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Alcoa (AA)

Participants
James Dwyer Vice President, Investor Relations
Roy Harvey President and CEO
William Oplinger Executive Vice President and CFO
Michael Glick J.P. Morgan
Curt Woodworth Credit Suisse
Lucas Pipes B. Riley Securities
Emily Chieng Goldman Sachs
Carlos De Alba Morgan Stanley
David Gagliano BMO Capital Markets
Alex Hacking Citi
John Tumazos Very Independent Research
Michael Dudas Vertical Research
Call transcript
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Operator

Good afternoon. And welcome to the Alcoa Corporation Second Quarter 2021 Earnings Presentation and Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. to of conference Investor like Dwyer, to now President Vice Relations. would turn over the James I Please go ahead.

James Dwyer

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

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

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

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

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

Roy Harvey

and Jim, you, thank joining everyone for Thank call. to you our

take has emphasize integrity, operate started, and and guided We with I act Before actions people. that consistently care by half our especially important moment year always it’s is as once a true want with been by for this challenges past the pandemic. every but in brought unprecedented That we quarter, are Alcoa’s wrestled again world values. get to on COVID-XX and excellence with a the

to quarter, are had case or and again. and I everyday our reduce. of reminders our business we to there have vaccines following both remain, supporting these of that are consistently disappointed, the done heat each proud however, helped I two injury to serious economies move am risks mitigate work These other, forward the work While must Alcoa that a have of that we injuries risks many the that communities. eliminate values numerous important employees our stress. hand our risks, world’s am a during

is employees. the safety of important our most objective Our

recap per demonstrate of sheet, deliver our Bill It’s will in to results of priorities quickly with a and debt segment. our earnings good in We independent some me to greater since progress XXXX in profitable our also our launch. company maturities half a are significant strategy XXXX. now which and first share It’s company an describe long-term Now, The until for very on Aluminum let business balance our the time to quarterly posted that the since year detail. strategic time the Alcoa becoming than ever is working most all results, be highest in that this a made results. time company eliminating Aluminum good XXXX. it’s any upstream stronger our We’ve strengthen our improve

within target we range Importantly, are our well adjusted of debt. net now proportional

from generate previously above We cash also our to target and delivered asset announced sales. beyond non-core

property for When Across on succeed priorities our through this. and an which ensure because we last strategic in company we commodity Although, year, the of was sites market our of place. were Last we communities sense. the use our value economic this to continue makes a plummeted of we Maryland, program, for been to it XXXX had other in used owner we It former reached too company the to month will data an can of new former can resilient This smelter this have prices site shows will that strategies bring when Eastalco in The is example working. operate. where we’ve the brownfield all already Alcoa, evaluate cycles. worked target closed center. have next-generation sales sale example

make future, the well. performed We improvements. focused plants to on Our stayed and remained operational continuing

line. benefits driving it Now, to the pricing better much capturing stronger bottom from with markets, the and we’re

saw segment to suggests continued continue will more ongoing Aluminum is industry efforts Aluminum ever for third-party its the companies we strength reform our and an The produce strength assets, portfolio our solutions. global China’s and demand sustainable price. future we to customer important material While and highest improve in realized Also, our pricing. of metal

development existing to We’re to through market. ready please we’re low the go for carbon I forward results. future into now, products that technologies and deeper our But I’ll breakthrough of ahead. and Bill, this discussing look ask to the to bring financial that working Bill more. dig

William Oplinger

same steady removing the mill on up were or Aluminum Roy. were the great million the year Revenues of last higher Thanks, up from $X.X prices. another It after sales impact at Warrick $XXX XX% was quarter. X%. sequentially rolling period billion and were Revenues

Second the first excluding to for cash total In line was The Even A of per special the per other segment best year per also similar million adjusted lower holds quarter quarter doubled this segment XXXX the up income no the earnings the EBITDA than net per half special half differentiator virtually items $X.XX the in ago of dynamic for earnings increased to a $X.XX been key higher special income to modest also than flows. contribution higher million. million quarter true period was minority half more XXXX, share record More with same per of $XXX share million previous segments. to to XX% a excluding Alcoa’s share, the than Adjusted second in of items, XXXX segment share and nearly first the excluding the $XXX items $X.XX year compared share years for interests. year’s our XXXX. net bottom first EBITDA share. was sequentially EBITDA Aluminum prior quarter. $XX $XXX first and than triple our the compared sequentially $X.XX record Aluminum of from Adjusted Alcoa’s total compared XX% and our half XX% key translates adjusted prior taxes provided reason last EBITDA relative has to the and Alcoa’s in per to higher XXXX. though XXXX income

higher $XX lower totaled prices which and Aluminum increase lower The Higher alumina of per were contract more intercompany higher excluding material In of only million prices shipments higher At Midwest in transfer lower stronger as improved added mix items partially unfavorable due million EBITDA was prices. driven costs and EBITDA the million. and contracts foreign special value-added ton partially by premiums. costs, $XX offset product production That better rolling premium, benefit as costs level partially bauxite adjusted in higher million review higher higher and and non-recurrence The by unfavorable were energy $XXX materials production and LME partially energy mix shipments raw were was currency work pricing, to alumina impacts, by higher adjusted EBITDA premiums, metal and maintenance segment offset higher by especially much detail. pricing. let’s and $XX well costs. EBITDA and $XX raw the value API production, and offset mill and shipments energy from together declined alumina, and adjusted while offset. impacts, segment regional benefited costs of Now

the Now this The actions let’s flows. have impacts adjusted of EBITDA. look major well at as many strong in our undertaken the from very benefits as highlight cash year, cash corporate flows

