Dec. 31, 2020 will be protected and included in benefits provided to the employees at the end of their employment with Alcoa or when becoming eligible for retirement, as defined by the plans.

Participants already collecting benefits under the pension plans and those currently covered by collective bargaining agreements are not impacted by these changes.

Alcoa also expects to make discretionary contributions, beyond required contributions, to the U.S. and Canada defined benefit pension plans in 2018 approximating a combined total of $300 million. In connection with the discretionary contributions, the Company intends to make annuity purchases to lower risk and cost while maintaining minimum required contribution levels.

Also, effective January 1, 2021, Alcoa will no longer contribute to pre-Medicare retiree medical coverage for U.S. salaried employees and retirees.

As a result of the above actions, Alcoa expects to both reduce its net pension and OPEB liability by $35 million and record non-cash nonoperating income of approximately $20 million in the first quarter of 2018.

U.S. Tax Cuts and Jobs Act of 2017

In fourth quarter 2017, the Company recorded a charge of $22 million in its income tax provision due to the remeasurement of its deferred income tax positions at the new corporate income tax rate of 21 percent (from 35 percent). Furthermore, Alcoa has completed an analysis determining its best estimate of the impact of the remaining tax reform provisions, which did not result in any additional impact to the Company’s 2017 financial results. The Company continues to finalize its analyses of the tax reform provisions in 2018, but it is not expected to have a material impact on the financial results.

Conference Call

Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern Standard Time (EST) on Wednesday, January 17, 2018 to present fourth quarter and full year 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. EST on January 17, 2018 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 and 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) declines in the discount rates used to measure pension liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; (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 (SEC). 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.

This release includes a range of forecasted 2018 Adjusted EBITDA for the Company. Alcoa Corporation has not provided a reconciliation of this forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure for the following reasons. The Company’s financial results are heavily dependent on market-driven factors, such as LME-based prices for aluminum, index- and spot-based prices for alumina, and foreign currency exchange rates. As such, the Company may experience significant volatility on a daily basis related to its forecasted Adjusted EBITDA. Management applies estimated sensitivities, such as relating to aluminum and alumina prices and foreign currency exchange rates, to the components that comprise Adjusted EBITDA. However, a similar analysis cannot be performed relating to the components necessary to reconcile Adjusted EBITDA to the most directly comparable GAAP financial measure without unreasonable effort due to the additional variability and complexity associated with forecasting such items. Consequently, management believes such reconciliation would imply a degree of precision that would be confusing and/or potentially misleading to investors.

                                                                 
Alcoa Corporation and subsidiaries
Statement of Consolidated Operations (unaudited)
(dollars in millions, except per-share amounts)
                                                                                      
                                                                                                                                                                                     Quarter ended
                                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          December 31,                                            September 30,                                           December 31,
                                                                                                             2016(1)                                                                     2017                                                                       2017
                                                                                     ---------------------------------------------------                        ---------------------------------------------------                        ---------------------------------------------------
Sales                                                                                                   $       2,537                                                              $       2,964                                                              $       3,174
                                                                                                                                                                                                                                            
Cost of goods sold (exclusive of expenses below)                                                                2,123                                                                      2,361                                                                      2,359
Selling, general administrative, and other expenses                                                                92                                                                         70                                                                         70
Research and development expenses                                                                                   7                                                                          8                                                                          9
Provision for depreciation, depletion, and amortization                                                           182                                                                        194                                                                        187
Restructuring and other charges                                                                                   209                                                                        (10 )                                                                      297
Interest expense                                                                                                   46                                                                         26                                                                         27
Other expenses, net                                                                              1                                   27                                    9  
                                                                                     -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
      Total costs and expenses                                                                                  2,660                                                                      2,676                                                                      2,958
                                                                                                                                                                                                                                            
(Loss) income before income taxes                                                                                (123 )                                                                      288                                                                        216
Provision for income taxes                                                                       6                                  119                                  272  
                                                                                     -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                            
Net (loss) income                                                                                                (129 )                                                                      169                                                                        (56 )
                                                                                                                                                                                                                                            
Less: Net (loss) income attributable to noncontrolling interest                                 (4 )                                                    56                                  140  
                                                                                     -------------------- ----------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                            
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION                                                     $        (125 )                                                            $         113                                           $        (196 )
                                                                                     ==================== =========== ====================                      ==================== =========== ====================                      ==================== =========== ====================
                                                                                                                                                                                                                                            
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS:
   Basic:
     Net (loss) income                                                                                  $       (0.68 )                                                            $        0.61                                                              $       (1.06 )
     Average number of shares                                                                             182,688,806                                                                184,594,233                                                                185,078,245
                                                                                                                                                                                                                                            
   Diluted:
     Net (loss) income                                                                                  $       (0.68 )                                                            $        0.60                                                              $       (1.06 )
     Average number of shares                                                                             182,688,806                                                                187,155,231                                                                185,078,245
(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
                         month of October 2016 included in the quarter ended December 31,
                         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 year 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)
                                                                                                       
                                                                                                                                                                            Year ended
                                                                                                                                                                           December 31,
                                                                                                      ------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              2016(1)                                                    2017
                                                                                                      ---------------------------------------------------                                             ---------------------------------------------------
Sales                                                                                                                    $       9,318                                                                                   $      11,652
                                                                                                                                                                                                       
