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Alcoa (AA)

Participants
James Dwyer Vice President of Investor Relations
Roy Harvey President and Chief Executive Officer
William Oplinger Executive Vice President and Chief Financial Officer
David Gagliano BMO Capital
Paretosh Misra Berenberg
Curt Woodworth Credit Suisse
Alex Hacking Citi
Matthew Korn Goldman Sachs
Timna Tanners Bank of America
Lucas Pipes B. Riley FBR
Chris Terry Deutsche Bank
John Tumazos John Tumazos Very Independent Research
Justin Bergner G. Research
Call transcript
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Operator

Good afternoon. And welcome to the Alcoa Corporation Third Quarter 2019 Earnings Presentation and Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to James Dwyer, Vice President of Investor Relations. ahead. go Please

James Dwyer

Officer. and Roy Allison, Officer; everyone. joined Chief I'm William Thank Alcoa good Corporation's by Financial and President Harvey, Executive Executive President today Oplinger, you, Vice day and and Chief

Bill. We will take questions after Roy comments by your and

reminder, Factors forward-looking relating in As to the actual that events may today's to various to differ will in are our and these presentation results included that cause today's expectations subject discussion statements materially assumptions future contain a filings. statements and and are from caveats. Company's SEC

effective of our to LIFO in accounting inventories addition, presentation. change certain January comparable XXXX, Also on included In for accounting effects the be from principle to its prior been our have some EBITDA note we measures today applied Any financial financial to The Company non-GAAP found the directly method means cost. financial X, most adjusted to presentation. measures changed a the all retrospectively appendix periods in valuing today's this presented. EBITDA. the in have in can Reconciliations to reference average GAAP discussion statements,

release Finally, our as on presentation website. earnings are previously available slide and announced, the

Roy. here's that, With

Roy Harvey

remained quarter, joining performance in thank bauxite today's demonstrate to achieved you, helped records production our alumina part We everyone profitable, new stability Thank in aluminum the prices. aluminum third and Jim, our across you operational to we and call. and by for segment aluminum continued In strong lower value and chain.

This we continued company. the plants to material announced two to of divestiture raw in our fell new contracts. across costs quarter, We new drive we model, the also line. the bottom of labor costs operating portfolio, and benefit strengthen a finalized aluminum continued reached Production and Spain, to our lower past

been multiyear we've our costs It because able continue we to profitability. markets. records, to work have of sustainable revitalize portfolio sales capacity safety. by Today, announcing as upon lower returned sheet. balance We've these separation, of and is a we're stability and to since production and review our asset improved we weather our aluminum plants building We're relentlessly drive enable to evidenced non-core back, that Looking alumina to and that our progress. and that

ground We have a lot cover. of to

get let's an third started quarter the with results. So, of overview

million reported of We aluminum divest a two charges to per model. Those in and net operating restructuring Spain loss results $X.XX $XXX include share. or our assets new implement to

we EBITDA adjusted per loss Excluding special excluding special items, or million. items, million basis, reported $XX we generated of an On net an $XXX adjusted $X.XX share.

million we achievement. the persistently slightly notable markets, period quarter Lastly, a given previous $XXX closed with higher than weak of cash, and that's the

recovering. we quarter now to third Turning and at serious disappointed employee one safety, experienced we’re one injury resting The refineries. is the our of that in

progress continue every everyone we our to of As making always, we're day, locations. improving prioritize who enters our and for on safety programs safety benefit the

positions the in new our four-year Aviles completed Our in focus a Coruna United for our on highest portfolio. be quarter we removing contract employees in to our historically successfully from our since XXXX. the future of Spain, uncompetitive our the and is enabled the the bauxite and in achieve as La underway XXXX. on of operating ratified a In and aluminum Bécancour to divested success. Steelworkers company In Quebec, facility restart And second portfolio United schedule current launch labor the that States, our and excellence production separate alumina operational quarterly segment, company facilities capacity our

some of bright Today's environment due a future, and current sustainability has markets, review a force, global our project growing our trends. trade to headwinds aside aluminum we for global year, aluminum reducing those becomes the deficit tensions. to In market but long, aluminum estimate continue a we're demand and macroeconomic we'll as

Lastly, to continuously demonstrated commitment we a have Alcoa. stronger create our

last Just announcing creating today, and closer plants, asset sales. leaner bring will to the review capacity saving management company even that a announced multiyear potential new our earlier, model I a we're mentioned our and operating costs. month, we And as

easy, made. of portfolio kind will it affect environment our But our the values combat announcement act outcomes continue of line decisions asset because term. This to communicate is must and sales We'll long current for and as with never Alcoa eventually employees. undertake some market strengthen and in are to we a the review

to quarter With review Bill over detailed our of that, results. for a I'll turn third it

William Oplinger

Roy. Thanks,

and prices the offset $XXX start income on were than alumina alumina year-on-year, aluminum were lower with million Let's aluminum. Revenues more statement. bauxite and and declined again realized lower as for by shipments prices. higher sequentially alumina X% down Revenues

