Alcoa Corporation (NYSE:AA) Q3 2016 Earnings Conference Call - Final Transcript

Oct 11, 2016 • 08:30 am ET


Alcoa Corporation (NYSE:AA) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen and welcome to the Third Quarter 2016 Alcoa Earnings Conference Call. My name is Shannon and I will 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, Matthew Garth, Vice President of Financial Planning & Analysis and Investor Relations. Please proceed.

Matthew Garth

Thank you, Shannon. I'm joined today 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, I'd like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find factors that may 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 and in the appendix to today's presentation. Any reference in our discussion today to historical EBITDA means adjusted EBITDA, for which we have provided reconciliations and calculations in the appendix.

Lastly, the completed a one-for-three reverse stock split on October 5. The per share amounts in our discussion today reflect the reverse split. Now I'd like to turn it over to Klaus.

Klaus Kleinfeld

Thank you, Matt. So, let's me characterize the quarter and let's start with the Arconic segments. Revenues of 3.4 billion, that's down 1% year-over-year and this basically reflects the customer adjustments of the delivery schedules in the aerospace industry, softness in the North American commercial transportation market, pricing pressures partially offset by the North American automotive volume.

The after tax operating income at 267 million, up 4%, and if you go down to the segments of Arconic and Global Rolled Products, 58 million of after tax operating income, up 23% year-over-year. This is without the impact of Warrick, changing Warrick over in to what we call a cold metal plant. Remember we have closed the Warrick smelter before, and you all see in global rolled products, a big driver of profitability and is the automotive sheet shipments' up 495.

In the Engineering Products and Solutions segment, record third quarter profit of 162 million, up 7%, the Transportation and Construction Solutions business, 47 million of profit, up 7%. Overall, also strong productivity, 187 million this quarter, and if you look at the year-to-date number, it stands at 547 million. So that's really good and on track to deliver the 650 million target for 2016.

We also adjusted the targets for 2016 to reflect the near-term industry challenges, and I will talk about this in depth when we come to the presentation at a later point in time. So then let's also talk about our future Alcoa Corporation. Total revenues of 2.3 billion, flat sequentially, continued low alumina prices