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Alcoa (AA)

Participants
James Dwyer Vice President, Investor Relations
Roy Harvey President and Chief Executive Officer
William Oplinger Executive Vice President and Chief Financial Officer
Satish Kasinathan Deutsche Bank
Timna Tanners Wolf Research
Carlos Alba Morgan Stanley
Emily Chieng Goldman Sachs
Michael Glick JP Morgan
John Tumazos John Tumazos Very Independent Research
Lucas Pipes B. Riley Securities
David Gagliano BMO Capital Markets
Call transcript
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Operator

Good afternoon and welcome to the Alcoa Corporation Fourth Quarter 2021 Earnings Presentation and Conference Call. [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. Please go ahead.

James Dwyer

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

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

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

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

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

Roy Harvey

And our financial Jim. Due for year call. employees across we're everyone a for the and of to Alcoa. truly was thanks dedication best joining globe, XXXX shape in you, ever. our transformative to work the Thank now

accomplishments a Our to industry our aluminum propel help the reinvent our will for forward business with future. us vision span sustainable which across

Before items. a I our in to few quickly results Bill want covers highlight detail,

safety. application which most helps care lead to is focus our on embedded that and And every with always courage. our values, values with First, our an in to for those Alcoa act safety, has operate important integrity, and with is excellent, people of improve one support

We safety; processes comes comfortably production must consistently or recognize some no rest and We never must it ahead serious remain put had experience and we fatalities vigilant. when to prevent reviewed Last to applied our we Importantly, and did we systems be that will injuries. regularly human we never will profit of life. but year, injuries.

million quarterly due company for setting $XXX to the quarterly million. future Rockdale, we Meanwhile, net at authorized additional increased turning assets Adjusted stock some restructuring of EBITDA as sale a special the dividends, core too of our operating the X.X We've quarterly Texas net that the on fourth quarter, first Bill program X.X We and $XXX the $X year of for improvement, Alcoa shares. strength record the fourth including non capacity company detail. the from cycle. as $XX excluding our continued cash addressed buyback in a adjusted that in quarter. also the review the a from the make million. paid roughly action divestiture. and closure, the also view prior or of now curtailment, items from our We've we'd our indicates to quarter, tons performance to was of XX% site global generated our significant We smelting metric of fourth our This million an In good our will charges loss we million In nearly repurchased initiation of our made to billion said XXXX income XXXX, program million had progress Next, evaluate in portfolio. of dividend results. XX% important quarter, we $XXX Corporation. an

our Importantly, year. the debt we have reduced significantly position during

US remaining annuitized Our additional from are pensioners while balance highly adjusted billion And of sheet year $X.X plans, and end rated ensuring $X.X billion debt XX, plans our XXXX, their pensions, improvement from on companies. funded. We an on that fully de-risking proportional net insurance receive December was our XXXX. qualified beneficiaries from portions payments US our pension

more And make where help for the advancements sustainable aluminum technology positioned create our toward net the and it progress and we're with world to choice us an greening a realize more material. even zero future industry. ambition, vision, well to are attractive will that important even become an more even will Aluminum sustainable been our Company, Aluminum metals. has We now always in ready

markets. it our to fundamentals positive we're in with see all Finally, together come many excited

market We for to and expect the be longer. stronger aluminum

Now, let Bill me QX and results. ask to our full year go through

William Oplinger

Thanks, Roy.

to were up to and XXX% XX% attributable Provide net little income both of $XXX from last net and annuitization, set billion. to netted a on from underlying becoming to net solid the for of are billion; site Special non and were same Alcoa quarter impacts prices. increase included million. more fundamentals year earnings $XX.XX $X.XX EBITDA quarterly $XXX was higher bottom a reflected full income. sale. $X.XX statement fourth page $XXX We income the an year. million, revenues EBITDA compared Our of alumina attributable since million a $X.X or from fourth $XXX asset of closure, of shows to income company Alcoa a $XXX recorded sequentially a busy increased XXX% to revenues positive items Ciprián quarter. our But special pension $XXX of year. last as at $XXX curtailment sales, the and actions. non bridge very GAAP about to smelter items in up adjusted period adjusted strategic income loss standalone or Corporation a primarily of the net Revenues loss core items. a $XXX X% Rockdale Alcoa basis, million Adjusted Wenatchee the from million, $XXX and of to up excluding adjusted and negative the the prior $XX as million net were revenues detail well Corporation we quarter to million highest San recorded million reflects up charges $XXX or attributable million aluminum On million smelter sequentially change special excluding net loss adjusted in the EBITDA billion Positive billion, market the our up cash At quarter from net million XX% to

special increase offsets came time increased well the energy EBITDA other offset items, in review in costs million related as aluminum adjusted alumina were partially energy and recognized and drove excluding let's partial primarily as higher shipments In prices. Now, prices, Brazil. $XXX detail. Higher while debt one San EBITDA from increased raw credits by Ciprián material adjusted in more impacts, metal in