Coruna million, charges to to restructuring to Alcoa La $XX $XXX related share by favorable million Bécancour net million to after Corporation costs Special In tax timing were million this per or the of and million offset to $XX disposition totaled shares attributable our the $XXX partially items implement the drove outstanding. model, of non-controlling in charge smelters, quarter, the operating components XXX.X on Aviles million loss third items tax and key quarter interest. The $X.XX restart new totaling $XXX the the charges quarter and and differences. lockout related related

look items. at income special let's the Now, excluding statement

special or excluding million. net excluding third items per items Our $XXX Adjusted loss adjusted EBITDA was $X.XX special million was $XX share. quarter

share the of the XX.X% to third up from XX.X%. for $X.XX full margin rate Australia annual lower higher was brought periods in Our EBITDA quarter true the on operational prior $XX XX.X% XX.X%. The the to rose adding Through rate second and quarter the profits, particularly to third operational rate million quarter, per quarter year or required tax Brazil. expense in and the estimated

at look closer driving EBITDA. factors adjusted Let's

operations million drove alumina adjusted other costs and improved partially market lower impacts, offset the price sequentially, $XX the This alumina quarter the all prices lower down of Taking improved Lower impact primarily together $XXX sequentially. offsetting EBITDA impact. million for partially prices.

costs, in and of coke the volumes those operational prices hydropower caustic, premiums, value-added bauxite, Brazilian higher improved portfolio and lower alumina primarily production raw petroleum the points, were positives. across key Lower gains. main partially sales some few lower offset costs A material and operational and

virtually every alumina on volumes costs. segment The in in EBITDA a sales to move improvement the and Alumina aluminum and the production production EBITDA the higher by mines. with volume primarily segments, volumes, EBITDA production as on lower third improved bauxite let's Pinjarra combined quarter higher from $XX adjusted adjusted partially production costs record We million, $XXX notably saw Alumar the our million Now, offset owned and whole. lower million area, declined most record and in sequentially segment lower adjusted prices, costs. at In volume segments. $XX sales on improved lower

inventory. profit prices netted were improving profit to dropped the costs and releasing favorable impacts $XX increasing by the in quarter million the margin but sequentially. in Alumina Non-segment lower and inventory, million negative $XX inventory. inventory were offset higher million, Inter-segment inter-company held $XX held remaining in partially in eliminations adjust

lower balance days we Turning ABI day third related smelter prices. as on $X $XX the improved We Days receivables up quarter made the million capital divestitures million $XXX working the In the in restart. to the sheet. payments one of XX million quarter, $XX ended sequentially. to declined with cash on million, to and Spanish

OPEB our billion. proportional net and Our of at $X.X liability and debt adjusted billion includes net pension remained $X.X

full Every rates. discount the pension year asset year-end, net account our we end year taking XXXX and and returns re-measure OPEB liability, into

of substantially our year-end XX, interest have As since declined rates XXXX September re-measurement. XXXX,

returns assets asset end had have and year-to-date expected lower XX% However, been quarter re-measurement occurred with partially greater if offset approximately at than rates. returns discount

discount rates full year our depend asset returns on actual effective results will and the year-end for course, Of other factors. at

Turning full year to our outlook.

tax last the expect $X XX%; quarter's to expected $XXX adjustments; slightly rate in to million; we Our instead be operational $XX approximately following full we full-year million the calculated expense better, year to tax a from year to we negative be outlook be up to addition using of year-to-date unchanged approximately to expect corporate with our million $XXX amount mostly transformation million million; up outlook tax EBITDA expect rate. is catch other remains the and the full approximately rate, $X

million million. expected given seeking with million sustaining to items be at related $XX $XXX cash capital conditions, at expenditures and current remaining capital return marketing $XXX are lower Our capital

expect million. ARO We approximately and be Environmental payments $XXX to

the in bauxite million provides adjusted list considerations EBITDA the million. this the records as quarter few line additional quarter, to for following include be in benefit sequential we In segment. volumes done sequential costs case EBITDA also alumina with and They to $XX higher the last the third maintenance which $XX totaling $XX to lower in benefits appendix, $XX the quarters, and fourth we to million quarter, lower million have sequential due EBITDA, approximately

to product Other we be to than million energy the aluminum benefit from costs expect premiums. lower raw material offset lower lower segment, costs third approximately European expect higher alumina the by $XX costs, and alumina quarter. seasonal we completely costs compared In

me Let to Roy. it back turn

Roy Harvey

Thanks Bill.

regarding practice, have In of bauxite. since seaborne markets. expect their surplus using remainder our show country's in inland we'll imported of to is the continue XXXX. interest As in increased the now we a the inland for fourfold China's our year. these remain market The refineries to discussion to turn key provinces bauxite, imports consumption approximately

China, reliable where the Refinery now refinery resulting demand. entered than and ex-China, a complex bauxites alumina by to to and economic alumina global due that tons In supply in an imported for and we offset higher is market South and from mitigate Imports into smelter surplus. Middle-East offset significantly factors XXXX. the In Caribbean chain. risk represented in expect from world, expansions from restarts Australia curtailments the of only In partially the sources the America. material reduce were more the larger alumina, Guinea surplus curtailments dominant the increasingly China, disruptions stockpiled

prior to weaker smaller the projection the aluminum market, continue than Finally, our year we deficit, full a albeit to project demand. global in

country's trade disruptions While deficit, year's demand for enough not lower to expectations of This smelter volumes have trade low aluminum offset growth back and in activity manufacturing swing demand. declining rest in the world. it growth lowered tensions, global this series to of with balance the helped our and year's China was the the

primary to activity consumption This is demand translate possibly Chinese reduced full-year to used a approximately primary mostly volumes. in started we revising curtailments which metric and order of from aluminum weaker our has prior aluminum have down that manufacturing product been has driven events estimate into to such, global of series year-over-year where country, As the Chinese mainly flat scrap global in XXX,XXX and factors due aluminum production world, that in is due maybe lower XXXX. XXXX and taken disruptive production. also tons by rising, ex-China, estimates. contract while economic imports for This outlook off We're

so challenges. growth, I'd demand outlook aluminum review we're conditions our discuss even longer-term a to we're for current summary, brighter for before downturn company prepared like Still, through I positioning real future. better In economic to pose manage to this continue and how

of our hallmarks focus of is our the continuous on One relentless company improvement.

