Alcoa On Deck

Tyler Durden's picture

This is what the market expects out of Alcoa, naturally guided lower in the past week.

And here are the full results:

  • EPS: $0.32; consensus of $0.325, and $0.355 4 weeks ago
  • Revenue: $6.59Bn; consensusof $6.31Bn
  • Fress Cash Flow: $526 MM
  • Reaffirms forecast for 12% global aluminum demand growth. Unclear if this forecast anticipates SHIBOR at 6%.

Full report:

Highlights:

  • Income from continuing operations of $326 million, or $0.28 per share,
    up 138 percent compared to second quarter 2010; excluding negative
    impact of special items, income from continuing operations of $364
    million, or $0.32 per share
  • Revenue of $6.6 billion, up 27 percent over second quarter 2010 and 11
    percent over first quarter 2011
  • Record profitability in mid- and down-stream businesses
  • Cash from operations of $798 million
  • Free cash flow of $526 million
  • Debt-to-capital ratio of 32.6 percent and cash on hand of $1.3 billion
  • Reduced days working capital from 43 in second quarter 2010 to 37
  • Reaffirm projection for 12 percent growth in global aluminum demand
    for 2011

 

NEW YORK--(BUSINESS WIRE)--Alcoa’s (NYSE: AA) second quarter 2011 income from continuing operations
jumped 138 percent compared to a year ago on growing revenue, record
quarterly alumina revenue and record mid- and down-stream performance,
the Company announced today.

Income from continuing operations was $326 million for second quarter
2011, or $0.28 per share. Excluding the negative impact for special
items of $38 million, income from continuing operations was $364
million, or $0.32 per share.

Second quarter 2011 income from continuing operations was up 138 percent
from second quarter 2010 income of $137 million, or $0.13 per share, and
up 6 percent from first quarter 2011 income of $309 million, or $0.27
per share.

Net income for second quarter 2011 was $322 million, or $0.28 per share,
compared to net income in second quarter 2010 of $136 million, or $0.13
per share, and net income in first quarter 2011 of $308 million, or
$0.27 per share.

“We turned in another strong quarter, with solid revenue and earnings
growth,” said Alcoa Chairman and CEO Klaus Kleinfeld. “Across the
Company, our team is delivering outstanding results through our constant
focus on execution and by reinventing what customers believe is possible
through innovation.

“Although the economic recovery is uneven, the overall outlook for Alcoa
- and for aluminum - remains positive,” Kleinfeld said. “Demand for
aluminum continues to rise and so does growth in our major markets.
These factors support our projection that aluminum demand will grow 12
percent this year and will double by 2020.”

The sequential increase in income from continuing operations was driven
by higher quarterly revenue (up 11 percent), higher alumina shipments
(up 8 percent), and higher realized pricing for both alumina (up 7
percent) and aluminum (up 6 percent), along with improved productivity
and continued strong growth in major markets served by mid- and
down-stream businesses. This was somewhat offset by a weaker U.S.
dollar, along with higher energy and materials costs.

Special items in second quarter 2011 included costs associated with
restructuring and Alcoa’s recent debt tender offers, somewhat offset by
the positive impact of mark-to-market changes on certain power
derivative contracts.

Revenue for second quarter 2011 was $6.6 billion, up 27 percent from the
year-ago quarter and 11 percent from first quarter 2011.

Compared to first quarter 2011, end market revenue increased in
packaging (13 percent), aerospace (6 percent), building and construction
(12 percent), commercial transportation (16 percent), industrial
products (9 percent), industrial gas turbines (8 percent) and automotive
(5 percent).

For the quarter, adjusted EBITDA was $1.04 billion, up 44 percent from
the second quarter of 2010 and up 9 percent from first quarter 2011.

Both Flat-Rolled Products and Engineered Products and Solutions segments
once again turned in record quarterly performance. Flat-Rolled Products
set a record for adjusted EBITDA at $193 million, while Engineered
Products and Solutions’ 19 percent adjusted EBITDA margin was an
all-time quarterly best.

Alcoa is also well ahead of the Company’s 2011 financial targets. The
Company’s debt-to-capital ratio at the end of the quarter was 32.6
percent, a 100 basis-point improvement over first quarter 2011. For the
first half of 2011, capital spending was $476 million, on track at 32
percent of the 2011 target. Expenditures on the Ma’aden-Alcoa investment
were also on track at $152 million, 38 percent of target. Free cash flow
was $526 million in second quarter 2011, putting Alcoa on pace through
the first half of the year. The Company ended the quarter with cash on
hand of $1.3 billion. Days working capital were reduced from 43 in
second quarter 2010 to 37 in second quarter 2011.

For the first half of 2011, revenues were $12.5 billion, up 25 percent
over the first half of 2010. Income from continuing operations in the
first half of 2011 was $635 million, or $0.56 per share, compared to a
loss from continuing operations of $57 million, or $0.06 per share, in
the first half of 2010. Net income in the first half of 2011 was $630
million, or $0.55 per share.

Looking ahead, Alcoa projects continued growth in all major end markets
on a global basis, including aerospace (7 percent), automotive (4-8
percent), commercial transportation (7-12 percent), packaging (2-3
percent), building and construction (1-3 percent), and industrial gas
turbines (5-10 percent). For the year, Alcoa projects aluminum demand to
grow 12 percent on top of the 13 percent growth seen in 2010. Alcoa
projects that, from a 2010 baseline, aluminum demand will double by 2020
on 6.5 percent annual growth.