Cost of goods sold (exclusive of expenses below)                                                                                 7,898                                                                                           9,072
Selling, general administrative, and other expenses                                                                                359                                                                                             284
Research and development expenses                                                                                                   33                                                                                              32
Provision for depreciation, depletion, and amortization                                                                            718                                                                                             750
Restructuring and other charges                                                                                                    318                                                                                             309
Interest expense                                                                                                                   243                                                                                             104
Other income, net                                                                                               (89 )                                                                        (58 )
                                                                                                      -------------------- ----------- --------------------                                           -------------------- ----------- --------------------
      Total costs and expenses                                                                                                   9,480                                                                                          10,493
                                                                                                                                                                                                       
(Loss) income before income taxes                                                                                                 (162 )                                                                                         1,159
Provision for income taxes                                                                                      184                                                       600  
                                                                                                      -------------------- ----------- --------------------                                           -------------------- ----------- --------------------
                                                                                                                                                                                                       
Net (loss) income                                                                                                                 (346 )                                                                                           559
                                                                                                                                                                                                       
Less: Net income attributable to noncontrolling interest                                                         54                                                       342  
                                                                                                      -------------------- ----------- --------------------                                           -------------------- ----------- --------------------
                                                                                                                                                                                                       
NET (LOSS) INCOME ATTRIBUTABLE TO ALCOA CORPORATION                                                                      $        (400 )                                                                                 $         217  
                                                                                                      ==================== =========== ====================                                           ==================== =========== ====================
                                                                                                                                                                                                       
EARNINGS PER SHARE ATTRIBUTABLE TO ALCOA CORPORATION COMMON
SHAREHOLDERS:
   Basic:
     Net (loss) income                                                                                                   $       (2.19 )                                                                                 $        1.18
     Average number of shares                                                                                              182,538,152                                                                                     184,420,404
                                                                                                                                                                                                       
   Diluted:
     Net (loss) income                                                                                                   $       (2.19 )                                                                                 $        1.16
     Average number of shares                                                                                              182,538,152                                                                                     186,981,665
                                                                                                                                                                                                       
Common stock outstanding at the end of the period                                                                          182,930,995                                                                                     185,200,713
(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
                         first ten months included in the year ended December 31, 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 year 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
Consolidated Balance Sheet (unaudited)
(in millions)
                                                                                                                                                               
                                                                                                          December 31,                                                          December 31,
                                                                                                              2016                                                                  2017
                                                                                        -------------------------------------------------                     -------------------------------------------------
ASSETS
Current assets:
  Cash and cash equivalents                                                                                $    853                                                              $  1,358
  Receivables from customers                                                                                    668                                                                   811
  Other receivables                                                                                             166                                                                   232
  Inventories                                                                                                 1,160                                                                 1,453
  Fair value of derivative contracts                                                                             51                                                                   113
  Prepaid expenses and other current assets                                                  283                             271  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current assets                                                                   3,181                           4,238  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                               
Properties, plants, and equipment                                                                            22,550                                                                23,046
Less: accumulated depreciation, depletion, and amortization                               13,225                          13,908  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
 Properties, plants, and equipment, net                                                    9,325                           9,138  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Investments                                                                                                   1,358                                                                 1,410
Deferred income taxes                                                                                           741                                                                   814
Fair value of derivative contracts                                                                              468                                                                   128
Other noncurrent assets                                                                    1,668                           1,719  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total assets                                                                                         $ 16,741                                           $ 17,447  
                                                                                        ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                               
LIABILITIES
Current liabilities:
  Accounts payable, trade                                                                                  $  1,455                                                              $  1,898
  Accrued compensation and retirement costs                                                                     456                                                                   459
  Taxes, including income taxes                                                                                 147                                                                   282
  Fair value of derivative contracts                                                                             35                                                                   185
  Other current liabilities                                                                                     707                                                                   412
  Long-term debt due within one year                                                          21                              16  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total current liabilities                                                              2,821                           3,252  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Long-term debt, less amount due within one year                                                               1,424                                                                 1,388
Accrued pension benefits                                                                                      1,851                                                                 2,335
Accrued other postretirement benefits                                                                         1,166                                                                 1,100
Asset retirement obligations                                                                                    604                                                                   617
Environmental remediation                                                                                       264                                                                   258
Fair value of derivative contracts                                                                              234                                                                 1,105
Noncurrent income taxes                                                                                         310                                                                   318
Other noncurrent liabilities and deferred credits                                            370                             279  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total liabilities                                                                     9,044                          10,652  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                                               
EQUITY
Alcoa Corporation shareholders’ equity:
  Common stock                                                                                                    2                                                                     2
  Additional capital                                                                                          9,531                                                                 9,590
  Retained (deficit) earnings                                                                                  (104 )                                                                 113
  Accumulated other comprehensive loss                                                    (3,775 )                                           (5,185 )
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
    Total Alcoa Corporation shareholders’ equity                                           5,654                           4,520  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
Noncontrolling interest                                                                    2,043                           2,275  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
     Total equity                                                                          7,697                           6,795  
                                                                                        -------------------- ------ --------------------                      -------------------- ------ --------------------
      Total liabilities and equity                                                                         $ 16,741                                           $ 17,447  
                                                                                        ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                                           
                                                                       