Lower production the of line was Though Looking true sequential segment's was the impact. negative a Below high $XX higher caused impact declined Highlights the shifting more offset in this customer to production still pricing with energy, costs. almost EBITDA Ciprián partial included and caustic quarter. the segment aluminum Quebec at higher and offset by offsets increased higher million it premiums. and the Brazilian of segment with as shipments in completely shipments regions San and than debt of costs, intersegment higher costs $XX costs. the higher $XXX as costs higher metal costs again to $XXX energy cost aluminum index in mine as shipments from lease Aluminum credits. XXX% at and it production profitable higher other million to production up million million, annual alumina, materials well $XXX increased The more premiums prices and most eliminations level of partially raw than Jardel favorable were EBITDA mix Alumina product a doubled prices segments costs. EBITDA situation offset shipments by on million was adjusted to on segments; bauxite higher jumped lower and lower royalties. segment creating

of primarily shows drivers cash $XXX to our in slide impacts non Ciprián at of full from on related billion million. core San debt look billion $X.X redemptions the quarter. million, cash was by to of sources cash $XXX pension the $X.X of $X.XX generated the the increase curtailment. combination in expenditures cash The strong special sheet proceeds The sequential $XXX flows. The capital of roughly a let's side billion, capital of sales million. billion, well the working core asset EBITDA, which restricted partially uses $XXX billion. left million billion increased offset million OPEB offering $XXX into side stockholders net cash increase from working the our returns million for of capital The balance second and slide were non $X.XX $XXX in a includes largest Capital Now and adjusted million stockholders, $X.X returns on increase increase million. expenditures basis, came asset discretionary a to as reduction Other of source the cash sales of of of which $XXX and right $X.X pension was year the capital as uses major capital and contribution the cash items On excluding EBITDA funding, while debt $XXX and were including

on build, working days disproportionately million equity offset year three of receivables collections. sequentially less nine and on million other day's of net sales Full payable. capital second not have quarter. and for days cash interest positive inventory other on decreased less distributions working $XXX inventory year-over-year in quarter's at up over locked the flow of to capital metal includes metric the days include strikes San XX,XXX and XXXX capital. represents We was XX the at amounts non controlling at XXXX Day's working net impact end working approximately hand key is the reduction DI a did days. days increased but from return basis which fiscal favorable was $XXX impacts cash capital flow free funding. favorable Both XXXX. this San Looking as On pension by shipments XXXX year XX.X% Ciprián million days three and tons worker in Free is flat Ciprián $XXX fourth metrics, was approximately higher

our metric months. debt now proportional to inventory billion With and Ciprián eight the $X.X expect $XX work of next adjusted San through cash build is leveraged billion, debt net at We key net unrestricted million. net cash the is $X.X over

key transfer billion a We pension Athene In Pricing meet a took pre Company. portion our competitive. As December, liabilities November totaling groups was we of very quarter and to and Annuity the two and December. comment pension used $X.X contribution a requirements. on to balance dive Life deeper Alcoa on here's actions in of funding November final US

book charge contribution those over obligations. term the million was non recognize been of that transferred $XXX deferred cash of to So Alcoa losses have no would realized the cash required.

of qualified That's now changed pension pension to pension gross the to rearview XX,XXX decreased substantially the lowering XX,XXX US enough liability in from billion Alcoa's number funded. year. the US the In in billion fully liabilities decreased annuitants mirror. risk. from $X.X US are last pensions looking Our related have and XXXX, $X.X

Now let's look to XXXX. forward

includes And San Below restarts year-over-year impact shipments million. the approximately EBITDA outlook EBITDA transformation In impact mill other corporate expected the the annuitization. well million. impacts $XXX spending sale XXXX $XX expected projected are to Alumar expected be project and expense and impact expense at pension million and and decline impact alumina the increases and spending decline to XXXX of rolling Warrick decrease the both XXXX is of the XXXX at curtailment to reflects the OPEB The of segments is net modest increase slight Ciprián. increased to bauxite net the as favorable the items non on expected as will shipments. $XX line Portland, aluminum the outside in line Our depreciation of three operating expenses and and to due interest

OPEB $XXX million. of is $XX prior impoundments approximately approximately result at mine of capital XXXX million pension Looking increase the primarily and expected Australia. spending to spending A Juruti to higher are decline taxable well flow expected Canada from move funding expected capital significant for residue is payment to change as and cash taxes, in in filtration to a $XX is of XXXX Brazil. increase approximately earnings million. expenditures income Returned to required Sustaining in approximately seeking on expected $XXX to year million and the as $XX million

to ARO occurs $XX approximately expected environmental spending close increase million XXX as remediate and Finally, locations. million is spending to to

to challenges seasonal expected of quarter adjusted XXXX, metal and we index current other of and changes Expected and XXXX. raw first and fourth and similar expect levels, in are quarter to benefits sales from the pricing offset headwinds. price improvement outlined actions roughly appendix materials income will to mitigate adjusted the the contract energy be the For price EBITDA at as net portfolio

turn it me let Roy. back Now to

Roy Harvey

a a As Bill aluminum experienced pricing significant aluminum decade, average than role our in we XXXX. and surged levels price segment higher In noted, its has the the in than average highest is to profitability. XXXX, more today level the elemi overall in

of in the Europe related of have the fundamentals important dynamics I in smelter to of in are a cuts world's only will more which next the due XXXX, in These energy power and side, to curtailed the and in have X prices enforcement annualized slide. largest to producer shortages, power environment. supply China, shape than In the there market discuss the series detail country led tons increases occurring aluminum. not supply million capacity taken On of policies in more is China, both that

for between increase the On XXXX. XXXX. in side, demand to global X% XXXX we aluminum Demand to eclipsed X% levels demand already of and pandemic expect had primary annual relative this the year pre

continue all and to pricing. most supply perspective, value leading to the Aluminum across have negotiations favorable have been sales, in shortages also from major see adds of value our inventory the production of volume sectors. We products products across positive sold constraints, low fourth of with the and prices growth supports key eased quarter. supported economies, the continued On aluminum are a GDP some tightest transportation contracts, in resulted and specific alloying high added industrial demand in which materials in our for From customers much use annual by somewhat aluminum annualized end commercial levels costs. world's points

expect We any XXXX continued premiums open and volume. relative remaining higher to for demand

