Alcoa (AA) 20 Oct 222022 Q3 Earnings call transcript

Good afternoon. And welcome to the Alcoa Corporation Third Quarter 2022 Earnings Presentation and Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like to now would turn over the Mr. I Relations. Vice President Dwyer, of James Investor Please ahead, go sir.

and and and am and Roy President joined you, Chief today Executive Thank good by Harvey, day, Financial Officer. Alcoa Vice Oplinger, Executive William everyone. I Chief President Officer; Corporation

We your comments questions by and Bill. will take after Roy

results and events that are actual subject a discussion contain differ will the expectations As to that forward-looking statements cause various SEC these and included assumptions caveats. from reminder, today’s relating Factors may to and statements future today’s in materially to filings. in company’s are our presentation

to have In presentation. our in today comparable we presentation. financial Any Reconciliations to financial the discussion adjusted EBITDA. EBITDA included addition, appendix measures GAAP in found this today’s some non-GAAP be measures reference directly most can means to the in

and announced, are that, Roy. release Finally, website. as on earnings With slide previously our here’s presentation the available

and Jim, you, thanks our for joining Thank today. everyone to call

quarterly discuss prepared remarks. will we after our first conclude As company, and we will answer results, finally, our financial review always, and our markets questions we the then

Before that however, our at have to I’d over we to Alcoa we years past these several done company. highlight the into get strengthen the quickly details, work like

So all we market be through can successful cycles.

a we improvement built on within stronger are have items current much sheet focusing and balance driving on We direct well foundation, address is strong our challenges positioned to our control.

required. to fundamentals in the is the that bright, as also industry strong long-term are we for we where ESG a remain deliver focused, future company We know and Aluminum world performance the remain

quarterly some to the turning Now on results. thoughts

in not altering quarter. did the third we have any importantly, injuries life most fatalities serious and or First,

a strong third with pension costs we our after sheet loss $XXX We materials. cash sequential which higher unwavering In quarter, decline in assets. pension to Aluminum coupled $X continued and and financial our finished the the $XX Alumina maintain driven by charge $X.X balance and for our in obligations cash annuitization, for quarterly We safety of raw energy is primarily priority. and million billion On Our to million another repurchasing non-cash a prices commitment to the completed net pension was an paying results, of a stockholders. approximately with transferred of quarter purchase, annuity billion related dividend provided stock. returns balance and and

on is we acutely actions but our war having also has industry, knock-on seen is effects operating which the uncertainty situation reliable for dramatic Russia’s globally, Ukraine a Next, affordable has against continuing to requires significant most energy in This are levels. global and created energy. Aluminum crisis, take impacts Europe. and which

company market. exposure energy our has limited energy our experienced volatility costs, plants losses in in the two the in spot European the to quarter While Europe by driven overall of significant

we is Norway annual Southern September, of in in mitigate plant smallest Lista a Our smelter, to capacity costs. third XX,XXX our curtailed of its electricity and tons metric spiking

we the however, We is in of place that to new contract price forward, improve fixed have, in beginning year. this quarter the as situation fourth a put move expected

remain at Aluminum some modest the Alumina other joint exorbitant of capacity. site’s at full restart of we the Ciprián and progress adjustments, the for in Portland In to Spain. Australia. San refinery been The natural operational venture on our other Brazil the in challenge in continued restart smelter on gas XX% the volatile. capacity we is Alumar the quarter, have and to production at Costs reduced third In

an month Australian advantages for performance will power announced market we at perspective, those agreements. energy renewable structural billet alloy renewables the demanding high now Alumar Also, innovation are a medium- in boost Stewardship certified has to For we Bauxite Aluminum percentages high the smelter. a have long-term sites, to of that construction of applications working Caldas all last and site, the fully the be we locations Initiatives of proud competitive the From for to sustainability see new a are automotive casting. range to Brazilian And and markets, Alumina and includes Aluminum the mining, which standpoint, our refining the Poços de including from performance we industries. wide with our addition for standards

we Finally, long-term Aluminum’s bullish remain on fundamentals.

the While decarbonization believe of fundamentals. in scarcity And commodity Aluminum is history greater challenges this context, goals the positively realize seeing as Alcoa’s us industry are help energy programs and can credentials our the focus we and value. sustainability shareholder is expected short-term, and R&D our our in bright to certainly continue future to the influence on portfolio, industry’s

For now, though, go quarter to let numbers. ahead. third our through walk me please Bill turn it over to Bill,

quarter closure a were non-cash $X.XX the Roy. $XXX million the share. in pension Special that billion loss include contracts $XXX to Washington. the U.S. special results million, for occurred totaled in per the Addy, of of annuitization or with in smelter curtailed in long the quarter a charges energy $X magnesium $XXX and net Thanks, The August. related mark-to-market of Other million items items

loss on to million, Alumina revenues lower than per was share million loss quarter of period. $X.XX $XXX $XXX $XX Third declined was prices. lower into Those $X.XX Adjusted $XXX and XXXX net EBITDA lower Aluminum share. million and billion per million revenues the translated diluted prior

was factors energy and in closer the EBITDA. higher quarter, third $XXX quarter EBITDA material When of at million second by These million. the of the prices, million for to and million $XXX Alumina a driver largest raw the change lower costs followed Let’s comparing $XXX decline. combined $XXX take look of sequential the metal EBITDA

