REG-Alcoa Inc Alcoa Reports Fourth Quarter 2015 and Full-Year Results <Origin Href="QuoteRef">AA.N</Origin> - Part 3
01/04/2016 12:24
- Part 3: For the preceding part double click ID:nBw55qgTNb
Adjusted EBITDA $ 133 $ 153 $ 139 $ 595 $ 611
Total shipments (thousand metric tons) (kmt) 508 464 446 2,056 1,836
Adjusted EBITDA / Total shipments ($ per metric ton) $ 262 $ 330 $ 312 $ 289 $ 333
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.
(1) Effective in the second quarter of 2015, management removed the impact of metal price lag from the results of the Global Rolled Products segment in order to enhance the
visibility of the underlying operating performance of this business. 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 this segment. The impact of metal price lag is now reported as a separate line item in Alcoa`s reconciliation of
total segment ATOI to consolidated net income (loss) attributable to Alcoa. As a result, this change does not impact the consolidated results of Alcoa. Segment
information for all prior periods presented was updated to reflect this change. See Segment Information above for additional information.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)
Segment Measures Engineered Products and Solutions(1),(2) Transportation and Construction Solutions(1),(2)
Adjusted EBITDA Quarter ended Year ended Quarter ended Year ended
December 31, September 30, December 31, December 31, December 31, December 31, September 30, December 31, December 31, December 31,
2014
2015
2015
2014
2015
2014
2015
2015
2014
2015
After-tax operating income (ATOI) $ 124 $ 151 $ 123 $ 579 $ 595 $ 38 $ 44 $ 40 $ 180 $ 166
Add:
Depreciation, depletion, and amortization 42 61 67 137 233 11 11 11 42 43
Income taxes 64 71 54 298 282 14 18 14 69 63
Other (1 ) - - - - - (1 ) - - (1 )
Adjusted EBITDA $ 229 $ 283 $ 244 $ 1,014 $ 1,110 $ 63 $ 72 $ 65 $ 291 $ 271
Third-party sales $ 1,114 $ 1,397 $ 1,409 $ 4,217 $ 5,342 $ 500 $ 475 $ 444 $ 2,021 $ 1,882
Adjusted EBITDA Margin 20.6 % 20.3 % 17.3 % 24.0 % 20.8 % 12.6 % 15.2 % 14.6 % 14.4 % 14.4 %
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.
(1) Effective in the second quarter of 2015, management removed the impact of metal price lag from the results of the Engineered Products and Solutions (now Engineered
Products and Solutions and Transportation and Construction Solutions - see footnote 2 below) segment in order to enhance the visibility of the underlying operating
performance of this business. 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 this segment. The impact of metal price lag is now reported as a separate line item in Alcoa`s reconciliation of total segment ATOI to consolidated net
income (loss) attributable to Alcoa. As a result, this change does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was
updated to reflect this change. See Segment Information above for additional information.
(2) In the third quarter of 2015, management approved a realignment of Alcoa`s Engineered Products and Solutions segment due to the expansion of this part of Alcoa`s business
portfolio through both organic and inorganic growth. This realignment consisted of moving both the Alcoa Wheel and Transportation Products and Building and Construction
Systems business units to a new reportable segment named Transportation and Construction Solutions. Additionally, the Latin American soft alloy extrusions business
previously included in Corporate was moved into the new Transportation and Construction Solutions segment. The remaining Engineered Products and Solutions segment
consists of the Alcoa Fastening Systems and Rings (renamed to include portions of the Firth Rixson business acquired in November 2014), Alcoa Power and Propulsion
(includes the TITAL business acquired in March 2015), Alcoa Forgings and Extrusions (includes the other portions of Firth Rixson), and Alcoa Titanium and Engineered
Products (a new business unit that represents the RTI International Metals business acquired in July 2015) business units. Segment information for all prior periods
presented was updated to reflect the new segment structure.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(dollars in millions)
Free Cash Flow Quarter ended Year ended
December 31, September 30, December 31, December 31, December 31,
2014
2015
2015
2014
2015
Cash from operations $ 1,458 $ 420 $ 865 $ 1,674 $ 1,582
Capital expenditures (469 ) (268 ) (398 ) (1,219 ) (1,180 )
Free cash flow $ 989 $ 152 $ 467 $ 455 $ 402
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
December 31, September 30, December 31,
2014
2015(3)
2015(3)
Receivables from customers, less allowances $ 1,513 $ 1,489 $ 1,428
Add: Deferred purchase price receivable(1) 395 382 324
Receivables from customers, less allowances, as adjusted 1,908 1,871 1,752
Add: Inventories 3,064 3,443 3,523
Less: Accounts payable, trade 3,021 2,871 2,849
Working Capital(2) $ 1,951 $ 2,443 $ 2,426
Sales $ 6,377 $ 5,573 $ 5,245
Days Working Capital 28 40 43
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 tied up 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 September 30, 2015 and December 31, 2015, Working Capital and Sales include $708 and $387, respectively, and $924 and $422 respectively, related to three acquisitions, Firth Rixson (November 2014), TITAL (March 2015), and RTI International Metals (July 2015). Excluding these amounts, Days Working Capital was 31 and 29 for the quarters ended September 30, 2015 and December 31, 2015, respectively.
Alcoa and subsidiaries
Calculation of Financial Measures (unaudited), continued
(in millions)
Net Debt December 31, September 30, December 31,
2014
2015
2015
Short-term borrowings $ 54 $ 50 $ 38
Long-term debt due within one year 29 136 21
Long-term debt, less amount due within one year 8,769 9,091 9,044
Total debt $ 8,852 $ 9,277 $ 9,103
Less: Cash and cash equivalents 1,877 1,739 1,919
Net debt $ 6,975 $ 7,538 $ 7,184
Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Alcoa`s leverage position after factoring in available cash that could be used to repay outstanding debt.
Alcoa
Investor Contact
Nahla Azmy, 212-836-2674
Nahla.Azmy@alcoa.com
or
Media Contact
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com
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