the changed on listed slide stability and this that But these improvement We've recent sheet. balance the a to contributed and operations, safety competitive have continued is the believe more not left we just selection particularly side to to Alcoa. proud forward. I'm stronger, point, as of as each improvement rather, in of have in our well see of of move ending I a our step accomplishments, an

Just a last operating new we model. announced month,

In a savings and an The Company's in November to in by team. at other more procurement eliminating which effect level of organization beginning annual quarter leaner the consolidating million will on also of Alcoa's result operator-centric Xst, organization, create to addition sales, capabilities XXXX. commercial business expected and a the streamlining operating creating second goes in executive model, costs, enterprise it's unit structure, $XX into

our supply each improved consolidated and on focus by focusing our we Rather will our to creating chain. improve. And commercial business functions, team our plant's innovate expect and on competitiveness, improvements of locations, be across drive space than each to and production sharpening while consolidating operating also units, products

our zone the enable our ensure each of more in Operating existing will To time command a time, permit be share frequent connect will to no At better this practices. rapidly operational office Chief can operations, with of of will and be that hub to a chain members Netherlands, locations relocating COO. efficiently plan in best Officer global our connected to executive our our that relocate. global team our via our communications central This other to

adjusted sales, to non-core Looking million million corresponding can which $X to XX over at months, next will approximately $XXX in far we EBITDA to we net review proceeds, outweighing between in million. produce billion asset the ahead $XXX estimated a reduction estimate XX $XX

source where I'd materials a global are to world Now, to to despite a of sustainability like thing take in dynamics is Alcoa One aluminum view current is market the responsibility longer-term growing and responsibly position clear, industry. succeed. force,

the is XXXX, products an at Let's aluminum to since for X% next and over approximately XX to has annually begin grow the expected rate continue years. doubled with fundamentals. Demand

as formability in friendly Aluminum through made applications are lifecycle. properties strength, lighter, more has low to such fuel-efficient gas Those reduced that complete density, anticorrosive. due recyclability, environmentally well documented being beneficial automotive properties, and aluminum the its for have durability greenhouse ideal and to due emissions more vehicles

reduces energy-efficient secular sustainable and enables demanding food more we're to trends. as conscious, energy recyclability positioned industry, It And become the airplanes as consumers well also safer infinite on aluminum's environmentally Importantly, packaging. and resource and an and solutions. they're buildings, beverage And more sustainable product consumption. capitalize

the Stewardship Aluminum across on named the We've leader already bauxite, our last were We're leader on Jones alumina now. our portfolio since Indices and been Alcoa at Looking also inception. aluminum recognized And certified year, index. this industry This listed Dow sustainability. month, the assets aluminum were Sustainability a Initiative. by we in

and areas Amazon planet, the mining our world-class in Brazilian to in of Australia. and the methods and bauxite, In mine mine in rainforest high the have two of us Western the best-in-class most the forest biodiversity Jarrah areas trust protected earned rehabilitation bauxite of in credibility

approach to operate. us ensure withstanding in communities governments to access keeps with long-term reserves our and enhance and Our to license bauxite

of pursuing the in portfolio practices while producers, our energy ton refineries carbon storage developing for the per materials. bauxite emitter continue better And lead is we Among alumina for alumina, uses global In efficiency. our also lowest residue, alternative already dioxide. alumina

from sustainability of as one emitters carbon through And global made our ton of metal also approximately producers. is carbon per aluminum. low energy. help aluminum, meet renewable our customers our produced of lowest their XX% we're line or with [sustainer] targets, among with products either the dioxide In our currently, emissions such of And to recycled products

differentiation Aluminum in from certifications marketplace. Initiative our the the important Stewardship And provide

producer built years, in and more focused players differentiate reputation global as the a a aluminum, even world our on alumina Over responsible we that that becoming succeed us reputation to this meaningfully for enable is sustainability. sustainability. can sustainable evolving from solid have We believe bauxite, of and us an

actions conditions. more our the improvement, strengthen To opportunities consider today, review But curtailments, and market for further our a first, we must a divestitures. will take review company, company asset of current become significant closures we're potential given competitive The multiyear to announcing profitable portfolio. or

anticipate meaningful and aluminum can see As alumina changes making in most you from our this we portfolios. the slide,

alumina, environment. access and position. of world's mining engagement with cost in than X review, and communities more under to In In placing our bauxite is segment. mining miner our We're across the protection to tons to and extend we're of quartile tons deposits our approach million cases metric with I'm advantages X.X bauxite careful each undertaking our look largest By million XX most second bauxite we review. rights the local proud approximately years. first that with practices metric capacity capacity of review to in aluminum, goal maintain this would under about achieve of

a smelting we in We're quartile alumina outside the refiner largest also portfolio global carbon ton biggest position dioxide renewable alumina. alumina to first all powered XX% as maintain have emitter of producers. is our position strong of look our emitter the among China. In of up energy. dioxide become of long ton among lowest with cost the per the with And carbon to producers aluminum, position our We per aluminum lowest to by goal

second resulting a are producer, review to on cost and complete. the be from position will first quartile curve, a hold once currently We the actions we quartile drive capacity

the its to in the and competitiveness but expect global all in segment have Alcoa also you ton companies As the per maintained see, only we of improved dioxide not smelting portfolio aluminum transformation, lowest of each or will emitter refining. at be end can carbon both among