Return and of addition capital ending XXXX which the bonds April benefit first in It key Those capital calling to partial have the XX.X% the balance EBITDA quarter other and bridged first Given the net asset typical the of balance benefiting the quarter year-to-date uses the change of see Eastalco to income equity to quarter year-to-date cash strong to cash cash a the of the from primarily from the cash in quarter It the uses also shows our related cash EBITDAs and EBITDA, record second of funding half operating in XXXX, prices. support sales particularly pension, the additional to the working chart benefit to first also modestly predominantly XX.X% a magnitude attributable well metrics. quarter included from smelter first Alcoa. cash of net in On segment, as higher proceeds the normal change. quarter the Aluminum the increased as can you from offset the we reflecting basis, on for impact former the inflows U.S. adjusted due location. flows adjusted first shows balance. non-core metal of financial strong

on well interest within sequentially higher the $XXX by free debt leverage billion First less and negative was day working flow to $X and one working million at strong target offset XXXX our half $X.X non-controlling our increased billion. $XXX capital capital range net metric now importantly, billion valuations. distributions adjusted Most pension proportional the key Days million, cash $X.X partially funding reflecting is EBITDA, the receivable net inventory increase.

$X.X to or billion XXXX OPEB good. $X.X has the net billion very billion. of liability $X.X Our year-end pension Liquidity and XX% balance from is decreased

Our $X.XX at quarter billion end. cash was balance

of the outlook year. remainder our to Moving for the

the Our are ranges XXXX tons increasing Alumina the slightly is expected increasing, the year and and shipments, improving in Aluminum the XXX,XXX XXX,XXX outlook segment. segments, in Bauxite for full tons both several in areas;

On than this better, is be two million. to chart. million expected better are is expected cash improvements, the are cash OPEB showed there the time costs expected pension income ARO million we statement, and improving flows, $X spending to transformation $XX In last $X funding and and be environmental

compared and current to to we significantly quarter continue importantly, aluminum alumina to very expected level, performing be solid at high More the second are are are quarter. expect higher Operations prices third another higher too quarter. the a prices

We costs. energy as will the and see raw some of these material benefits in form higher we are costs, inflation cost offsets partial seeing transportation

over in another the our earnings, Finally, of market be with prices third expect to current we million quarter substantial $XXX indicative quarter. operational expense tax of

to turn me let Now Roy. it back

Roy Harvey

Thanks, Bill.

in role realized as than to grew has physical Aluminum turning all low LME last quarter. a segment our regional economic upward significant premiums. of XX% the second XXXX. Aluminum this the of in profitability continued restarts noted, trend quarter Broad and saw to support the recovery, markets, and availability more continued since and and in the the It and Now we Bill our rally pricing a tightness manufacturing have

trends Also GDP world’s stimulus both implemented and have used advance, are macroeconomic progressed. announced stronger many of That in production markets. programs strong eased the and monetary fiscal and measures continue demand is aluminum’s vaccination lockdown’s economies. and positive expected industrial including supported efforts stimulus in end as observed have to We leading

industries like we emissions. own noted addition meet to constrain as moving In goals Aluminum reduce help energy continue its to in carbon intensive to to supply last growth see quarter China

year-over-year impact products. In commercial saw shipments. we are also value-added in Alcoa’s both and sales specifically, in for quarter increases second we seeing Aluminum For significant the growth

quarter quarter sequential was the XX% improvement and second up shipments, The year-over-year. for XX% the in fourth consecutive

year-over-year full year For we growth XXXX, sales product expect in revenue. value-add continued

industries intensive for emissions energy topic is its Now look, per XXth its a global predominant government on role Central and a GDP play let on of including five-year of to unit per dual to its energy highest aluminum goals. continuing to ends for with deeper to continues The assist the me Government to plan, priority total unit The XXXX, per intensity the In set targets consumption GDP announced of focus energy province it return energy consumption. country reduce in goals, by by fundamentals. Chinese China as control in which industry set to carbon XX.X%. has and XX% each GDP reduce work unit decarbonization

program primary you’ll close described the of from On targets. deployed traffic and provinces their to first provinces. of to China’s producing the approach of to chart. developments or produce is other efficiency Aluminum industries, Mongolia new government provinces targets energy on the are curtailed dual the limit as top have of that tighten policy correspond disclosed are seeing Central on energy been outcomes a on this primary meeting already this This provinces own at such taking the limiting not we two Aluminum to show left are Chinese as Aluminum called this rated least primary for for that in China’s one for where Results factors. a quarter as and has XX% response summary The smelting. growth yellow has response, has priorities. XX China’s intensive controls. action part control in primary colors that to light of see Aluminum system other some Government snapshot In red projects provinces Inner publicly production smelting