We The structural supporting decade, supported represent our the higher premiums supplier carbon as energy emissions the On in place solutions. market remain a by at are remain commitment annualized drive continue a efficiency, China. a prevalent, will global a of a reduce target changes their that to production China supply is and fundamental high. domestic factors boon for more where for more becoming total prices to a room growth. made in dynamics, overall believe the policy Europe, focus in carbon in we million primary on benefit towards when demand goals aluminum to that next any America deficit to push aluminum regional emissions time and capacity reductions XX metric capacity, at position North which With cap aluminum over leaves sustainable tons from little smelting particularly constraints has net markets

XXXX a China at constraints recovered or some being production pricing Also, process remains expect higher We in either refineries demand. are supply remain to will in alumina have supply disruptions of in market, aluminum resolved. primary the XXXX of in aluminum. primary relative China reduced importer net In the but average, of the have ex-

market strong remains advantaged. Our alumina position in the and

for smelter supply. and We are alumina integrated of bauxite the world's caustic it is refining outside our alumina largest party uses producer of system per China. third produced less grade of soda And optimized an ton

industry's our carbon our its refiner In a refining to We by global are also this proud our simply reduce carbon sustainable and evolving to emissions intensity. to carbon offering And smelter switching allows have brand a only rapidly sell to in we're a low the product system world. EcoSource, system product. a the with that advantage unique lowest refining view, alumina aluminum an provides

in deficit a The I'd XXXX. is ended global and another to average a expected X.X analysts deeper million ton Next, of close aluminum is metric at from like market. view look deficit that take the XXXX tons to million with approximately metric X

is inventories decade. at when lowest this their a happening of All are at level in time a

challenges days these related inventory An at rates for to spot of days a the deficit the at of Europe. lies low to in to holds, to aluminum of changes supply new due this smelters of XX to of aluminum Europe. due like capacity and XXXX. increased the renewables. sustainable constraints could emphasis the levels XXXX December deficit Alcoa operators in interesting has a inventories and between to latest demonstrates This sink from smelting across low market between days structural we mentioned January impacted pressure the more annualized levels, power important give projection should tonnes between the of This advantage smelting dark average future. continuing study the we shows end decarbonization of XXX% production. increasingly in reduced chart cuts Europe's driven which of consumption I see during operating by perspective, earlier, And driving in consumption XXX,XXX estimate in fuels countries and Despite In as sustained inventories market on face and are end conditions power around inventories have market, carbon from fossil issues. consumption dynamics Looking expect to capacity. the where of blue low in XXX% capacity been power case XXXX returned that XX% a If XXXX. cuts transition represents capacity, will at low point competitive by the XXX,XXX XX of the We

San related challenges XXXX, issued we end own without relates it power recap to And to news the the weren't prices we like the to of our at However, Ciprián in as next Spain. I'd Smelter.

on The discussed San the exorbitant all Ciprián approximately of Ciprián find lose representatives aluminum agreement the electricity to the working December hit XXXX, last December. month in unfavorable to per primarily prices averaging with XXX Even we've continued control we've price XX, for been megawatt energy for calls, energy time year, pricing, Spain. has at temporarily in losses. solution of signed previously, to As shifts workers euros two seen high hour late to there to with an the an because smelter San we've the these curtail years On our the in smelter we the Smelter. earnings positive prices our money of

long term and curtailment in the expect We month. this the smelter of We to will metal power from January we've month, committed an end molten will production restart solution find all use earlier the started smelter that cease XXXX. time of purchase energy process via to the this by agreements;

we million million, net year agreement, this both to $XX between in $XX expect the XXXX. losses With and annual

the important with to to clarity new resolve and to was everyone and it ideal, issues importantly, on have a arrangements. power to the a the timeline restart While define date is for situation losses clear not have

refinery. the operate using could not action. that during effects forward to with strike certainly negative shipped workers our is during during ended The strike, more working representatives be this on There Ciprián two the be successful smelters toward a done we the had casthouse Smelter. also to look much year continue period, will to accumulated which curtailment, agreement but the We San inventory the

showcase high of Next, becoming XXXX across call, our the company. efficient our achievements I beginning streamlined, toward focused at and truly efforts a mentioned performing commodity more as our

strategically. five financially, years, the past improving operationally, For have on foundation worked our we and

the for Now future. we ready are

our we in Lista. we refinery family. only quo. and low a few many reflect for wheels reinvent recognize From operations, we few. Mosjøen have We three make are Norway, purpose ever the this accomplishments sold This our tons. just set products a carbon its XXXX combined joint metal bauxite aluminum in take buildup slide. In goal shipments car. GT a at at certified record important make, Sustainer a on company's turn are accomplishments drying real in the opportunities we serves emissions had and record values These how implement. continue our we decision progress. to had In production aluminum and Australia, to Kwinana process. foundation. year, of and Initiative, status we production set, carbon like potential our commercial matched very molten most technology its In a electric operations purpose overarching had Australia best term the low strategy embracing metric our we to all challenging of from the alumina, now the molten EcoSource our to the in Quebec Etron impact we industry's long annual low wheels guide and in Canada, and EcoLum like direct records. highlight innovating our carbon operate, smelting every we as Alcoa Also, industry's Audi I'd It I'd our alumina. the year suite gas annual on helps strong Last nearly for grade action use from greenhouse our Stewardship record of we production with The raw alumina, revolutionary production In EcoLum listed for smelter of XXXX. to our mine all venture, the advancements the commercial first sold comprehensive In to standpoint, the only ELYSIS Huntly eliminates sports that aluminum both into

