Alcoa Corp (AA) Q4 2024 Earnings Summary

Executive Summary

Q4 delivered strong sequential step-up on alumina price strength: revenue rose 20% q/q to $3.49B, adjusted EPS $1.04, and adjusted EBITDA $677M; both EPS and revenue were above third-party consensus proxies, while GAAP EPS was $0.76 (prior qtr $0.38) .
Mix and price tailwinds in Alumina drove outperformance; Aluminum benefited from higher prices but faced higher alumina input costs and nonrecurring credits in Q4 that will reverse in Q1 .
2025 outlook: Alumina production 9.5–9.7 mt; shipments 13.1–13.3 mt; Aluminum production 2.3–2.5 mt; shipments 2.6–2.8 mt; capex $700M (sustaining up $185M vs 2024) .
Stock catalysts to monitor: tariff outcomes (potential Midwest premium spike), closure of Ma’aden JV sale (~$1.3B stake value at announcement’s subsequent pricing), San Ciprián MOU execution, and alumina/bauxite supply tightness into 1H25 .

What Went Well and What Went Wrong

What Went Well
- Alumina price and volume strength: Alumina third‑party revenue +46% q/q on higher realized pricing and shipments; segment adj. EBITDA jumped to $716M in Q4 .
- Profitability program beat: Company exceeded the $645M program early, reaching $675M by year-end; Alumar restart surpassed its $75M target ($105M) and is ~85% utilized .
- Balance sheet/liquidity: Repaid $385M Alumina Limited RCF; year-end cash $1.1B; days working capital improved to 34 (−11 q/q) . Management emphasized deleveraging focus in 2025 .
- Quote (CEO): “We delivered and exceeded our $645 million profitability improvement program ahead of schedule...” .
What Went Wrong
- Aluminum segment headwinds: Higher alumina costs offset metal price gains; Q1 guide calls for ~$60M aluminum segment sequential headwind and ~$90M unfavorable alumina cost in Aluminum .
- Kwinana curtailment costs: Additional $82M restructuring charge (water management), slowing savings realization; ~$140M of related cash still to be spent, largely in 2025 .
- Tariff uncertainty: Management warns potential Canadian tariffs could meaningfully disrupt flows; Midwest premium would need to move “substantially higher” to attract non-exempt supply .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$2,595	$2,904	$3,486
GAAP Diluted EPS ($)	($0.84)	$0.38	$0.76
Adjusted EPS ($)	($0.56)	$0.57	$1.04
Adjusted EBITDA excl. special items ($USD Millions)	$89	$455	$677
Net Income attributable to AA ($USD Millions)	($150)	$90	$202

Versus estimates (third‑party proxies; S&P Global unavailable)

Metric	Consensus	Actual	Commentary
Adjusted EPS ($)	$0.93	$1.04	Beat (drivers: alumina price, shipments, lower energy)
Revenue ($B)	~$3.45	$3.486	Slight beat; alumina led

Segment breakdown

Alumina

Metric	Q4 2023	Q3 2024	Q4 2024
Third‑party sales ($USD Millions)	$781	$1,003	$1,467
Third‑party shipments (kmt)	2,259	2,052	2,289
Avg realized price ($/mt)	$344	$485	$636
Segment Adjusted EBITDA ($USD Millions)	$84	$367	$716

Aluminum

Metric	Q4 2023	Q3 2024	Q4 2024
Third‑party sales ($USD Millions)	$1,683	$1,802	$1,895
Total shipments (kmt)	638	638	641
Avg realized price ($/mt)	$2,678	$2,877	$3,006
Segment Adjusted EBITDA ($USD Millions)	$88	$180	$194

Key KPIs

KPI	Q4 2024
Cash & equivalents ($B)	$1.1
Free Cash Flow ($M)	$246
Days Working Capital (days)	34
Net Debt ($B)	$1.457
Adjusted Net Debt ($B)	$2.054
Dividend in Q4 ($M)	$27
YTD Return on Equity (%)	6.5%

Non‑GAAP adjustments (Q4): Adjusted net income excludes net special items of $74M, including $82M restructuring for Kwinana water management (partly tax‑offset) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Alumina production (mt)	FY2025	n/a	9.5–9.7	New FY25 outlook
Alumina shipments (mt)	FY2025	n/a	13.1–13.3	New
Aluminum production (mt)	FY2025	n/a	2.3–2.5	New
Aluminum shipments (mt)	FY2025	n/a	2.6–2.8	New
Transformation costs ($M)	FY2025	n/a	~75	New
Corporate expense ($M)	FY2025	n/a	~170	New
Depreciation ($M)	FY2025	n/a	~640	New
Non‑op pension/OPEB ($M)	FY2025	n/a	~25	New
Interest expense ($M)	FY2025	n/a	~165	New
Capex ($M)	FY2025	n/a	700 (625 sustaining/75 return‑seeking)	Sustaining +$185M vs 2024 actual
Environmental & ARO ($M)	FY2025	n/a	~240	New
Kwinana cash restructure ($M)	FY2025	n/a	~140 remaining, majority 2025	New
Alumina segment seq. impact ($M)	Q1’25	n/a	+30 (inventory adj. reversal; typical maint./ship timing)	New
Aluminum segment seq. impact ($M)	Q1’25	n/a	−60 (IRA 45X non‑recurrence, Brazil hydro seasonality, Ma’aden offtake absence)	New
Intersegment profit elim. ($M)	Q1’25	n/a	+20 income (inventory profit)	New
Operational tax ($M)	Q1’25	n/a	~$120–$130	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Profitability program	On track; ~$350M targeted by mid‑year; curtailment of Kwinana completed	Exceeded $645M target; $675M actions by YE	Positive execution
Alumina/bauxite supply	Q3: API pricing up; Alumina shipments guided higher on trading	Alumina prices at all‑time highs; bauxite extremely tight; tightness likely 1H25	Tight markets persist
Tariffs/Midwest premium	Not central earlier	Tariff uncertainty; Midwest premium would rise “substantially” if Canada tariffed	Risk to flows/premiums
San Ciprián	Q3: progressing partner agreement	MOU with governments/IGNIS; restart prioritization; still conditional	Constructive but pending
Capex/mine moves	Q3: Portland power agreement; mine approvals process ongoing	2025 capex $700M; sustaining +$185M (mine moves, grid connections, equipment)	Elevated through mine moves
Energy/data center optionality	Not emphasized	Evaluating monetization of legacy sites; prior Rockdale ($~270M), Intalco ($100M) sales precedents	Optional upside
Technology (ELYSIS/refining)	Q2: ELYSIS progress noted externally	ELYSIS 450kA cell expected to start in 2025; refinery electrification (calcination) progress; limited 2025 tech capex	Incremental R&D, modest near-term spend
WA mine approvals	Q3: approvals by 2026; new regions mining ≥2027	Public comment late Q1–Q2’25; approvals 2026; access to upgraded bauxite ≥2027	On plan

