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AA Reports $0.13 EPS Versus Recently Downward Revised Expectations Of $0.11
AA reports $0.13 EPS versus expectations of $0.11. A month ago EPS expectations for AA were $0.16 per Bloomberg. Q2 revenue was $5.19 billion on consensus of $5.02 billion. A month ago this number was $5.140 billion. The company projects an increase from 10 to 12% in global aluminum consumption on "improved end-market demand." Such as vacant cities in China and rolling over in auto SAARs.
NEW YORK, Jul 12, 2010 (BUSINESS WIRE) --
--Income from continuing operations of $137 million or $0.13 per share;
net income of $136 million or $0.13 per share.
--Revenue of $5.2 billion, a six percent increase from the first quarter
of 2010, primarily driven by higher volume.
--EBITDA of $724 million -- EBITDA Margin of 14.0 percent highest since
third quarter 2008.
--Free cash flow in the second quarter totaled $87 million.
--Cash on hand of $1.34 billion.
--Global aluminum consumption forecast raised from 10 to 12 percent on
improved end-market demand.
Alcoa
today announced second quarter 2010 income from
continuing operations of $137 million or $0.13 per share compared
with a
first quarter 2010 loss from continuing operations of $194
million, or a
loss of $0.19 per share. First quarter 2010 results included
restructuring and special charges of $295 million, or $0.29 per
share.
The second quarter of 2009 showed a loss from continuing
operations of
$312 million, or $0.32 per share including restructuring charges.
Earnings for the second quarter improved $331 million sequentially as
stronger volumes, productivity improvements, favorable currency
and
lower energy costs more than offset slightly lower average
realized
metal prices which declined $22 a metric ton, to an average of
$2,309 a
ton in the quarter.
The second quarter 2010 results reflect the impact of restructuring
including job reductions and special items such as costs
associated with
the recently completed United Steelworkers contract negotiations,
offset
by non-cash, mark-to-market benefits on derivatives in several
power
contracts as well as a net discrete tax benefit. Taken together
these
items had a net unfavorable impact of $2 million in the quarter.
First
quarter 2010 results included restructuring and special charges of
$295
million or $0.29 per share.
Revenues for the quarter were $5.2 billion, a six percent increase from
the first quarter of 2010 driven by a four percent increase in
aluminum
shipments and a one percent increase in third-party prices for
alumina,
partially offset by a one percent decrease in realized prices for
aluminum. In many markets we saw strong revenue growth from the
previous
quarter with packaging (+17%), commercial transportation (+10%),
building and construction (+9%), distribution (+5%), industrial
gas
turbines (+5%) and aerospace (+5%) realizing gains. Revenues
increased
22 percent from $4.2 billion in the second quarter of 2009.
"We improved profits and revenues and maintained our solid cash
position," said Klaus Kleinfeld, Alcoa Chairman and CEO. "The top
and
bottom line growth was driven by higher volumes from stronger end
markets and continued gains from our productivity programs. Based
on
this improved end-market demand, we are raising our projection for
aluminum consumption from 10 percent to 12 percent this year.
"Prospects for Alcoa and aluminum continue to be excellent," Kleinfeld
said. "Aluminum is traditionally a backbone of growing economies
and is
penetrating new applications every day. Alcoa has enviable
positions in
bauxite, alumina and aluminum and our investments will move us
further
down the cost curve. Meanwhile, our mid- and downstream businesses
continue to improve margins."
Alcoa continued to produce strong results in its cash sustainability
program. After the first six months of 2010, the Company is
tracking
toward its expanded goals for 2010, including: $1.4 billion of the
targeted $2.5 billion in procurement savings; $311 million of the
targeted $500 million in annual overhead reduction savings; days
of
working capital at 42, a six-day improvement from the same period
last
year; and $514 million toward the targeted $1.25 billion in
capital
spending. The capital spending includes the Company's investment
in the
Ma'aden/Alcoa joint venture in Saudi Arabia, which will create the
world's lowest-cost aluminum complex, including a mine, refinery,
smelter and rolling mill.
Cash sustainability efforts helped improve the cost of goods sold as a
percentage of sales by 90 basis points to 81.2 percent from 82.1
percent
in the first quarter of 2010. EBITDA for the second quarter 2010
was
$724 million. The Company's second quarter 2010 EBITDA margin of
14.0
percent was the highest since third quarter 2008.
