Alcoa Corp (AA) Q3 2024 Earnings Summary

Executive Summary

Solid sequential improvement in profitability on alumina strength and cost actions; Adjusted EBITDA ex-specials rose to $455M (+$130M q/q; +$385M y/y) with GAAP EPS $0.38 and adjusted EPS $0.57 .
Alumina markets remain tight; average realized alumina price rose 22% q/q to $485/mt, driving Alumina segment EBITDA to $367M (from $186M in Q2) despite lower shipments .
Strategic actions advanced: closed Alumina Limited acquisition (Aug 1), agreed to sell Ma’aden JV stake for ~$1.1B (cash $150M + Ma’aden stock $950M), and progressed a San Ciprián partnership with IGNIS; Board declared $0.10 dividend .
4Q guide: Alumina segment sequential +$30M, Aluminum flat; other expense +$20M; operational tax $120–$130M; FY24 alumina shipments raised to 12.9–13.1 mt (from 12.7–12.9) .
Estimates context: S&P Capital IQ consensus data was unavailable at time of preparation; we cannot classify beats/misses versus Street. We will update when available.

What Went Well and What Went Wrong

What Went Well
- Alumina pricing tailwind: “alumina price increased further in the third quarter to the highest since 2018… demand remained strong” (CEO) .
- Profitability step-up: Adjusted EBITDA ex-specials rose to $455M on higher alumina prices and lower raw materials; adjusted EPS $0.57 .
- Portfolio progress: closed Alumina Limited acquisition; announced ~$1.1B Ma’aden JV stake sale; long-term alumina supply agreement with Alba (up to 16.5 mt over 10 years) .
What Went Wrong
- Volume softness: Alumina third-party shipments -9% q/q and Aluminum shipments -6% q/q due to decreased trading and timing; DWC days rose to 45 (+4 q/q) on inventory timing .
- Aluminum segment headwinds: Aluminum segment EBITDA fell to $180M (from $233M) on lower shipments, lower metal prices, and higher alumina costs .
- Restructuring and mark-to-market impacts: net special items $45M included $31M MTM energy derivative loss and $26M sequential increase in other expenses expected in 4Q (Ma’aden equity losses, ELYSIS contributions) .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($B)	$2.602	$2.906	$2.904
GAAP Diluted EPS ($)	$(0.94)	$0.11	$0.38
Adjusted EPS ($)	$(1.14)	$0.16	$0.57
Adjusted EBITDA ex special items ($M)	$70	$325	$455
Net Income attributable ($M)	$(168)	$20	$90
Free Cash Flow ($M)	$(76)	$123	$(3)

Notes: Adjusted figures exclude special items per company definitions.

Segment performance and realized prices

Metric	Q3 2023	Q2 2024	Q3 2024
Alumina avg realized price ($/mt)	$344	$399	$485
Alumina Segment Adjusted EBITDA ($M)	$84	$186	$367
Aluminum avg realized price ($/mt)	$2,678	$2,858	$2,877
Aluminum Segment Adjusted EBITDA ($M)	$88	$233	$180
Total Segment Adjusted EBITDA ($M)	$172	$419	$547

Operating KPIs

KPI	Q3 2023	Q2 2024	Q3 2024
Alumina production (kmt)	2,789	2,539	2,435
Third-party alumina shipments (kmt)	2,259	2,267	2,052
Aluminum production (kmt)	541	543	559
Total aluminum shipments (kmt)	638	677	638
Days Working Capital (days)	50	41	45
Cash from operations (quarter) ($M)	$69	$287	$143
Net debt ($B)	—	$1.183	$1.632

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Alumina shipments (mt)	FY 2024	12.7–12.9	12.9–13.1	Raised
Alumina production (mt)	FY 2024	9.8–10.0	9.8–10.0	Maintained
Aluminum production (mt)	FY 2024	2.2–2.3	2.2–2.3	Maintained
Aluminum shipments (mt)	FY 2024	2.5–2.6	2.5–2.6	Maintained
Alumina Segment EBITDA seq impact	Q4 2024	—	+$30M (higher shipments, lower costs)	New detail
Aluminum Segment performance	Q4 2024	—	Flat vs Q3	New detail
Other expenses (below EBITDA)	Q4 2024	—	+~$20M (Ma’aden equity losses, ELYSIS)	New detail
Operational tax expense	Q4 2024	—	~$120–$130M	New detail
Depreciation expense	FY 2024	~$675M (prior)	~$655M	Lowered
Return-seeking capital	FY 2024	~$110M (prior)	~$135M	Raised
Environmental & ARO payments	FY 2024	~$295M (prior)	~$265M	Lowered
Dividend per share	Quarterly	$0.10 /	$0.10 (declared Oct 16)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
Alumina market tightness	Supply disruptions (Australia, China, Jamaica); alumina deficit; tight inventories	“Highest since 2018”; tight market, low inventories; potential further disruptions	Tightening sustained
San Ciprián (Spain)	Dual-track: competitiveness and sale; cash exhaustion risk late 2024	Progress toward 25% IGNIS partnership; €75M Alcoa + €25M IGNIS; conditions include CO2 comp, permits, access to restricted cash	Toward strategic partnership
Profitability improvement program ($645M by YE25)	>50% captured by Q2; raw materials ahead; Kwinana benefits mainly 2025	~80% of target actions implemented; on track for full target by YE25	Execution advancing
Deleveraging & capital allocation	Assumed ~$390M Alumina Limited debt; exploring delever options	Priority to delever and reposition debt in early 2025	Increased focus
WA mine approvals (Myara North, Holyoake)	Timeline toward approvals; public comment expected	Public comment early 2025; aiming approvals by early 2026; mining no earlier than 2027	Progressing
ELYSIS	Industrial-scale demonstration announced; Alcoa 40% offtake rights	Q4 other expense includes equity contribution to ELYSIS	Moving toward demo