Alcoa Corporation and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
                                                                                            
                                                                                                                                                         Year ended
                                                                                                                                                        December 31,
                                                                                           ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2016(6)                                                     2017
                                                                                           ------------------------------------------------------                        ------------------------------------------------------
CASH FROM OPERATIONS
Net (loss) income                                                                                             $           (346 )                                                            $            559
Adjustments to reconcile net (loss) income to cash from operations:
   Depreciation, depletion, and amortization                                                                               718                                                                           752
   Deferred income taxes                                                                                                   (46 )                                                                         176
   Equity earnings, net of dividends                                                                                        48                                                                             9
   Restructuring and other charges                                                                                         318                                                                           309
   Net gain from investing activities - asset sales                                                          (164 )                                                                        (116 )
   Net periodic pension benefit cost                                                                                        66                                                                           111
   Stock-based compensation                                                                                                 28                                                                            24
   Other                                                                                                                   (16 )                                                                          32
   Changes in assets and liabilities, excluding effects of
   acquisitions, divestitures, and foreign currency translation
   adjustments:
     (Increase) in receivables                                                                                            (234 )                                                                        (118 )
     Decrease (Increase) in inventories                                                                                      1                                                                          (238 )
     (Increase) Decrease in prepaid expenses and other current assets                                                      (52 )                                                                          43
     Increase in accounts payable, trade                                                                                     6                                                                           377
     (Decrease) in accrued expenses(1)                                                                                    (320 )                                                                        (563 )
     (Decrease) Increase in taxes, including income taxes                                                                 (148 )                                                                         111
     Pension contributions                                                                                                 (66 )                                                                        (106 )
     (Increase) in noncurrent assets(2)                                                                                   (184 )                                                                         (99 )
     Increase (Decrease) in noncurrent liabilities                                                       80                                     (39 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH (USED FOR) PROVIDED FROM OPERATIONS                                                         (311 )                                                    1,224  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
FINANCING ACTIVITIES
Net transfers from former parent company                                                                                   802                                                                -
Cash paid to former parent company related to separation(3),(4)                                                         (1,072 )                                                                        (247 )
Net change in short-term borrowings (original maturities of three                                                           (4 )                                                                           7
months or less)
Additions to debt (original maturities greater than three months)(3)                                            -                                                                            21
Payments on debt (original maturities greater than three months)                                                           (34 )                                                                         (60 )
Proceeds from the exercise of employee stock options                                                                        10                                                                            43
Contributions from noncontrolling interest                                                                                  48                                                                            80
Distributions to noncontrolling interest                                                                                  (233 )                                                                        (342 )
Other                                                                                        -                                      (8 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH USED FOR FINANCING ACTIVITIES                                                               (483 )                                                     (506 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
INVESTING ACTIVITIES
Capital expenditures                                                                                                      (404 )                                                                        (405 )
Proceeds from the sale of assets and businesses(5)                                                                         112                                                                           245
Additions to investments                                                                                                    (3 )                                                                         (66 )
Sales of investments                                                                                                       146                                                                -
Net change in restricted cash(3)                                                                      1,226                          -  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH PROVIDED FROM (USED FOR) INVESTING ACTIVITIES                                              1,077                                    (226 )
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                          
                                                                                                         13                                      13  
      EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Net change in cash and cash equivalents                                                                                    296                                                                           505
Cash and cash equivalents at beginning of year                                                          557                                     853  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      CASH AND CASH EQUIVALENTS AT END OF YEAR                                                                $            853                                           $          1,358  
                                                                                           ==================== ============== ====================                      ==================== ============== ====================
(1)   The (Decrease) in accrued expenses line item for the year ended
                         December 31, 2017 includes a $238 payment for the early
                         termination of a power supply contract related to Alcoa’s Rockdale
                         (Texas) smelter, which has been curtailed since the end of 2008.
                          
(2)                      The (Increase) in noncurrent assets line item for the year ended
                         December 31, 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.
                          
(3)                      In September 2016, Alcoa Nederland Holding B.V., a wholly-owned
                         subsidiary of Alcoa Corporation, issued $1,250 in new senior notes
                         in preparation for the separation of the Company from its former
                         parent company (completed on November 1, 2016). The net proceeds
                         of $1,228 from the debt issuance, along with $81 of cash on hand
                         (see below) from the former parent company, were required to be
                         placed in escrow contingent on completion of the separation
                         transaction. As a result, the $1,228 of escrowed cash was recorded
                         as restricted cash on Alcoa Corporation’s Combined Balance Sheet
                         as of September 30, 2016. The issuance of the debt and the
                         increase in restricted cash both in the amount of $1,228 were not
                         reflected in the Statement of Consolidated Cash Flows for the year
                         ended December 31, 2016 as these represent noncash financing and
                         investing activities, respectively. The $81 represented the
                         necessary cash to fund the redemption of the notes, pay all
                         regularly scheduled interest on the notes through a specified date
                         defined in the notes, and a premium on the principal of the notes
                         if the separation had not been completed by a certain time as
                         defined in the notes. The subsequent release of the $1,228 from
                         escrow was reflected in the Statement of Consolidated Cash Flows
                         for the year ended December 31, 2016 as a cash inflow in the Net
                         change in restricted cash line item. Of this amount, $1,072 was
                         paid to Alcoa Corporation’s former parent company in conjunction
                         with the completion of the separation transaction.
                          