Net income for the second quarter 2010 was $136 million or $0.13 per
share compared with a net loss of $201 million, or a loss of $0.20
per
share in the first quarter of 2010, which includes the previously
mentioned restructuring and special items. The second quarter of
2009
showed a net loss of $454 million, or $0.47 per share, including
restructuring charges.
Free cash flow in the second quarter of 2010 totaled $87 million. In the
quarter, the Company ended several accounts receivable sales
programs,
which resulted in an unfavorable working capital impact of
approximately
$260 million and held free cash flow back from even stronger
performance.
Debt-to-capital at the end of the second quarter 2010 stands at 38.4
percent, 130 basis points lower than the second quarter of 2009.
Overall
debt decreased $465 million from the second quarter of 2009. Cash
on
hand at the end of the second quarter of 2010 was $1.34 billion.
Revenues for the first half of 2010 were $10.1 billion, and results from
continuing operations showed a loss of $57 million, or $0.06 per
share.
The first half of 2010 showed a net loss of $65 million, or $0.06
per
share.
Segment Results
Alumina
After-tax operating income (ATOI) in the second quarter was $94 million,
an increase of $22 million compared with first quarter ATOI of $72
million. Higher production and a one percent increase in realized
price,
along with favorable currency and productivity benefits, were
partially
offset by commissioning issues at the Sao Luis refinery. Alumina
production in the second quarter increased 24 thousand metric tons
(kmt)
to 3,890 kmt as increases across our global system more than
offset
declines at Sao Luis.
Primary Metals
ATOI in the second quarter was $109 million, a decrease of $14 million
from the first quarter. Lower LME prices and higher LME-linked
costs,
primarily energy, were partially offset by favorable currency,
non-LME-linked energy benefits and continued productivity gains.
Litigation related to a power contract at the Rockdale smelter and
the
associated legal costs negatively impacted results by $10 million.
Also
in the quarter, the Fusina smelter was fully curtailed and the
Aviles
smelter was forced to halt operations due to flooding. Primary
metal
production for the quarter increased 4 kmt to 893 kmt and
buy/resell
activity totaled 68 kmt.
Flat-Rolled Products
ATOI in the second quarter was $71 million, a sequential increase of $41
million. Higher volumes in Russia, China and North America, and
continued productivity gains were partially offset by lower
prices. In
the quarter, the Russia operations benefited from improving market
conditions and a lower cost structure to generate positive ATOI.
Engineered Products and Solutions
ATOI in the second quarter was $107 million, up 32 percent while sales
rose four percent. Higher volumes in the aerospace, building &
construction and commercial vehicle markets along with strong
productivity gains.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
July 12, 2010 to present the quarter's results. The meeting will
be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com
under "Invest."
»
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Beat, bitchez
Not beat, it's like scotty on Star Trek would announce he needs an hour to fix something and it really takes him a half hour.
Manipulating the message is more important than the product. I bet a beer in three weeks it's under it's asking price tomorrow and stays that way in the ten buck trench it needs to stay in.
Fool me once, shame on me. Fool me twice, shame on you.
Alcoa, we hardly cared to know you. I'm moving into a short position in a week or two.
Big surprise they beat lowered earnings forcasts. Sounds like last year in the making, time to go long like Jim Holmes.
Yep, back to the "Better than expected" headlines. :-(
The people need baseball bats and light weight durable pitch fork. Understandable.
Good thing they dropped estimates by .10 prior to this.
30 days ago the est was for .17 7 days ago the est was for .14 Now the est is for .12 they came in at .13 hahahahaha thats just to funny.
And Consumer Reports recommends people avoid Apple's new iPhone. Site hardware flaw according to BBerg headline.
Seriously, why bother anymore. You know everything is manipulated. Shorts will get killed. They will never let anything go down ever again.
I'm so burned out from all this complete bullshit. I need a vacation.
Must..resist..urge..to.. short...
After all, with the bar Alcoa has to clear given its revised estimates, I'm sure the futures will be up 150 points tomorrow. So they jumped over a bar a little higher than a sheet of paper. CONGRATS. YIPPEE. THE ECONOMY IS BACK.
LOL The earnings were .19 beginning the quarter, lowered to .17, then again lowered last week to .12 so they can make it look like they beat estimates. ROFLMAO
How do you have revenue of 5.12 Billion and only make 136 million? That is a horrible business model. No wonder they had such massive losses when the SHTF in 2008. They will lose a ton more this time around when this whole ponzi collapses.