Since and At announced company this our we it's strategic our our that we destination. company. journey, in to strategic priorities a strengthen better to priorities time of define as steps in we've used our today launched making the to refresh to have light our that continue as decisions appropriate guide in XXXX,

our commodity reduce the as we'll focus compete cost industry. low being First, complexity, in we cyclical global on to reiterate

capabilities, margin on margins drive improve growth across remain as focus our returns, and Second, chain. targeted value focused. increasing commercial we we'll invest to intend opportunities, in We the

more And deliver work stockholders. balance the value lastly, to we've This and becoming the standards and Alcoa's stronger portfolio company, social strengthened both sheet for to to continued on sustainability leading reflect our transform a sheet, balance environmental the Alcoa’s sustainably. plan and advance improvements. sustainable increasing We focus updated priority our industry captures leverage strengthen to financial

infinitely the remains to will on been of demand aluminum look products we portfolio with next we'll a an expand are that the the but capture Alcoa believe ourselves we position future, recyclable the leader focus in market. outlook aluminum changing always require win long-term sustainability global the has to aluminum. more our producing to marketplace and responsibly range aluminum, in sustainably our produced. A As With views in strong. materials lightweight shift over sustainability few and for increased further advantage years,

that, get and us take you would instructions be remind Bill we'll could happy of please questions. I With to Allison, started? the and your

Operator

and thank Certainly you.

session. question-and-answer BMO of the ahead. come begin Capital. David Please [Operator now will from will go first And Gagliano question Instructions] our We

David Gagliano

more detail asset? is and capacity of smelting was you I on X the what X.X just tons a could First, review refining if tons wondering million which provide under little million in and are

Roy Harvey

and working portfolio they of with is give we're to through what targets. and simply and part need because careful that continue optionality flexibility operate. I'll a as is that that work of as being these we bit it one to Dave, And to we be our part with The our us exactly hit first. plant plants fact is Sure, that revealing about

the the make plants. look but fact of the as at ahead we're our you work us is I curve, So, you cost announcing some think and lies can not conclusions, specific

David Gagliano

follow-up, my just two-part has I a to it guess, be then And here. followup

timing In the five which terms from about it's non-core -- consideration, refining perspective, ask under but under assets a of process. let a five-year smelting else and of capacity year somebody review, I'll review, you're the

First a number it part respond sense Five give do loaded, to, can loaded? is or how two long the may and a that frontend your whatever, you is a is, almost capacity a some of number global this people if what company smelting of time, XX% demand. -- not are lot or mean, part this question is year think us is I say I one. in B of And is degradation kind backend you of that projecting aluminium

market comment? obviously a the respond of it’s loss that So, How from is that implication perspective. a do type global you share that to

Roy Harvey

Yes.

me let So, and first hit then can try Bill chime in. those and

upon from need we So, the and how at flows fact this type holistic will dependent The be that we're seeing look timing is a market perspective, to a program. based of cash the it as would upon try part of at existing this some those our argue plants. of some changes, that also structures market, to a market is and cost remember of in change step conditions. I make that those

Some in change case. refining take renegotiate or we're order in of to that that fundamentally approaching in the those how time to some or smelting

quite do into us to divestitures timeline that both be curtailments. those about simply market a reason the can the than and perhaps rather five to afford put changes; changes we most to make we and flows importantly, we in closures how is because permits and will cycle how adapting coming or So, cash it year

parameters of So, that consideration. into taken a different to need be decision lot

I than top both we when at that can. the to as and rather need possibly in our about market the focused fact and most looking competitive ability the about set the that cycles, one forward smelters think at smelting XX% it bottom, is share, or at we viability having the our aluminum we to think of be at On and your is go look capacity company on comment we move we through market market share, of our

better more have once a parts So, gives all from return springboard stream a which -- grow. once cycle, become we we the more to us that of competitive, consistent then at

your point. understand I So,

However, I but market competitive the presentation, we that approach a to of my determined and make low-cost in very we make sure clear about tried we as position. very very to enthusiastic that that market, future are are also in

William Oplinger

for add far would it for The market only thing owners. driving value looking really driving I shareholders, our as share, we're as from value at

it necessarily at market don't looking we position, as owners. So, look share it maximization for a we're as at value

Operator

Please go Our from next Paretosh ahead. Berenberg. question come will Misra of

Paretosh Misra

sale, be Maybe assets some I'll the one. energy could asset you downstream your a On non-core potential that other asset have, and of sale? ask assets those for the your could

William Oplinger

similar not talked Yes, asset in we're Roy's very about portfolio they'll answer the noncore being to in the of the at. and But assets be that past, which We're you be that about review. that, in number at around assets could considered looked specific we've a looking sale. know

are at this So, not getting sale specific point. assets about for which

We will let you know as we progress.