(4)                      In accordance with the terms of the Separation and Distribution
                         Agreement related to Alcoa Corporation’s separation from its
                         former parent company into a standalone, publicly-traded company,
                         the Company paid $243 of the net after-tax proceeds from the sale
                         of the Yadkin Hydroelectric Project to the former parent company.
                          
(5)                      Proceeds from the sale of assets and businesses for the year ended
                         December 31, 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.
                          
(6)                      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 first ten
                         months included in the year ended December 31, 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 year
                         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) (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))
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                4Q16(8)                                                                   2016(8)                                                                1Q17                                                                 2Q17                                                                 3Q17                                                                 4Q17                                                                 2017
                                                                                       ------------------------------------------------------                        ----------------------------------------------                        ---------------------------------------------                        ---------------------------------------------                        ---------------------------------------------                        ---------------------------------------------                        ----------------------------------------------
Bauxite:
 Production(2),(3) (mdmt)                                                                                             11.8                                                                  45.0                                                                 11.1                                                                 11.0                                                                 11.6                                                                 12.1                                                                  45.8
 Total shipments (mdmt)                                                                                               12.2                                                                  46.9                                                                 11.6                                                                 11.5                                                                 12.3                                                                 12.3                                                                  47.7
 Third-party sales                                                                                        $             91                                                              $    315                                                              $    70                                                              $    80                                                              $   104                                                              $    79                                                              $    333
 Intersegment sales                                                                                       $            202                                                              $    751                                                              $   219                                                              $   208                                                              $   221                                                              $   227                                                              $    875
 Adjusted EBITDA                                                                                          $            102                                                              $    375                                                              $   110                                                              $    98                                                              $   113                                                              $   106                                                              $    427
 Depreciation, depletion, and amortization                                             $             20                        $     77                        $    18                        $    19                        $    24                        $    21                        $     82  
----------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
Alumina:
 Production (kmt)                                                                                                    3,295                                                                13,251                                                                3,211                                                                3,249                                                                3,305                                                                3,331                                                                13,096
 Third-party shipments (kmt)                                                                                         2,276                                                                 9,071                                                                2,255                                                                2,388                                                                2,271                                                                2,306                                                                 9,220
 Intersegment shipments (kmt)                                                                                        1,169                                                                 4,703                                                                  947                                                                1,152                                                                1,153                                                                1,223                                                                 4,475
 Third-party sales                                                                                        $            618                                                              $  2,300                                                              $   734                                                              $   749                                                              $   713                                                              $   937                                                              $  3,133
 Intersegment sales                                                                                       $            377                                                              $  1,307                                                              $   361                                                              $   384                                                              $   398                                                              $   580                                                              $  1,723
 Adjusted EBITDA                                                                                          $            171                                                              $    378                                                              $   297                                                              $   227                                                              $   203                                                              $   562                                                              $  1,289
 Depreciation and amortization                                                                            $             47                                                              $    186                                                              $    49                                                              $    53                                                              $    53                                                              $    52                                                              $    207
 Equity (loss) income                                                                  $            (10 )                                         $    (40 )                                         $     1                        $    (6 )                                         $    (5 )                                         $     5                        $     (5 )
----------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
Aluminum:
 Primary aluminum production (kmt)                                                                                     587                                                                 2,368                                                                  559                                                                  575                                                                  596                                                                  598                                                                 2,328
 Third-party aluminum shipments(4) (kmt)                                                                               852                                                                 3,147                                                                  801                                                                  833                                                                  868                                                                  854                                                                 3,356
 Third-party sales                                                                                        $          1,782                                                              $  6,531                                                              $ 1,806                                                              $ 1,988                                                              $ 2,090                                                              $ 2,143                                                              $  8,027
 Intersegment sales                                                                                       $              4                                                              $     42                                                              $     4                                                              $     3                                                              $     9                                                              $     5                                                              $     21
 Adjusted EBITDA                                                                                          $            152                                                              $    680                                                              $   206                                                              $   221                                                              $   303                                                              $   234                                                              $    964
 Depreciation and amortization                                                                            $            104                                                              $    414                                                              $   101                                                              $   108                                                              $   106                                                              $   104                                                              $    419
 Equity (loss) income                                                                  $ -                        $    (24 )                                         $    (7 )                                         $     3                        $    (7 )                                         $    (8 )                                         $    (19 )
----------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
Reconciliation of total segment Adjusted EBITDA to consolidated
net (loss) income attributable to Alcoa Corporation:
 Total segment Adjusted EBITDA                                                                            $            425                                                              $  1,433                                                              $   613                                                              $   546                                                              $   619                                                              $   902                                                              $  2,680
 Unallocated amounts:
   Impact of LIFO                                                                                                      (28 )                                                                 (10 )                                                                (14 )                                                                 (8 )                                                                (14 )                                                                (55 )                                                                 (91 )
   Metal price lag(5)                                                                                                    4                                                                     9                                                                    6                                                                   11                                                                    5                                                                    4                                                                    26
   Corporate expense(6)                                                                                                (44 )                                                                (177 )                                                                (34 )                                                                (36 )                                                                (34 )                                                                (32 )                                                                (136 )
   Provision for depreciation, depletion, and amortization                                                            (182 )                                                                (718 )                                                               (179 )                                                               (190 )                                                               (194 )                                                               (187 )                                                                (750 )
   Restructuring and other charges                                                                                    (209 )                                                                (318 )                                                                (10 )                                                                (12 )                                                                 10                                                                 (297 )                                                                (309 )
   Interest expense                                                                                                    (46 )                                                                (243 )                                                                (26 )                                                                (25 )                                                                (26 )                                                                (27 )                                                                (104 )
   Other (expenses) income, net                                                                                         (1 )                                                                  89                                                                  100                                                                   (6 )                                                                (27 )                                                                 (9 )                                                                  58
   Other(7)                                                                      (42 )                          (227 )                          (38 )                          (43 )                          (51 )                          (83 )                          (215 )
----------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
 Consolidated (loss) income before income taxes                                                                       (123 )                                                                (162 )                                                                418                                                                  237                                                                  288                                                                  216                                                                 1,159
   Provision for income taxes                                                                                           (6 )                                                                (184 )                                                               (110 )                                                                (99 )                                                               (119 )                                                               (272 )                                                                (600 )
   Net loss (income) attributable to noncontrolling interest                       4          (54 )                          (83 )                          (63 )                          (56 )                         (140 )                          (342 )
----------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ --------------------
 Consolidated net (loss) income attributable to Alcoa Corporation                      $           (125 )                                         $   (400 )                                         $   225                        $    75                        $   113                        $  (196 )                                         $    217  
================================================================= ==================== ==================== ============== ==================== ==================== ==================== ====== ==================== ==================== ==================== ===== ==================== ==================== ==================== ===== ==================== ==================== ==================== ===== ==================== ==================== ==================== ===== ==================== ==================== ==================== ====== ====================
                      
