- Part 2: For the preceding part double click ID:nBw71lBjPa
Global Rolled Products:
Third-party aluminum shipments (kmt) 432 462 449 432 1,775 433
Third-party sales $ 1,621 $ 1,668 $ 1,527 $ 1,422 $ 6,238 $ 1,397
Intersegment sales $ 36 $ 34 $ 29 $ 26 $ 125 $ 29
Equity loss $ (9 ) $ (7 ) $ (8 ) $ (8 ) $ (32 ) $ (11 )
Depreciation, depletion, and amortization $ 56 $ 56 $ 56 $ 59 $ 227 $ 56
Income taxes $ 36 $ 25 $ 28 $ 20 $ 109 $ 34
ATOI $ 54 $ 76 $ 62 $ 52 $ 244 $ 68
Engineered Products and Solutions:
Third-party sales $ 1,257 $ 1,279 $ 1,397 $ 1,409 $ 5,342 $ 1,449
Depreciation, depletion, and amortization $ 51 $ 54 $ 61 $ 67 $ 233 $ 65
Income taxes $ 76 $ 81 $ 71 $ 54 $ 282 $ 78
ATOI $ 156 $ 165 $ 151 $ 123 $ 595 $ 162
Transportation and Construction Solutions:
Third-party sales $ 471 $ 492 $ 475 $ 444 $ 1,882 $ 429
Depreciation, depletion, and amortization $ 10 $ 11 $ 11 $ 11 $ 43 $ 11
Income taxes $ 14 $ 17 $ 18 $ 14 $ 63 $ 14
ATOI $ 38 $ 44 $ 44 $ 40 $ 166 $ 39
Reconciliation of total segment ATOI to consolidated net income (loss) attributable to Alcoa:
Total segment ATOI $ 656 $ 567 $ 410 $ 273 $ 1,906 $ 291
Unallocated amounts (net of tax):
Impact of LIFO 7 36 50 43 136 4
Metal price lag (23 ) (39 ) (48 ) (23 ) (133 ) 1
Interest expense (80 ) (80 ) (80 ) (84 ) (324 ) (83 )
Noncontrolling interests (60 ) (67 ) (62 ) 64 (125 ) 5
Corporate expense (62 ) (65 ) (72 ) (67 ) (266 ) (55 )
Impairment of goodwill - - - (25 ) (25 ) -
Restructuring and other charges (161 ) (159 ) (48 ) (575 ) (943 ) (61 )
Other (82 ) (53 ) (106 ) (307 ) (548 ) (86 )
Consolidated net income (loss) attributable to Alcoa $ 195 $ 140 $ 44 $ (701 ) $ (322 ) $ 16
The difference between certain segment totals and consolidated amounts is in Corporate.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited)
(in millions, except per-share amounts)
Adjusted Income Income Diluted EPS
Quarter ended Quarter ended
March 31, December 31, March 31, March 31, December 31, March 31,
2015
2015
2016
2015
2015
2016
Net income (loss) attributable to Alcoa $ 195 $ (701 ) $ 16 $ 0.14 $ (0.55 ) $ 0.00
Restructuring and other charges 158 507 61
Discrete tax items(1) − 187 2
Other special items(2) 10 72 29
Net income attributable to Alcoa - as adjusted $ 363 $ 65 $ 108 0.28 0.04 0.07
Net income attributable to Alcoa - 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 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 income attributable to Alcoa determined under GAAP as well as Net income attributable to Alcoa - as adjusted.
(1) Discrete tax items include the following:
• for the quarter ended March 31, 2016, a net charge for a number of small items; and
• for the quarter ended December 31, 2015, a charge for valuation allowances related to certain U.S. and Iceland deferred tax assets ($190) and a net benefit for a small number of items ($3).
(2) Other special items include the following:
• for the quarter ended March 31, 2016, costs associated with the planned separation of Alcoa ($17), an unfavorable tax impact resulting from the difference between Alcoa`s consolidated estimated annual effective tax rate and the statutory rates applicable
to special items ($8), an unfavorable tax impact related to the interim period treatment of operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($2); and a write-down on inventory related to the permanent closure of
the Warrick smelter ($2);
• for the quarter ended December 31, 2015, a write-down of inventory related to the permanent closure or temporary curtailment of various facilities in Suriname and the United States ($28), an impairment of goodwill related to the soft alloy extrusion
business in Brazil ($25), costs associated with the planned separation of Alcoa ($12), a net unfavorable change in certain mark-to-market energy derivative contracts ($5), and an unfavorable tax impact related to the interim period treatment of operational
losses in certain foreign jurisdictions for which no tax benefit was recognized ($2); and
• for the quarter ended March 31, 2015, an unfavorable tax impact related to the interim period treatment of operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($35), a favorable tax impact resulting from the
difference between Alcoa`s consolidated estimated annual effective tax rate and the statutory rates applicable to special items ($31), costs associated with acquisitions of aerospace businesses ($7), and a net favorable change in certain mark-to-market
energy derivative contracts ($1).
