Alcoa (AA)

James Dwyer VP IR
Roy Harvey President & CEO
William Oplinger Executive VP & CFO
Chris Terry Deutsche Bank
Carlos De Alba Morgan Stanley
Timna Tanners Bank of America
Lucas Pipes B.Riley
Alex Hacking Citigroup
David Gagliano BMO Capital Markets
Michael Dudas Vertical Research
John Tumazos Very Independent Research
Paretosh Misra Berenberg
Call transcript
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Good afternoon, and welcome to the Alcoa Corporation Third Quarter 2020 Earnings Presentation and Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [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

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

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

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

means In measures the addition, financial to directly non-GAAP today presentation. we adjusted measures have included EBITDA in to GAAP appendix in the EBITDA. some financial reference comparable in Reconciliations this discussion Any presentation. found today's can be our most to

announced, slide Finally, our the available on here's and With earnings are release website. presentation that, Roy. as previously

Roy Harvey

accomplishments that everyone for Alcoa's thanks circumstances and our underpinned a prices Jim, this set successful that report I to today. you, quarter, measures solid A production, progress our strong. turbulent improving this for our Thank by been what to term. and unpredictable comprehensive examples increasing revenue few reduce Despite performance been joining of has to had proud and call am quarter's and efforts on cost of improving the structure sales long company are include: continued

necessary, these people The mandates in quarter. safety. to and times. to The has report attention when details clear a potential mitigation, happy the I'm that to risks, fundamental. is approach includes help we've begin me keep uncertain including safe worked initiative, safety, no to our risk discussion careful my serious to based during seek to had important Let systems placed which injuries most with we on priority

our Importantly, getting business. of in to aspects right well safety perform other us allows

the to conditions. are items pandemic our continue that on risks create We follow that can unsafe the staying mitigate the also distractions. to everyday health-based teams from recognize we protocols can focused create While pandemic, the

So pre-job consistently place the beginning of communicating safety ensure being and the before importance as completing laser-focused example, briefings, adequate are to on hand in work. have we an controls ever tasks at we

as our overconfident teams of the by and diagnosed experience posed since as we've pandemic low countries across most Meanwhile, risks recovered remained becoming cases active. in our cases, far and work. the have response had a some company number who and began, relatively regional fully As the we're returned to crisis now rise a not global are pandemic,

response to locations our are remain to simply, plans Our continuing are update our of they or conditions priority. regional top ensure a and fit-for-purpose that refine as the teams preparedness and local global Put their and well-being safety change.

we that move what through our company. do said continue you'll make We're to today, would we we presentation we our fronts. doing multiple on As improve to progress see

improve Alcoa have priorities of of us, a and strategic entered we in steps helped We for position including strength had Our can a already through this action, these to uncertain clear long implementing so unexpected we're period from succeed strengthen current we and cycles, plan all as term. relative the market times.

$XXX than more reported third balance cash end of $X.X our billion a Turning the million, and results. the XX% also increased improvement, EBITDA We of to sequential to our which at we was quarter.

challenges will allocation our our while increase bond most to to capital continue The a flexibility As we proceeds hold recall, July. in framework. to issuance completed we short-term meet

Intalco in a in production which volume restart also cost I and quarter, in productive curtailment we we operating employees model, sequential capital completing year, of output. finished we smelter, set in placed Again management operating smelter new which markets, quarter. want is products in the we we curtailment. the the and records the XX% driving ABI within are efficiency of already safe our are the there last costs seeing Bauxite to is consider late our in Our mode third commercial thank site. and an saw relationships. effectiveness. increasing customer Alumina arm of our model the lows And Bécancour. We aluminum and has value-add increase This which improvements this for of in Also, resiliency took for our second the significant segments. Separately, faced and the while view completed down opportunities business. smelter a now the August, change orderly proven fully future and care the our and challenges. recovering In working effect We've chain, from full quarter, supply driving its maintenance

portion The significant understand Ciprián representatives. the of community, our We smelter. X financial We outplacement XX-day last the industry. that employees most casthouse this San will cast our and made regulations has leadership period the announced of the to our I action as we week. to addition an largest and to made the ongoing the consider just to workers' losses. carbon completing world's carbon next the a want of Separately, we metal. average decision aluminum A which EcoSource low comprehensive Sustana and with months is leveraging our sustained employees. sustainable third-party severance continue smelter-grade the lowest for to alumina the month supplier a X, services we world's products the curtail our of decision is and do in steps are to new smelter with offering alumina industry. last of brand, On Spanish footprint continues brand, decision October first note we operate. in the suite per on announced a our Next, the within affected after refinery and significance consultations

and China faster restart in globe. regions, than our comes it way. leading demand, economy discuss let's aluminum we Chinese the from observed are has across been COVID to of improvements Now the rebound trends other Though the When markets observing. global we're is the the the seeing

of continued construction all the were industrial on up quarter X% in aluminum China, above chart of strength the Europe and the second quarter key XXXX America, are those left, with quarter. regions the we for In same levels starting as transportation indicators third bottom the First, saw early North compared improvements quarterly We as and those aluminum as key as when in well production sectors. which building see the year. X the solid last with Alcoa's customers, end markets from and across

the is strong year-over-year recovery fourth building X% aluminum basis, is and the likely as light not to and according a as sector, market where, be a on to where as improvement up is to due specific space. China, demand markets shock pull and likely with slower is in analysts. production these for construction While but in automotive North vehicle to Union America X% as up Europe, end A in The is returning. America in in expected North gradual didn't used, in to reduced severe be demand expected construction, transportation the recover more transportation suffer the European commercial sector, office quarter

the as China, flows. second are unusual of of quarters, last third aluminum has of increased primary in alloyed the global the unraw up third that there over XXX,XXX into steadily in of XXXX. Imports XX% the improved that It in scrap. inventories, secondary typical flows in totaled from the quarter, an quarter-on-quarter X-month In markets areas of the hand domestic time, comprised in quarters On August has the Moving aluminum was third metal. same prices and make same enough mix shortage, period China placed and translated this from and This for XXX,XXX in course unraw demand Chinese increased of import more unalloyed the now primary aluminum XXXX. net over quarter. aluminum demand imports to having a X% metal relative aluminum these is aluminum. to primary the is China this slide. increased alone indicative to is from growth and reversal second from which seeks end the quarter, slowed trend primary due and result a the worldwide aluminum to global demand: in In other unraw, At further limit and half, tons in metals drop an that demand the improvement China same in on the estimate improvements aluminum trade an low-grade Recovery nearly of both Two tons, of we of off right year. the first first quarter. has demand in where indicate it of just to scrap X the July was in of for a over inventories imports period likely imports stock showing have profitable the