prices, $XX and items, production impacts intercompany in million pricing both was the non-recurring segment Alumina In segment, contracts the to higher in In unfavorable due million prices, on lower lower on the offset by EBITDA at higher volume volume, costs. various better $XXX and improved higher the the primarily of partially of to the CBG quarters. second and benefits prices The and index mix third to million, by fully the Alumina segments, partially of the higher Bauxite refinery prices other category and San consists gas higher production. impacts. intersegment costs, production $XXX Ciprián metal eliminations cost of of Ciprián net in and was corporate decline decline largest carbon production lower EBITDA offset transformation slightly at offset Below San The due intersegment weaker and other caustic reductions slightly Aluminum, level, inability elimination and cost value-added the and costs, pricing. more energy higher costs higher expense than the higher segment improvements primarily offset

five-year X% the When five-year Likewise, The materials period. XX% in of average an increased used Let’s about has quarter, increased to cost The the of the have being Alumina the third raw five in unfavorable costs for over third versus major deeper of raw the approximately the our impact segments. In materials selling costs the for quarter. caustic material to a smelters percentage run dive carbon both substantially take averaged costs. percentage XX%. carbon a $XXX quarter price the Aluminum cost in of Alumina converted price, third and XXXX selling costs of was in at quarter into between million a years. the difference prior XXXX

caustic a quarter. quarter the to revert sales as the approximately XX% Alumina million rose the mean. was and Over approximately third we That time, caustic average percentage carbon XX%. segment Third to to costs of price costs $XX expect the impact five-year normalize compared in to XXXX in and

with remained increase We $XXX flow, sheet capital the was equity a $X.X sheet move billion balance to million returns XX adjusted cash and XX.X%. returned proportional quarter, capital quarter. returns. declined The $XX the strong third net on totaled distributions days the did and share in dividends. quarter of is to cash capital $XXX million of balance in balance itself $X.X non-controlling revenues, on interest of though year-to-date Year-to-date breakeven capital of Let’s $XXX lower on million debt million less quarterly and Free working essentially million. and capital the repurchases even Days $XXX billion. in working return

cash flow. to Turning

use quarter cash million capital third declined capital cash cash sequentially year-to-date releases working increased taxes, stockholders, capital to million. rehabilitation capital cash taxes On our returning EBITDA The returns expenditures. capital expenditures, followed a remains billion, working closely largest to and due to cash capital of income primarily of funded $X.X uses. and and balance by of spending basis, other $XXX income to stockholders $XXX

fourth its trend recent of a working the expect of continue quarter, source capital we cash. to being For

year Now for the outlook outlook, for starting full of shipments. the XXXX with remainder our the we are refining year,

range income As The year shipments the expenses lower production, X.X line, million refinery expect to to $X totaling other to improve improvements of and million several expect of to San rate are million. a the There at million we and corporate million the expense unchanged. XX XX.X improve are operating we million moving tons versus $X tons. year by Bauxite Australian $XX remains and EBITDA In a tons expected full $XX and to to projections full pension Aluminum result tons on and to Below XX.X $XX depreciation shipments tons million. lower million million million OPEB Alumina XX Ciprián to prior tons non-operating lower-than-expected improve our shipments transformation X lowering EBITDA, improve million refinery expenses we outlook statement.

to and For improve to $XX ARO expect we payments cash $XXX full impacts, million environmental year million.

energy third-party currency EBITDA the areas. many approximately the at costs sales shipments. million approximately $X quarter, San to refinery. expect Bauxite, adjusted in fourth For Alumina, expect impacts, we improve prices we higher or lower expect on excluding $XX index in In improvement In Ciprián we million

rapid adjustments fourth expect expect Lista. expected Bauxite million, costs, premiums raw segment, EBITDA sales raw value-add the of In also we million in Australia to and favorable impact value, we at lower curtailment lower $XX by the to prorated to the the sensitivities. costs using energy and and Ciprián offset offset benefits higher be changes we than $XX made quality lower metal Warrick material by due third plant expect product Additionally, power are annual the price to quarter inventory costs. Further, the lower to in of calculated of end net metal be higher Aluminum the at be costs Alumina San higher realizable quarter to material

accrued government limits XXXX reverse benefit. impact based the If EBITDA Norwegian Government unfavorable quarter approved, budget this proposal compensation COX issued to potential be has we sequential In a negative million impact would in in is proposal addition, the $XX fourth there’s on that XXXX the be from approximately a purchase. The as paid action. power

the million. word on pricing, to expense operational Finally, $XX be recent million to tax taxes, a approximately on fourth quarter company expects XXXX based $XX

will it Roy. back turn I Now to

on like markets. start Bill. focusing by long-term to my our of Thanks, fundamentals I’d comments the

by sides driven whether industry While but of cost been in the customers, Both also isn’t on Aluminum through case like supply ultimately, is the positive for energy period for structural outlook heightened differentiation our world not further for Renewable the a help energy is it Still, determine supplies I’d evolving consistently economically. and currently year-over-year very just remains and more consumers. choices production, that sourcing, and supported embedded of to than is in uncertainty, emissions. a by the Rather, energy our demand facility this their the a That’s a lower demand changes fact facet highlight industry. the decarbonization and carbon compete both of merely and markets a view source the of increasing. is the of energy therefore, provides our final can decade.