Shandong of in per would the an metric by permits. a mean would capacity Province, annum, example, this implementation that strictly of XXX,XXX example, XX% factor to scaling Chinese capacity For would to it smelter per transfers. to for of two-thirds Aluminum require which XXX,XXX purchase interprovincial home tons annum a give principle, to or announced To intention recently of around Shandong enforced expand apply its metric reduction capacity capacity of tons transfer

in this primary aluminum that for noted tariffs Gansu year, canceled have Finally, smelters. power province we the preferential

all trading Government is a potential tons of is phases to have importer to policies. outside and of global in China, also primary Aluminum policies future. emissions expected the announced industries. be of with Aluminum carbon national the Chinese with continuing the addition, included reform new the the per potential drive for on change a efforts of the carbon of Considering to to positive side in and scheme also industry be as net first capacity country supply Clearly, the its significant primary of in energy A other needed target remain Aluminum towards the phase capacity of work announced China fundamentals. Chinese Aluminum to intensive subsequent ongoing reduction in annum. emission expected with XXXX started industry has part in In China million limit XX energy

that I well, we’re continue positive us the the currently segments allowing the perform experiencing. three to Next, to want benefits highlight market fact capture our from to fundamentals

to processes focused tons from Larego. milestone our remained continue owned engineered and impressive and Western region safe crusher. Australia, Alumina, In earlier used our congratulate processes with world’s of we’re In process to record the levels new to known to region, have project venture hub a and near strengthening which maintaining an mines. XXX move at year moving region for was operate this a will team cost couple that production higher relocating for major an continuing the competitive a Transferring production that for Bauxite, the the successful be Québec, included I next most offset decades. by we we’re ton reached as In benefiting reduce refinery It Aluminum, Willowdale boost highly Bécancour, stability. our mine, new a improve In new bottlenecks this the involved that the system. and Intalco was We to for ABI majority partially joint this curtailment. fully ensure we’re operations in to to from the operate last We’ve restart reliability on of seeing we continued our to mines year, smelter through from and completed efficiently. improved albeit

year. achievements of turn to let’s half in our Now first some the the of

mentioned as on our relating while we to First, continuing overachieved goal opportunities. non-core sale of the assets, to earlier, future evaluate

of includes product is June, commercial of in in significant closures were we opportunities shape year financial a improvement, standpoint Earlier our grade best announce on a on From the as world’s company sustainability low this portfolio alumina particular execute smelter this standalone Alcoa’s to an repowering in that We carbon our placing divestitures. a part Australia. first low we’ve also our to more world’s made has noted, actions the with first a the review, launch our products. balance lowest sheet family largest perspective, dioxide Smelter of loads as to as in progress have well-positioned evolving we EcoSource, which pleased and leadership system third-party taken. which Portland is In curtailments, greater only This carbon for globe’s leverages are or From marketplace shipped the is our the Aluminum that flexibility Sustana strategies. provider intensity. alumina year, we the average due we brand. since carbon emphasis refining of Today, our the we

Energy this basis instead smelting last most smelting development While technology at and at technology Center Metal to cells we steam, comprehensive produce strong complement the to would began venture. products, the capture process inert reduce waste high carbon the next-generation month producing side process, use vapor for ongoing which mechanical emissions successful, also XXXX, metal used Québec, Development greenhouse position technology R&D module refinery’s as the scale. and project in to our testing. Alcoa’s that test pure Québec. joint ELYSIS The renewable second approximately Renewable used has to Alcoa refinery’s GT, of traditional potential announced a We already and gas The investigating natural May energy we first announced provide of Research year. sports use the products, a oxygen. with ongoing half and the funding will car. heat, by in the been deal refinery our we’re e-tron carbon displacing line XX%. that helped If direct turning we technologies. the now carbon produced company’s pressure to earlier install up the It developed in ramping leading progress end And venture the of Australian from which we Pittsburgh be supply our the the the the a which then this Also, at ELYSIS for slide, continue currently commercial is we’re industry, all our Recompression, provided construction by including technology from at would process have a commercial from application LSS has used create of Wagerup the to low wheels eliminates right-hand on the gas. would will heat of sized Center of near zero to year technology Technical known Audi’s in electric on Vapor the in now in The the joint has work the in Agency for anode Australia of Mechanical footprint recompression the

allocation, Rockdale government the sales real with our that acres perspective, sheet significant we made we’ve to evolution are product includes site We’re Sandow a Texas, with the than in working continue we work capital continuing In Ciprián improvements representatives for of San Spain, rights. balance workers former solution sale Lakes light to asset. to water From and the on and of our stakeholders of our of as financial for XX,XXX focusing known the on State listing process markets. pursue our in smelter including a the estate more Ranch. the on The

committed continued Sustana lower We and executing of on to sales technologies will to our growing our from focus our carbon our a will line, advances development breakthrough remain their footprint. help customers priority sustainably on which

business capital to for return our that executing expenditure projects. both and on sustaining We seeking budget continue includes consolidated improve will our XXXX by

also implement to intend reduces technology required sustaining refinery, as and projects water saves in residue. store of we’re end adopted we From our increase seeking capital Poços Québec, of first production press the boosting a the amperage construction at the smelter’s costs we commissioned month on capacity year. lower a to perspective, residue smelter The the project the Next Caldas return working annual one use Deschambault we It our by filtration. approximately XX%. on at de Australia and be Western will expected by project known begin is to to in enable where land of

remarks, I since formal Before several only the want we months. to accelerated our significant again during the inception emphasize progress progress last these close our we’ve not of made but the company

push sheet, operating the XXXX well this of Relentless significantly succeed. facilities the demonstrated even consistently we and improved the capturing balance systems challenges better. Yet well, resilience to for will to Alcoa operational of continue are to We much Our the improvement our processes know-how, future. continuous positioned With structure, way. market. is benefits to and have the improved and we a is perform company

lead will your take future. in a continue leadership you I for to proud are again breakthrough with a ready Finally, and are Bill values-based products and your with technologies, for social be practices, today. to sustainable once processes and more and now questions. time to governance Thank we environmental, we company