Paretosh Misra

And are regulations business new set my fuel, that the maybe any IMO that pretty of cost of any availability difference materials see making soon. your for any raw in active you or of be either the to XXXX terms Do consume? follow-up, the in you marine

William Oplinger

Yes.

IMO have shipping would XXXX to as we that we a we annually big could operations. around envision imagine XX% because are you costs, shipping costs. up on global add million $XXX So, and spend on We can shipper our

would be up. So, fuel to due be prices the that would going that fact

at we're IMO a So, looking XX% year-over-year due to XXXX. increase maybe

Roy Harvey

think can just I add ,as to that quickly If that. too about you Paretosh

remember occurring also to competitors. will that that I important think it's our also to be

overseas, China And of across about those how in IMO materials that's rest cost you going because on looks the that about so simply world think of to different impact have a of they that been each the so and versus consume much shipped is when you think ocean movement bauxite companies. curve the

also think on as the a of increase through well. relative our increase it's yes, some cost cost So but competitors

Operator

come go will And question of next Please our Curt ahead. from Woodworth Suisse. Credit

Curt Woodworth

on down Bill. cost raw on just is question materials, First

rally other ago the massive I in or some and think and half commodities. years it two caustic you year have when was

have to raw obviously like $XXX think of of And materials. raw number seen all reversal massive you in of we million inflation. these pretty guided material most a I a

kind give are was I So year. this versus year of wondering for into heading spot raw look on if materials where general where some you you guidance today, you could next

William Oplinger

Yes.

put in and bit a big in seeing So we materials, $XXX increase materials projecting me We in gone raw let for were approximately little the had XXXX it perspective. a million increase raw XXXX. into a

of a increase, course saw over million over we the decline 'XX. about seeing material raw 'XX, material During XXXX, probably cost into in a we're $XXX improving. raw third 'XX of 'XX prices that and that's translating of

'XX a of roughly year-over-year million between $XXX 'XX. improved raw So costs material and

It's coming in areas. a couple

First prices all, sharply. caustic of fairly prices down. are also down Coke are

come continued income raw down so bit costs, our we those also benefit. pitch see benefit should takes smelting but also. continue to flow-through caustic the XXXX, has flow to a there business, one nine that us The should statement, we is to through our that's as you see months coal so little anywhere of know, six And been going because between stubbornly high into tar material

So we're starting and to that 'XX. more see of the improvement versus in see 'XX, should 'XX

Curt Woodworth

delta the sense look could assets when I to production, EBITDA give then us 'XX restarting congrats for quantified an the look asset of guess And Spain, guess that's drag relative decision. for $XX shutdown this I what Bécancour But versus'XX? million restructuring, in kind and terms and then, a like obviously when Can year you level -- that the those you that tough Bécancour's at there of you of a Bécancour. and normal on

William Oplinger

breakeven some haven't is perspective. said of numbers. What of sensitivity Yes, quarter the have from be provided Bécancour, we just because the in should around that EBITDA Becancour an we the second

losing where Spain there, a in million, over is we recollection $XX that 'XX. the a around on to $XX reserved. million post-tax and is tax because Spain both a fully there was My benefit the that pre-tax were significant So approximately basis, earnings

able pre-tax two a a would by been we eliminate base selling those it's million that $XX of to $XXmillion, post-tax facilities. So have and

Operator

And question will of next Citi. ahead. Please Hacking Alex come go our from

Alex Hacking

alumina the have trying question way. I'm capacity. up say to not million different wanted portfolio tons talk when XX follow to you and on you Dave's of the review, ask just I But about, a portfolio,

review. million X come said You will under

million, currently that have of curtailed. XX -- that's million You you X.X currently

that correct to X.X be Am plus additional in I would get the assuming to X will under million? million right? come So about an that, I X.X that review million thinking

William Oplinger

Yes, exactly math we should the Alex, that's be doing.

Roy Harvey

that goes for goes and smelting. that refining both And

for so review. So provided capacity, would currently the under of that all curtailed operating capacity and review are both numbers be that capacity we've

Alex Hacking

And I And why then that asset a is assets. Thanks. EBITDA necessarily XX following why economy weak? on time selling be up these on like you seem bit guess now best can the guess assets? sales. the the doesn't non-core It global I to quite believe you do get times

William Oplinger

for I haven't we are think said which assets yet. sale

some will once comes assets we're assets of not that that be the to sell you'll that the for selling. clarity think see I sale, around probably it's time the a bad

$X sold. the made $XXX a generate that don't lot potentially will to are we've that billion that the once EBITDA announcement clarity on more assets be that contributes you could There what in other give proceeds. we'll portfolio to in be sold So of million

Operator

Korn question come next go of Please from ahead. Sachs. Our Goldman will Matthew

Matthew Korn

how little bit to reduction the $XX and more do consider conservative management looked that to a give in OpEx million really target then the you from could me, a on be this be? hierarchy? it -- from detail First consolidation And you in comes how

Roy Harvey

can maybe one Bill the the conservatism. take Let then me hit and first

we're what doing the essentially out structure. So is unit business collapsing

is smaller, their certain managed when it's addition, also announcement moved in you But I think you team this the executive operations, chart together grouping the that are of but permitting will to plant and to now to part actually so extent, where place, my think essentially more having those courses. was centrally that members. freedom And a take grouping seven reductions together commercial, for own about

it very And depend course of middle into different layer organization. much in at the of of talent So we parts redeploy happens it the will that end, management. as