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)
Adjusted EBITDA Quarter ended Trailing twelve
months
March 31, December 31, March 31, March 31,
2015
2015
2016
2016
Net income (loss) attributable to Alcoa $ 195 $ (701 ) $ 16 $ (501 )
Add:
Net income (loss) attributable to noncontrolling interests 60 (64 ) (5 ) 60
Provision for income taxes 226 44 30 249
Other (income) expenses, net (12 ) 29 34 48
Interest expense 122 129 127 503
Restructuring and other charges 177 735 93 1,111
Impairment of goodwill − 25 − 25
Provision for depreciation, depletion, and amortization 321 322 308 1,267
Adjusted EBITDA $ 1,089 $ 519 $ 603 $ 2,762
Adjusted EBITDA Measures:
Sales $ 5,819 $ 5,245 $ 4,947
Adjusted EBITDA Margin 18.7 % 9.9 % 12.2 %
Total Debt $ 9,069
Debt-to-Adjusted EBITDA Ratio 3.28
Alcoa`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`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.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions, except per metric ton amounts)
Segment Measures Alumina Primary Metals
Adjusted EBITDA Quarter ended
March 31, December 31, March 31, March 31, December 31, March 31,
2015
2015
2016
2015
2015
2016
After-tax operating income (ATOI) $ 221 $ 98 $ 8 $ 187 $ (40 ) $ 14
Add:
Depreciation, depletion, and amortization 80 68 63 109 105 102
Equity loss (income) 7 14 14 3 (3 ) (4 )
Income taxes 92 36 5 57 (42 ) (16 )
Other − 2 − (1 ) 1 (1 )
Adjusted EBITDA $ 400 $ 218 $ 90 $ 355 $ 21 $ 95
Production (thousand metric tons) (kmt) 3,933 3,856 3,330 711 699 655
Adjusted EBITDA / Production ($ per metric ton) $ 102 $ 57 $ 27 $ 499 $ 30 $ 145
Alcoa`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. The Other line in the table above includes gains/losses on asset sales and other nonoperating items.
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`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.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions, except per metric ton amounts)
Segment Measures Global Rolled Products
Adjusted EBITDA Quarter ended
March 31, December 31, March 31,
2015
2015
2016
After-tax operating income (ATOI) $ 54 $ 52 $ 68
Add:
Depreciation, depletion, and amortization 56 59 56
Equity loss 9 8 11
Income taxes 36 20 34
Other - - (1 )
Adjusted EBITDA $ 155 $ 139 $ 168
Total shipments (thousand metric tons) (kmt) 447 446 449
Adjusted EBITDA / Total shipments ($ per metric ton) $ 347 $ 312 $ 374
Alcoa`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. The Other line in the table above includes gains/losses on asset sales and other nonoperating items.
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`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.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)
Segment Measures Engineered Products and Solutions Transportation and Construction Solutions
Adjusted EBITDA Quarter ended
March 31, December 31, March 31, March 31, December 31, March 31,
2015
2015
2016
2015
2015
2016
After-tax operating income (ATOI) $ 156 $ 123 $ 162 $ 38 $ 40 $ 39
Add:
Depreciation, depletion, and amortization 51 67 65 10 11 11
Income taxes 76 54 78 14 14 14
Other (1 ) - - 1 - -
Adjusted EBITDA $ 282 $ 244 $ 305 $ 63 $ 65 $ 64
Third-party sales $ 1,257 $ 1,409 $ 1,449 $ 471 $ 444 $ 429
Adjusted EBITDA Margin 22.4 % 17.3 % 21.0 % 13.4 % 14.6 % 14.9 %
Alcoa`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. The Other line in the table above includes gains/losses on asset sales and other nonoperating items.
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`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.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions, except per metric ton amounts)
Business Measures Value Add(1)
Adjusted EBITDA Quarter ended
March 31, December 31, March 31,
2015
2015
2016
After-tax operating income (ATOI) $ 248 $ 215 $ 269
Add:
Depreciation, depletion, and amortization 117 137 132
Equity loss 9 8 11
Income taxes 126 88 126
Other - - (1 )
Adjusted EBITDA $ 500 $ 448 $ 537
Third-party sales 3,349 3,275 3,275
Adjusted EBITDA Margin 14.9 % 13.7 % 16.4 %
(1) Value Add is composed of the Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions segments.
Alcoa`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. The Other line in the table above includes gains/losses on asset sales and other nonoperating items.
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`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.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)
Free Cash Flow Quarter ended
March 31, December 31, March 31,
2015
2015
2016
Cash from operations $ (175 ) $ 865 $ (430 )
Capital expenditures (247 ) (398 ) (251 )
Free cash flow $ (422 ) $ 467 $ (681 )
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 due to the fact that these expenditures are considered necessary to maintain and expand Alcoa`s asset base and are 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.
Days Working Capital Quarter ended
March 31, December 31, March 31,
2015
2015(3)
2016(3)
Receivables from customers, less allowances $ 1,487 $ 1,428 $ 1,462
Add: Deferred purchase price receivable(1) 389 324 238
Receivables from customers, less allowances, as adjusted 1,876 1,752 1,700
Add: Inventories 3,189 3,523 3,516
Less: Accounts payable, trade 2,936 2,842 2,654
Working Capital(2) $ 2,129 $ 2,433 $ 2,562
Sales $ 5,819 $ 5,245 $ 4,947
Days Working Capital 33 43 47
Days Working Capital = Working Capital divided by (Sales/number of days in the quarter).
(1) The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial institutions on a recurring basis. Alcoa is adding back this receivable for the purposes of the Days Working Capital calculation.
(2) The Working Capital for each period presented represents an average quarter Working Capital, which reflects the capital invested during a given quarter. As such, the components of Working Capital for each period presented represent the average of the ending balances in each of the three months during the respective quarter.
(3) In the quarters ended December 31, 2015 and March 31, 2016 Working Capital includes $606 and $640, respectively, and sales include $207 and $217, respectively, related to two acquisitions, TITAL (March 2015), and RTI International Metals (July 2015). Excluding these amounts, Days Working Capital was 33 and 37 for the quarters ended December 31, 2015 and March 31, 2016, respectively.
Alcoa
Investor Contact
Matt Garth, 212-836-2674
Matthew.Garth@alcoa.com
or
Media Contact
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com
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Alcoa Inc
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