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 for each of its segments 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 for each of its segments 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. The Adjusted EBITDA for each of Alcoa
                                          Corporation’s segments may not be comparable to similarly titled
                                          measures of other companies’ reportable segments.
                                           
                                          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)                                       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.
                                           
(3)                                       In the second quarter of 2017, Alcoa Corporation revised the
                                          respective production amount for the 2016 first, second, and third
                                          quarters to reflect refinements to individual mine data. As a
                                          result, the production reflected in this table for the referenced
                                          quarters was revised from prior period reports. Total bauxite
                                          production for annual 2016 remains unchanged at 45.0 mdmt.
                                           
(4)                                       The Aluminum segment’s third-party aluminum shipments are composed
                                          of both its primary aluminum and rolling operations.
                                           
(5)                                       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.
                                           
(6)                                       Corporate expense is primarily composed of general administrative
                                          and other expenses of operating the corporate headquarters and other
                                          global administrative facilities.
                                           
(7)                                       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.
                                           
(8)                                       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
                                          month of October 2016 included in the quarter ended December 31,
                                          2016 and for the first ten months included in the year ended
                                          December 31, 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 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 year 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
Calculation of Financial Measures (unaudited)
(in millions, except per-share amounts)
                                                                                                                                                                                                                                                                                                                             
Adjusted Income (Loss)                                                                                                                                                    Quarter ended                                                                                                                                                                                       Year ended
                                                                                                    ----------------------------------------------------------------------------------------------------------------------------------------------                                                                          --------------------------------------------------------------------------------------------------------
                                                                                                 December 31,                             September 30,                     December 31,                                                                                               December 31,                                   December 31,
                                                                                                    2016(5)                                                      2017                                                 2017                                                                                                      2016(5)                                                            2017
                                                                               ---------------------------------------------                        ----------------------------                        -----------------------------                                                                  ------------------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                                                                           
Net (loss) income attributable to Alcoa Corporation                                                                    $  (125 )                                            $  113                                              $  (196 )                                                                                                      $           (400 )                                            $    217
                                                                                                                                                                                                                                                                                                                                                                                           
Special items:
 Restructuring and other charges                                                                                           209                                                 (10 )                                                297                                                                                                                     318                                                   309
 Discrete tax items(1)                                                                                                     (11 )                                                13                                                   82                                                                                                          -                                                    93
 Other special items(2)                                                                                                     30                                                  36                                                   31                                                                                                                     (65 )                                                  (9 )
 Tax impact(3)                                                                                                             (22 )                                               (11 )                                                 (7 )                                                                                                                   (25 )                                                 (24 )
 Noncontrolling interest impact(3)                                                                      (55 )                             (6 )                             (12 )                                                                                                (55 )                              (23 )
                                                                                                    -------------------- ----- --------------------      -------------------- ---- --------------------      -------------------- ----- --------------------                                                                -------------------- -------------- --------------------      -------------------- ------ --------------------
    Subtotal                                                                                            151            22            391                                                                               173             346  
                                                                                                    -------------------- ----- --------------------      -------------------- ---- --------------------      -------------------- ----- --------------------                                                                -------------------- -------------- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                           
Net income (loss) attributable to Alcoa Corporation - as adjusted                                         $    26                           $  135                           $   195                                                                                     $           (227 )                                            $    563  
                                                                                                    ==================== ===== ====================      ==================== ==== ====================      ==================== ===== ====================                                                                ==================== ============== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                           
Diluted EPS(4):
Net (loss) income attributable to Alcoa Corporation common                                                             $ (0.68 )                                            $ 0.60                                              $ (1.06 )                                                                                                      $          (2.19 )                                            $   1.16
shareholders
                                                                                                                                                                                                                                                                                                                                                                                           
Net income (loss) attributable to Alcoa Corporation common                                                                0.14                                                0.72                                                 1.04                                                                                                                   (1.24 )                                                3.01
shareholders - as adjusted
                                                                                                                                                                                                                                                                                                                                                                                                                       
Net income (loss) 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 income (loss)
attributable to Alcoa Corporation - as adjusted.
 
