Alcoa Corporation (NYSE:AA) Q4 2014 Earnings Conference Call - Final Transcript

Jan 12, 2015 • 05:00 pm ET


Alcoa Corporation (NYSE:AA) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2014 Alcoa Earnings Conference Call. My name is Tia, and I'll be your operator for today. As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Kelly Pasterick, Vice President of Investor Relations. Please proceed.

Kelly Pasterick

Thank you, Tia. Good afternoon and welcome everyone to Alcoa's fourth quarter 2014 earnings conference call. I'm joined by Klaus Kleinfeld, Chairman and Chief Executive Officer; and William Oplinger, Executive Vice President and Chief Financial Officer. After comments by Klaus and Bill, we will take your questions.

Before we begin today, I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the Company's actual results to differ materially from these projections listed in today's press release and presentation and in our most recent SEC filings.

In addition, we have included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, in the appendix of today's presentation and on our website at under the Invest section. Any reference in our discussion today to EBITDA means adjusted EBITDA, for which we've provided calculations and reconciliations in the appendix.

And with that, I'd like to turn it over to Klaus Kleinfeld.

Klaus Kleinfeld

Well, thank you Kelly and welcome everybody on the phone. So let me in the usual fashion summarize this quarter for you. I would say the transformation of delivering results of profitability is up year-over-year. So talking about the operational performance, I think there is only one word, strong operational performance, starting with the downstream 19th consecutive quarter, year-over-year profit growth is excluding Firth Rixson midstream, profitability up substantially, more than 200% upstream, improved performance 13 consecutive quarters.

Look at the alumina segment, profitability stands at $178 million, primary metals, profitability at $267 million. Look at the fourth quarter cash from ops, $1.5 billion, highest quarter in history. Fourth-quarter free cash flow highest quarter since the fourth quarter 2010.

Look at the full year productivity that we've been able to generate, stands at $1.2 billion. And it's really coming from all across the Company. I mean all segments, all functions. And then, when you look at the free cash flow we have been able to generate, $455 million, 18% improvement versus the year before.

And if you look at the second point here, it's the accelerated portfolio transformation, when we put the slide together, actually it was quite -- and listed what had been going on in the fourth quarter, we were surprised ourselves, that this all fell into the fourth-quarter. It almost had too few days to get that all done. So we closed the Firth Rixson $3 billion acquisition we announced the TITAL acquisition, we expected to close this one in this quarter, the first quarter here.

We unveiled