replacing to especially reduce vehicles. engines tactic combustion the heavier during to is by internal reduce weight electric one example, Aluminum, from metals lightweight carbon with transition to vehicle For emissions

North Aluminum to by the primarily Aluminum by in XXXX baseline. This you that than left-hand expected of XXXX as by contained powered electric amount the the one XX% on using which average, by more America, slide, engines. transition vehicles example, nearly increase driven the side On internal in XX% will of passenger is at vehicles, is vehicles see to change the combustion

for Aluminum emissions. sector a reduce easier Demand to weight expected steadily important is its and due to increase market the and which ship, Another that recyclability, makes choice of for consistently. is that helps packaging is end-use format to Aluminum in its it low packaging. all sustainable

hydro thermal, solar and of wind will Aluminum generation nuclear. forms of than more both other energy, transmission such Next, require or the as power and

requires capacity to that compared XX ton. megawatt of generation, requires generating only approximately per metric of Solar metric example, for Aluminum tons about coal X

the our commodities examples these for are to by decarbonization demand continue and meant illustrate trend renewable While my the toward grow long positively they supported energy. into to point, and should is future demonstrate that

to is XXXX, XX% of tons slide, currently that where X which expected one moving their footprints, from continuing primary the to side of capacity is is producers sourced still we to metric the Alcoa source of energy. believe with to smelting standout. predominant posing area some smelting constrained grow the move years million carbon see right-hand the work are and powered mostly capacity Renewable only This the energy to the boosting Now away XX we be for on Aluminum wind to we metric today. ahead. Of of power reduce portfolio in new as energy we Aluminum required future. percentage in renewable global million know, renewable industry by are tons limit sources, a by a availability, coal, already by is and is are renewables, that global hydro our the in to continuing and are

metric European demand this Ukraine of more Today’s in can power our ongoing million uncertainty, Finally, production raw seeing We of is from Russian but the market with decision as energy impact European this Russia’s buying of the offline, and produce be its quickly of invasion energy X the on same the are amidst North smelters made businesses. been believe our Russian costs in energy had impacted the company materials it on Aluminum Aluminum governments distortions we demonstrate number our X directly impacted. industry customers to taken metal thus, urgent invasion affecting energy Aluminum and necessary selling by can and produced. we energy And products under issues, now policy. the year, also how market significantly declining distortions by decision of was and their is The right another costs metal, energy chain threat. has allies. global and be created weakening are tons rooted of make linked implement by to is sanctions In to and proactive it should Europe, million to continue therefore, skyrocketing the increasing cease increased in an reported been to of Ukraine. European the U.S. metric Ukraine. the Russian Aluminum supply aggression been March consider in our believe prices, that and increased while That market the tons financial the combination to has meantime, sell action American the curtailing which than companies amount and in an Russian adverse have Aluminum crisis, or Due markets, business, producers the

data warehouses. of growth. uncertainty in trends again, thus, as in supply including Now what driven difference shows we demand this illustrate an economic look consumption by is a demand, driven today fundamental And and closer industry followed the inflate this significant challenges, key energy held as driver. let is on being for weighs downstream industry our The energy industries first energy to to what continue the costs electricity days Aluminum inventories us is see with centered supply at downturn Aluminum in Aluminum smelters. Europe, and significant downturn. such The impacts take that historical happening is LME is on impact has and crisis of thus, The today been its where, to data intensive it by an chart for in uniqueness

that historic explain these we cost over to crisis last note few illustrate ourselves. is sharp price see America Europe, we the notched we demand to in would and some global uncertainty and believe seen positions. for our of uncertainty. represents declines global inventories at between can noting help products. warehouses value-add and significant demand demand rather highs, find downwards products COVID-XX already strength most the in for energy continue material have XXXX, XXXX on in of examining based that During downturns while These environment North representative and LME in situation in in significant this of thus Raw increases where the and drove for here simple the continuing I delivery by inventories shuffle while products, prices inventories global was Europe. prices global are sharp pandemic We Anecdotally, in in in further financial that of than metal Aluminum billet particularly to in more a overproduction. facts We this metal have material held days.

metal to believe Aluminum the XX% smelting negative a a operating XX% XX% XX% is lower, water. refineries we XX% approximately cash-negative basis, In of For China, but capacity on we basis between refineries still of between Chinese Alumina, to ranging on operating of percentage what the XX% production are that to rest is is that of on XX% the cash basis. less seeing the the in world, cash loss, is in operating, operating are at to a from of world currently XX% under operating is In than and a rest negative significant. operating

talk smelting, on let’s doing company’s and approximately In XXXX, what refining Now two to address were Aluminum are Company-wide, XX% electricity total Alumina Europe. are we refinery, locations and cost greatest the our in Ciprián production. smelter spot comprised In energy exposure our to focused areas approximately the impacts of our about two total challenges. San specific of costs. prices of energy XX% the Lista of both the costs

with start our Norway. in smelter first Southern Let’s

portfolio in about company of to spot prices, exposed this this approximately spot XX% only its X% the our smelter exposure quarter. While third of represented has energy overall smelting

we energy. were mitigate one the in site paying In three fact, hour as of made quarter. lost decision sites, the the curtail we had third megawatt some cost in of the periods August, to $XXX million much the high $XX per EBITDA to when we as and In potlines,

year and Importantly, remainder with more provide into negotiated throughout power to XXXX. the we the our energy predictable an utility agreement of also costs

a are continuing to monitor significant improvements fourth site the We the quarter expect result to we situation. as in and the see