Operator

J.P. first today Morgan. from Glick you. Thank go And question will Michael [Operator come our Please ahead. with Instructions]

Michael Glick

evening. Good

Roy Harvey

Michael. Hi,

William Oplinger

Michael. Hey,

Michael Glick

I range? that talk yourselves for of in Capital debt obviously about Hey. investors or you your and of you’re net mind most now top how your targeted about mean, allocations thinking shareholder returns you’re can included. growth proportional

William Oplinger

tons. said mistake prepared We by actually wanted had Bauxite clarify outlook Yeah. Michael, remarks. I XXX,XXX remarks But in I my prepared in one. I let that do, before I said me take had increased that that, a think, my I to

which look the it’s makes than you at lot metric by chart, tons. X XXX,XXX increased tons a sense more If million

So to of get way. that the out

capital me Now let address your question. allocation

As four-pronged a you know, have to we approach allocation. capital

are target quarter. first have target, debt for net range the We that we which after time, in the second a

One of returns to prongs shareholders. the is

And model. strategic the review is or of Third And capital to growth the is allocation continue follow we asset portfolio. repositioning the that earnings opportunity. fourth

We’re our a point. in you’ve this debt the disciplined net five think happy how target allocate we’re we to about at And last be over range years, I that capital. seen very

model So follow continuing that we are at point. to this

Michael Glick

of prices that, think just other maybe given flows it’s else it. products value-added your us products, simply value-added on premiums give is terms the of in pricing Got for you could and billet move But you view the I what some a driving mean, through And in do demand. contracts? remind how and

William Oplinger

Yes.

American there on as majority is annual up price basis. more price flows done North Europe, the -- flow of an back we there in the some metal quarterly value-add value-add how large regional through. far premiums are as through, In basis. believe pricing information a presentations flow the is of So on I on products how and But through premiums

priced a in the flow So you that year. will billet is But already on quarterly much the North America lag for generally. through see of prices

spot would we spot been America year, from market annual basis. XXXX business able in at to our as now up pricing business, value-add those value-add business our seen growing. for products negotiations customers with pick you’ve largely North we’re having volumes be on Obviously time-to-time, this but because more spot into to we’ve is have able picked sell We’ve Going if the up been products. least an

Roy Harvey

going picking just on up U.S. that America bit are particularly fact products right now much in also also premiums but Europe, and that to we’re And spot billet so is then and what demand North little complement seeing the on Michael. in The other is a up. with

premiums in to season the up into like that pick we And and can those up contracting next spot have so as North then year we’ll and get we was that opportunity we -- quicker -- saying as pick as Europe America well. Bill in

now. So, certainly, good a value-added right selling to products time be

Michael Glick

Understood. Thank you.

Roy Harvey

Michael.

Operator

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

Curt Woodworth

afternoon, Bill. Good Yeah. Roy Thanks. and

Roy Harvey

Curt. Hey,

Curt Woodworth

First that and question, announced When of kind then look ton. that’s was And capital the I see to that specifically? for this significant affecting address then going on kind market, get to also capital do sort occur of the previously I tax around potentially at new on my that, amount normalized compressors. longer EU to need about metric refinery I you the of and there’s taking your you you’ve you you carbon the how of pricing? border That’s the in first take I framework carbon broadly parcel talked that incentive into some pricing just How initial want guess, with X,XXX think, that be for smelters spent you globally question. issue, to in could know term the see system

Roy Harvey

Sure.

let about Bill me bit pricing. and I’ll comment tax carbon little the me a let talk EU So border incentive on let

we the details. we better obviously, low off the to to the very the can carbon To our price portfolio the inside beginning, that The quicker Alcoa embedded at with start the because we look we can a and industry. So, much operates of be. the just perspective, compared are that global carbon through go fact of price Aluminum started from of

Alcoa. on And look the to whole, we development they’re think be so regionally of about and the mechanisms, of positive at world for types we going as around these the

border mechanism, to Now, need what there’s a really something like lot that gives look to we and the European of sort adjustment the start at are takes. to when understand through to able details be you

a direction, a a the the low to going help right difference step forward. that that aluminum, step establish aluminum what However, is between and carbon there positive me fact carbon and is in absolutely very higher it to is it’s true to is

William Oplinger

the the The set pricing come Curt, have And let we -- a from perspective. they slightly that cap it well the committed at are future. incentive to question, that pretty think me different Chinese in that address I if

you of if really consider outside pricing could then two you So there’s areas incentive China, that consider.

But there’s that announcements that pricing, few I the rest a world is whether sense top them. smelting restart first trying makes The of while then and and the and for and on greenfields running seen online. determination take make greenfield to a restarts numbers in producers of the they are think you’ve restarts of today’s that, to around would very projects come a lot for

at this anyone’s down greenfields, of road. years couple probably considering it’s if point, the a So

Curt Woodworth

Okay. That’s step year-to-date. helpful. I the question. allocation take another with CapEx then million And spent that I’ll start try Maybe think fact growth on only to the $XX capital use you’ve at

to of to there’s scope But flow to clearly, So, you’re outlook, like growth it more company for going ahead. do the the accelerate spend given free plenty seems cash both. have wherewithal

and around opportunity here? a Is fundamentals target good start because there’s there return waiting frame opportunity capital could investor quantify So you way mean that investors should of net the shareholders? to ahead back for to have the I that, that terms the for in of in aluminum of the specifically think shareholders, or pretty obviously cash set of been recovery to will the patiently any flow lot to percentage help creates the accrue we sort a decent Thanks. your a free be

Roy Harvey

Yeah.