Management Commentary

Strategic focus: “We expect to maintain our fast pace in 2025… pursue targeted areas for growth via organic and inorganic opportunities… delevering and repositioning debt are a priority” .
Market view: Alumina market tight on bauxite constraints; 1H25 tightness likely; Aluminum demand resilient ex‑China, with tariffs potentially altering trade flows .
Tariffs: “A 25% tariff on current Canadian export volume to the U.S. could represent $1.5–$2.0 billion of additional annual cost for U.S. customers” .
Profitability program: Raw materials savings ~$385M, productivity/competitiveness $80M toward $100M run‑rate by Q1’25; Alumar restart outperforming .
Liquidity/returns: Adjusted net debt $2.1B; deleveraging prioritized; potential monetization of legacy sites for value .

Selected quotes

CEO on alumina tightness: “Prices reached an all-time high in the fourth quarter as a result of a tight market on lower-than-expected supply” .
CFO on Q4 drivers: “Adjusted EBITDA increased $222 million to $677 million… higher alumina and aluminum prices, higher shipments and lower energy costs” .
CFO on capex: “Our capital expenditure estimate is $700 million with $625 million in sustaining and $75 million in return seeking” .

Q&A Highlights

Tariffs and Midwest premium: Management expects the Midwest premium to rise “substantially” if Canadian metal is tariffed; trade flows could reroute toward Europe and Middle East/India .
Deleveraging targets: Adjusted net debt ended at ~$2.1B; deleveraging and debt repositioning are 2025 priorities; Ma’aden stake lockup releases over 3/4/5 years .
Bauxite tightness: China import bauxite pricing ~$120–$130/ton; alumina market likely tight through 1H25 .
Monetizing legacy assets/AI-data centers: Prior asset sales (Rockdale ~$270M, Intalco $100M); evaluating sites (Point Comfort, Wenatchee, Massena East) .
Capex trajectory: Elevated in 2025 from mine moves and targeted projects; multi‑year mine move drives sustaining capex higher through execution window .
WA approvals timeline: Public comment expected late Q1–Q2’25; approvals targeted 2026; access to upgraded bauxite no earlier than 2027 .

Estimates Context

Q4 results beat third‑party consensus proxies: adjusted EPS $1.04 vs ~$0.93; revenue $3.486B vs ~$3.45B, reflecting alumina price/volume strength and lower energy .
Implications for revisions: 1) Upward revisions to Alumina pricing/shipments and segment EBITDA likely; 2) Q1 modeling should incorporate segment‑level sequential headwinds (+$30M Alumina; −$60M Aluminum; +$20M intersegment), higher alumina costs in Aluminum (~$90M), and operational tax $120–$130M .
Note: S&P Global consensus was unavailable via tool access at time of analysis; third‑party proxies (Yahoo Finance/Zacks/Nasdaq) are cited above.

Key Takeaways for Investors

Alumina‑led beat with durable near‑term tightness: Elevated alumina prices/shipments powered Q4, with management seeing tight alumina through at least 1H25; supports near‑term EBITDA resilience .
Watch Q1 cadence: Expect a mechanical giveback from nonrecurring Q4 items (IRA 45X, inventory adjustments) and higher alumina cost passthrough in Aluminum—model segment deltas provided by management .
Tariff headline risk: Any Canada‑focused tariffs could sharply lift the Midwest premium and reroute flows; AA’s optionality mitigates operational risk but may not fully offset earnings exposure .
Capital intensity rising near term: 2025 sustaining capex up ~$185M (mine moves, energy projects, logistics upgrades); expect multi‑year elevation until mine moves complete .
Balance sheet actions ongoing: Deleveraging prioritized; potential monetization of legacy sites provides optional upside; Ma’aden stake value creates long‑dated flexibility despite lockups .
Execution track record: The $645M profitability program was exceeded ahead of schedule; continued focus on productivity and competitiveness into 2025 .
San Ciprián is a swing factor: MOU is encouraging but conditional; labor/energy contracts and RSA approvals are gating items for restart and cash trajectory .

Sources: Q4 2024 8‑K and press release ; Q4 2024 earnings call transcript ; Q3 2024 8‑K ; Q2 2024 press release ; San Ciprián MOU press release . Estimate proxies: Yahoo Finance/Zacks/Nasdaq .