assets. quarter. on Alumar to and in production in damage we've the good motor On Finally, capacities of addressing the our cost very production from progress portfolio, ship and our quarterly recovered the made competitive Brazil, refinery create record a a set operating bauxite set in fourth sustainable

investors which vision world research to pressing create challenge future a for here industry important oriented transform have define that a included carbon in helps most and really challenges. needs. That's Our and And value the of development low industry, potential to to solutions next carbon our not to but to some the our aluminum only solve our our innovate sustainable reinvent for future projects, in the constrained drive world. our industry's

in with And competitiveness numerous need We accomplishments for to provide we future. mind, are stronger this capital. But on we must much cost, we cost positive successful, in a the addressing had low carbon, be but challenges which Alcoa's slide, build and low the these low to financial for momentum. foundation finally, year, also for solve on

discuss at the In Alumar of full in will Portland modest at a our on completing few Australia. capacity some smelter safely this the smelter the I'll additional for New restart next, Year. focus in restart Brazil, XXXX, the items list we of on and So

some actively capital projects, Brazil, I implementing are the crusher. mine situation Juruti Ciprián. will we move on working bauxite As important we mentioned, be the which energy for also In at include San

For the Brazil Poços filtration installation technology we press that Western adapted for two at residue, first Australian on de bringing Caldas, refineries. bauxite we to are of working

as market new in risk on are the allow. this investigate time, we to annuitization Finally, conditions continue our focused Investor November. will We technologies. same pension actions at Day share to we additional At reduce information

to investors to it and and purpose we've you've to archived today on how view aligns If vision. briefly I this with revisit had some our of our chance would material, of like its the due it the that not importance kept section website.

positioned when drive world well make the are Alcoa sustainable positive solutions, a needs and time a is more We to value. difference at and

commodity these supported also mindset have reach help experience. The projects challenges The net the to roadmap are provide our potential refinery technology a includes a which differentiate we Australia the cost technology and October. to ambition, ELYSIS Alcoa which value. We further of announced conscious zero technical and future, drive addressing the and path with last by operational stockholder

that Our and begin refinery at for greenhouse the ELYSIS our will smelting aim This and year, from first underway redesign that supply our not improve future joint costs detailed proprietary development our XXX generation including are venture but additional materials also testing commercial to of at the of zero carbon efficiency, Also, kilo cathode year processes. reduce to in its chain, technology, for process production carbon is critical only Center. the Technical Alcoa planning developed the work research projects target sized free production smelting the that of amperes. respective gas anode next was complete their ELYSIS reduction

XXXX, installation development free JV for current potential adopters two With ends later. from the the pathway, technology have approximately carbon to allowing aluminum years produce available to

process. Another project our exciting Australia is R&D

to can We metal ramp far are smelter. that up the this innovation from which the commercial of produced aluminum grade exceed working to purify quality scrap levels

currently as a use create As value high can converted the needs year, year. design aluminum that technology facility material is and can pilot quantities the technology source this The demonstration scale, automotive a next vast at end We to with engineering aluminum, bench as taking world scrap. to and can of the premium aerospace. work feed more for plan place purity leverage we low develop be working this applications such use

energy, eliminate an will refinery developing vapor recompression, to is involve renewable financial the of Adapting allowing in applications renewable vapor fossil Next, support would steam and to process Australian that the stage our of could electricity. from our would refining technologies rather the cal electric to process refinery operate bauxite replace develop; calcination. to also final and residue. from standpoint, the process to to to for mechanical Government consumed Converting molecules. From hydrate all finders significantly future alumina reused, refining fuels the while we're bundles by future beneficial energy all remove the use. also improvements recompression fuel heated Calcination and which two the project crystals emissions in primary generated emissions working captured mechanical refineries the innovations which allow water of are where has reduce water fossil be than numerous boilers,

ion year of project Next, LED the a alumina HPA to we the due non market joint used sectors. expected announced transportation, sapphire lighting market metallurgical a items and last products. Alumina, HBA. Purity glass other It's batteries, for development A lithium the efficient and beginning grow and energy applications other to to related carbon High for need or like low solutions for is in

HPA The align pilot average so have first market. trials produced far purity expected in the levels that with what is

estimates our capital the Finally, support side for future of these right to slide projects. you'll far see this on

of one for stockholder are project To each R&D phase implemented, are there gates full the must them, expected still Importantly, funding stage be several is in each yet not which provide approved. returns. and

late Next, progress, to simplified last I want capital which with framework, year. we the revisit allocation so much financial

