LONDON, UK / ACCESSWIRE / July 25, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Alcoa Corp. (NYSE: AA), which can be viewed by registering at http://protraderdaily.com/optin/'symbol=AA, following the Company's posting of its second quarter fiscal 2017 earnings results on July 19, 2017. The global leader in bauxite, alumina, and aluminum products reported a 23% gain in revenue. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Alcoa became an independent, publicly traded Company on November 01, 2016. Prior to November 01, 2016, Alcoa's numbers were reported on a carve-out basis.
Earnings Reviewed
In second quarter 2017, Alcoa reported revenue of $2.86 billion, up 23% compared to revenue of $2.32 billion in Q2 2016 increasing $536 million on higher alumina and aluminum prices; and 8% sequentially, reflecting higher shipments across its product portfolio. The Company's earnings numbers surpassed analysts' expectations of $2.85 billion.
Alcoa reported Q2 2017 adjusted EBITDA, excluding special items, of $483 million, down 9% from $533 million in Q1 2017, but up $173 million on a y-o-y basis. The q-o-q decline was mainly due to lower alumina prices, which rebounded late in the reported quarter. On a sequential basis, EBITDA margins tightened to 17% due to lower alumina prices, while on a y-o-y basis, margins improved 350 basis points on higher alumina and aluminum prices.
Alcoa reported net income of $75 million, or $0.40 per share, which include the negative impact of $41 million in special items, primarily for certain tax items and additional restructuring charges related to previous actions compared to Q1 2017 net income of $225 million, or $1.21 per share, which included a $120 million gain from the sale of the Yadkin Hydroelectric Project. The Company has posted a net loss of $55 million, or $0.29 per share, in Q2 2016.
Excluding the impact of special items, Alcoa's reported quarterly adjusted net income was $116 million, or $0.62 per share, compared to adjusted net income of $117 million, or $0.63 per share, in the previous quarter and adjusted net loss of $44 million, or $0.23 per share. The Company's earnings numbers exceeded Wall Street's expectations of $0.60 per share.
Segment Results
During Q2 2017, Alcoa's Bauxite segment adjusted EBITDA declined $12 million on a q-o-q basis to $98 million, attributed to lower earnings from the Company's equity partnership mines as well as higher operating costs at Huntly and Juruti. Alcoa's Alumina segment's adjusted EBITDA fell $70 million on a q-o-q basis to $227 million due to a $98 million impact from lower API prices, with favorable partial offsets from currency, LME, and positive net performance.
For Q2 2017, Alcoa's aluminum adjusted EBITDA gained $15 million on a q-o-q basis to $221 million. Higher metal prices drove $31 million improvements along with favorable Brazilian and Spanish power prices. Partial offsets came predominantly from higher alumina costs as well as unfavorable price mix and other factors.
On July 11, 2017, Alcoa announced plans to restart three of five potlines at its Warrick Operations smelter to supply the co-located rolling mill. The Company based its decision on its ability to increase the integrated asset's capacity utilization, the smelter's ability to directly supply molten metal to the mill, and the mill's anticipated production increase of flat-rolled aluminum for the food and beverage can package industry.
Cash Matters
For Q2 2017, Alcoa's cash from operations was $311 million and free cash flow was $223 million. The Company ended the reported quarter with cash in hand of $954 million with $1.4 billion of debt. Alcoa had net debt of $487 million and net debt-to-adjusted EBITDA of 0.3 xs.
Alcoa's days working capital improved to 18 days in Q2 2017 compared to 19 days in Q1 2017. The Company's capital expenditures totaled $159 million for H1 2017. The reported quarter spending was $88 million, up $17 million on a sequential basis. Alcoa's return-seeking capital was $27 million, and sustaining capital was $61 million. The Company's first half annualized return on capital was 6.1% up 4.6% compared to FY16.
Market Update
For 2017, Alcoa continues to project relatively balanced global markets for bauxite and alumina with a modest surplus for aluminum. In global alumina, the Company is forecasting the market to range from being balanced to a slight deficit of 800 thousand metric tons in FY17. In global aluminum, the Company maintains its expectations for a modest global surplus between 300 thousand to 700 thousand metric tons. Alcoa has increased its 2017 forecast for global aluminum demand growth to a range of 4.75% to 5.25%, up from 4.5% to 5% in Q1 2017.
Stock Performance
On Monday, July 24, 2017, the stock closed the trading session at $36.69, slightly up 0.19% from its previous closing price of $36.62. A total volume of 2.24 million shares has exchanged hands. Alcoa's stock price surged 23.12% in the last one month, 10.15% in the past three months, and 1.10% in the previous six months. Furthermore, since the start of the year, shares of the Company have soared 30.66%. The stock is trading at a PE ratio of 44.37 and currently, has a market cap of $6.78 billion.
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