Alcoa (AA) Q2 2024 earnings summary

Executive summary

• Completed acquisition of Alumina Limited, increasing vertical integration and simplifying governance; transaction valued at approximately $2.8 billion, with 31.5% of Alcoa's fully diluted shares now held by former Alumina Limited shareholders.

• Net income attributable to Alcoa was $20 million in Q2 2024, reversing a $252 million loss in Q1 2024 and a $102 million loss in Q2 2023.

• Profitability improvement programs delivered $350 million in run-rate improvements year-to-date, with over half of targeted EBITDA improvements already achieved.

• Operational stability demonstrated by production records in Canadian and Mosjøen smelters, and improved stability at Alumar, now at 72% capacity.

• Completed full curtailment of the Kwinana refinery in June 2024, incurring significant restructuring charges and reducing workforce.

Financial highlights

• Q2 2024 sales were $2.91 billion, up 12% sequentially and 8% year-over-year.

• Net income attributable to Alcoa was $20 million, reversing a prior quarter loss of $252 million; EPS improved by $1.52 to $0.11.

• Adjusted net income was $30 million, or $0.16 per share; Adjusted EBITDA excluding special items increased to $325 million, up $193 million sequentially.

• Free cash flow (less net non-controlling interest distributions) was $101 million, up $370 million sequentially; cash balance at quarter-end was $1.4 billion.

• Issued $750 million of 7.125% Senior Notes due 2031, supporting liquidity and green projects.

Outlook and guidance

• 2024 alumina production and shipments expected at 9.8–10.0 million and 12.7–12.9 million metric tons, respectively; aluminum production and shipments projected at 2.2–2.3 million and 2.5–2.6 million metric tons, respectively.

• Q3 2024 guidance: Alumina segment expects higher production costs due to lower bauxite grades; Aluminum segment expects lower raw material costs and a $10 million positive impact in Adjusted EBITDA.

• Interest expense in Q3 2024 expected to rise by $5 million due to Alumina Limited debt assumption; operational tax expense projected at $60–$70 million.

• Return-seeking capital to rise to ~$110 million, focused on value-add product enhancements and small projects.

• Net income attributable to noncontrolling interest expected to be ~$20 million through acquisition closing.