You'll from similarities prior notice framework. are our some important there

focus net strong continue includes the which through both example will a cycle, to debt We cash on for sheet and our balance position. our

first for have and On per in initiated million we positioning the improvements for Next, and the and creation, change increased is from mine order the our up $XX growth. we year, returning we of to share. impoundments. fourth will some Below $XXX elements cash continue year. This at driven $X.XX Juruti to to sustain capital dollars chart no This transforming cash by million, our line the totaling operations. listed planned improve allocate on value specific portfolio $XXX the our three the million priority, capital to dividend at to move both in stockholders, mostly sustaining prior to stockholders, quarter, returning we've cash

out authorization also QX $XXX prior repurchasing million buyback unused an buyback We shares. closed available. million in million a program X.X currently $XXX have We

costs. in closure actions. again important sales on costs core process. assets, transformation to example, The our have for portfolio we with strengthening offset to Next, It's helped to mitigate emphasize to associated XXXX closer that non the of options

the of full On just aluminum in repowering both million two we Bécancour in as now past smelting The now our States, the Portland of United as the earlier, XXXX. Ciprián, and of includes Intalco October restart capacity, and the tally year now Australia, XX% we've year which at curtailment X.X portfolio first transformation, capacity. we're at program, five curtailment the the metric closure a noted repowering tons underway the mark addressed the and San announced permanent restarting of year Alumar on of roughly at Brazil, in future including Wenatchee in two

slide, our and after key through as our across the business based To In implement across the foundation with highest we've made in We company, summarize, focused appropriate capital demonstrate provided growth XXXX positioning includes on commodity it our income. difference. future. segments. a all globe the adjusted a made net a progressing this opportunity XXXX, we employees Alcoa ever brighter in together; have our as fundamentals came our on XXXX innovations our an technology strengthening timeframe develop for stage allocation gates. to company been Finally for work we doing

from our profitability We aluminum robust pricing. market saw strong segment also with

aluminum due the in industry, continue supply stronger to positive meaningful expect to in We constraints China. markets including changes

through provide Next, the we've for which we the fourth supported Alcoa capital have strength to announced to decision quarter. cycles, positioned market returns our the

be very faced it's time aluminum in decade, the challenges good has prior the over the Finally, upstream business. after to industry the a

that time. now is environmental, are We our where the the that the company right is your in The are I to you are take changing. do we industry our a with importance social of in One, for for right to the are change in fundamentals coming as trust eager Operator, excellence and This on who once benefits company we forefront. and standards drive line? company value the governance the Bill Thank questions. And future. your and again work to future. have the at

Operator

Bank. Our from Instructions] today first question with Satish [Operator Kasinathan comes Deutsche

SatishKasinathan

Ciprián bit for light. Can the appears moving for morning. guidance -- on good parts? Yes, be provide was offset smelter the The really question taking Understand ton million will little Thanks volumes My given color a year. my X.X given of hi, should for restart from be first Warrick aluminum should last the But Alumar from April you it divested of more should one Portland. quarter volumes is evening. lower guidance in various lower. some to be higher just San that there but the shipment questions. XXXX. X.X impact be to by they Thanks good it volumes and

you any thank So provide, color can you. please,

WilliamOplinger

curtailed after in hit the last we all so. week will had Satish, moving year, I or next parts San of we you've Ciprián work think first within major the get quarter smelter the the on

third Alumar then and some we small have shipments in production then the the we months XX will into of And quarter all you've ramping think of are And but on starts the Portland. in at So I there. amount goes production that fourth And up some hit major quarter. items.

SatishKasinathan

that purchases the than the XXX, for to the just lower XXX year. in for expected include reason third be Is party does larger to clear, XXX,XXX decline the So decline? any the it volumes, annual

WilliamOplinger

be amounts some of there that's major not buy Well, the resale, driver. but may smaller

SatishKasinathan

overall for question on Thank the XXXX. you. of my quarter first And the guidance Okay. is second

So, I headwind in was $XXX fourth in the which consideration to intersegment just the reversal quarter. want million takes clarify eliminations, guidance into if potential

WilliamOplinger

X It that -- take into into account. does that

lower what so quarter, will into loss we we fourth but to pricing reversal will So, in the in we things have we have two had it that alumina of related intersegment a currently reversal takes pricing, have that this alumina case also. than

Operator

Tanners Wolf Timna with comes Our from next Research. question

TimnaTanners

looking thanks New of for and footprint. as I the portfolio, doing want looking said Happy evaluation and still heard, high hey, all your task Year you're remaining, just you level what's at detail. great to I we know off Yes, across first the

was of first with You work that US possible or is wondering still your in in. inclined to to just a are That's set after I assets that have number still happy you're my LMR it in Massena question. Portland, you West? revisit believe that footprint

RoyHarvey

I'll choose handle that what one, Timna; at we we're to always looking operate.

happening what's environment, at well. -- current project that And look the we as out in so it's you

capacity, also And potential or some to from et up these with active we And process. but restart it's also in build an have to from talked both capacity for look them, connects this Timna it ways the a trying side, before strengthen so curtailed invest for partnerships. facilities connects it do over to curtailments to cetera, repower to we've order about and and divestitures,

need answer can is sure net how to But is our our try in at zero obviously and number always So we quartile on I be actively that targets the yes, which think and straight a looking working your meeting question to now. away. number the first that portion good driving to two, decide we're we we're towards that XXXX, portfolio drive make decarbonization towards and one, then

TimnaTanners

really you of off, San that. CapEx some Ciprián it that local hit And if discussion a that's wondering power had in San committed the the question Ciprián quarter, investment some first about so for Got option, wind seen to, a in media There's broader particular, also agreed was can fourth you. option of I've the had would that's you've the $XXX in be to. about million that I tentatively materialized. viable about discuss And wondering that if second million is you reports if media been said $XXX