William Oplinger

perspective. address I And to to asked have number you let of number. the me in numbers. The put we a conservative that line it's It's want number -- it realistic is sight a achieve. a

spend you basis $XX we that's And of on SG&A. on about million tell million SG&A. approximately know I an a $XXX You that annual would quarter

This it it you look $XX perspective, of already. competitors, out preponderance the To to major a at SG&A. all that's SG&A. in but come if of million were isn't put And on we will going come X% of competitive revenue to our number roughly of pretty out SG&A, spend

us an take to additional out sight an but for there. is number, have line to to million So get we be of $XX able aggressive

Roy Harvey

operating and I us our course, Bill's as operating. executive of it markets, form comment. and better just us managers of importantly, it let improvement it connection point year-over-year, to understand a will And this one will a team to But the believe the think trends us competitive. more The to to me will us more and it market. to savings on to add but corporation, be be the happening what's truly a efficient more changes better that better better more is it see and actual of makes very making I model, to closer have connection helps plant. only To make our even And in we're in our be welcome just that give to it not

Matthew Korn

but you the is this subtractive ops just as to additive not well… see as So something it

Roy Harvey

Absolutely.

Matthew Korn

you're of bit The Is carbon today? investing are priority here Slide want or what it or friendly to your position sustainably relative you how second, that set a it for does bottom Is Really does emphasis practices? and in per the this advanced in change of you're the -- to very out goals I little interested environmentally, how AA these XX is new to about changing practice? more sustainable at very measures, know I practices going lay things, was operating talking new it this What more. actively ton. on new currently means

Roy Harvey

So directions. in me put let that two

ahead. we're First I and have an many we and think hitting The most you're that foremost, practices of I reclamation is with and just you right. operate the and about I we areas, example, we rehabilitation country mining ahead our are of our activities, to communities that as of fundamentally where and fact connection think these believe it think choose in our

it next. to necessarily change to see up practices, means adapt And to what to ahead. is we we be our mean to of analyze, that have will coming it so maintain doesn't it and us But be have course ability

However, other our portfolio. be necessary our competitors. of projecting spot in there would aluminum that's In order to in areas to and areas, we're other some change some first will that compare ourselves we I inside change aluminum when that the highlight capture

and is because us so and more And us it also place financial placed products moving it will in way value into aluminum. financial be to lowest that to because all makes where it more in makes alumina believe are that the sense the bauxite sense makes then market carbon that there those responsibly from to a sourced, we competitive, are

actions some there're So to that need taken there. be

it way priorities, to would those in at So look order I the are we strategic our make guardrails you that the look when that decisions. at is use that

does look way it that look at the can So when at dollars, does a reduce invest is and example, model, simpler, there the it to it said we those for invest does operating we those. deploy as ability make us complexity, more, to us us new we changes; give the management an

mine expansion only we us that energy if have a that And make are important, that in not help following the our makes in about make balance mine, what think so be of -- about Greenfield source, improvement, will what is then of what do do when or sure now, that's to already. how will we the plant, seen impacts incredibly also sustainability sustainability how footprint; happy that existing then be to for choose a that our in the but invest Brownfield potential that have me support which sheet, we'll to will thinking the we we is sure practices then how invest in we one we

Operator

Our next America. Bank Tanners of will Please question ahead. Timna from come go of

Timna Tanners

years the Alcoa part producer. its being So go lower past review, don't and kind have of I continuously the answers. portfolio short over cost But the regarding assets in about to the pursuit we've Hopefully, couple I a questions. want in talked on to a all reviewing on.

from a re-up this think different and already I and So few power in I all? Wenatchee Massena some been you've how agreements, you've that is doing, cases know Second, and initiative of others. what some first just

five we have How can review? review? year a break is when do those So this is you or the permanent along then why closure costs same or think that do just about costs, lines. you And those, question exit third you

Roy Harvey

that me get and on help to support. started in let So then can Bill jump

that So mean at example a look Spanish the as the I of real you that we've would asset changes we've inside a year-after-year. first of of that same made, of Soderberg at the have making all, I the progress it review. think fallen it's great this are type right to been look place continuation

market our we're the fundamental go we we that, think help how is think deploy be I choose why choose trying will and that. make ourselves dependent where and industry. and to years you we us the destination. What while target difference giving to Timna, we is again the understand, that that five will is to It of successful in are

fundamental the difference. that's think I So

this the question is on power to the in ensure facility On power start flexibility agreement The give that's we to the market. react and to structure fact one. to us agreements I'll depending the those

facilities contracts for we to exit would at and very frank. take cost curve, those long-term in on then low risks higher So more to duration that would the the be we power curve, facility ability that on is cost very are on

William Oplinger

three jump asset review. really a just it review. me or let this should -- self And clear an we pronged wanted review close in. to improved make It's is I that

closure can how also and three are these at look we we out to there options significantly if facilities. improve will we but potential options. sale figure So will, for them And

Massena state a power of and is curtail you at and signed Wenatchee was a a listed Massena in that years longer-term couple facilities, couple Wenatchee. of point. does currently is a agreement, back. Wenatchee So curtailed, have this

As or not it's the program improve, been on things: far a cost focus because three as go, exit five-year about is sell. cost close, exit those and we've clear

going have to do tries way options at we're a this that we point, for three those facilities. owners the of each it exit between precise to because costs So don't maximize value the for