San refinery. and the year, natural to of approximately supplied that natural gas two this until from of July demand In XX% of contract let’s Ciprián’s San Next, this December refinery’s of suppliers XXXX Ciprián gas terminated January one turn its XX% June to the year.

this we Spain February. XX% we In At metric While high gas in we to and of less new quarter, cost the million capacity. X.X been to we these end annual exorbitant. been production natural the gas negotiating have rates production use exposed site’s our costs. approximately of facility contracts, third we The since of to at would been had avoid have have began cut of tons the adjusted the spot so quarter,

prices savings refinery production. eroding million San estimates the In $XX the volatility gas to from due third difficult predict. cost to continue EBITDA escalate The However, these gas quarter, in reduced makes high for to future in Spain Ciprián lost conditions. to

the for reviewing including and support. production, options tittering well location’s actively options, operating as are We commercial evaluating adjustments to levels further as

We will the ways at continue to facilities. structure improve cost at both to look

now continued progress. to the to Brazil, XX% owned subsidiary including new Alumar idle at capacity items global belonging the some discuss to metric continues to owns In Brazil me where smelting our that or of operations in we venture with continuing portfolio, XXX,XXX Alumar Alcoa’s overall address smelter percentage sites. previously to remaining we two we add restart SouthXX. at joint Let with restarting other working are are the fully the our improve. capacity, progressing In tons,

agreements and to and Spain, our by we have staffing of smelting stability good done. lines curtail one the safely reached on restart energy two which smelter’s of agreement July Xst, to We quarter for allowed progress plan three of Ciprián wind reached to the the to smelter. a there San on us at XXXX the for expect solution, we on but that operating until XXXX work an decision line be power Spanish framework It’s end of remaining We of focus smelter XX% the will solution, shortages the is continued wind support needs XXXX. curtailed Separately, process the now on an Warrick the one the States, in In early be depend first in curtail the this for on a to energy to most operating to United smelter facility. the lines. capacity the to farms. still much two work energy of viable to see operational for permitting We would develop experienced a

in the that right-hand can and turning plans In to to to are performance due were the slide. maintenance. this of we now recover Next, implementing our outages refinery improve volumes so unplanned we from system Australia, lower

effectively our than friendly to and a make renewed are operating people, manage and strategies turnover of system-wide historical our to of we impacts working bringing employee our and excellence even levels due to processes on actively we focus In maintenance program are attrition a for equipment. including to perspective, We are retirement. people higher processes, redeploy From performance, accelerated the all users. more and equipment working reliability

visible that relevant impurities, address requires higher system So grade processing metrics, lower working and lower delivered with volumes higher can we Bauxite it Variability the costs. are tracked levels mud removing includes which mines. Bauxite levels from and of trigger higher escalation. clear challenges resulting support a and to Also, in in colocated production and for sand loads, are grades from our

have we While focused and to stable of operating it the at restore clear time a for some will performance capability. drivers full take system understanding effort a improvement,

casting Canada. a quarter to for capital line the of project as products expected capabilities to July, at and to meet complete XXXX. be foundry first in is on smelter return-seeking item, such will in increase That Deschambault we in alloys Moving value-add ingot production our next announced the needs new

initiatives industry. we to strategic numerous advance reinvent have our support future, vision that Looking the sustainably to our priority Aluminum and towards the

introduced also have process Stewardship applications use industry. for new our the now in billet. that intended lightweight the from alloy rigorous of all locations Brazil we Initiative, most is high-strength added in and Last Aluminum the the our the ExtruStrong certification We month, which comprehensive is that to

Most that developed of for mega last engineering developing and recognition to challenges, were decades world’s to our casting want solutions as traction known alloys We automotive also market. closing vehicles. electric today, one gaining in metallurgy solve piece Aluminum I an Alcoa month by weighting few customers for of the quickly is first leadership a alloy light existing or gigacastings received items. including the In important reiterate and we have help for

balance Our of billion is debt the and low solid, with proportional cash finished hand. on $X.X sheet quarter is our net we

of to This quarterly to quarter, we provide purchases. also capital dividend stockholders stock a form completed continued and our returns the in

forward, As across refining our positioned remain basis we operational in Australia three segments including move a are well on cost we improvements our system. system, addressing and our

We as realizing prepare are today working to to for tomorrow, future. including vision sustainable the reinvent we our deliver Aluminum industry a for

technology have and potential a Alcoa. the We R&D projects industry robust to roadmap have the of decarbonize that Aluminum differentiate breakthrough

low We industry’s products existing are bring and customers, to our that most day the the innovation of of solving including Sustana line. proud in problem comprehensive portfolio we our every carbon

Now have who Operator, on I forward we taking questions. do line? Bill look to your the and

come And go question from Stanley. Alba Carlos Instructions] [Operator our with will first Please Morgan ahead.