So little to it just color how Ciprián ramifications of get to and going a San about forward. trying on more think the

WilliamOplinger

million third. the and the $XX strike And the I million and let EBITDA Ciprián around then wind million it's address Timna believe, impacts from sequential projected, Roy we the had in saw guess take Ciprián, San me in around around refinery of first I that's negative sequential impact smelter, question. $XX there. the million $XX the from of San So, $XX $XX approximately million, We from power can

metric go, that tied fact at up it as capital up cash projected see be the end would working thought, far capital. of didn't what around year. tons did we that's million held as And that $XXX we had the shipments we of situation we a essentially working least in of the that given XX,XXX around million $XXX had of So goes, at capital was

at we of million million of $XXX $XX restart breaks years, facility million spend around committed the $XXX $XX down next as far have of the costs. CapEx, to million we've As capital of over that couple committed restricted the and to of that And cash.

prepare you our that we've do for of Because So committed want held cash. next spend sheet you'll the we as couple to see the balance question? restricted take that's power to wind actually years Roy, a restart. that on over as

RoyHarvey

Yes.

Europe so San And in is in just we the stepping very think energy have because gives a back what a and it's dislocation some I prices in Spain. clarity Ciprián, outcome deal specifically through good pretty looking us incredible it and in at that

our so was the sort cuts described of well. off curtailment because reach is next those which And this most Bill step very important losses, to it what

can linked that take those, price in XXXX. are And risk. restart And towards to importantly, starting already mentioned look away spend and committed for renewables But we're this case now, that we've X, this that stretch pre looking can be the contracts longer, and for wind to of you MOU. course energy or more mobilize energy So to. agreements committed to January had potential capital that those out tend We're projects. for power,

moving step in this direction. first the indicative the they're So in right are of They process.

to the renewable us connected which have in on opportunities, it's, And the Assunta government X, in with XXXX. policy Ciprián, build connect we improvement what could policy to have change San in need entertain to January price step regional and those how then so we allows energy to it think national power I this is government that

is same and Ciprián longer January is that as possibly we're we're as what that energy, competitive working reaching at can, So the the for San means incredibly to thing make we XXXX. time high restart consuming X, no curtailment, important which priced

Operator

Alba Carlos from Morgan comes Stanley. question next with Our

CarlosAlba

Happy Yes, New guys. Year, you much. thank very

you stocks there? San stores the you -- currently you feedstock the you those metal that run do for first How how to down question, have the inventories? And just are to how is cast run house? the expect going So primary it long you remain what in going is are to Ciprián to use after

WilliamOplinger

then So Carlos. will to bring the we inventory nine in cold after metal. over using we next months, And eight that that, anticipate

CarlosAlba

bring And ask would you if and this metals, from other third from buying parties in Bill, be may European I it would you across or metals? European

WilliamOplinger

don't I sense, answer makes will that an the months, I where most the metal cast think after logistically we'll we Carlos, have be the sales. XX whatever necessarily to run we'll do for continue but getting

CarlosAlba

is Alright. year? operations of melting melting increase other And that the comment, Roy, this [Indiscernible] there that comments you primary can metal add the if to you expect the you maybe yes, profitability benefit is any VIP could to is or

RoyHarvey

give Yes, you comments. I qualitative can some

basis. markets these on driven I North think and America, to in the tend annual markets at an when look we be particularly

to moved quarterly be we've a basis. tend In So redefined they annual period. on that contracting through Europe,

portfolio our And so of good we progresses, you the course capacity are capacity available -- year very can do see the then over advantage some and that what have of to then as we we that build changes can or and take prices. the add spot the our year, typically

see is a in have clear period is, North there continue lot annual seeing all America demand and across different a strength were America, to when of upsurge North so us lot of market that a our in right we contract of it in we deficit now; It And of a sort particularly is for strength. products.

those was curtailments different a contracts. And for and it's even I very there will time become well, that as the would argue annual out good European we're going tighter it in to likely same Europe of so be given seeing. And all

So added we values added on on these a there and we definite qualitative upwards can much as is is; it possibly general. to just products. basis, a haptic make think in driving striving I move can And in sure we're produce as premiums much that as value

CarlosAlba

the P&L? terms in or first the throughout of year we contract or the first mostly throughout that then your mean, this of January, quarter? in the see year. reset on when And is Is half I hitting do the

WilliamOplinger

Roy. ahead, go Sorry,

RoyHarvey

reset January. happen you'll again, January. in see the changes driven they're quarterly will you have And European see And American typically the then for in of on a reset that'll pricing each Yes, in North quarter. sort that

I Bill, and not as to add mix And it change change. as can simple to impact it's So on one that. know, product looks the don't it if want you depending doesn't what like also itself.

