Presenting Alcoa's Recurring, Non One-Time "Non-Recurring, One-Time" Restructuring Charges

Tyler Durden's picture

Moments ago Alcoa reported Non-GAAP, adjusted EPS of $0.04, missing already meager and downward adjusted expectations of $0.06 while revenues declined to $5.585 billion from $5.898 billion a year earlier.

Additionally the company's Free Cash Flow (EBITDA less Interest Expense less CapEx) dropped to just $143 million from $199 million a year ago. Which is understandable - after all the global economy is rapidly slowing down, and ultimately resulted in the biggest slap in AA's face: the company's expulsion from the DJIA.

But the one item that caught our attention in the just released earnings was the GAAP EPS: a whopping loss of $2.19/share. Ok so, Alcoa added back a few things to get the Non-GAAP number: about $2.1 billion in goodwill impairment and restructuring charges to be precise - happens all the time. The only problem is that for Alcoa, this indeed happens all the time! The chart below shows just how freely Alcoa abuses the non-GAAP EPS definition, and how adding back charges has become ordinary course of business for the alluminum company. Very much in the same way as adding back litigation charges for JPM is now a quarterly ritual.

In a nutshell: in 2013 alone, the company recorded $782 million in restructuring charges, all added back to non-GAAP earnings. This is more than the company's operating income (excluding the goodwill impairment) for all of 2013... and 2012!

We wonder: at what point will anyone realize just how massive the schism between corporate GAAP and non-GAAP earnings has become?