sign another is China. it temporary, of be recovery the may trend in the this While of strength

cautious impacts with demand. can Of on for Nonetheless, third the global provides its course, happen economy. much some global the optimism still aluminum and COVID-XX quarter

the Now is We let's the Bauxite, our record, saw the Through to operations. our and without all dedicated a providing our from Alcoa's we production during produce. the interruption discuss third prior Western a pace. proud our implemented appropriate X all first cost We in daily Alcoa's health program positive X in protecting health-related segments, mining improvements the increases our year-to-date across We we starting improvement assets consistent for teams again momentum in by The are using global performance of operated keep global tons the We're X period. the led saw mines operating in continuing crisis. remain of quarter, third productivity production of work segments. In the mines of in the average record Australia. at set vigilant people measures. once production with quarter, of we saving in sustainable year quarter

we we tons set in day quarter For metric per a this segment Alumina, last for also broke production. record

segment, drive operational in output. to Finally, increased our is Aluminum stability helping improved

quarter. now account earlier, completed ABI smelter this fully task Québec As restarted, noted in in takes third a is that the into the

for In on Also, tighter-than-expected an tightening in expect pricing aluminum Now improved the update the benefits in balances alumina, third by during year. producers bauxite, the a realized a volume the commercial market from we other we quarter. steady discussed. resulted supply have the in supply/demand driven disruptions some we and further activities. that our from market, In

we as Finally, increase noted, an saw products. value-add orders in overall for we've aluminum, in

were same products both XX% In point. the improvement, XXXX. the value-add than second sales the quarter, negatively we still and quarter quarters, a saw impacted sequential the lower mentioned in of low we in as with As third although period COVID, by third an second

customers While demand our see XXXX still continue cautious, we levels. signs remain QX below although is expected of green shoots, to be to

quarter's more turn over results. I'll to to it Now discuss fully Bill this

William Oplinger

achieved Roy. quarter. Thanks, the We third significant improvements in

$X.XX due third or and provision the of per share, million, million generating attributable up to revenue higher share. The $XXX special share. net excluding of profitability in $XXX resulting tax quarter. Corporation an interim items, a $X.XX adjusted per and to The $XX on primarily quarter of sequentially and margin was loss driver million was tax $X.XX or XXXX $XX Third or XX%. million, significant alumina The EBITDA, of million full most prior improvement Alcoa million $XXX improving an net was year alumina million $XXX was per period's up was sequentially prices. catch impacts the Adjusted view the up EBITDA $XXX loss

sequentially to of $XX weaker Alumina volume positive were segment costs were partially production $XX other this model combined prices. our due operating higher Higher look increased a $XXX EBITDA. impacts a partially in in bauxite the and to alumina intersegment aluminum segments impacts pricing the costs, energy mines. impacts XXX the higher dollar. which new offset Price quality improvement adjusted alumina improved Other our All metal Aluminum capturing contract The million partially in segment with the reversal million, million excluding million. third and favorable mix gas of U.S. $XX where two-thirds the benefits million bright lower million seasonally in quarter. $XX segment The as a prices Aluminum million, by costs, alumina coming Price segment. quarter, eliminations, and with inventory improving from to usage. saw non-metallurgical quarter one-third to the the testament Let's well at intersegment performance Alumina higher largest activities. additional mix, costs natural shipments sequentially Alumina labor $XX by primarily usage eliminations. driving experienced alumina million million and from of $XX included and related special in in by Adjusted better totaled mix higher production spots lower shipments value-add negative costs were an The Bauxite from $XX saw the factors as operations lower closer segment were were market earnings were price operated commercial Section offset improved and and benefit lower $XX sales sales market. costs, and $X EBITDA, $XX segment in third factor Overall, Norway. lower was for in million production smelter and items, caustic of tariffs the the factors at Volume the offset and due in coming improved million

to cash. Moving

Third balance was sheet. in quarter over billion exceptional cash with the liquidity $X.X on

million. $XXX counting totaled million first and the Our increased the of uses X debt totaled net sources actions and debt billion. Even of improvement of year-over-year million uses have billion issue, year-to-date $XXX early July issued cash debt reflection $XXX program. sources Through $X.X cash cash cash million. $XXX quarters a million, in proceeds sequential of balance of outpaced sequentially, solid $XX our cash $XXX successful $XXX and by with of removing $XXX the of million. performance million, our million $X year-over-year operating was cash cash balance and increased our $XXX increased proceeds Not We balance of million, XXXX,

decline Year-to-date, Now $XX less capital result Days million on XXXX days working distributions a at day in quarter negative let's X sequentially XX of million, lower by hand. the interest to metrics. look to partially and take cash $XX inventories driven financial other days, improved improved free capital. the non-controlling working in a flow

do sheet target been the and to expect approximately change, were pension liability remeasured asset remeasured. net quarter XX% debt, plans been the liability balance basis at million to the down to taken an adjusted fourth net are points OPEB metric, approximately $XXX our XX for variety discount remained Due billion. billion a asset basis roughly current all factors $X.X and Year-to-date, pension not pension basis. discount proportional returns has at X.X% rates we our billion. key interim and this have year, would rates last returns points and If OPEB on of are to of other $X.X approximately since increase the from Our actions XX $X.X

million $XXX cash program. Turning to our actions

drive of program. continue to remain Targets cash on We all aspects track. our

improved review our in lower production on timelines place. terms to see of leaner model, benefits operating capital portfolio of and continue lower We spending the and remain sales working the asset new and both in and non-core focus costs,

less Our COVID we spending response track, than pension on controls are although funding planned. also expect to defer slightly originally

adjustments outlook. to are We few XXXX a our full making year

$XX depreciation and the We tons range $XXX of costs. million performance. a impacts the improve by outside million shipments million. better segments, expect we are increasing tons are reduced production $XX XX.X to based for to EBITDA million tons below XX.X the XXXX alumina earnings shipping we driven on to expense In range improving to million, by On line, EBITDA XXX,XXX transformation

full the operational outlook an tax providing not for are year We rate.