WilliamOplinger

see the guidance that the first in pricing two pricing Carlos, is a provided. is add, the The We've first and we've the we there I'd in quarter. quarter, that thing only in reset benefits fact will included

is non in of quarter came down we repriced is pricing pricing in fourth so Alumina fourth that in the in the aluminum the value across the see recurrence the first. gets first quarter, And that segment second and a the won't was adds as alumina The the quarter premiums in higher negative and the prices recur the segment. negative you the block have that some fourth that

Operator

Our Chieng next question comes with from Sachs. Emily Goldman

EmilyChieng

year through there. and and on with the is around your just and XXXX. yet strategy Bill, in will I expect review guess close congratulations we progress deployed? those at should this question some reaching outline dates? but sanctioned project ban CapEx XXXX what not Good HPA are words, point first to see we be an further different stage conditional on during the Roy In other how My portfolio when evening, to update

RoyHarvey

is active because and their business. partner research Emily to perspective, there's I development the ongoing probably appreciate you're fact, venture project getting more and HPA an of important how from Yes, that joint This information in the an because question. lot is and a this

course year we'll small scale in be of with project. to what is of and consider that this right starting move whether make actually when into now actually XXXX, the over a so to relatively is it sure larger design see end that forward works. application we'll And we And coming advancements then the

technological no further gates the more same that also able And a reiterate invest information through certain will project and think forward. be is and go out fact return. will although when time, just for sure a ELYSIS, be successful, the this aren't so at that continues in that extent Australia, be different shareholder would good the been projects risk, very, phase, capital in we're I make for choose to these have to will to we've coming there R&D doing I the but we We to very it's along. eliminate that stage in ELYSIS XXXX as that that And like

come So need the side importantly, want to. in we to market but we the cost more side, both where

EmilyChieng

returns around previous is billion question second My clear. well really you've That's well How just past. capital right leverage should cash the your above the the Roy. target XXXX? $X look And is what perhaps below net the how cash could Thanks is about capital the think throughout balance sheet? talked in could prior on level balances targets, what for about of space, allocation mean we that

WilliamOplinger

$X the shares $X in fourth authorization target. dividend roughly the seen the me, we've of million we initiated our over have I'll have quarter, that as that where in Let With mind, today, in that five back the you been you've there a take in can above to, billion one, years million that quarter; further we're times $XXX Roy. last And the billion alluded the Emily, balances we fourth been cash below as $XXX have fluctuated; we clearly bought XXXX. target. we of execute

revised developed cash allocation as positioning be all that we framework. returning shareholders, of information, for the future. the repositioning at we've and on portfolio the in growth so look to And focused things, three capital It'll

the of portfolio You've cost does repositioning actually us seen money. that the some

restart the situation, cost us Alumar of got $XXX But to we've that the so had that in will facility. Ciprián committed we've we, So some. restart million that we've San capital

So the capital that's into behind the program. thinking what's going allocation

Operator

next with JP Our question Glick comes from Morgan. Michael

MichaelGlick

through just XXXX? up in you your buybacks. the Yes, of maybe moving did XQ. buyback dividend generally on pace just million should $XXX a increases How on follow there versus then the think thoughts about buybacks we And

WilliamOplinger

coming quickly execute based Yes, situation. on and how upon see the Michael, as cash it have will guidance, market on in future we don't the any will we buyback; really be

being set the question five we about potentially an before And versus years The buybacks. should, in we as rush I the was just increasing the our an around initial quarter fourth company. consider dividend we to dividend. after dividend, As paid dividend first talk of dividend independent

comfortable be a we that the dividend cycle. at that So we could thought set level through we

buybacks. we'll of as versus future consider the additional flow, So dividend the excess cash be balancing free use we

MichaelGlick

the maybe on the see to some the and year. that's how it, And Got cost items it can as trajectory through the you into of of side, the relates key go moving cost helpful. you side raw material

WilliamOplinger

I'll materials cost the very raw quarter fluid. address situation specifically the is on first

provided drivers full two year situation, on raw big haven't cost we the raw So of material materials. guidance

is second sequential of caustic is $XX and are million The first the be negative products. about impact. Those to up adding quarter carbon

that's in we've and million what between the provided, caustic to that guidance but products. So combined carbon $XX included that's

Operator

Our next Very question comes Independent from John Tumazos with Research. Tumazos John

JohnTumazos

helpful. estimate It's are capacity priced expanses Which of with most GDP grow makers demand growing, X% by very X% electrical or involves They're squarely to might can in X%. depending you slide the sales much two regions very Ball, times construction; growth or markets. X% cannibalized and and segments sales My by be that aluminum availability. to for more than uses, to grew X%. aluminum out question especially building three chip are more the on is your and to auto grow last XX that of typically or can going markets XX four many world different X% slides. very Thank internal markets; of World might the pages for year. helpful, like combustion are different times engines, EV XX% displacement than The other you XXX% grow do Bevcan PET XX. bottles to there in expect

RoyHarvey

enjoying aluminum because I'm a same type of when talk about Yes, would simply sure and across me above metals much John, we are well. too competing and $X,XXX, of let positive information lot helpful. the it's we're of prices, not like a certainly some be that inflation as little try extra commodity And might provide I that price cannibalization, seeing while

some sure markets see I'm the in if so much not it's that today. sitting we And weakness so as they're cannibalization as

one China, the you they've taken flatter at that vibrant much how of That's tends more market. to of until so of we fiscal we that And point, see something drive policy this could credit. the can change, growth looking up me and now this construction, that's were into construction more as that And a or and construction money can market. quick a going take so of transport in that inside some let tightening watch measures some the fiscal drive example

standpoint, And availability credit. the really of the construction Chinese is from its it So around side.

be think From that XXXX, a very very So around, think to turning could had I the if see which strong of we demand you that could argue is the this, world sharp rebound. rest start you're standpoint you with this where I stronger. going

the I see the which in continue got actually puts I again, to think chip forward. seen different had where you've going transportation continue good aluminum on a that all And much driven think build going the We're seeing bit the And strength the strength. we to we're markets. positives, forward. we much is markets. we're think uncertainty in have of we end, how separate continue shortage, a comes those across place board that is to sort in to around strong these I across that all strength going be little of really see pretty to And will it's, XXXX. But used and