(1)                                                          Discrete tax items include the following:
                         ?                                         for the quarter ended December 31, 2016, a benefit for the
                                                                                remeasurement of certain deferred income tax assets of a subsidiary
                                                                                in Brazil due to a tax rate change;
                         ?                                         for the quarter ended September 30, 2017, a net charge for several
                                                                                small items;
                         ?                                         for the quarter ended December 31, 2017, a charge for a valuation
                                                                                allowance related to certain non-U.S. deferred income tax assets
                                                                                ($60), a charge for the remeasurement of certain non-U.S. deferred
                                                                                income tax assets due to a tax rate change ($16), a charge for the
                                                                                remeasurement of U.S. deferred income tax assets and liabilities at
                                                                                the new corporate income tax rate of 21% (from 35%) under the 2017
                                                                                Tax Cuts and Jobs Act signed into law on December 22, 2017 ($22),
                                                                                and a net benefit for several other items ($16);
                         ?                                         for the year ended December 31, 2016, a benefit for the
                                                                                remeasurement of certain deferred income tax assets of a subsidiary
                                                                                in Brazil due to a tax rate change ($11) and a net charge for
                                                                                several other items ($11); and
                         ?                                         for the year ended December 31, 2017, a charge for a valuation
                                                                                allowance related to certain non-U.S. deferred income tax assets
                                                                                ($60), a charge for the remeasurement of certain non-U.S. deferred
                                                                                income tax assets due to a tax rate change ($26), a charge for the
                                                                                remeasurement of U.S. deferred income tax assets and liabilities at
                                                                                the new corporate income tax rate of 21% (from 35%) under the 2017
                                                                                Tax Cuts and Jobs Act signed into law on December 22, 2017 ($22),
                                                                                and a net benefit for several other items ($15).
                                                                                 
(2)                                                                             Other special items include the following:
                         ?                                         for the quarter ended December 31, 2016, costs associated with the
                                                                                separation of Alcoa Corporation from its former parent company
                                                                                ($19), interest expense incurred in October 2016 related to debt
                                                                                that was issued in September 2016 in preparation for the separation
                                                                                of Alcoa Corporation from its former parent company (completed on
                                                                                November 1, 2016) ($8), a net unfavorable change in certain
                                                                                mark-to-market energy derivative contracts ($2), and an inventory
                                                                                adjustment at a curtailed refinery in the United States ($1);
                         ?                                         for the quarter ended September 30, 2017, costs related to the
                                                                                partial restart of the Warrick (Indiana) smelter ($17), settlement
                                                                                of legacy tax matters in Brazil ($11), a net unfavorable change in
                                                                                certain mark-to-market energy derivative contracts ($11), a
                                                                                favorable tax impact related to the interim period treatment of
                                                                                operational losses in certain jurisdictions for which no tax benefit
                                                                                was recognized ($8), 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 (Australia) smelter ($8), and a favorable tax
                                                                                impact resulting from the difference between Alcoa Corporation’s
                                                                                consolidated estimated annual effective tax rate and the statutory
                                                                                rates applicable to special items ($3);
                         ?                                         for the quarter ended December 31, 2017, costs related to the
                                                                                partial restart of the Warrick (Indiana) smelter ($29), a favorable
                                                                                tax impact resulting from the difference between Alcoa Corporation’s
                                                                                consolidated estimated annual effective tax rate and the statutory
                                                                                rates applicable to special items ($13), a write-down of inventory
                                                                                related to the permanent closure of the Rockdale (Texas) smelter
                                                                                ($6), an unfavorable tax impact related to the interim period
                                                                                treatment of operational losses in certain jurisdictions for which
                                                                                no tax benefit was recognized ($6), preparation and contingency
                                                                                costs for a potential work stoppage (lockout commenced on January
                                                                                11, 2018) at a non-U.S. smelter ($4), an additional gain on the sale
                                                                                of the Yadkin Hydroelectric Project in the United States ($2), and a
                                                                                net unfavorable change in certain mark-to-market energy derivative
                                                                                contracts ($1);
                         ?                                         for the year ended December 31, 2016, a gain on the sale of wharf
                                                                                property near the Intalco (Washington) smelter ($118), costs
                                                                                associated with the separation of Alcoa Corporation from its former
                                                                                parent company ($73), a gain on the sale of an equity investment in
                                                                                a natural gas pipeline in Australia ($27), a benefit for an
                                                                                arbitration recovery related to a 2010 fire at the Iceland smelter
                                                                                ($14), interest expense incurred in October 2016 related to debt
                                                                                that was issued in September 2016 in preparation for the separation
                                                                                of Alcoa Corporation from its former parent company (completed on
                                                                                November 1, 2016) ($8), a write-down of inventory related to the
                                                                                permanent closure of a smelter in the United States and adjustments
                                                                                at two previously curtailed facilities ($7), and a net unfavorable
                                                                                change in certain mark-to-market energy derivative contracts ($6);
                                                                                and
                         ?                                         for the year ended December 31, 2017, a gain on the sale of the
                                                                                Yadkin Hydroelectric Project in the United States ($122), costs
                                                                                related to the partial restart of the Warrick (Indiana) smelter
                                                                                ($46), a net unfavorable change in certain mark-to-market energy
                                                                                derivative contracts ($25), 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 (Australia) smelter ($21), settlement of
                                                                                legacy tax matters in Brazil ($11), a write-down of inventory
                                                                                related to the permanent closure of the Rockdale (Texas) smelter
                                                                                ($6), and preparation and contingency costs for a potential work
                                                                                stoppage (lockout commenced on January 11, 2018) at a non-U.S.
                                                                                smelter ($4).
                                                                                 
