Alcoa (AA) Q4 Loss Narrower Than Expected, Revenues Miss

Alcoa Corporation AA reported fourth-quarter 2023 results, wherein its bottom line beat the Zacks Consensus Estimate, while the top line missed the same. During the quarter, the company gained approval for its Western Australia bauxite mine plans as it continues to improve its global asset portfolio.

Total revenues of $2,595 million missed the Zacks Consensus Estimate of $2,613 million.  The top line declined 2.6% from the year-ago quarter. However, the metric was flat sequentially.

The company’s adjusted loss was 56 cents per share, which beat the consensus estimate of a loss of 99 cents. The bottom line fared better than the adjusted loss of 70 cents per share reported in the prior-year quarter. The metric can be compared favorably with the adjusted loss of $1.14 reported in the third quarter.

Segmental Details

In the fourth quarter, Alcoa’s Alumina production fell 1% on a sequential basis to 2.79 million metric tons due to lower production from the Australia refineries. On the other hand, Aluminum production increased 2% sequentially to 541,000 metric tons.

Alcoa’s overall third-party revenues totaled $2.60 billion in the quarter, flat sequentially. The Alumina segment’s third-party revenues fell 5% on an average realized third-party price decline of 3% and lower shipments. The Aluminum segment’s revenues increased 2% on an average realized third-party price gain of 1% and a rise in shipments.

Alcoa Price, Consensus and EPS Surprise

Alcoa Price, Consensus and EPS Surprise

Alcoa price-consensus-eps-surprise-chart | Alcoa Quote

Costs & Expenses

The company’s total cost of sales in the reported quarter was $2,425 million, down 6.6% year over year. Selling, general and administrative expenses were $64 million, flat year over year. Interest expense was $28 million compared with $26 million a year ago.

Net loss (adjusted) in the fourth quarter was $100 million compared with a net loss of $144 million in the year-ago quarter.

Balance Sheet/Cash Flow

Alcoa, currently carrying a Zacks Rank #3 (Hold), had cash and cash equivalents of $944 million compared with $1,363 million at the end of December 2022. Long-term debt was $1,732 million, lower than $1,806 million at 2022-end.

In the quarter, AA generated net cash of $198 million from operating activities compared with $118 million in the year-ago period. Capital expenditure totaled $188 million in the quarter compared with $171 million in the year-ago period.
Free cash flow was $10 million in the fourth quarter compared with a cash outflow of $53 million in the year-ago period.

Guidance

For 2024, Alcoa expects alumina production in the range of 9.8-10 million metric tons and alumina shipments to be between 12.7 million and 12.9 million metric tons. For the year, AA expects the Aluminum segment to produce 2.2 to 2.3 million metric tons. Shipments from the segment are expected to be in the range of 2.5-2.6 million metric tons.

Key Picks

We have highlighted three better-ranked stocks from the Zacks Industrial Products sector, namely Crane Company CR, Flowserve Corporation FLS and Reliance Steel & Aluminum Co. RS, each currently carrying a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has been unchanged.

Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has remained stable in the past 60 days.

Reliance Steel delivered a trailing four-quarter average earnings surprise of 10.6%. In the past 60 days, the consensus estimate for RS’ 2023 earnings has improved 0.1%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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