So I’ll facts just upon brought of that touch a couple you up.

First in we a of generation all, had the quarter. cash great

So million pensions. U.S. contributed to $XXX to the we

ops cash from -- from of you close $XXX to you was that our If million back ops, that out. after over back out cash was

cash I’ll cycle come in back current the are So where of -- significant model. capital the though flow. in of generating allocation part we prongs. this position this we’re the market part to a There’s four

But the value not going over million to return I speculate that do occurs four We’ve and opportunities. next spent to We to, am prongs we growth point will at how alluded earnings capital. you weigh as $XX have maximize only those few seeking this of quarters.

up year, target to see the we’re because the million a that as at outlook. additional ramp of $XX $XX million end to going We’re by you in the

significant going allocate capital to model how capital the at return allocation seeking but we’ll this use not capital forward. determine point, So we growth current

Curt Woodworth

quarter. Great. Thanks on the very much. Congrats

Roy Harvey

Curt. you, Thank

Operator

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

Lucas Pipes

much Yes. afternoon, debt quarter, to like also good and I’d -- on hitting Thanks congrats outlook my targets. everybody. good And very the net and add good your

Roy Harvey

Lucas. Thanks,

William Oplinger

Thanks, Lucas.

Lucas Pipes

dollars, I I XX the this question of their to dollars creating millions investors of think of outlay strategy transformation of for value next I last would as you. investing return Are of want a for item really and kind capital hundreds in to portfolio the millions the to expectations opportunities. that remaining there of wondered four-pronged a and growth to help over the is quantify we Thank talking of well set shareholders? tens months? return the way potential

William Oplinger

return the million, for an the $XX spent this capital $XX we of seeking the $XX We’ll million additional during spend million year-to-date. year year. So, is budget course

be anything and going five-year a and back the deal go fundamentally tail not case-by-case we We that going we a need to it’s repower how -- reposition period. to cost because And put the Portland should that when size around to strategic Greatest treat have to haven’t were why it have on successful that put to we basis. essentially to is repositioning, is we so to have number much us We didn’t cost position a now Portland the over portfolio. wrong. reason been done it forward and we announced said, a Portland not we out with each us plant closer would purposely power repower that Portland to we time able example Portland

to trying it So how the because it not we how on depend to a will of reposition portfolio, give we’re that. cost will much do view

Lucas Pipes

this I this source And example. you on you. fit Thank that to transformation, Can terms that for of thinking helpful. Rockdale, today outlays, in of we maybe into but of how framework? a could speak capital too. and discussion have the be am capital might That’s

William Oplinger

we for look up, to for Many to value. environment be legacy a in one good is cash Quantum best looking we opportunities stewards closed Thanks. those to Lucas. of a number it We to sustainable put them But Eastalco years and We have the them. the manage been do is of site only bringing that -- in that place have of a world. and million have plan another sites curtailed group Thanks a they communities great we and maximize redevelop is portfolio about along of move for example. we world. the sale transformation ways. came the and in the around able a million them Rockdale site and or closed Eastalco for need closed of One, the and there. $XXX curtailed to environment, example where number of minimize to around secondly, manage the and value for we for and redevelopment we to maximize were on from work liabilities Eastalco those a to with where had around our the we sites the tend we think for will works way $XXX XX so them currently sites, ago. it the and people as as think Loophole we bought outflows

Roy Harvey

enjoy the we working of And sites again, reasons manage Yeah. very all the in have redevelopment. much, we a And and inception down can very I see then and that, focused to team Lucas, from that is that think, talented most these on just closure that is complement for legacy you Alcoa Eastalco. if I way those sites and one can I

our have great also operation for this So, life just entire opportunity Alcoa, to demonstrate for communities. that of a an value but can

Lucas Pipes

investors follow-up you. much. environment? today’s million the other helpful. that’s one That’s on very in million you very I’ll $XXX about point, Thank $XXX think existing buyback. How the that available, Thank should

William Oplinger

the to program to four-pronged have. the we point part just that capital allocation It’s back would capital allocation I you of program.

Roy Harvey

Lucas. Thanks,

Lucas Pipes

Thank you. Yeah.

Operator

And Please from go question ahead. with Goldman Chieng come Sachs. Emily our will next

Emily Chieng

of starting those us are through sort of creep commentary you to think Hi, I a sort Do how are and guidance on of that to had in around some on good the XQ manageable check component-by-component some quarter. everyone. pressures number of you’re do stepping pieces inflation you going see a wanted cost mind just Congratulations of of that the you pieces sort and through. of cost forward?