Timna Tanners

on us could balances could XXXX. aluminum demand said a comprehensive going do little was indulge there I you trade the more wondering broad sensitivity if aluminum But that I question bit things could or if the you at agreement a are affect you high I just And forward? How scenario outlook helpful know flat you know if you is in breaststrokes, wondering late thoughts for me level and market a us get give if trade I and as see is, was into to you down the give think we agreement. we do get where a

Roy Harvey

U.S. no difference automotive year, if is consumer and numbers. this see last how look way I the to both and see in or markets I of happening over at year. that's would I those the what's look these year I look it you last also at in development it yes, and is similar fundamental answer course happening downturns you types think, of Europe, there can there the is that, earlier Timna, year the is our that look But you that reduced and of at in the when particularly at in that's weaknesses this a versus also guess driving China. or things reduction

war sitting to economy uncertainty or It's whether focused in explain trade really about right beyond clearly. ability the the macro that's and economy my now is

we when point of underlying why reason recover earlier aluminum don't it a wouldn't any be will last drive about to recover, help how this market that where So to the year change. or quite demand honest, think see were I year, that characteristics we to me, because to

I and see think as of I to the would aluminum, recyclability, you'll and will look for infinite substitution use one there more that specific green content you consumers of becoming to component And materials also that add-on ways that. more and are that of aluminum that when And at lifecycle, conscious. to new be lifecycle carbon the I believe the sustainability continue

Operator

next Please B. Lucas go ahead. will Our Pipes question from of come Riley FBR.

Lucas Pipes

is My in across and question of first savings the the those cost. should allocated corporate million $XX on $XX How segments? restructuring be million

William Oplinger

We down haven't broken segments. by it

are it not business piece units. There three is and referred in will affect It it's it of corporate, it corporate. You There impact corporate. the a former to one piece is a segments. will the as that each segments of three actually of that

Lucas Pipes

back of then And review, to the harp and to on point this. sorry

What looking by was this? this Thank global the broad reaction caused about better time. on conditions? I for review evolving you. Just curve? understanding position brought Is basis it what market your Is at more upon to point in of a the it cost

Roy Harvey

and lot about of I have The portfolio. our is of since markets And all above. thinking Lucas. launch, to that going answer thinking a be the spent Yes, the time think about is fact our we

a been we've this back environment. review. bit It's a of it's board is Timna's gets continuous make and announcement this So directors question. involved and long-term particular how and think spent the have look -- markets, thinking ourselves win an how going in real finished have right and of Why forward. to and time we that a today at I up been in-depth our thus just in tomorrow's because we And we today's about taken succeed position study comportment of now

see simple essentially importantly, the market also are there low we strategic think complexity to therefore about course, as bias today. what get a those what and for our success as the so of about we And being priorities. eye is think the back about having more wanted to in possible to to being little and But cost. It's long-term, a keys

standpoint. that actually the was produced in can time, operational And also in make need And to same how ensuring at will consideration do that have be then finally, dollars? those in need sustainability and It's we about at capital how you more to you the that we the we're And facilities the fact aluminum more succeed. to take my balance hey, I a look back changes aluminum again, sheet drive sure that those and we markets am tied from how into say, investing returns. that using and

investors, start us, five to our for right give to will we view give to look start what time it's forward So just looking the analysts, just about like in years. a better our

Lucas Pipes

or initiatives higher of it's to kind point are customers' we value, we the that pay capture value willingness the drive today to which sustainably this ground What assume Thank driving Are aluminum. are to can side fact? I sourced capture? that of on you. sustainability on to there you just strategic seeing willingness And undertaking ground happening you sort value point the that What's having shows things on in initiatives and for -- the up on then front? your is on sustainability follow that

Roy Harvey

Yes.

spend that. are lot think But of won't is approaching a think in on you you how there see shift how sustainability, So Lucas, approaching companies think, this. across when how about people I I think time that look are I I a consumers sustainability,

Now, other and in necessarily the doesn't of shift end. general in financials nature drive that

So about financials. let's talk

aluminum products think your are that time right take We that produced. aluminum or marketplace. that aluminum as now are and this example, was made seeing is Those to being just products how a refined, have able and being how command in particular a series a your more your from market. I to for the of It's low are was recyclable material. going But been was have focused of to customers premium of more either certain nascent a carbon mined, in very that on that amount bauxite also how responsibility develop. you're interested a

on ask discount for to so our content customers premium for win. is you and can how carbon have it would more And planet, deliver when technology. is And aluminum the argue for I lowest producers that our move those a from fact whether producers the standpoint, that Elysis also we're at we more seeing to higher questions. of carbon is a a or the both that look choose

oxygen The development fact the dioxide that research Pittsburgh at and in is Rio rather in because Tinto, here carbon that only is some than smelting fact conjunction the is can with on works and it working Canada. different. in point, in this process up generate process we're the again, the that, that And fundamentally program that is

market would that's to And capture market niche to But be is another out. global a able but tomorrow. take step perhaps be going time it a again, so more is what to prove today, niche, a it much -- that to

Operator

come Please go will question next Bank. Deutsche from Our Chris Terry ahead. of

Chris Terry

from me. of questions Couple

just you First [XXX] in talked the included to come. Thanks. was one the included I XQ the the wondered, on cash about side? the related just what XQ cash through smelters? during Spanish quarter. you actually And was on talk flow in what to Can just

