DEFA14A: Alcoa Releases Preliminary Q2 2024 Results, Anticipates Alumina Limited Acquisition

Alcoa Corporation announces preliminary second quarter 2024 results showing sequential improvements in revenue, net income, and Adjusted EBITDA, driven by higher alumina and aluminum prices, and anticipates closing the Alumina Limited acquisition around August 1, 2024.

Summary

• Alcoa Corporation released preliminary second quarter 2024 results on July 10, 2024.
• The company reported sequential increases in revenue, net income, adjusted net income, and Adjusted EBITDA excluding special items.
• Revenue is expected to be between $2,850 million and $2,925 million, up from $2,599 million in Q1 2024.
• Net income attributable to Alcoa Corporation is projected to be between $5 million and $25 million, a significant improvement from the $(252) million loss in Q1 2024.
• Adjusted EBITDA excluding special items is expected to range from $310 million to $330 million, compared to $132 million in the previous quarter.
• Alumina production is expected to decrease by approximately 5 percent sequentially due to the full curtailment of the Kwinana refinery.
• Aluminum production is expected to be consistent with the strong output of the first quarter.
• Total aluminum shipments are expected to increase by approximately 7 percent sequentially.
• Alcoa's cash balance is expected to be around $1.4 billion as of June 30, 2024.
• The acquisition of Alumina Limited is expected to close on or about August 1, 2024.
• The company completed the full curtailment of the Kwinana refinery in June 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to improved financial results and the anticipated closing of the Alumina Limited acquisition. However, there are some concerns regarding production decreases and the future of the San Ciprin complex.

Positives

• Sequential increases in revenue, net income, adjusted net income, and Adjusted EBITDA excluding special items.
• Higher average realized third-party prices for alumina and aluminum.
• Expected completion of the Alumina Limited acquisition on or about August 1, 2024.
• Consistent aluminum production compared to the first quarter.
• Increase in total aluminum shipments by approximately 7 percent sequentially.
• Stable cash balance of approximately $1.4 billion.
• Progress on ELYSIS technology with Rio Tinto's plans to launch the first industrial-scale demonstration.

Negatives

• Alumina production is expected to decrease approximately 5 percent sequentially.
• Third-party shipments of alumina are expected to decrease approximately 5 percent sequentially.
• The preliminary financial information is subject to change and finalization.

Risks

• The preliminary financial information is subject to change.
• The acquisition of Alumina Limited is subject to shareholder approval.
• Available funding for the San Ciprin complex is anticipated to be exhausted by the end of 2024.
• Finding viable energy solutions for the San Ciprin refinery and smelter remains a challenge.
• The company is progressing the process for the potential sale of the San Ciprin complex.

Future Outlook

Alcoa anticipates closing the acquisition of Alumina Limited on or about August 1, 2024, subject to shareholder approval. The company is also working to find viable energy solutions for the San Ciprin complex and progressing the process for its potential sale.

Management Comments

• We had strong preliminary results for the second quarter of 2024 which reflect market improvements, said Alcoa President and CEO William F. Oplinger.
• We are looking forward to closing the acquisition of Alumina Limited on or about August 1, 2024.

Industry Context

The announcement reflects the impact of improved alumina and aluminum prices on Alcoa's financial performance. The acquisition of Alumina Limited is a strategic move to consolidate Alcoa's position in the alumina market.

Comparison to Industry Standards

• It is difficult to compare Alcoa's results directly to specific companies without detailed industry benchmarks for Q2 2024.
• However, companies like Rio Tinto and BHP Billiton, which also operate in the aluminum and alumina markets, serve as general comparators.
• Alcoa's Adjusted EBITDA excluding special items of $310 million to $330 million suggests a positive trend compared to its own Q1 2024 performance, and indicates a recovery from previous losses.
• The successful integration of Alumina Limited could further enhance Alcoa's competitive position relative to these industry peers.

Stakeholder Impact

• Shareholders can expect potential benefits from the improved financial performance and the Alumina Limited acquisition.
• Employees may be affected by the curtailment of the Kwinana refinery and the potential sale of the San Ciprin complex.
• Customers may see changes in alumina and aluminum supply due to production adjustments.
• Suppliers may be impacted by changes in Alcoa's operations and strategic decisions.

Next Steps

• Alcoa will announce its second quarter 2024 results on Wednesday, July 17, 2024.
• The company expects the Alumina Limited acquisition to be completed on or about August 1, 2024, subject to shareholder approval.
• Alcoa will continue to work to find viable energy solutions for the San Ciprin refinery and smelter.
• The company will progress the process for the potential sale of the San Ciprin complex.

Key Dates

Keywords

Alcoa, Alumina Limited, Preliminary Results, Second Quarter 2024, Acquisition, Aluminum, Alumina, EBITDA, Revenue, Net Income