Infinity Hedge Bitchz. Google to $ 500,000,000 a share. ( Sarcasm x 10 ). I can't wait for this shit to end.
I had low expectations and they were met.
HA! Awesome. beer came out my nose.
these comments are farcical. when a stock / index declines and analyst lower estimates it is called "the bear case is in the price". why are you surprised? analyst have been lowering estimates in every sector. PS: if you see very small profits on a large revenue base you need to examine how cyclical earnings behave. ever heard of experienced market participants buying cyclicals when they are on high p/e's and selling on low p/e's. go learn about equity markets as a discounting mechanism for future earnings and how stocks behave versus earnings revisions before wasting any more of your capital.
I havent heard of many experienced market participants really looking at p/e's any more. Mostly they have quit and are now looking at the beach.
2 points to make
1 - trading cyclicals earnings as you suggest is OK if you think we are in a normal business cycle recovery from a normal recession and we will recover eventually. If not, you can't be long.
2 - of course it's mostly in the price. So IMO it shouldn't really bounce, they didn't really beat. I don't have a position, that's just my view.
( Wave 5 is working OK for me thanks. )
I wonder if howswave5 is going to set a record for the most "junked" first comment on ZH.
16 to 11 to get 13 a 2 cent beat? Now, I have finally seen and heard it all. Fucking bullshit is what this is, but we all know that. I guess we just have to laugh our way to the grave.
here s commentary on this market: AA is down 33% ytd. the bonds are actually unchanged to higher. cash loves corpoate credit. but equities discount the future. A Tale of Two Markets.
That yield is horrible and their exposure to a 2nd downturn is high.
My prediction is that investors take that massive profit of 0.13 cents per share and dump the Aloy Queen right after. Happened after the April earnings season if y'all remember.
FYI Watching CSX in afterhours has been entertaining.
Barrons.Com has started the ol' ...BEAT BY A PENNY...in its AA story.
Bernanke and Obama must be beside themselves. AA beat by 2 cents a share. Recovery must be well under way, thus no stimilus or QE2 is needed. Call an emergency fed meeting and start raising interest rates. Man up Bernanke, maybe Tom Hoenig will show you how to grow a pair.
They had more revisions than the GDP and Jobless claims combined LOL
This next downturn kills this stock into oblivion
this is a repeat of q1, early march 17 cents, late march 14 cents, early april 12, then ten and finally 9 cents. Guess what they did 10cents, beat by a penny. Cnbc cheers "beat the street". Wasn't there something about selective disclosure that is a no-no. Amazing how all these analysts gravitate to the perfect spot within the last week prior to release date.
UPOD bitchiz
Saudi Arabia? ROTFLMAO. Dubai laundry 2.0
http://www.youtube.com/watch?v=J5djylp-Kao
So they are shrinking:
During the CA electricity (enron) crisis, they made more money by reselling their Bonneville Dam electricity long-term block contracts than they made on their product.
Do the facts come out? Or how long does this stay...? oh nvm
- Ned
Not sure why there is such anger over the positive spin from Alcoa. Obviously, the question asked is how will the company fair if there is a sudden drop in demand.
So we need to watch inventories to see the direction.
I do not hold AA, but when you look at the possibilities for high efficiency transportation, Aluminum is the material of choice.
To many who watch the engineering trends, for example with the Chevy Volt, the original concept was for an all aluminum body, but today the production car will have a Steel Frame and composite panels. However, for range we may see a return to the all Aluminum frame. The point being, if you design a small car out of aluminum, and put all the interior materials on a diet, with a four cylinder turbo diesel you could easily get 50 mpg highway. Aerodynamics would be key so the shape would be much like the older EV1.
If you did not like a diesel a supercharged 4 cylinder direct injection gasoline engine would be a good choice with some loss in efficiency. For a really small installation I have seen in the past an all aluminum V4 with a transaxel, but this never made it to production because the steel car body was too heavy.
Aluminum structures are the long range solution for the future. Composites are better but are very expensive and are not optimal for fatigue (repeated high stress) failure modes.
Mark Beck
Good luck passing crash testing standards.
Audi has no trouble passing crash test standards with their Aluminum body cars.
http://www.audiusa.com/us/brand/en/tools/advice/glossary/aluminum_body.b...
Mark Beck
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