we approximately operational million. the be $XX tax expense recent However, prices, fourth quarter based in to on expect

are we XXXX we For pension to up and flow required costs. year cash to pension lower our reflect adjusting full made funding expected modest minimum million $XX OPEB funding impacts,

funding We environmental are million result million, of and reducing actions. spending $XXX COVID-XX $XX by to controls a and ARO

a methods disclosed Office to its In Notice Our Australian share. XXX% proceedings a previously include and payment its penalties of disputed cash to resolution assessment year-to-date of available The administrative to this the to preliminary will related paper and issued Alcoa up $XX position, view dispute the Tax the including process for position ATO taxes the September, AofA begin company that with resolution agree and defend million, of Australian to on of penalties not the XXXX million continue filing a and pursue in of courts. proposes all matter the $XX does Australia ATO's approximately Assessment.

quarter. of for in as third to and are the no in the ultimately to alumina lower EBITDA expect are compared quarter; shipments impact; we in the segment, cash higher sequential same be In approximately segment, in we is adjusted considerations EBITDA the until is list to further it expecting in the third include: expected estimated matter costs to $XX the mix the result segment, appendix, impacts the Aluminum quarter. expected this customer costs We fourth for flat resolved. additional energy the also Bauxite Alumina million be They

tariffs Europe, the me for the Aside or are to Roy. back from price it XXX including With a of quarter. impact $XX Section factors expected maintenance and higher million costs, potential that, metal of higher partially currency offset costs all let quarter by impacts, the in to Intalco and other power curtailment full turn seasonal positive labor decline sequentially, anticipated full

Roy Harvey

Thanks, Bill.

footprint leadership alumina. the we've the and chain. as lower unique And emissions alternatives, their to refining broader noted, producers third-party expanding indirect our assets aluminum value This is minutes low our of Considering alumina, Next, metric sustainability leverages Sustana launched our brand. content, a to measurement I their product line sourced includes of producers our goals. product our carbon EcoSource a footprint. supports EcoSource, strategic Sustana few from smelter-grade as aluminum, half provides mining first while want sustainably, to metric and carbon another the alumina we with world's It equivalents in portfolio. In discussing EcoSource is the line offers spend sustainably industry's pull and advance EcoSource and refining. dioxide no consumers more customers month, of decarbonizing alumina provider X.X our last increased low-carbon to sustainable of the average to priority aluminum line our which tons product in from for help the global the ton lowest our largest average industry. direct carbon world's and have per opportunity carbon than carbon reach

production brands the most includes also note too, and which family define with across at here, chain. ton emissions mining that is a XX% from emissions tons guaranteed than content. This impacts all example. recycled considers from It X per important It's metal aluminum of includes one that more products. bauxite Our metric a our great and carbon advanced comprehensive green, the aluminum to on to aluminum Sustana is cast how with low view produced of equivalents Scope of take X in industry, least we the no aluminum low-carbon dioxide steps. Scope more to guarantees Equally, production X.X

casting, market to space. that are is in our in standards customers validation include aluminum more seeing production. to the alumina with producers, is It value entire interest way products the practices continuing of and develop, the of bauxite across and chain chain. are products industry. NGOs. X demanding are value for smelting the deliver all mining, line aluminum uniquely to leading and responsible set segments While we we users positioned comprehensive ASI. the operations only at of that has looking Stewardship or practices more Initiative, our Aluminum comprehensive sustainable we our and the for low-carbon sustainable With of our certified by involves Also, in consumers and this the refining assurances And Alcoa are products, sustainable third-party

our certification, products to chain the also We market us ASI's of across have right earning custody value chain. ASI-certified

already more are have We locations and the currently in pipeline. certified XX

X more of operating a new ago Next, first to from We've assets production a announced that agile company. to and generate included plan key made of additional are was portfolio. I progress. model, how significant a a strategies driving and we sale year that strategic review It stronger, quickly our recap actions non-core the cash actions our wanted

is to And global divest the fully $XX capital productivity We've annual collaboration these that plans is model by action includes projected with is pandemic. our year-over-year downturn deliver economic implement of X mitigate to savings. to on to generate portfolio made year improve, pandemic, to the annual continue curtail, became finally, the we the cash COVID-XX, help a manage range on the implemented we're associated pace In weather early from million February, finish Our in and within leaner us savings drive the headway was brought economic to also vital new or and we across operating close now before COVID-XX options programs. ideas and projecting working to multi-year we'll cost This on remarkable. gains, impact review launched Alcoa and improvement implement total and assets.

Bill cash million total in these XXXX. are to all As actions track on noted, initiatives $XXX in

been in improvements Across path and continued on is of means challenging to an our Alcoan. be projects what part pursuit steady we've Our to of it Alcoa. strengthen tackling a company, consistent

the including seen the program a improvements items liabilities. overall our You'll lagging strategic strengthened our few numerous indicators that align priorities. the and and real OPEB our of listed also see safety facility, bottom at and these importantly, slide, with we've of reducing have annuitizing safety sheet in credit our just across renegotiating our leading pensions balance organization. strengthened We've actions, Most through

continue Canada strong Our on labor break commercial efficiently produces ELYSIS And venture, States, our production leveraging progress the drive work scale The which United is sustainability, progressing. technology aluminum. to teams in modern records, in mentioned carbon-free operating and with before, joint to our continued this are more we we're including to as reputation and agreements new Australia.

but for guiding do what to I'd tackled us still you prepare slide, Alcoa to company. have to as see and have consistently we like prior the much a from strengthen a As is future. difficult And can we challenges, reinforce brighter

to questions. Alcoa and focus on to decision-making which across and value for a sustainably are and our fundamental alignment margins and the future be our with Bill long that, And And reduce in our company. operate returns our We and ensure a welcome complexity, improved our so values I and and advancing ultimately, for we economic, stockholders improve These with products. road cost. it's and drive Those for act outcomes, values: provide environmental underpin the your can we resources. First low across would priorities, with our term. people. foremost, are operations We provide our central integrity, X map X care with to excellence strategic social


ahead. will our Chris [Operator Terry Please with come from today go first Bank. Instructions]. Deutsche question And