Thank question. you very much for my

decision this, decision then of on late. company as is a terms situation share you something But given a company the the The bit that in share forward? change shareholders, the see both second, challenging government just do When on to Thank is going the more first the and compensation. the money by who be be of is to could government how industry requires dioxide focusing this this the here that in or to Is and to behind been terms the or stay? Congress reverse clarify clearly pass this? in one Bill has later And Norway, buybacks what approval potentially you. facing, maybe can are it would is it something just you this is the be, or something little that -- do proposal envision returning of do you is and or trying that conditions announced Roy and to buybacks to expect that that temporary carbon the a

It’s address for Government The that Bill budget COX ton the Carlos. eliminates me is first both compensation a Norwegian there that indirect there carbon. that out Norwegian action per and Thanks, let we of is referenced draft NOKXXX those. of

longer they up So $XXX, that that am will compensation. level, sorry, cover up indirect to I no to that NOKXXX

accruing additional $XX So we an benefit during in benefit year, fourth this the of a the million. would had of course quarter $XX accrue of been million

fourth our if So a in the were million impact come that will $XX negative pass. results of we to have quarter, in to

not, speculate keep would We the future will years, of to on probably tracking into that I on it am appears or that process not would. are and it whether going that you go posted whether happens in and we it

As Lista you be facility on situation energy Lista. on more puts but Lista. high-cost year pressure it incremental million at that and probably it’s Mosjøen, with where pressure an a cost know, $XX is the on of to would million per so puts $XX

So Lista. that puts a lot of on pressure

about So in learn more the we we loop will keep you when that.

buybacks, buybacks share $XXX saw you Regarding as did we million quarter. of share in the third

uncertainty of $XXX a lot around and the million lot point, markets this I a uncertainty of have At in there’s done in our think geopolitical we world. year-to-date.

capital based the continue and will markets to and are. how the evaluate make we our will strong on cash decisions distributions flow So we

So that’s where we stand.

Good guys. you. luck All right. Excellent. the Thank with quarter,

Carlos. you, Thank

Thanks, Carlos.

go The ahead. B. Please Securities. Lucas question come from will Pipes Riley with next

everyone. afternoon, Good Hey.

So really obviously, sticky, intuitive I this? be could to in and some these the carbon and are would on this is so of the for alloying comment really on your if costs sticky elevated. what for have you materials environment, but costs wondered causing power soda perspective costs And also caustic I remained appreciate

for goes, the prices individual complex products costs number atom different oil oil caustic. also. prices and I with it that go Caustic Lucas, given that largely is a Well, the think much come as are typically more varies, carbon are of of there carbon will related The item. out cost fact by the

carbon prices high. and caustic look as down So stubbornly for us, buy we starting are but it in to fourth peak continue we the be are quarter, actually in we to costs particular, go that forward, anticipating as

that at that the look built you costs have we it as basis $XX anticipating million, material higher guidance flows fourth in into are on quarter. when of through raw million That’s a cost Now lagged the $XX our sold, around provided. we goods

have we So the the that’s are guidance to costs. to based have it fact but starting stubbornly lagged that’s for to in continue high. we top projecting out on will But and on future, that caustic we that peak of -- are carbon see not provided, go down remain the start

I that’s Aluminum higher materials, segment, X% alloying the of about think, year-on-year. the your also cost in total On

materials vary deal customers gone we it time, up prices and good over positively of A gets much or costs Alloy customers. started through will very our to to you and of some see down. vary have they one negatively, Right. the come passed have to they like see and ends way alloying that LME passed but so the through get up getting another just --

Thank power helpful. you. the smelter with the and covered in or then Thank then get to consider the And operating loss would question returning That’s third nameplate a on two-thirds solution is full much. currently to be of second you EBITDA solution capacity That’s from neutral the that quarter? this Lista. very you quick power

Yeah.

Lucas. me So one, fill let that

the the of the facility for quarter So, that whole the for the of full consumption of energy consumption the the covers or contract first of fourth we the then exposed and foremost, to and spot. remainder have that was XXXX facility

for to the rest flexibility course, are an we production decision like. Aluminum then market well choose do look as about the on regional and as with what us demand when basis, up ends gives happening going that. and we the seeing of what costs to input of if up an Aluminum. factors, And full premiums, are a to to From move that what’s So back that being

act which to to a forward to prices continue also material our that to make what and and long-term, for part determine as different the as curtailment the medium- put high thing protect we of to if particularly do to they that have but outcome, caveat this and we look be us what But decisively in know bottomline. EBITDA the highest I need That and prices always the Aluminum So short-, can and across to costs best have. was those question, understand we to get able we to in Lista decision there when with cost I a to be what are have to to make then right plants have program, contributor raw as fix to we slipping. designed we the always option move calculation portfolio, positive plant our at the is those move to decisions. to as think is And we to about

luck. That’s very of the color best helpful. and I appreciate

Thanks, Lucas.

Lucas. Thanks,

question next Research. from come will ahead. go with Tanners Please The Timna Wolfe

afternoon, Good Hi. Yeah. guys.