William Oplinger

for question. So, Emily, thanks the

two million flow I prices components segment is there’s the think Alumina really we alluded higher caustic That’s are -- to and that beginning that. $XX to through. in that to

know a you lag. Now through flows six-month on caustic

costs and cost of through now some some just caustic flow of cost. goods are starting we the the energy So higher see sold higher to

got Spain So gas is places we’ve natural to have especially like prices. we linked in do that oil

costs sequential are trend seeing In That’s we’re Aluminum costs. a there. driving segment, transportation and So pitch on higher and around combination the up, higher energy some of some oil to a really quarter costs, coke the higher costs. million are prices basis $XX of starting which

who starting surprising a it’s there So a see and material raw have when up a that us those today. for in be the for that run followed higher -- that long we’re you folks not are prices our see will in the Aluminum trailing cost components. time industry to big I

Emily Chieng

may, really if one a Alumina market, seeing you’re That’s that’s trailed bit it around update for what of like little aluminum I Thanks. Can now. to provide seems the you an helpful. time sort of there? follow-up just And as

Roy Harvey

appreciate Yeah. Emily, one take I the that I’ll question. and

reason are fundamentals. fact with set mean, So, think it would be rather the that an simply of methodology to It’s helps Aluminum. than foremost, pricing move very to first having I I two a very to markets percentage and we these of API different that the demonstrate it started different

is main there two that points think up. really bring I’d I

costs, driving it’s freight, is and increase domestically. in you operate import really to the to first therefore, look The be at alumina, China as less more freight

to are with And really to day-by-day in buyers, there which China, that surplus. as or so incentivize price fact constrain the And and and even there that so are Aluminum the fact a probably is ties happening is helps pricing certain so the extent you to to, environment. in many see, imports tends those that, second the that as week-basis, as tends the week-by it buyers look inside happening increases less of balance balanced one, slight a transactions sellers you when market to at on a and

a you catalysts the driven Aluminum is how would macroeconomic as sentiment be downwards. just some have the also price don’t to are to sensitive means have looking demand is to tends lot those Alumina because of of price a that note of lot and much upwards, sensitive, I driving a bit you production less trends. at of So by and very specific less actual right Aluminum catalysts same that the drive it the that changes, that don’t very by now as well

Emily Chieng

Thank Got clear. it. That’s you.

Roy Harvey

Emily. Thanks,

Operator

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

Carlos De Alba

was Yeah. Thank and you very basis explain if on much, on a balance special the in one million. revision this that and/or Roy, items. $XXX $XXX the on sheet. is the and quarter Bill. settlement also Congratulations in pension payment wonder on difference, the discount million could of the The the the a is around that cash came you a I drop assumptions quarter. yet A couple is around accrued rate on benefits questions, is the through

pension And lump which sheet was the balance to decrease flow? to the may decrease on the you on and I therefore, when linked it start expect products the world? the think reductions of the in exports net balance the have be settlement, regarding the focusing result question versus you, China that semi in a rest Aluminum environmental benefit what in emissions second excess the lower aspects in of will $XXX the sum and market, then cash would million

William Oplinger

and The we’ve U.S. offer, plans taking catch of that. U.S. is we take plans. $XXX did lump Carlos, the that’s the change that out we we enough in the move additional much the liabilities the part a lump pension is we part reason re-measure between million. pension to part great the re-measured to see of we treatment a had first versus how the the that one, biggest offered sum those accounting of The contribute the contributed pension because sum plan of people and us I’ll that that when requires the why sheet balance re-measured

in end. an year decline from you’ve that’s rates the because increase So discount seen

drove in part that’s change. that So what

Roy Harvey

And Carlos, your let me question. market answer

it’s dual starting a highlight -- also good already meet active it’s we’re very provinces the start to also think pretty, When we the graph, ground. I neat not it’s question. because actual we pretty take And China on different look only targets. of having steps that the see those today, at reason is impacts is effects it control to and to a methodology,

in tighter become China see to starting China’s believe we’re and and fact, tighter, so a we deficit And situation. in

have to imports net continue they these have their while over actually steady pretty grown. few So last months exports

release in production they fact those so the the impact I the of already in is that short inside to that answer question their really be from of the It’s of which then metal demand are to right reserves, think demonstrating have they also -- you address export changes. the China. And is, they your of metal can semi fact see that And that more are the also the seeing think, the inventory in they of able to you’re less now. strategic I impacting that importing and

Carlos De Alba

Excellent. much right. very you All Thank guys.

Roy Harvey

Carlos. Thanks,

William Oplinger

Thanks, Carlos.

Operator

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

David Gagliano

for address have targets last the seem quarter. a set Thanks just Hi. of assumed quarter questions couple taking my that this that to some have were of guidance questions. I to sort in

business, the came Bauxite the flat million you is the flat and quarter-over-quarter. the talk quarter line for Bauxite of I quarter-over-quarter think, all commentary on the what’s first in a and was quarter in last around there the at guidance changed about So, quarter EBITDA $XX million it $XX was business? second Can third

William Oplinger

intercompany was Dave The our that refineries. between to some of biggest reduced change of one pricing is mines one our

decline of $XX that am estimate we the globally, we’re approximately seeing and to Bauxite that. That prices in adjusted With change. I approximately going is now that million

impact. biggest the that’s So

David Gagliano

Okay. low XXs reasonable adjustments moving Is per are sort other of like… run that quarter or there forward rate then

William Oplinger

Yeah.

have -- large the But don’t bauxite Bauxite adjust pricing. quarter, a seen expecting We and third fairly the third in prices typically we’re flat. that refineries. the decline said, for year-to-date For the be we between to as we mines

made So we that adjustment.