Chris Terry

Bill, of Roy, me. from couple a questions

on bigger wanted million I Just divestment of get to targets, target over the an XX think, update $X your picture billion, to some $XXX months. of

think I since was XX about that announced. we're months

wondering at Ciprián then of thinking in looking Just of target relevant are the spotlight in a reviews, in Portland such? that? that be whether still you're San would the next and right after terms asset that's And asset how as we sort the

William Oplinger

take So I'll that thanks Chris, first for the one, question. at pass and the

would be is forward net sale of and continue to the of target to processes said quarter As go, we're We October the at come right. far us will net of $XXX payment sales which generating only since but time, as divestitures. a haven't million asset billion $X $XXX million Springs end some that of the have we which The with year is to beginning to pursue proceeds. year, proceeds. We said sold with year, announced billion to we the first months up holding in Gum by those $XXX last XX that of contingent look And we that assets And for been that Rockdale that over that immediate $XX you're between we've of transaction. further million execute asset we next sales that this would take of that lands, running are to an time. XX at asset million netted are, -- to the $X we on

with do reviews? to asset Roy, target. you address the So sticking yes, want we're that

Roy Harvey

specifically sits Chris, We've the inside said question. those for not asset And what absolutely. thanks of reviews. Yes,

specifically that, very that what have of end, include been at we might that's find for for opportunity the continue have facilities, really and in number the a do to also to work has of I'd trying et the to a that doing that program And the options -- purpose to each to we repower cetera. And trying years tracks same of locations. number ways remind So curtail the at time. you new different divest, or we on to these

think, we've that's list to, next, what Portland, the to as not. comes not referred I whether you said as So or on

we facility, We reassure the to with forward just in as on Aluminum the midst very be certain cost portfolio, green are both drive government a work that can how and would very But make you also we segment, to how and sure that. and we're are the particularly then carbon. Australian our that of portfolio, in very also discussions decisions making low but the we'll extent, low looking the at and move we really Alumina I they hard at repower

So hear along, you'll we as Chris. more go

Chris Terry

And questions, very quick just Okay. X hopefully.

Just pension. checking on the

XXXX, year. So the $XXX of originally, was this of million to going I be think for start as it

of to be to And per sequentially, use million you that. a $XXX think, on the when XQ. The saying for correct costs think, wanted $XXX You're check on Slide prepayment small, flat very for one, XX, sort I'm be other segment then it you implying Aluminum dollar I I that. wanted but that's if talk about about I XX%, sense, ton, million just alumina the to I with from cash the just right? production implies down check.

William Oplinger

one, one. probably pension and the ask So let me address Chris, the you second clarify to then I'll

pension with of OPEB in projecting million and We XXXX. outflows have cash $XXX been

contributions Those that due in You deferred $XXX XXXX. XXXX. of we know pension in million come would

sum the and to of OPEB. So $XXX equal would the $XXX of with associated and million the pension $XXX million cash million outflows

just up That -- a have we to is prefunding $XXX in also approximately plan. However, the U.S. pension corresponds balance million. set

XXXX. contributions on in balance cash in large like required what are depending use offset cash to looks that prefunding XXXX, to those we flow choose that can So

prefunding XXXX. be to of if approximately So $XXX and we the all cash back use outflow would chose to we in balance, million OPEB of pension

lose If ask or did question we could I that's to hope clarify Aluminum I you clear. segment So your Chris?

Chris Terry

Sorry. No, I'm still here.

where -- alumina on says, XX, cost. just Just was Slide flat. it I

So just dollar million. checking or I that's per ton dollar was whether

William Oplinger

that's million. -- Dollar dollar

ForEx, Aluminum top $XX we're costs alumina Aluminum and what is essentially million would then on the segment so sequentially. there prices aside And we're down will total. And flat that about have in from be signaling that, that of signaling

that Europe. of would that to quarter. in get energy some higher figured quarter costs energy will the I do into $XX in I piece and have those costs we just in don't Norway I the good know is fourth operational third But A question, We had going economies very energy Before recover. address costs, Spain We as if so higher the mention $XX million, approximately million. repeat it. costs,

surprising couple to number continue and the in And of Canada that for included costs higher some fourth outages rolling is nothing do maintenance assumption have that also. would in mill We We from quarter, then the be planned labor have in our are that coming a so the paid. there. tariffs

are because tariffs the in be for just for quarter certain accrued in not we're accruing will tariffs the or exemption the quarter the third we in place the whether We fourth as not.

considering from out. presidential that be -- we're come the So but tariffs those at still that this we accruing that And for will we're Canada. in assuming coming has helps. point, decree Hope


Carlos come question And with ahead. will next our Stanley. Morgan Alba De Please from go

Carlos De Alba

of may to some that the could quarter be together going to to -- something of little you you more So exhibit is maybe at in that expect energy that you -- relating Alumina, XX. with just the towards to of customer What need higher energy details some it is to EBITDA. you on the a And something has provide reduce Or can first terms stay higher extending complete with do shipments because contracts? mix the the a together is lower details? sorry, On if cost -- cost more -- comment question, this provide in XXXX? bit that this just see Slide will, your end

William Oplinger

oil for costs just going instance, higher shipments in components The So is the the quarter. the Energy timing facility costs are mix And to that. Carlos, on larger soon at oil component quarter. a Brazil, fourth the energy be for there's X customer at around of fuel to our this overall the is Alumar of up higher shipments end based in really comment of cost. the

-- that out So into is XXXX. nothing to projecting

Carlos De Alba

from As expect the should last do All in with curtailment right. the as production the casthouse? shipments assume my of in what production see you there? is, alumina And of just level we of question and terms well sort what to Ciprián, San

William Oplinger

and some assuming of continues end -- smelter question XXXX. currently by expecting your the that we're timing quarter be more operate. commentary. the wants maybe of the address add far directly to So of we're as the Roy that to to on first And curtailment, But casthouse I'll completed as and