Operator

Riley Our next Securities. Lucas from question with comes B. Pipes

LucasPipes

I taking my circle wanted question. for thanks And on year. a great different put a maybe on twist your for my on back footprint to Congratulations evening. first good Hey, it. smelting question,

power think it about have your located. that's Looking you also at San idle of but How markets, global assets smelters Ciprián capacity? do more the competitive, restart US of think some that relatively and capacity where still you could these sense outside make to become

RoyHarvey

Because it's pretty have that US Greenfield really a a and into come power. the road. to of brownfield the you foremost; or when you good or energy down first is absolutely And it's question. answer. so access most true important to one decisions restart a someday a it's complex Look, And also come in the

net that it sources to to portfolio, with so a XXXX. some We to a it The power and are the of to pathway relatively need go price second versus and while recent takes clear you second we is fuel? risk have by decarbonization commitments are carbon And renewables is for our sort What naturally because decarbonize source? comes access question when have simply fossil that consideration. developments, is of moving our zero it Is how away a absolutely certainly power well power. these renewable towards and to

that more The though, perhaps the the this and other is is the one technology itself. piece, US affects

jobs is at that the smelters can so the with future facilities some Pacific US at newer And we you when we in of the much Orleans, to most be have difficult Wenatchee, or hands recent jobs find really Intalco be New of labor dollar great very in look tend you you is compare a to fact more do. want what there our look that operators. is and people long enough Northwest and that the idled some very as on technology efficient, example really the significantly of less to to more and happen work there. requiring when well, to very operating to difficult investment it in that they that actually compare, good, And And don't proficient become can of be

as goals. then we our we environmental fit to then of of And all have look would that we Energy important, the across look all so any restart and about how different at very potential. think kind dimensions but against those technologies

LucasPipes

could for and what it second. And markets for question take and I are? geopolitics for you want that. to aluminum If perspective the you much tensions that Thank very for Thank global much my very be to perspective. Ukraine, second between implications unfortunately increase a your Russia on for to aluminum

RoyHarvey

My question. a goodness, that's Lucas, big

would And because already can have impacts; is impacts is aluminum in where of of if gas there on prices And And react can, to countries? very broad kind the are of broad the so because on supply some of different coming. European global to can an of this are to and if in are were imagine energy what different you on countries inside energy power. very happening impact depends increase. seeing comments some curtailment types my Europe. It impact that of How prices quickly how from the very what's happens going because they comes I that going supply think say the of to that's aggression. can be supply supply. that? so has this How because impact tensions the to those side the I today, particularly have broad much that We're limit much also natural the where Europe tensions

even this up potential Europe supply of If further. but for some impact, could see you something you're knock elsewhere potentially indirect see you well. as the of the start thinking to And more happening even And more the on what conflict that that really through could availability end be. seeing outcome natural demand go to could because for less in then generally, start is disruption of the could projecting could just of prices and of an gasoline risks impact in be could again, And just a an impact more and impacts. be forward

LucasPipes

I very XXXX. great perspective. you much of and have hope a appreciate Best your luck

Operator

Our David Gagliano from BMO Capital question today with final comes Markets.

DavidGagliano

I And here. a as on prorated progresses, that quarter you those flow added first and this each have the XXXX. question. clarification Great, a of point. for change couple basically thanks for basis in equally value wondering benefit questions through contract to I my just fitting EBITDA me if quick was can quarterly the at year just quantify year-over-year or

WilliamOplinger

block the is see business pricing you can the recur quantify, an between quantified million fourth quarter. around benefit haven't million. But can alumina of that higher David. alumina in premiums value benefit, negatives the pricing you the the that in $XX the the quarter year-over-year around quarter can't idea we You sequential give won't $XX sequential I in And the and yet, was add

So piece sequential $XX would million $XX at put basis. the value - added on a quarter around that million

So significant.

DavidGagliano

million step behind but from you can the bit a about then helpful. little prior just years? I up I back catch think that this, Thanks second for that. for Okay, and $XXX that's speak missed And details more tax payments a

WilliamOplinger

very simple. it's Yes,

the long following enough cash based following year. you taxes on that case pay from been Australia, of us in the prior to typically You've tax, know year the earnings

of So approximately $XXX is million, XX%, of XX% that out that in Australia.

quarter. specifically piece in of year, that in last the is significantly in the fourth Canada smelters that the other of end towards the Canadian grew The earnings

quarter. So in reasons. for Europe then of And piece that exact there's same over the into the that falls first a

made of the earnings year. the And we of typically bit European you little in Canada countries, when have pay strong the in So, the the cash the system this out pay earnings fact to and very we a smelting a both taxes make lag in in out. actually given that some from you when quarter cash that fourth

Operator

This concludes call our question-and-answer any session. for remarks. back I'd like to the turn over to closing Harvey Roy

Roy Harvey

everyone to of our in stay be have for Alcoa's all good like Thank again and at employees I forward today. answering everyone meantime, also evening. you, you. in Wiley, excellent their questions ahead the discussing once who road Thank healthy, the to April. enjoy and XXXX. for talking thank course call call company. look I'd a and always safe, thank We your please of joined our to our first you quarter the in to again earnings performance In performance

Operator

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

You may now disconnect.