Upcoming AWS Coverage on Arconic Post-Earnings Results
LONDON, UK / ACCESSWIRE / January 30, 2017 / Active Wall St. announces its post-earnings coverage on Alcoa Corp. (NYSE: AA). The Company announced its financial results for the fourth quarter and full year 2016 on January 24, 2017. In the first reporting period for the aluminium giant as a new, standalone, publicly traded Company, the adjusted numbers came in below market expectations, while sales topped estimates. Register with us now for your free membership at:
One of Alcoa's competitors within the Aluminum space, Arconic Inc. (NYSE: ARNC), announced on January 23, 2017, that it will release its Q4 2016 and full year 2016 financial results on Tuesday, January 31, 2017. AWS will be initiating a research report on Arconic in the coming days.
Today, AWS is promoting its earnings coverage on AA; touching on ARNC. Get our free coverage by signing up to:
For the three months three ended on December 31, 2016, Alcoa reported revenue of $2.5 billion, up 9% sequentially, reflecting higher volume in the Company's rolled products business, and higher alumina pricing. The Company's sales number topped analysts' expectations of $2.39 billion. Alcoa's revenue in FY16 totaled $9.3 billion, down 17% from FY15, reflecting lower pricing and volumes in alumina and aluminum, and was slightly offset by higher third-party bauxite shipments.
For Q4 2016, Alcoa reported net loss of $125 million, or $0.68 per share, as a result of costs to streamline portfolio. The Company's earnings results included $151 million of special items primarily related to the permanent closure of Suralco's refinery and mines in Suriname and the impairment of Alcoa of Australia Limited's (AofA) interests in a Western Australia (WA) gas field. For Q3 2016, Alcoa reported a net loss of $10 million, or $0.06 per share. Excluding special items, the Company's adjusted net income was $26 million, or $0.14 per share, for the reported quarter, which was below analysts' forecast of $0.22 per share.
For FY16, Alcoa reported a net loss of $400 million, or $2.19 per share, compared to net loss of $863 million, or $4.37 per share, for FY15. Excluding special items, the Company reported an adjusted net loss of $227 million, or $1.24 per share, for the year.
Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), excluding special items of $335 million, was up 18% sequentially on rising alumina pricing. Alcoa's adjusted EBITDA excluding special items for FY16 was $1.1 billion compared to $1.8 billion in FY15, due to lower alumina and aluminum pricing during the first three quarters and incremental costs to operate the Warrick, Indiana rolling mill as a cold metal plant, but was partially offset by net productivity improvements.
Balance Sheet
As of December 31, 2016, Alcoa had $853 million cash balance and $1.4 billion of debt. Since launching as an independent Company on November 01, 2016, Alcoa has increased its cash position by $198 million and closed Q4 2016 with a cash balance of $853 million. In the reported quarter, the Company achieved a seasonal low of 13 days working capital. In FY16, Alcoa invested in return-seeking capital projects of $82 million, and controlled sustaining capital expenditures to $322 million. Return on capital in FY16 was 5.3%.
Outlook
For FY17, Alcoa is expecting relatively balanced global bauxite and alumina markets and a modest global aluminum surplus of 400 thousand to 800 thousand metric tons. Alcoa is projecting FY17 global aluminum demand growth of 4% over FY16. The Company is estimating pension and OPEB expense to be approximately $175 million for FY17, down from $200 million. Alcoa is projecting transformation costs to be approximately $150 million, plus additional cash from R&D expense remediation and ARO reserves in the range of $150 million to $170 million.
Alcoa is forecasting FY17 capital expenditures to be less than $300 million. The Company stated that it has18 projects totaling $385 million in growth spend. In FY17, it will start 11 of those 18 projects.
Stock Performance
At the closing bell, last Friday, January 27, 2017, Alcoa's stock climbed 1.02%, ending the trading session at $36.67. A total volume of 3.62 million shares were traded at the end of the day. In the last month and previous three months, shares of the Company have rallied 23.68% and 75.31%, respectively. Moreover, the stock surged 30.59% since the start of the year. As per its last close, the Company' stock has a market cap of $6.66 billion.
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