William Oplinger

I associated think with with million approximately additional was side, on the $XX associated ABI and then there Spain restart. the million it an $XX cash was

when we're we in ABI I associated in at maintain and were balance tough that given I Spain look with at was So able able make to the that $XXX million, payments the the pleased market cash while the cash we balance environment third quarter. the quarter, that in to were those

my So performance a from good view. it cash in was perspective

Chris Terry

And then just opportunities, on point of going capital forward, from view? the cash a working

William Oplinger

working fourth the a the typically about capital in we quarter and fell day decrease capital in see quarter. Working

I us. fourth able in for still probably level the free get in some it slightly ever fact a opportunities generate were again is so and market cash quarter. cash our actually result for cash capital positive we at from good balance ops, the grow keep working flow, these environments, there's the to tough that declines back really guess, to So

outcome. pretty the So with pleased

Roy Harvey

working Chris, one from well add Bill's as qualitative let me on standpoint. comment capital

individual three that as products, inflowing and at our be look inventories and to the a will As way it I as than ensure part manage join of Alcoa. think the competitive bringing us essentially combined that detailed across and commercial and and optimization, having them through that new focus operations businesses then on a model, we in very operating together at we commercial supply looking rather chain help outflowing smarter

won't think in rather real expect be to right I target looking able working give you now. the I XXXX. to immediately and But XXXX collect more opportunities as capital well, is a we So for fact probably in than

Operator

Please And from Research. go Tumazos our John John Very Tumazos next ahead. today will come of question Independent

John Tumazos

another the doing growth. for rise refining of or we've maybe who quarter of prices, due says, and must metal a carbon doing one at green XX half other and taxes looks what years We're you're think not than just or recession. someone is way more almost a costs and smelting. economic of Alcoa thinking that as gee, it's If business will had

a war. have We trade

it? things. the explain How that, business? and quarter should re-evaluating says, about bearish investor who to shoulders over you're react his react or shrugs Or Somehow you're to we of a an

Roy Harvey

to needs answer portfolio, alumina well, of our one. that depending to the our this ensure with back we is are improve, there at operations of about swings and John, or that improve on us Depending fix how don't recognize in we to And aluminum need structure gets fact let and how cost the cost you that us divest. swings, fact than have first market quartile to close me comments curve. it to is, be these curtail, each to how think Bill's plants choose gives know industry And look to in been our that you action very, market to believe you've green we time. the that or of I on rather or opportunities divest long in order more or opportunities in that to to The very that more a operations. for when to

need green Alcoa I think recognize think believe stronger. to So makes fact you in portfolio don't that the changes to these I

at way and the because because green in there some change the something in point that that future, do green, fact responsibility. sustainability Alcoa recognize is will into succeeds thing the think message, and I the market that value addition in natural the a is that is right we is the and

William Oplinger

a we've studying And are the higher I world months a green, to John, suggest greener necessarily world, that of would I metal mutually six you prices, and markets. exclusive. would also of sustainable over last our done lot add, a not

because greener metal sustainability a natural of these to eco aluminum. aluminum fact, just of In of world and the friendliness pricing better lead may

for is So greener producers. world look a forward, we probably aluminum a world as better

Operator

And Justin go G. today question Research. from our Please come will last Bergner ahead. of

Justin Bergner

alumina bauxite Can on material X nothing XXX to noncore or infer that I assets question planned there's the that mining refining in First operations sales. aluminum within your million smelting billion?

Roy Harvey

line and to going specific of once asset have not clear make it will the sight into assets details sales. we we to we're go of Justin, Again, specific

Justin Bergner

of right? And by own XX,XXX you still those Rockdale, acres most

Roy Harvey

is been Its for sale. acres for and few years. It's it XX,XXX now do. for a We sale

call, And if Texas, a a so me you Justin. good want give ranch in

Justin Bergner

exhibited know to flat-rolled and what Could us the going you year-to-date. higher Lastly, a profitability what's for forward? sort maybe than had on of just the targets realistic give you I constrained sense as you profitability operations, expectations are

Roy Harvey

talk made to the very some me efficiently points about and to. in The together we it hit as put Bill specific team wanted simply profitability. is drive what let to first needs about it plant But targets. be better done Yes, could hasn't I belabor that operated won't a believe And to that as fact part, it. we I will order change changes the and

also in point the you now I'd smelter has that embedded it to the it. fact

because that margin is So those of be. happens that a there piece might prices how metal changes of embedded and

William Oplinger

as in that, Roy said, XXXX. has in has that And million lower fact to been profitability prices assets. with that like of group so smelter I of think that $XX is of And the $XX that the the that by million is the group view current of more part included metal and negatively EBITDA in of hurt impacted

Operator

At closing over for back like turn session. question-and-answer the this our I conclude will this to Roy conference would And to any time, Harvey remarks.

Roy Harvey

you, Thank everyone for today. thanks And Allison. time again your to

made acted more continuously stronger things; us for they they grow make have achieve existing two today and we advantage. company. to sustainability announcements position profitability sustainable and a have We The Alcoa profitable our

path aluminum and be and our companies strong with bright We that differentiation material believe and without, gap to a continue the for between actions positioning widening commitments most responsible. that aluminum profitable is long sustainability There towards those a meaningful responsible a and future. provide choice is, for companies consumers, the will both

in look time. fourth to we Back and And sharing to thanks. January. you forward our Thank Allison, for quarter results your you

Operator

you now and The now you you. presentation lines. may We attending conference disconnect your for has Thank concluded. thank today's