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How Alcoa Just Smashed Earnings Expectations
Moments ago Alcoa did what it always does following the now traditional several weeks of guidedowns heading into the earnings release that until recently used to kick off the earnings season for the Dow Jones Industrial Average (at least until Alcoa was unceremoniously kicked out): it beat, and beat significantly, with Wall Street expecting $0.27 in Q4 EPS, Alcoa reported a whopping $0.33, a material beat to expectations.
Terrific job, and yet regular readers know that while some companies boost their buybacks and other fudge their tax-rate to beat EPS, Alcoa is known for something different: parking as many costs as possible into the "one-time, non-recurring" category, and thus getting non-GAAP addback "benefits" for these.
Sure enough, this is precisely what happened in Q4, when Alcoa recorded a whopping $388 million in "addbacks", which also happens to be the second largest addback to in the past 4 years.
Putting this number in context: GAAP EPS: $159, which however is pre-addbacks, a tiny $0.11 per share. Net of addbacks, however, this number surges to $432 million after tax, or three times higher, $0.33 EPS!
In other words, two-thirds of Alcoa's beat in the quarter was due to what management thought was another quarter of recurring "non-recurring", non-one time "one-time" charges.
What about the full year? Well, GAAP EPS was a measly $268 million or $0.21 EPS. However, when one adds back a whopping $1.2 billion pretax in one-time charges, what does one get? Why net income of $1.1 billion, or $0.92 EPS. Non-GAAP that is. Because only for Alcoa is the difference between GAAP and Non-GAAP some 75%. Visually:
And that concludes today's lesson on hitting your non-GAAP bogey thanks to a year of record "restructuring" addbacks.
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Whatever works -
...until it stops working. Then it will be too late to fix.
What? Shocking! I'm stunned I'm telling you, stunned. Another earnings game manipulation! Who does Alcoa think they are; INTL?
they could be bankrupt and exceed everyone's expectations
where is the Aluminum sold is what I'd like to know?
I adopted that accepted bookeeping method when doing my Tax.
Did not go down too well as It was I that got ripped a GAPP
Je Suis Consterné.
BONUS TIME!
"Buy, Mortimer, Buy!"
"Buy!", says Baron Danglars, "BUY!"
Most of these corporations suck balls and have no ethics and integrity to report the actual facts.
MOAR bullshit...
by the time the american sheeple awake their job, their 401(k), and whatever else they thought they owned will be gone - even the clothes on their back will be on a lease program to a corporation.
Is it really fraud when it is called Generally Accepted Accounting Fraud Principles ? I confused.
Generally Avoided Accounting Principles*
who's their perpetrators, I mean auditors?
Scotland!
What is most frightening about the quarterly Wall Street earnings charade is that for most public companies, even GAAP income numbers are grossly overstated.
Accounting rules permit companies to grossly overstate assets (by not amortizing 'goodwill' for example) and grossly understate liabilities (pension expense, for example). This in turn allows earnings on the income statement to be grossly overstated, even using GAAP.
When the gap between GAAP and non-GAAP is as large as Alcoa's you can call it GAAFP. GASP!
waterboard earnings
Banks don't report until Thursday.
Look for this at your favorite energy company this coming earnings season. Write-downs, one-time losses, adjustments, add-backs, etc. are going to be in full diplay and coming to everyones favorite retail store (i.e., brokerage house that is going to push this crap out the door). Remember what accounting really comes down to in its simplest form.
What does 2+2 equal? What ever it needs to be!
There apppears to be a GAAP in ethics....
Ethics can be amortized.
One must monetarise them first.
Depreciated...
dup
kicking the can down the road. Literally
That is why Hollywood and Wall Street are both in the US
"Alcoa sees global aluminum demand growth of 7 percent in 2015, following 7 percent growth in 2014."
i'll take the under
where do they pull this number from and more importantly where is the growth going to be? more cars in India and China?
Ford F-150, lots of aluminum. But that's only if they SELL a lot of Ford F-150's. Time to crank up the subprime auto loans a couple more notches.
lower gas makes trucks attractive again for sure..
but those who drive trucks have less reason to drive around as they've lost their jobs. Perhaps you're implying they show up in their brandnew F150s to the interview?
definitely less demand for new trucks in Alaska, Canada, Texas and US shale states, Mexico, Venezuela, Brazil ...
what's left for a market?
Very few people people who drive pickup trucks actually need them.
All the dealers I've seen have added parking spaces and even separate fields to store all those vehicles the government considers "Sold".
I'll take the over based on the assumption that Americans will start hoarding gas in one gallon aluminum cans.
This crap has been going on for years.
You should be ashamed of yourself ALCOA.
Seriously.
Can't you post some HONEST numbers?
Can't you stop with the BULLSHIT?
Can't you let investors really HONESTLY see where your numbers are?
Corporate America is fucking insane.
Alcoa is The First And Best Example.
Is payroll a one time event?
No, but bridge loans to make payroll are.
Stating Non GAAP numbers is just screaming "See if you can find the fudging"
This is only disconcerting if you believe that company financial data bear any relationship to stock prices.
They should pay out all yearly salaries in Q1 to have a fantastic Q2,3 and 4
Non GAAP earnings are useful for one thing: to guage how dishonest a company's management is. The larger the difference between GAAP and non GAAP, the more brazen the management.
Kicking the soda can...off the cliff.
They used to say "Where's the meat ?" but that would be scandalous.
I think the manufacturers have discovered that all "matter" volume is 99.99% fluff and free space. The electron shell defines "volume", but it all nothing in-between the electron shell. The financiers have turned this physics fact into a non-GAAP trick.
it is a fundatmental premise of American corporate management to do whatever it takes to make earnings and stock bonuses.
Including and by no means limited to putting an insurance policy on their mom's life and rolling her out into traffic.
Imagine a day where we have eliminated the corporate income tax. We all know the end consumer is bearing the brunt of all these taxes anyway.
Away go all the accounting gimmicks. The only thing that matters would be the real bottom line.
Companies have to focus on real performance, real production, and real results.
" I'll have what she's having."
GAAP is for investors and creditors. Corporate income tax reporting is for the IRS. When you do away with the bond and equities market then the accounting gimmicks will go away.
Clarence Beeks was able to steal the report. Time to buy, buy, buy!!!!
It's tin-foil hat time.
This will end badly one day!!
Arthur Andersen is BACK BABY. Way ahead of their time, and back in business. I'm wondering if they could be my accountant. We're all living in a non-GAAP world.
Meet our beat and vice versa... Bitchez
They talk about good demand while the shipments decreased 2% QoQ and 4% YoY.
Am I missing something?
Non-GAAP earnings are simply fraud.
I think that the company is playing its' last game. Such efforts and ideas are often used when the company has nothing else to make and does not know how to change the situation. Fortunately people who have already invest money in it now have the chance to get it back. However if the situation gets worse, they can always get money in Canada instantly in a case of any financial emergency. The online monetary service is a new possibility to become financially independent of any economical changes and investing problems.