(3)                                                                             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
                                                                                Corporation’s partner’s share of certain special items.
                                                                                 
(4)                                                                             In any given period, the average number of shares applicable to
                                                                                diluted EPS for Net (loss) income attributable to Alcoa Corporation
                                                                                common shareholders may exclude certain share equivalents as their
                                                                                effect is anti-dilutive. However, certain of these share equivalents
                                                                                may become dilutive in the EPS calculation applicable to Net income
                                                                                (loss) attributable to Alcoa Corporation common shareholders - as
                                                                                adjusted due to a larger and/or positive numerator. Specifically:
                         ?                                         for the quarter ended December 31, 2016, share equivalents
                                                                                associated with outstanding employee stock options and awards were
                                                                                dilutive based on Net income attributable to Alcoa Corporation
                                                                                common shareholders - as adjusted, resulting in a diluted average
                                                                                number of shares of 184,448,353;
                         ?                                         for the quarter ended September 30, 2017, no additional share
                                                                                equivalents were dilutive based on Net income attributable to Alcoa
                                                                                Corporation common shareholders - as adjusted, resulting in a
                                                                                diluted average number of shares of 187,155,231;
                         ?                                         for the quarter ended December 31, 2017, share equivalents
                                                                                associated with outstanding employee stock options and awards were
                                                                                dilutive based on Net income attributable to Alcoa Corporation
                                                                                common shareholders - as adjusted, resulting in a diluted average
                                                                                number of shares of 188,027,654;
                         ?                                         for the year ended December 31, 2016, no additional share
                                                                                equivalents were dilutive based on Net loss attributable to Alcoa
                                                                                Corporation common shareholders - as adjusted, resulting in a
                                                                                diluted average number of shares of 182,538,152; and
                         ?                                         for the year ended December 31, 2017, no additional share
                                                                                equivalents were dilutive based on Net income attributable to Alcoa
                                                                                Corporation common shareholders - as adjusted, resulting in a
                                                                                diluted average number of shares of 186,981,665.
                                                                                 
(5)                                                                             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
                                                                                month of October 2016 included in the quarter ended December 31,
                                                                                2016 and for the first ten months included in the year ended
                                                                                December 31, 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 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 year 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
Calculation of Financial Measures (unaudited), continued
(in millions)
                                                                                                                                                                                                                                                                                                       
Adjusted EBITDA                                                                                                                                      Quarter ended                                                                                                                                                                                  Year ended
                                                                                --------------------------------------------------------------------------------------------------------------------------------------------                                                                          -----------------------------------------------------------------------------------------------
                                                                            December 31,                             September 30,                    December 31,                                                                                           December 31,                              December 31,
                                                                               2016(2)                                                      2017                                                2017                                                                                                  2016(2)                                                       2017
                                                           --------------------------------------------                        ----------------------------                        ----------------------------                                                                  ---------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                                            
Net (loss) income attributable to Alcoa Corporation                                                $ (125 )                                            $  113                                              $ (196 )                                                                                                      $  (400 )                                            $    217
                                                                                                                                                                                                                                                                                                                                                            