David Gagliano

quarter? $XX I we in costs there or around in million Alumina a the Is And business. in reduction segment. reduction any there Alumina the total $XX then for noticed one-time costs. wasn’t third quarter, third actually kind commentary in in dovetails into list the -- reduction the meaning in in that the -- quarter for Alumina assume million next in question, should quarter items noticed consideration the million this increase $XX of it’s a And quarter next special Okay. Last is which my was cost of

William Oplinger

No.

be higher costs. a raw quarter third I think materials alumina that, the and we that’s to we $XX higher I say think, million and energy said negative related costs, in will it

little maintenance a than bit the in third anticipated. spending had quarter more we are We what

Given to to a spending alumina, you’re more than the of what but walking versus probably maintenance the segments, get third in And we little shortly. Aluminum as extent a largely in to lesser the quarter metal the going strength bit down here had our anticipated quarter. markets you’re are second we

Aluminum, So a what bit we advance. quarter investing part third I’ll answer on the more are restarts In question anticipated. had than in we little of the case in the

of paybacks we all Given to metal the we’re that have the possibly today’s trying be make the sure can quickly very we metal prices, producing that in online parts strength have overall online prices. that to

David Gagliano

costs? now Are follow-up helpful. the Thanks. we to to then on $XX a do And on think? that what then be Alumina costs you kind $XX increase quarter that from we up so so another That’s talking supposed just a happened actually was first the were side, million in Okay. of it’s one-time that million have about

William Oplinger

Yes.

a quarter second in then $XX anticipating million quarter quarter. that third raw materials. So more increase the and first million the Remember $XX to $XX million includes increase versus the

So we see increase raw energy prices. starting are to in and an materials

So, yes, that’s the case.

David Gagliano

it. Thanks. That’s Appreciate Okay. helpful.

Roy Harvey

Thanks, Dave.

Operator

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

Alex Hacking

and Yeah. a Roy Bill. couple I of questions. have Thanks,

XX, I Is Midwest FY slide specific your around did second reason for guidance then Firstly, shipments. a curious is thoughts million I the still half. in mean $X the you first The secondly, slowdown and in the It’s Aluminum for guidance on or I that And behind on just things world, fair a premium. that? guess do there reflecting strong. half. in forces am that the I structural? What implies going key strong aluminum Thanks. other do the just think there Is costs the you are that you think more sustainable mean, it’s to you it? that amazingly of around there great may is? how high demand be think freight see. the Obviously

Roy Harvey

because Aluminum weaker facility driving The out There’s take are things half the first that the on Ciprian that elevated at first second I labor two half San things the the time the quarter and two not half, are the shipments. and that Aluminum shipments read quarter first driving certainly in In being me that than shipments. are lower. higher. Let first would up into the the the in was inventory to ship that we going that some had we hung of able inventory dispute structural

in was the included Warrick we’ve for rolling rolling have you divested first quarter and to those shipments the Secondly, also remember Warrick mill. the subsequently mill

second the So underlying to as strong quarter. in half. I shipments is sorry, first am the half in the second

William Oplinger

and the question take Alex, And your I think I’ll Midwest to you premium on started answer yourself.

it’s to and being there’s we basic our XXX today the market develop how through time what enough is North off to continue now is an metal really demand duty unpaid need premiums. out of of structural so America, get into that understanding think it just to the time there’s which justified market driving is and unprecedented are inside with I just because start at the takes we’ll is it not perspective that a and up. is fact time. divert to very in change of from very duty looks paid it the so though to that those because Outside that, playing able dynamics premiums it And market that the well

Alex Hacking

Thank you. Appreciate it.

Roy Harvey

Thanks, Alex.

Operator

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

John Tumazos

the all see to good results. great It’s you. Thank

Roy Harvey

Hi, John.

William Oplinger

John. Hi,

John Tumazos

Hi. X% described as a increase or driven the the much X% pricing it the How and as only the X.X% energy XX% how other unit of million impact part and or question, explain from of Bauxite Alumina it in much metal? cut of cost caustic, Aussie rose obviously, by could things has to-date is EBITDA so course, being rose and diesel you is the cost Second $XXX dollar green you Aluminum too? Bauxite the it much of is hitting that. currency X%, less, of

Roy Harvey

your it’s I is premium immaterial. this green simple I the that can point think relatively and at still answer answer

It would upwards, you discussions and that premium total has premium immaterial, that far true and still so a of it now but indices, can sales. portfolio I and really of pretty is that quickly some is there product in while our see it’s relatively listed argue right the headed very small So, in our is growing also a John.

John Tumazos

you. Thank

William Oplinger

And, two. on Alumina cost the So dollar that. structures The there making the me the fundamentally which one refining up, I that that’s costs. to John, them, premise you cost you and and between in of lag, caustic, some of business, alluded the just of Aussie Aussie business case dollar structure big both Bauxite understand the cost you as of an the let linkages question we back underlying And are have and the to see labor sure gave refining component In the they few and the are natural can try different. a of right? to is of components the gas, the address

case to So the cost we had of to Alumina comparison the in really higher maintenance In case do I some the quarter. flat costs out Bauxite said, of, a is cost, as difficult. second in the of Alumina

much increase, We’re stable. starting to is Bauxite more see caustic prices

John Tumazos

Thank you.

Roy Harvey

Thanks, John.

William Oplinger

John. Thanks,

Operator

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

Michael Dudas

Bill, Roy, evening, Good Jim.

Roy Harvey

Hi, Mike.

William Oplinger

Mike. Hi,

James Dwyer

Hi.