Timna. Hi,

Timna. Hi,

bigger allowed. just it I LME, on not out on if or wanted Midwest premium I and any to is missing is of and not I the just thoughts to material your the it China ship something again, declines, am ships impact? the perspective on rest China the Does get also there mean, there

let Midwest me first your question, hit So premium.

about So it’s going what’s you a that’s concise answer and give on. -- decisive hard to

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to that Midwest pressure good of have all premium. on together put comes place the amount a So into

will take Russian applying what U.S. Government the happens metal about that coming also and with United States that might decision is on -- further the into what course, sanctions. the depend happens Of

connection it our United in support no direct think I that that. comments, in States. we also Europe importantly Russian just premiums direct elsewhere, the and in most prepared sanctions is relative makes there believe said a course, depends we As metal but into in on Europe. the so versus a Europe, intuitive it connection There’s be coming and should -- sense U.S. more And of

change, with through and question, coming it’s the place Russian a China was also happen -- can metal go Timna, in be whether and as second markets because your then repeat just effects might warehouse. from metal you you one on it I shipments As so to the see some simply can in overseas. might flowing those in lag two be lag can other and

Yeah.

think I question So, number answer a there’s probably countries. yes, whatever to an separate one the warehouse. get in ways as the metal as around sent is, the ability far LME’s far be to There’s ways important country into process of certainly about they it’s for mean, think around might -- back to as be Russian that’s I as and to lots of happen what versus might going sanctions are what also do to the get

what that there’s and to we we sort and can we So we the to of It’s in issue, that at really with when it tried make And say entities. broader move for buying was a into simply position the be for -- believe why position selling Alcoa the solution U.S. Russian always to it year, looked back simplest is with doesn’t to simplify Europe, lobby example. the follow did try around. we ways or us a that simply beginning sense for to to of the for at which

how sanction can right regime operate we fact what’s to it across us, difficult for see moved knock-on When San inside to just of it now in given we right at the this so in impacts happening we Europe. sense it Ukraine and and makes now, the that the that that’s happening is And difficult world. Lista Ciprián, and how is a look

without We sense Russia and It States. on sell that have knock-on that. inside United kind regime also to seen continues of sanctions make doesn’t the produce type impact any same of the

impact. and the able played that games is try point. solution that sensibility us, to easiest metal different also market, that And are a into ensuring to to same such so of sense course, seen to with the a you step, we Russia that any out take you of think time flows already of metal will and in that And bit around try But first way the we in bring no have going entry Russia. world are into time, a have bring coming common for metal a -- kind there’s that into to change be to for of Russian and the being regime or as cheating this already never of at little it Alumina try start and I and sanctions build can

snuck -- consideration. I I understand sure make just than prorated $XX but comment want this, I No. business sensitivity. just have additional And using appreciate calculated could I I that. about million the in your more here to to know one the metal it’s I follow-up on two, if higher annual

then add up the am math? rapid price, the you if adjust today’s QX that because the into should in delta different with like, -- over do QX factors, So we sensitivities just $XX would of changes coming that and $XXX million because us, like the give that million of you price, you way I commodity is back the QX

Largely, Yes. Timna.

So thanks let to lot and me because business considerations moment question through a a for there’s the the just additional take run there.

it. clarify So to I it’s think important

Yeah.

look look they we we that’s And declines about forward, for sensitivities $XX the sensitivities of the and sensitivities we don’t completely million $XX right. then sometimes quarter. third X summary back predict One there. gave add million. at in million Your just that. value Use recorded annual $XX realizable the and is we as net annual really is reasons -- and we the you why don’t the then There’s quarter --

Aluminum -- that the think quarter The space the million in other the and these -- improvement thing Alumina a to consider other we offset comes in flat. Aluminum $XX over is It the space will rest is items. fourth to pretty be out in the

in material the zero Lista. nets from work once about raw that plant power lower out higher sales, benefit to So premiums, costs, product all you factor

Bauxite expect be be $XX the about we that’s million Alumina, $X better and to we million segment. Aluminum expect better. So to

itself, the strong. So currencies, current current metal prices, pretty actually guidance the the once is performance guidance in you baked

Thank you again.

Thanks, Timna.

Thank you.

will The Emily with ahead. Goldman next from come Sachs. Chieng question go Please

for Alumina Good those I back afternoon, around one energy wanted Bill, and costs and the questions. first taking business segment. focus just thanks considerations. my to My on Roy to and is coming

you looks Ciprián. second the what improvement you sort quarter-over-quarter like third what to during were some come million Could in light about improvement? million that a what are to prices it for there’s San electricity of and $XX prices quarter So of or out shed $XX sort energy you with baking calculating or price energy -- perhaps quarter improved are as on those

fourth the top improves was quarter projecting and around on but Oh! the head, today. are the what third dangerous Emily, it in gets price my we am gigajoule think to quarter me the of I -- it I for off that stuff a based know $XX do in gas something we

in million origin number question, improvement. then kind $XX If that your the that’s the of So Alumina of segment. out going things of broaden that there’s a I are on

top -- material raw Bauxite higher to there money the that costs were San from that that, got Lucas’ also costs. in alluded I positive in every because in we Ciprián. some you shipping, losing curtailed offsetting that get were benefit ton costs have is the Ciprián a of you around some answer I on question curtailment So and is on the Bauxite energy of caustic And But benefit lower and we have San what the lower Australia. think quality issues we to

zero. segment Alumina better then else the being should $XX million net, energy in with So costs out better, everything nets to to be and flat

is allocation. Great. my Thanks. they XXXX to the increase versus maybe balance CapEx if capital pensions, follow-up have around XXXX. sequentially returns the you touch capital on but piece, just even know on the perhaps, could I expectations. and know supposed I you early quickly, And touched were XXXX sheet,

would the be the Analyst last Day, but look was I helpful? any guidance early think there at