Add:
 Net (loss) income attributable to noncontrolling interest                                             (4 )                                                56                                                 140                                                                                                             54                                                   342
 Provision for income taxes                                                                             6                                                 119                                                 272                                                                                                            184                                                   600
 Other expenses (income), net                                                                           1                                                  27                                                   9                                                                                                            (89 )                                                 (58 )
 Interest expense                                                                                      46                                                  26                                                  27                                                                                                            243                                                   104
 Restructuring and other charges                                                                      209                                                 (10 )                                               297                                                                                                            318                                                   309
 Provision for depreciation, depletion, and amortization                           182           194           187                                                                      718             750  
                                                                                -------------------- ---- --------------------      -------------------- ---- --------------------      -------------------- ---- --------------------                                                                -------------------- ----- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                            
Adjusted EBITDA                                                                                    $  315                           $  525                           $  736                                                                                     $ 1,028                           $  2,264  
                                                                                -------------------- ---- --------------------      -------------------- ---- --------------------      -------------------- ---- --------------------                                                                -------------------- ----- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                            
Special items(1)                                                                    20            36            39                                                                       80              88  
                                                                                -------------------- ---- --------------------      -------------------- ---- --------------------      -------------------- ---- --------------------                                                                -------------------- ----- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                            
Adjusted EBITDA, excluding special items                                                           $  335                           $  561                           $  775                                                                                     $ 1,108                           $  2,352  
                                                                                ==================== ==== ====================      ==================== ==== ====================      ==================== ==== ====================                                                                ==================== ===== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                                                                                        
Alcoa 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)                                          Special items include the following (see reconciliation of Adjusted
                                                                Income (Loss) above for additional information):
                 ?                                 for the quarter ended December 31, 2016, costs associated with the
                                                                separation of Alcoa Corporation from its former parent company ($19)
                                                                and an inventory adjustment at a curtailed refinery in the United
                                                                States ($1);
                 ?                                 for the quarter ended September 30, 2017, costs related to the
                                                                partial restart of the Warrick (Indiana) smelter ($17), settlement
                                                                of legacy tax matters in Brazil ($11), and 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 (Australia) smelter ($8);
                 ?                                 for the quarter ended December 31, 2017, costs related to the
                                                                partial restart of the Warrick (Indiana) smelter ($29), a write-down
                                                                of inventory related to the permanent closure of the Rockdale
                                                                (Texas) smelter ($6), and preparation and contingency costs for a
                                                                potential work stoppage (lockout commenced on January 11, 2018) at a
                                                                non-U.S. smelter ($4);
                 ?                                 for the year ended December 31, 2016, costs associated with the
                                                                separation of Alcoa Corporation from its former parent company ($73)
                                                                and a write-down of inventory related to the permanent closure of a
                                                                smelter in the United States and adjustments at two previously
                                                                curtailed facilities ($7); and
                 ?                                 for the year ended December 31, 2017, costs related to the partial
                                                                restart of the Warrick (Indiana) smelter ($46), 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 (Australia) smelter ($21),
                                                                settlement of legacy tax matters in Brazil ($11), a write-down of
                                                                inventory related to the permanent closure of the Rockdale (Texas)
                                                                smelter ($6), and preparation and contingency costs for a potential
                                                                work stoppage (lockout commenced on January 11, 2018) at a non-U.S.
                                                                smelter ($4).
                                                                 
(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
                                                                month of October 2016 included in the quarter ended December 31,
                                                                2016 and for the first ten months included in the year ended
                                                                December 31, 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 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 year 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
Calculation of Financial Measures (unaudited), continued
(in millions)
                                                                                                                                                                                                                       
Free Cash Flow                                                                                                 Quarter ended                                                                                                                                       Year ended
                                          -------------------------------------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------
                                      December 31,                             September 30,                    December 31,                                                December 31,                              December 31,
                                         2016(1)                                                      2017                                                2017                                                       2016(1)                                                       2017
                     --------------------------------------------                        ----------------------------                        ----------------------------                        --------------------------------------------                        ------------------------------
                                                                                                                                                                                                                                                                           
Cash from operations                                         $  239                                              $  384                                              $  455                                                              $ (311 )                                            $  1,224
                                                                                                                                                                                                                                                                           
Capital expenditures                        (146 )                            (96 )                           (150 )                                           (404 )                             (405 )
                                          -------------------- ---- --------------------      -------------------- ---- --------------------      -------------------- ---- --------------------                      -------------------- ---- --------------------      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                           
Free cash flow                                               $   93                           $  288                           $  305                                           $ (715 )                                            $    819  
                                          ==================== ==== ====================      ==================== ==== ====================      ==================== ==== ====================                      ==================== ==== ====================      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                       
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.
 
(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 cash flows of Alcoa Corporation for the month of
                                                                October 2016 included in the quarter ended December 31, 2016 and for
                                                                the first ten months included in the year ended December 31, 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 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.
                                                                 
                                                                                                               
Net Debt                                                                                          December 31,                                     September 30,                                           December 31,
                                                                                                      2016                                             2017                                                    2017
                                                                                          ----------------------------                     ----------------------------                     ------------------------------------------
                                                                                                                                                                                             
Short-term borrowings                                                                                        $      1                                         $      3                                         $                    8
Long-term debt due within one year                                                                                 21                                               17                                                             16
Long-term debt, less amount due within one year                                              1,424                         1,384                                       1,388
                                                                                          -------------------- ------                      -------------------- ------                      -------------------- --------------------
Total debt                                                                                                   $  1,446                                         $  1,404                                         $                1,412
                                                                                                                                                                                             
Less: Cash and cash equivalents                                                                853                         1,119                                       1,358
                                                                                          -------------------- ------                      -------------------- ------                      -------------------- --------------------
                                                                                                                                                                                             
Net debt                                                                                                     $    593                                         $    285                                         $                   54
                                                                                          ==================== ======                      ==================== ======                      ==================== ====================
                                                                                                                                                                                                                  
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=20180117006355r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180117006355/en/

SOURCE: Alcoa Corporation

Alcoa Corporation 
Investor Contact: 
James Dwyer,+1 412-992-5450 
James.Dwyer@alcoa.com 
or 
Media Contact: 
Monica Orbe, +1 412-315-2896 
Monica.Orbe@alcoa.com


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