We are the that continue will refinery operate. to assuming

the how so And also site that casthouse would we and see the the in the this operate. by that's continue smelter unimpacted refinery to that is situation

Roy Harvey

focus the Yes. find issues, well, making that I'll as we was process assumptions number I covered long that solution we've think We've of with just weeks. there thought seen, and on Carlos. a it government, hard a for quantified to a chime and point. try I announced recently. bring and that spanned over And this to fact worked Bill at want just And works into long-term the with in just issues pricing the the worked energy that our cetera, and et council, underlying this the we're

has what That strike. we will and impacts said, to no certainly we move on know no post as seen, curtailment, long-term and So have the been that a there coming have potentially is expectation the as will has the from the have. impacts output defined Bill casthouse, not and refinery. expect But yet, been impacts don't then still you've a


And Timna question go with our of Securities. Bank Tanners will ahead. from America Please next come

Timna Tanners

and for just kind debt the of there I obvious the to here, apologize that, is been now issuance the months. a for going wanted So but back Clearly, on of books, XX. ask I Slide to couple just

pension paying Is that really you look about help would what a anything time the us a is or to frame in us mechanism clearly there addressing top that pension a down said think like? also priority. or can to signal or You healthcare just that underfunded

William Oplinger


raising interest have ages Currently, quarter point. for debt. that beginning we slide Timna. a very as one, as out debt raised at this of and strong the which the cash Let seems why ago reasons We the me there a -- shows, at we are good went And of was number like balance.

that foremost, up being we of the debt we raise out of have. cheapest able ended the coupon First to debt and at issuances any

the gives of we can debt for off we instance, if so the So the that flexibility tranches, us it XXXXs. want, other pay some

making using be the at this We I next, pension. on in like in cash continue saw would assuming we X the proceeds, to to you, point, tell fund that what will But the months, quarter. X with come third see also we'll that we those over do to say, let's consider decision we the

capital we model. a So allocation have

level on capital in got issuance, our that able were sheet. of know uses We You of billion that have various the of billion with we that we $X capital allocation keeping were model, We've excluding -- will regain times, balance proceeds $X cash for said X cash of model starts to cash cash able to X the the which the things. we at sheet. allocation on those to debt use the balance

repayment. The first being debt one

growth projects. The mid-sized second one being

-- over third that months. how have be The I I'm is losing the clearly the is train my a thought. next should shareholders, making X us. But to that And decision of cash which essentially, being we'll third on said return just to to use important

Timna Tanners


hear concerns One the like that we that the debt issuances is to and like would fully out, just asset in feel point they'd of uses, proceeds sales. investors things from that here positive and balance without arena, sources from the be you that this repeatedly comfortable

place sales balanced? get balance, more helpful recurring the kind it's issuance? to to asset kind think just that years over and the you a understand do how reducing these loss-making are on some better have of I debt be and several a how restructurings footprint proceeds ex do Alcoa So some place of where a do businesses. But where next you to back the see normalized getting of it'd or function profitable a from your of carrying less we of Like basis,

William Oplinger

I'll address Well, let I'll quantitatively, address further. that and it Roy

today underperforming You assets clearly the have. rectify to taking us of some see action that we

So on Comfort, that put of we metric took and X.X took under smelting immediately we Point refining down metric tons action. tons We have we said capacity, X of shutting that so action million capacity. million will review

at intalco of a lost quarter facility curtail. Intalco curtail action taken million $XX that this to a in the have We to we've year, loss-making loss-making facility that tried at so first Intalco. Recall

Ciprián's made the San said have We San the smelter employees we've collectively Ciprián. to and is at disadvantaged, dismiss decision structurally that

the deck, you we there. the as first When taking -- to through this and bauxite, get portfolio review, we be us major Once action the through where said, X top of the this of I quartile think we back being the quartile that first emitter smelting. all review, that, amongst we of So lowest first refining, get quartile. will carbon Roy all portfolio we're would But point on be see second players. quartile assets can as we sets

lowered footprint. to moved breakeven will we taken the cost our curve and right of smelting quartile second So smelting have carbon them significantly the second at are assets, first their which quartile, and

So much that I be think in our review is that position view done. the will is portfolio near-term a once better

Roy Harvey

mines time what culminated about the and portfolio we much last bunch a in just I'll with cash valid go. then the I last he thinking out only And team do the and commercial to but new through a can the ongoing it think drive of reinforce been And statement reiterate announcement the comments we divestitures not it's how really of question years. raised. that want really process operating time thinking operations the that, a years. And And number because it's that good a a just as a mean, to the I how about market, market we're portfolio model Yes. -- how for think management said I But looked you and looks X to amount that have spent interacts year, generate also just today through we've spent Bill's it's really of -- in where review. -- do we our on. bunch the But want spot Timna, of that I I going to about

also, the big low an us make its And will very a with make go But very, opportunity a green thing, some standpoint, the it's into end, said little They take actions in from believe, it's decisions I the has it significantly a will way but one for I great will really will at with meantime. It but of reputation going a the down right think spot. make won't a dealing and for time require time, difference, bauxite take these in so from improved challenging everything us that aluminum. bit us each the us a in to doing very great And leave Bill carbon all cost. And amount schedule. in to a up but own again, I situations. work same of to


Lucas Please Pipes with go Securities. our from Riley And come will next question B. ahead.