Michael Dudas

done doing you’re Just non-core only job here. on solid not what certainly excess, a transformation invisible a achieving in very you’ve question this on combined affiliates but of and you portfolio

in and cyclical markets that XXXX, you what there that’s Is what horizon highlighted XXXX, the serve? anything to transformation. in portfolio structural have changed? outlook XXXX or maybe different you You Ciprian the we’ve three-year changes than plus, and you’re different Rockdale, San much be would Is in but prior in the could talking portfolio about the the the XXXX thought XXXX massive and seen

Roy Harvey

Mike. take first me let a shot So at that,

our really cycle. what’s succeed of happening -- in is have purpose behind can matter market that transformation to portfolio no the a set the we So ensure that assets the

And But market a same competitiveness have that successful be and the positioning time. that so, at of sure course, changing consideration no we want the position impacts what. that how we we might current matter make time, -- into cost be take through to will

in honest, that, behind closures has or and the be that circumstances cost the change Portland result that structure happening curtailments it And So a I example transformation I in overall would well fact to also a the program great divestitures. portfolio us. on quite between as different and say can is would as in depending around the changed. the those axes the might fundamental of purpose is highlight a going change what’s not

to work moments some those would have that five-year is five of the period years. still a later in do. we So some reason the you’ve got change happen of Part step that

about XXXX, you until to the expiring access contract and So in don’t get you a have make that decision really example, you point a power be plant. step for that if actually have to change to able make

So we are very committed. still much

As carbon Bill depending are underlying change and very minds. to of the the the very earlier our But might around cost meet market is plants, Q&A of having on and much frankly, how plants of the you. session, future purpose low swirling alluded having outcomes in environment current that demands had are also that the competitive top aluminum

Michael Dudas

such. and low And carbon just your less a follow-up comment on about

see Alcoa, in be aggressively think more appreciative with much so, most or there when some obviously potential how months your XX or and of a the structure or be capital of you’re some do areas, you that I think of to investment or would or of? significant have next lot required seeing investment the staged progress you more allocated from people initiatives will some which the probably Over do those you accelerate

Roy Harvey

you stand fundamental portfolio it green Yeah. at all. to when going that, at that given that positive would have a grown in the Alcoa which is very us that. perspective, answer doesn’t very we way a advantage have has is rich way -- mean that and I The Mike, still we be look that a from from

curve. know, time from same XX% XX%, renewable down you the the a moving As while at drive to energy up to cost have we target

We’re step just getting on Mechanical which started Vapor is the change. Alumina, inside of Recompression

inside be the But using can the gas find We’re energy which well. think about a as minimal most than research Alumina ways planet. would need planet. also see renewable Aluminum now already natural look green the carbon that we ELYSIS as forward. and the stepping outlay. intensity highlight does refining rather and what the start to that’s It’s is relatively to if in lowest next project, future could like refiner And development we Right Alumina that actually of I we on

in starting now. anode commercial We’re as inert scale right construction the cells speak first we

have and by question to be be up for package get to said done would a when commercial take that that However, open place that prove when about we investment we’ve the how available, XXXX and that licensing. you able would would investment

Michael Dudas

Roy. much, so Thanks Excellent.

Roy Harvey

Mike. Thanks,

Operator

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

David Gagliano

Thanks much. Great. very

Roy Harvey

Hey Dave.

You’re back.

David Gagliano

Yes. I am.

wanted I producing give a an to now? ask, value expect add you range the next to year? Alcoa into few for premium your -- your context times just give average of product can a improve value-add Just for product is the us is mentioned here, a just as that quick obviously. like bit how us you a follow-up on a Can how What you Thanks. value-add much for just might really, current you much and

William Oplinger

Yeah.

products XX% sales number because know products differential give So is to our sell of that the exact we are very variety a XX%, hard the of wide, wide. is total is it’s value-add don’t metal right? So product range and and the just I

from billet Europe. going into pricing drive everything you slab and So try to in be We XXXX. to have would better America North to America to foundry in North looking

improve us for pricing said, Roy allows and strong to the XXXX. As are hopefully very markets that

David Gagliano

there framework a of I bit of or any -- you there issues what just so perhaps, like -- is commercial a give is a around to up don’t am -- kind of sorry, anything It on bit average, a I a way give you’re that. mean,

we in? just can a model expectation reasonable so Just what is on kind of average it

William Oplinger

No. Yeah.

them give with it’s of the an our Dave, -- will year. this in to expectation and we now too early of the around customers at process We’re you between negotiating end point. increases the be

David Gagliano

All right.

you very Thank much. Okay.

William Oplinger

you. Thank

Roy Harvey

Dave. Thanks,

Operator

Roy session. conclude the turn Harvey remarks. for this like conference And question-and-answer any back I’d does over closing to our to

Roy Harvey

to Thank questions for everybody thank you, Cole. today for and us. And your I joining want

work to in be company. the industry proud XXXX. today and time our hard any leader our a stronger due to since in We’re than across is the Alcoa launch

priorities are to strategic Our results. working bring

said what all Alcoa sure Making do. through doing successful cycles. we is the are We market we

from on We in for please will value the October that, with across focused operational forward Aluminum chain be and safe, benefits strong to speaking improved capture our And momentum, continue continuous you third results. with improvement the I again to Thank you. look stay markets. stability quarter

Operator

you Ladies and attending concluded. gentlemen, now the for today’s conference presentation. is Thank

time. lines at now disconnect may this You your