$XXX the haven’t was $XXX this capital capital going the XXXX is about the updated time million. so capital it seeking we from last be Return XXX the around last year. haven’t sustaining since Day. my we time at for million, updated look that we going be Analyst recollection externally up and XX from was the since -- So to And to showed

and goes allocation sheet, the we a billion. of quarter balance capital as balance with far ended cash $X.X As the

the are instance, pensions around the raising much proportional The for net $X.X XXX% globally have are They with shape discount better I U.S., rate. funded. in over We debt in of, believe, much, billion.

don’t we few significant years have So pension. over the the contributions for cash next

material with contribution we debt coming then And million $XX that’s cash the We have due any neighborhood of ongoing OPEB, $XX until in the have associated but XXXX. to don’t million.

next over the throughout and business serve us will cycles. balance So sheet few great is shape the well years, the in

Great. Thanks, Bill. Thanks, Roy.

Emily. Thanks,

Bank Our Instructions] from Winder [Operator Lawson go Please come of question with ahead. next will America Securities.

at think how push Good you drives gentlemen. update. the allocation you CapEx flow buyback and of the the million $XXX thank after free for your sort you buyback, in and Are and just of that of more total to deeper could that cash Hello, cash maybe so on If the million understand bought of with working shares. and kind looking about free the was flow you driver capital as just $X capital flow? what back evening about a as I opposed QX, context cash and return

the capital Today, pretty strong capital. in first will our we strong framework that for cash and time the we clear have ever third maintain have quarter entered potential balance Well, operations with the the we case of quarter, third after three the been very we quarter a the and have then that, a allocation we with we we sustaining the have And sustain balance uses. an through investment-grade done sheet balance sheet. will

first the rank The first, but cash and is shareholders. order, not necessarily to returning in

third is positioning in is repositioning for the the second future. the portfolio. And growth The

not we quarter, specifically -- and create significant shareholders. uses around we the therefore, cash, did excess have we to the Lawson, had it would so return was cash And third that value,

smelter color. ask Okay. about restart that Alumar the if the I then Thank you for And could there. additional maybe and

the to if that you reasons and mean just up there restart held to of follow driving and the a today. was a lot still wanted that ago see decision and I restart about I driving reasons took the year So

has way in so mean, I and Some environment? you the local Thank gone a mentioned of of FX now which like still other current the Alumar the restart sense things the does were price makes you. market, Aluminum strong

of premiums and I actually good very domestically area, the With and it’s and as go understand strong would A turn us good worked able at product very there’s circumstances in we that from learn bunch financial look them. say, a today’s we that well. and having some the we facility sell try -- it’s to -- then we and always it’s be of series local and and to -- in what the decisions you more important. technology much Lawson, how bunch that half of we we much And technology is energy in are look and and a export, it’s helped run to day a and in are ensure question, very a cost it have so workforce that considerations, surprised which of there and is you make decisions and other also available tax... a course, good turn a It’s curve like the low into actually availability decision. a of contract, can versus a value-added a led how can Alumar, to had which bottom to it’s and means cost important a the that then be more try be of to that so back plant. Yeah. do renewables-based and that or that competitive started market, how modern us a to become age, And able more

credit… Tax

order we in Key to have Yeah. Yeah. credit domestic to sales. have monetize that, monetize

pieces they of so actually to that a other got here workforce years a very changed things, of a different curtailed. being the coming do difficult of we up have number It’s bring plant how is decision. it. after that a knows is advantage that a But to up again, are these But all we made all have smart that being and little as decision. bit prices So support that Aluminum than course, the those

back We have and have for upskill a actually of been come great and number people upgrade us. able working to

getting believe raw it’s going to want. seeing it’s on -- great cost because going essentially it’s end, the the availability great We of and in great be complicated But progress I good a we are low back at that the the and to going investment come investment because life materials truly to smelter be resources qualities on that the It’s of a again. making plan. be a it’s curve. to the

you Thank Okay. much the comments. very for

Thanks, Lawson.

The Jefferies. from go with LaFemina question will come Chris next ahead. Please

cash for guys, question. least the and billion have I another thanks maintain think think, balance Thank your first sorry about criteria way to billion. another sheet about you. of of to $X Bill, it you to returns, roughly, to if $X return, announced taking at question capital ask you my Hey, was a to before get $X.X but cash capital just billion balance here,

fund the capital like do in looks third it was capital first my returns? to but comfortable I sheet, billion balance breakeven. depends So third funding capital quarter, that the returns returns you as think is as now. the capital need capital cash above of cash flow, That’s you long the Should to sheet have billion cash question. the it are you about $X.X cash relate balance you returns free came cash flow with the were $X balance earlier the so returns? mentioned you that assume and on balance flow are the free had quarter, we In that or right, sheet out decision not

Yeah.

want balance strong good to So two. the there’s sheet. it. and a necessarily question binary appreciate I We maintain Unfortunately, not answer between a

From balance get we billion to are above billion us historically we From below time cash we billion sheet. are have that’s will $X time, have today. been of where rush $X holding sources. time out on said to and didn’t $X and to We cash we you see be time, the comfortable

of and the and based cash on cash decision we cash coming So those the how much how much the we factors. make see will two we as have it’s in in generation at best a combination we look forward market,

So not single a answer necessarily.