Lucas Pipes

look made on at X vision little to Roy, Can you few this road? just I there out X, looking up comment years the like. your a what you of regards wanted elaborate a going this to pick a industry bit? and looking What's down in is years on to that industry

Roy Harvey

a Lucas, fun that's question. Yes, and

been out, So like. aluminum demand fundamentals couple that blessing demand with decades. And great start has we've the strong always I had of when look the over what you look these last

of to see demand, you high China has in everywhere a forward, because the as we'll how market, in much China outside impacted and to continue look this and we as well look at as that see China so is metal And growth. continue of demand we

are there's the in market -- the bauxite. is lot themselves. consumers at And we into and the see those significantly have so of expectations of contained a customers in end products our and lay same in understanding customers that of a going those higher into those from and to aluminum alumina that and then impacts down other what At the in also opportunities pure perspective, knock-on time,

there electric aluminum vehicles because good impact to into electrical a seeing content only infrastructure, growth not entire just shift of and programs social demand more So believe seeing around the communities we the and of are cans the those in good or we and I only of carbon but all more or will and all automotive final are be demand, not -- to a the combines everything product. having of how understanding that things

exciting pretty particularly be And a like acceleration today's that what and what's can I future in a market. we and as that and the we're of seeing a at towards happening future, so can as think look company great spend market aluminum, examining Alcoa, I have inside time

so pretty but it perspective, at think the Now portfolio, a and changes same from standpoint. the us drive we this that content, great opportunity our have in we in in it the structures quickly also cost well time, up I for because bodes awareness future. we need approaching sets to carbon But win that today we that need to a responsibility have cost means make have both opportunity from very portfolio environmental the social to we our

Lucas Pipes

That's my improvements envelope. was And versus into meaning the higher in metal question then is I this. Kind now. it at like looking kind And would second were been of here really appreciate back prices than on QX implied as on you we I unique additional numbers, of pricing wondered, on wouldn't with mix the the reverse, more and there side? helpful. my looked color very additional of much anything what capture look then the that QX? the the And could QX, going anything have

William Oplinger

the third quarter Lucas, saw the Yes. value-added thing I'll above address we and volumes in that saw rebound a demand in value-added products. for second products the We increase is XX%. Thanks, one by of question. beyond for quarter that The one.

metal, We also business, increase the and quarter saw the for realizations higher. premiums third in spot for drove that

As waiting we're But favorable, still in markets orders spot quarter. being cautiously the are optimistic to come-in but underlying quarter, currently. trends feeling end we about how into look The market see the optimistic. fourth fourth we're generally our

Lucas Pipes

Got helpful. it. That's

on the there you Slide already considerations on side shouldn't So kind discussed any of additional la be revenue à side, XX, the already. cost what

William Oplinger

increase some think, sales. materialized. spot via we currently, But what third we XX not we point, the certainly fourth quarter. quarter value-added No. being is is business that our from a things But in the at no the it But in at little the bit, view again, saw I current fourth When of yet quarter. cautiously the could we -- around in look with all level what we're products third see. of they deterioration quarter have this see saw inclusive Slide optimistic we is


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

Alex Hacking

is $XX how tariff? do Aluminum Section you tariff, -- of guess? is on I headwinds XX. kind do first And how like accounting how Slide XXX kind the perspective, unwind on an you the additional segment, again that The question there no now, the there XXX million accrual much from My of which Section if that for isn't of is of right

William Oplinger


so questions, great I appreciate you are those think asking. I

of Let of we're tariffs. $XX that you million, quarter, a we accrued which bit of little that million of expense, me projecting million, fourth tariff give the In broader third landscape the In in have you situation. the quarter, for tariff number means an see we'll $X the $XX quarter, in $XX the incremental that about in tariff million $XX million expense.

retroactive, retroactive. that lag find tariffs not are on book question when the lag, we month's out tariff. X-week that can know accounting, tariffs whether we whether the a gain X-week with Your After will the we then associated are a around

on the book thinking to X that a determination tariffs quarter; we months, month, not Each on you're based having tariffs. million. with if accruing tariff $XX about prior we're X a we'll associated whether million $X system the because make gain weeks' So

that the the estimate in to border whether how come question have quota and meet next should to you're be, you see how your to are try think your in going metal flows to are the going So to I that place. watch they models? levels across

Alex Hacking

first accrual. the was the was I away? when the right. on go XXX comment Section thanks like, All that That's slide I Bill. for confused helpful. very the when about explanation. didn't saw you And I Thanks, made

William Oplinger

very make accounting it's and and the whether for It's determination it. it. And we we situation, think to point, given of can quota accrue have levels, we certainly confusing at we probable, an estimate this a

that surprised we with hopefully, So we And that's for it. it. why gain accrued we're pleasantly associated a have

Alex Hacking

you bigger of right out what more point ready with products? Are you stages sustainable generally, is On things, green material you aluminum, customers, and inflection interest the the are just now? in your how as you headline, you be green sitting mean from going Okay. outside, start figure buying an the on characterize like fact-finding seeing of near in and the to particularly seeing metal guess, of companies, [has Or And and term? gaining kind think the discussions still the in talk kind should and of would And they are I green forward? Elysis, traction, of Tesla. idea doing -- is, Apple actually on consumer-type kind to do green trying customers metal, they're seems it second responsible then question the I to picture. a push]

Roy Harvey

say or starting we're beginning last inflection the see some Yes. and one. that course And bit general are looking end Alex, to a and an I'll to the truly actually of of year I over point. take customers that really really year, think I'd a this real and consumers interest of we've that create just beyond reached deals.

number working of so a areas And have on. we're we that

product, brand As you know, new. we've just launched EcoSource, which is new this green alumina is which

discussions So interest pandemic, that craziness development COVID-XX to to we that's the around have more under given a more and But into something would continue amount that the say discussions more even potential and of see starting great all contracts. conversations just now. that are I of because turning that and is happened

think and seeing we're I of that. more more

would be that market priced. months, and and last is over when you the course really is that that, quickly turned say pretty can XX to So the should more and quickly what changes. fact quite I'm becoming how about the investors' really that more dashboards this XX developing pleased orders really, at has be it's on think the developed still how into of I actually

and So there's having proposed. that of From dependent choose, to customers, I our how to importantly, know explaining And think what having. that that still the today, and to get that real we'll the be we you here back to I'd in think in it's Alcoa fact again, and long has down options even I road. be being a portfolio really can operating potential the right end, and history, us the the I to of Alcoa is with are opportunity front more upon discussions do a bunch that's I operate the that a think the determine that. simple different benefit discussions those real differently, standpoint, product our