Management Commentary

“Positive markets and our focus on continuous improvement led to stronger results for the third quarter” — CEO William Oplinger (press release) .
“The alumina price increased further in the third quarter to the highest since 2018 as supply disruptions continued in a tight market.” — CEO .
“We have taken actions to deliver approximately $525 million of the $645 million savings target as of the end of the third quarter.” — CFO Molly Beerman .
“As we look ahead to 2025, delevering and repositioning debt to the jurisdictions where cash is needed will be a priority.” — CFO .
On San Ciprián partnership terms and stakeholder needs (CO2 compensation ~$80M, permits, access to restricted cash): CEO/CFO .

Q&A Highlights

San Ciprián path: Partnership with IGNIS would bring €25M from IGNIS and €75M from Alcoa (with up to €100M additional by Alcoa if needed), contingent on CO2 compensation (~$80M), project permits, and access to ~$85M restricted cash; without support, insolvency decisions loom if cash runs out around year-end .
Alumina outlook: Market “acutely tight” with limited liquidity; multiple disruptions (Australia, Jamaica, India) need resolution plus new capacity in Indonesia/India for balance; tightness likely through 1H25 .
Modeling 4Q bridge: Company reiterated qualitative guide—Alumina +$30M seq; Aluminum flat; intercompany profit elimination adds ~$30M in 4Q beyond standard sensitivity; alumina cost headwind in Aluminum ~$80M .
Capital allocation: Near-term emphasis on deleveraging; management sees paying down debt as best near-term equity value lever; return-seeking capex modest, focused on creep and VAP .
Operational notes: Alumar smelter near 80% capacity; Portland power secured to 95% of capacity from July 2026 via AGL .

Estimates Context

We attempted to retrieve S&P Global (Capital IQ) consensus for Q3 2024 revenue and EPS, as well as prior quarter for trend; data access was unavailable at time of request. Consequently, we cannot assess beats/misses versus Street. We will update this section once consensus data can be pulled.
SPGI request status: “Daily Request Limit Exceeded.”

Key Takeaways for Investors

Alumina leverage materializing: 22% q/q increase in realized alumina prices and Alumina EBITDA jump to $367M underscore earnings torque to alumina tightness .
Sequential momentum into 4Q: Company guides Alumina +$30M and Aluminum flat, with tax and other expense headwinds quantified; FY24 alumina shipments raised to 12.9–13.1 mt .
Balance sheet strategy: With net debt at ~$1.63B, management prioritizes deleveraging in 2025, which could re-rate equity as cash generation improves .
Strategic simplification: Alumina Limited consolidation increases economic exposure to alumina; Ma’aden stake sale crystallizes non-core value and enhances flexibility .
Watch San Ciprián: A structured partnership could mitigate ongoing losses and unlock optionality; failure to secure stakeholder support raises downside risk .
Execution risk remains: Shipment timing/trading reduced volumes, Aluminum segment EBITDA dipped; DWC rose to 45 days—inventory management and Aluminum margin resilience are near-term watch items .
Catalysts: Alumina pricing trajectory, formalization of the IGNIS partnership, Ma’aden transaction progress, incremental guidance at January call, and demonstrated deleveraging path .

Additional Notes and Data Cross-Checks

Cash balance at Q3-end: $1.3B; quarterly dividend of $0.10 declared Oct 16 .
Long-term Alba alumina contract (up to 16.5 mt over 10 years) and AGL power agreement together secure ~95% of Portland energy from July 2026 .
Free cash flow was near neutral in Q3 (–$3M) as working capital rose on shipment timing .

Citations: Press release/8-K and earnings call transcript as referenced above.