just for then to be probably to commodity cannot quick market. the want to a that. for case, to that one they I you marketable, and Russian the hold tight market am on that that the LME? readily the Russia get thinking it And because sell want Wouldn’t if that there. from the very might trading would for be to case LME, sanctions probably again, trading I it correctly? which not to that In have companies that metal mean other the severely and lead just disruptive Thanks think and be would conditions and what conduit not companies metal sell wouldn’t about will to inventory can’t market to readily the China quickly, it’s regions

think, I the thinking predict and could Yeah. be. about you much Chris, correctly it as what effects are we try can as

I think it’s already clear.

either So let clear me -- Russia. we sell put far. certainly to what’s that from me so want didn’t We or to didn’t be decided to want buy we

of So the seen go and decision. year sort are in number and that -- many as the one. customers more that seeing people Point we making and that more in number and marketplace calendar what point have turns, of people in ours, same more we two, direction, companies that’s are more same are general,

isn’t and isn’t acceptable. adapt So available to the starting that where simply to a already is market world metal

full the want to in to exactly I that when imposed, they white. customers, most the trading think you are that at are happens different not sanctions look there, is even if what And price you metal I so accelerate are customers and that And and deliverable deliverable become to on are won’t to pay hold at out of right, or black the I and discounts. think, see that you going be certainly, to the willing end are much to process think, companies more LME or either

deliveries U.S. you from tell tons the the what to more and when what transparency what’s the reports of at days. we delivered seen, actually simply that that. high lot sanctions of could of into you all I there a to few Government, have like who a lot some and in for warehouses, it I going lot last of the not being people go what with one So we and it a have But interest than and those certainly comes the LME says sort come place some the and et look seeing news to if it has that had decide show that really source will because the wish, it Government metal goes some imposed XXX,XXX more know discussions the recent I’d to have holding delivered is was cetera, and likelihood then have online these LME what of metal there’s are of was, over delivered this we transparency of if that and you are that it a would to that don’t European to on these is

world delivered Russian have to of could be metal are fact So for lot to to hitting prices, impacts able all that predict of changing your and catalysts would XX% the having that Would hard on significant a you there’s already more more to happening of in much fundamental just that of on you significant this. be -- It’s you be starting be at the it crunch? the correctly. the world. is Again, market so what’s it to underwater and think, in changes supply And say, the how knock-on that tells are those demand there impacts. these the with a pieces I because and around have that market not smelters adapt the

Thank you it. Appreciate for that.

Chris. Thanks,

come Our from with Lucas Please ahead. go final will Pipes Securities. B. question Riley

Do impact follow-up in you very for missed what terms wanted the then And issue. sorry, you just during quarter, work quality through if have I you a my on taking Thank this take back question. Thank long how EBITDA was much. issue? it to might I the of to circle very it. of Bauxite sense the timing, much

maintenance and ended third -- will and Western that another the other in that problems we though. issues Don’t maintenance volumes equipment half issues about about spending Roy in the $XX and on referenced, that million Bauxite a address There led components and that which So around part of chalk million that the of of to quality, of Australia, saw availability things lower Roy let we Western quarter. there. me There’s up about all In the second. out on were million. $XX that a is $XX of was question couple the to address and was up the earnings more aggregate, drag first Australia

Bauxite the $XX million that of part the So net a was quality million. impact with $XX being

number chime And question on original depends because think don’t in different of are or I the that are your pits a can back in mine improve essentially midst and give Lucas, long-term. are factors. you we we to on the we that of on inventory, to half and see second depending are when of that second Bauxite one, using clear quality resource optimizing we the Number the question, to cetera. those condition ensuring a changes where et answer the into for together bring you them on how choosing you do

choose fundamental to that a variance make sure the that, resource itself for the in because us there’s of that how comes resource will long-term. So and we last

how those more lot them a sure to we to can we sure we try be the we we and right efficiently. to make and you the of grades, we so to you the able Bauxite tend those doing we in experiencing. midst and other to of also of on in can make things that need more can places right are sand, to the lower that have we them grades that are and On looking grades more choices that. well other make side have make that at and control lower we of you is are When also mud, how predictable, at able ability work Bauxite our within handle in be you adapt the grades side, that have are the Both tend manage to to can so are operate operate our that the to mining time getting our

we into We that making effort are results. putting can have a of predictable sure more lot

our I I from to changes working we updated the we you those great on have we to the the a market standpoint. and things. it those number we also anywhere. the will think I difficult happen at giving, to I right time ways to right you roll occur. an as see to will people of have And of incredibly believe Lucas, are keep have these keep able be expect us will Alumina improvements and excellence, we able considerations as resources, both better keep the to the problems centrally centers and an we just we think tell tried site manage But is additional we for build will find we operate what into in we to but also on and issues. guidance solve these -- time, same segment be

appreciate color. Thanks and best again again I of the luck.

Thanks, Lucas.

Please go ahead, sir. like over would for to Harvey turn any I remarks. session. Roy question-and-answer our concludes This back the Mr. closing to conference

for call. our once Thank you again to listening

have We appreciated the today. questions

talking to January discuss friends. quarter night. we to focused family today safe. year that we fourth finish Until we forward to close for are Stay year, control items again and deliver future. to you within prepare in can As full our the Good the so and on XXXX when remain the look be I and will we your will our work results. then, please

has concluded. for presentation. today’s Thank now conference attending The you

now You may disconnect.