William Oplinger

mind, you in a jump if if don't bit And Roy. little that, on I

looking a you've is And uniquely me, certified get to a content, with low-carbon alumina. content our EcoSource much allows Just power source time alumina. to customers joint be aluminum smelter know right a can and it's difficult how changes as our sell out I that pointed of But that EcoSource don't AWAC, somebody at alumina change very to very able venture, the makes big alumina. the highlight EcoSource. to EcoSource, to content fundamentally EcoSource, change buying of for carbon low-carbon expensive to positioned source And a deal. is you your now and saved by low-carbon certified the smelter. to get

we're And space. us, that full suite aluminum So a low-carbon I But actually little a offer sustainable source. big products job content the believe only salesman there. ones a it's bit offering of alumina in a a pretty deal for that the we of are

Alex Hacking

much And sorry, could if follow-up? how alumina I everybody you Like can theoretically just EcoSource it? produce wanted

William Oplinger

EcoSource All alumina that The our that emitting. thing getting is that that a get low you carbon get EcoSource. be produce refineries you the can certification you with is would of

So emissions in it's -- we we cuts the that half in a average. the which are carbon process versus get certification industry the certified that can make you alumina process

point, carbon. EcoSource from that us this certified low actually is or it's you EcoSource, but buy you buy at So alumina can can

Roy Harvey

the if very portfolio on to you and that the When gets over this And really as tie transition the a And in Aluminum very, products to can very, of marketplace. green lowest not low-carbon layer difference doing to aluminum but really work let segment and back you low -- just purpose of other from for low-cost one difference portfolio, that portfolio then as in I've And me means top the to happen into make content, the it I strategy Alex, products the a that content a we'll have I'd a again about add we only well be green from -- long term. to that back the very the we're producers. that aluminum just very carbon what our talked behind that, but also make as have is future, all across well. of can sufficient board also the go refineries low-cost have Alcoa,

has so to the a these sustainable your actually helps And and renewable sustainable the because as to is it it aluminum, portfolio gives characteristics and green you board. win world across you turns advantage


will from And Gagliano David Markets. come our ahead. with BMO next question go Capital Please

David Gagliano

questions have I the to answered, but than my do Or guess to pick been are with of the the price of plan differently from and alumina? to content. the you hearing you of lot EcoSource the A price up just How regards do this? last you what already wanted low-carbon rest to And I plan customers? on question alumina line EcoSource

Roy Harvey

because not as honest, So that to that's be working to that answer going on something Dave. question, something discussing we're and I'm that a speak going we an of good we're you And with I'm much our customers. give is

you there cards, well and certification social into responsibility step as to content not et there ASI a is value it certification the think really realistically, the both in that the so real further to strategy And is awareness, cetera. would we carbon that talk I environmental a about as takes tell of

as We on space is a this still just that argue -- look So for premium. customer-by-customer basis. on we're with how exactly working would I deal a will we there just that

David Gagliano

excluding Okay. clarification And million headwind, out fourth FX obviously, one then regarding segment, you $XX In called the commodity and incremental just quarter. this question Aluminum changes.

consideration offset those as the the of FX through other for that commodity the flow that does changes, part would Alumina that, If changes you as down in results headwind? and million $XX well? that take FX segment, quarter-over-quarter current And into assume XQ XQ,

William Oplinger


them So FX. of all exclude

metal Dave, exclusive give and we whenever FX. guidance, So prices of it's

$XX million, and would were it of better, to the be clearly, As prices whether the side in in really the the that question at would this we and worse of you the little quarter. to as piece mix. And point, far regard We bit it's energy goes, third are quarter. they all that. are Metal premiums some give in LME as as offset than your FX early sensitivities far alumina where a said

we we end and can as on up through what quarter, the just $XX determine in go do build based sensitivities that your you where So million. is


And our next question ahead. Dudas Michael Please go will come with Vertical Research. from

Michael Dudas

Turning to China.

the flows heading or something into in -- give going been year, Is on changes demand. restarting the a the indicated, exports of, to there's rest pricing of recovery aluminum should COVID they're And marketplace excess as assuming very into some wash in next Certainly, as on assessment figure on Your alumina then investors out continue threat expand that you situation capacity China? of side. emerging to into strong to to where XXXX focus get world? trying might out a continue we real the

Roy Harvey

Yes. appreciate Michael, I the question.

pretty the think simple, I answer is yes.

should in do I have we be mind. something think that's quite investors that would that it's have mind. honest, all -- those It in are all considerations

then snapped that QX China's to want from a has benefit really when V-shaped if we've recovery, the back. of that think seen and QX at you is demand mean, really definition I you into I have look a look pretty QX, quickly. through very particularly strong at we've look that, really, July broad-based all different recovered seen on they transportation, in very a into you really packaging, the snapback. And areas, and construction, August,

the look they've demand, demand And very that of out, where think rolling should helpful that it when and is you continuing. at supportive very think, support been is that I some I of be. So back mechanisms

come that, to it I online. has think online supply coming at It's you've slower rate a continues than also that seen before. certainly

available. more provinces towards them seeing move have renewable they also energies where You're

to order shift doing So portfolio. work in they are their

into try and bring to demand would very then so the but And around to they then manage growing book demand the online have permit. I permit, think have connects supply connects incentivize capacity and in their And it to operating enforce have has in I I I where constructive then over guess us. question back how fundamental ball, been and take has don't say leaves both that I China that, crystal think is, -- an is environmental available ensuring how rules trying pricing? it. careful capacity been that actively how nor But very a it a also and to the that the in would also

that been its years, rules, over of careful So these last China been very say has couple I'd to perspective. very that's enforce and my welcome from

Michael Dudas

the what encouraging. -- they can is where and shift they're the they're somewhat much And have on get mentioned those second how my And to aluminum to was, sources. how industry? board low-carbon in is for That what's the they kind of country to in to -- their issues you be but limited portfolio, trying question with going China ability go

