REG-Alcoa Inc Alcoa Reports Second Quarter 2016 Results <Origin Href="QuoteRef">AA.N</Origin> - Part 3

AlcoaAnnouncement

12/07/2016 07:05

- Part 3: For the preceding part double click  ID:nBw700PfJb 

Solutions                         
 Adjusted EBITDA                              Quarter ended                                                                                                                                
                                              June 30,                 March 31,                June 30,                 June 30,                March 31,               June 30,          
                                              2015                     2016                     2016                     2015                    2016                    2016              
                                                                                                                                                                                           
 After-tax operating income (ATOI)            $     165                $     162                $     180                $     44                $     39                $     46          
                                                                                                                                                                                           
 Add:                                                                                                                                                                                      
 Depreciation, depletion, and amortization          54                       65                       62                       11                      11                      12          
 Income taxes                                       81                       78                       87                       17                      14                      18          
 Other                                              1                        –                        –                        (1    )                 –                       –           
                                                                                                                                                                                           
 Adjusted EBITDA                              $     301                $     305                $     329                $     71                $     64                $     76          
                                                                                                                                                                                           
 Third-party sales                            $     1,279              $     1,449              $     1,465              $     492               $     429               $     467         
                                                                                                                                                                                           
 Adjusted EBITDA Margin                             23.5   %                 21.0   %                 22.5   %                 14.4  %                 14.9  %                 16.3  %     

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                             Value-Add ((1))                                                  
 Adjusted EBITDA                              Quarter ended                                                    
                                              June 30,               March 31,              June 30,           
                                              2015                   2016                   2016               
                                                                                                               
 After-tax operating income (ATOI)            $     285              $     269              $     294          
                                                                                                               
 Add:                                                                                                          
 Depreciation, depletion, and amortization          121                    132                    129          
 Equity loss                                        7                      11                     10           
 Income taxes                                       123                    126                    133          
 Other                                              –                      (1     )               1            
                                                                                                               
 Adjusted EBITDA                              $     536              $     537              $     567          
                                                                                                               
 Third-party sales                            $     3,439            $     3,275            $     3,482        
                                                                                                               
 Adjusted EBITDA Margin                             15.6   %               16.4   %               16.3   %     

 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))    Value-Add is composed of the Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions segments. On September 28, 2015,    
          Alcoa announced that its Board of Directors approved a plan to separate into two standalone, publicly-traded companies. One such company will be named Arconic and will   
          include Value-Add, except for the Warrick, IN rolling operations and the equity interest in the rolling mill at the joint venture in Saudi Arabia, both of which are      
          currently part of the Global Rolled Products segment of Alcoa Inc. and will be included in the other company, Alcoa Corporation. See Segment Information for a            
          reconciliation of Alcoa Inc.’s total segment ATOI, which includes the Value-Add ATOI presented in the table above, to its consolidated net income.                        
                                                                                                                                                                                    



                                                                                       
 Alcoa and subsidiaries                                                                
 Calculation of Financial Measures (unaudited), continued                              
 (in millions)                                                                         
                                                                                       
 Free Cash Flow          Quarter ended                                                 
                         June 30,              March 31,             June 30,          
                         2015                  2016                  2016              
                                                                                       
 Cash from operations    $     472             $     (430  )         $     332         
                                                                                       
 Capital expenditures          (267  )               (251  )               (277  )     
                                                                                       
                                                                                       
 Free cash flow          $     205             $     (681  )         $     55          

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.

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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