Roy Harvey


good question. really Another

hydropower. has I outside to It at the and you way -- typically when so the price low-cost tied renewable energy, industry of I China, look of think over the that it's it's carbon free. developed think much was was simply of -- because the energy low-cost

available our In we're much market been how in on direction. that coal So based that's -- coal developed. in because renewables relative country, but based It's the portfolio, large on at and that the been reserves. the going very coal look it's inexpensive China, it's much very and on more universal, not we

of towards alumina look in And we and content quite aluminum, curve if few quarters a staggering as higher look the skewed the it how you content, the published in chart, well. when and ago, carbon at at so that you it's carbon part frankly,

is think I some moving they've you announcements that that is of -- acknowledgment, available. into Chinese that see the made an because there of an and that provinces this issue, the hydropower see an do about acknowledgment and have you by

how aluminum how much into that think hydro want limited online by dedicated to can certain a they bring industry. extent, the is, they much and I

think more at can of transparent, plants. people and classes green Chinese the of and general I at time, look rest look different it extent, -- will development really we as accelerate as the But might take it content, more starting even of constructing and in also, and although carbon certain think Chinese metal hasten becomes it the the the be. what good at the of and world to the it's a are supportive perhaps very I to market therefore,


And John come Tumazos our with next question John Research. will from Very Tumazos Independent

John Tumazos

et you refineries? us ratios, There equity reading it were never to to a the perform And in ore and you it disclosure gone performance or lost grades looking other big year-to-date. was equity at is looks be stake from alumina doesn't in. refinery. differential the standpoint. newest attractive as It the and as your strip $XX Could would your I have a million tell modern why your cetera, alumina, well prepare limited like line presumably, appears P&L pretty

William Oplinger

John. Thanks,

very that of When The take equity me is earnings you're perform does Let share modern refinery see question. well, depreciation. post interest that the pickup, and actually. post what you seeing

So income a it's depreciation, not an EBITDA number. post net interest number, post it's expense

overall the pleased So market that in at to a And modern money the refinery level, of at it. well. operates modern add level, lost with on third that extremely and we've net very the quarter, was the performs refinery but actually operation and the to income been smelter

John Tumazos

in equity see number Does the have it? that taxes also we

William Oplinger

does. It

at So -- you're that looking earnings a you're our looking post post post post at taxes, interest, depreciation. equity are essentially

John Tumazos

your earned X way quarters reported, the it like numbers alumina looks XXXX. since cost are of refinery the capital, the maybe So

a So the tax is bit. capital burden and good

William Oplinger

look to John. you that, the confirm is can it I'd that, was finance. numbers back project the have What to -- tell at project that I

we're the to at time, now And alumina and prices paying both the metal higher and refinery smelter back at -- of point, it expensive was prices. the So had projections this were the and debt. fairly build,

making out So venture, the at on years, smelter. available. our flow you few is pay see that disclosures earned we're of last from refinery this sure out the we've of that or very to cash But dividend not the the starts over the focused not when out as dividends point, of a can venture


And will go come Berenberg. Misra ahead. Please Paretosh with from our today question final

Paretosh Misra

for get to of a some sector. on aluminum guessing just market packaging the be premium aluminum good those green that products for I'm would green first, discussion. -- So going sort the back price

primarily you much scrap? end buy beverage just So curious, into that can makers do sell those Or market?

Roy Harvey

to detail. Yes. going level get Paretosh, be to it's of that into hard down

customers. of some you somewhat competitors number I different think our also as as green similar products know, a we've had And have with similar or well. of conversations

a to market to is from that there can content. think and makers I ways into So step specifically, carbon move for look lower their

As rolling that we've can stock. mill you make a know, does got

comes a of lot smelter. feed Warrick metal that from our However,

think now, order at future. But those be ongoing, to great think we seeing and aluminum. not we'll that us about right considering same premium again, up opportunity, although perfectly in a itself a great more are I like discussions think more and discussions the that for I think into I positioned for packaging place are in And and how aluminum, that future. something more it's the so I the a time, firming is look turn to green will And probably put that's

Paretosh Misra

plastics, That's will last companies out Agree. not some recycling And just on be seeing started of but and the very X. that Yes. that, of all types idea I'm also of exploring maybe of have plastic, X perhaps interesting. another the one one. plastic the

from are point So from you aluminum think of your the view? material, seeing the also still, plastic increased recycling in you far, least preferred at Or competition remains by markets? some of

Roy Harvey

But to it's as that they're how build We've drink plastic recycling not programs seen obviously, Also, cold your stackability, I'd some aluminum I'd like where the refrigerator are the And taken made, on to from into well, the recycling. that real choice. cans develop be offers transfer benefits expert Yes. ability aluminum your and as programs. plastic beverage work time the way will it say of aluminum recycling the other of manufacturers, to recycling the that never up say programs. those trying

or of tell job end, an the those that that, that's no alumina and So and rolled plastics benefits that It the doubt The that how brings to all I a makes cans cetera. proposition at et make same we choice. inside way and sure aluminum happens, again. metal difference beverage I I'll be you flat fact, aluminum and but the I really the thoughtfully not trying of what of the bauxite follows strengthens green that, just pretty is responsibility, lot and think, only from advantages. that But content -- down out, markets into any I'd that say that run think just make a will the product, price, offers of to social explain smartly reasonable time, to that actually green have other has forward And for offers in of the in all the of value market. certifications some our be part that end ASI aluminum will

So we'll be working it. on

William Oplinger

if there you some Roy, just additional before remarks. don't closing mind, prepare And your you out facts share I'll

plastic is down all get clear, it aluminum, process. in the Paretosh, right? cycled unlike does be to recyclable, Just not infinitely So

X% recycle versus of So a about infinite one. It or you an an uses basis. recycle create energy it to can the aluminum new can on X/XXth

the So still tremendous aluminum in one being recycling XX% economically viable. the actually like made is world's that to ever recycling economic all something just benefits is is and of aluminum stream it because use,

the future aluminum. tremendous economic So and there's a the for benefits environmental we think of

great ops the get it's metal on soap future. there, So sorry a into to but the


session. will Roy conference any this turn for conclude gentlemen, the to and question-and-answer back I'd like remarks. over Ladies Harvey to the closing

Roy Harvey

Perfect. Thanks, Cole.

still of evening. us is in in we work to places, looking good of number what times as because that appreciate updating the work very simply time have Thank very much next to saying also to drive everybody done have story you, I'd you our to different today. look of there summarize their to you Alcoans again by a and like quarter. discussed what a and strategy. thank forward forward be for following for I'm proud number that order I'm towards continue So I achieved, I'll we've to a our achieved. ahead


has concluded. Thank now for The today's attending you conference presentation.

now disconnect at may time. your You this lines