Alcoa (AA) 18 Jan 232022 Q4 Earnings call transcript

Good afternoon and welcome to the Alcoa Corporation Fourth Quarter 2022 Earnings Presentation and Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to James Dwyer, Vice President of Investor Relations. Please go ahead.

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

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

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

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

release our available earnings presentation, Finally, announced and website. as on the are slide previously

Roy. With that, here is

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

and from stockholders results returned million in quarter As capital today, dividend you in we fourth and we our full saw released buybacks payments $XXX year to the that through XXXX.

be to a in ending year net well with continue We sheet, debt billion and proportional with cash $X.X strong the billion. $X.X balance of positioned

energy XXXX, a That and progressed we of high restarts and said to for In energy. mitigate events of impact it strategic worked was influenced World challenging the materials year. capacity costs also costs. raw

and half, complexity significant once reducing again pricing markets of are our between second focused in and variances on the demonstrating Our the why saw the improvement first year half so initiatives. we continuing

will and cost operational commercial execution and year, we rigorous As drive progress excellence, this continue to to we act through management. disciplined

to always, constant those safety. though, not emphasize, a where This and details more priority, to have at vigilance protect XXXX, simply not get fatalities. strive achievement, requires is that fatality-free improve. can facilities did workplace always who our maintaining areas and we visit work however the important and risks. most of eliminate or have them. an safety We critical And we as Before we health We recognize workplace expectation. our it we want to is identify In into will an I any

In permission to and any a it’s There over that they is will fact, and if are seek every the to authority safe job safety. if take production unsure at never has employee my proceed. Alcoa stop goal help priority

Now fourth our $XXX on of we million a million in loss to In adjusted and $XX financial results. the quarter, EBITDA. net had

me For and clear action for who improvements promoted market join been to situation to confronting earnings X, our will are Bill’s April become Vice are financial she full call over leader results Financial is we Bill’s experience our are as focused and driving has a will Controller, firmly provide taking detail be will had moment. skill he Chief being his takes and in and Senior will financial for operations. role Alcoa. experience beginning current President She a Officer. earnings last as Beerman, just our Incidentally, Molly to be tremendous this CFO. our has and calls strong takes She fourth It we million and a company. in operations and operational former our of we that on is Bill, Officer Operating on adjusted results we Chief sure full year $X.X our and challenging that net February from XXXX, the across loss a billion. $XXX of our EBITDA quarter on

that Last value some several year, bring we restarts will the to to turning highlights. operational advanced Now economic business.

advance Victoria we completed Last in Brazil. smelter swiftly in of month, to where Australia. conditions continued also to we the warrant the reduce aluminum it. at in when state the We capacity And our Portland restart smelter safe production joint the restart and Alumar acted venture of

in Spain weeks, due these at of of of and last at output we To that aluminum and the refineries refinery in three our production over smallest the Norway. persist electricity, couple to our gas production Australia at continue natural the region. Ciprián of curtailed the to Western adjusted rising in Separately, gas reduced shortages one-third we cost smelter alumina mitigate Lista San in

have a with drive foundation and We company strong the across know-how improvement. continued this to expertise

works on are We challenges more while remaining short-term as address to ready aluminum the future, even important will focused one where our become decarbonize. world to

purpose that it’s progress and our on we year, actions doing guides reinforcing and are a has a ESG Alcoa into worth our we objectives. the work vision the As decision-making. also clear

and and that shared communities value our support own creating other and are producing products are delivering We stakeholders. our we our for customers’ sustainability ambitions

producer we a again fact, in Sustainability Jones Dow recently, were by named Indices. once industry Just the top tier

We also a sustainable And future. we via that progressing are which industry of our projects align continue with production. to aluminum to our our the pursue about vision reinvent transformative for creep can fully excited technologies, the growth development opportunities

let’s that, with So Bill, go dive ahead. numbers. into please the

$XXX prices. quarter mark-to-market alumina assets, in million the a smelter Fourth the restart million allowance deferred Brazilian energy and related this in compared and or yet million million billion million cycle, $XXX primarily net $X.XX contracts. lower quarter on and to tax of per $XXX $XX and quarter valuation million aluminum included for $X.X XXXX from were a to on was costs result of the input loss declined tax $XX quarter share. the costs totaled items, Special third items fourth revenues to of point At the not $XXX declining

million excluding $X.XX million. share. After special special loss was items, or net Adjusted was $XX per $XXX EBITDA, items, adjusted

per or million billion from income $X.XX changed increased million share per to year of full XXXX in EBITDA, $XX.X or billion. $XXX billion million special $XXX and decreased excluding year-over-year adjusted $X.XX to the a and loss For $X.X in XXXX, XXXX moved net $X.X from $XXX to Adjusted income net to revenues share. items, billion $XXX million $X.X

look the at closer a change quarterly EBITDA. take Let’s in

higher smelter production $X alumina million prices aluminum. substantial material EBITDA adjusted third the in and at refinery, to includes raw and taken the Energy Thanks and million the improvements compared of COX Lista quarter refinery and million San to smelter EBITDA and prior offset the Ciprián metal in San quarter, by Lista $XX driver Norway improved Ciprián improved San and of higher $XX to compensation quarter. as Lista decline fourth the were lower $XX and largest For actions compared partially Ciprián was costs of adjustments combined alumina to costs million. the

other of The Brazil of a in intersegment primarily $XX comprised eliminations. million is category million ARO charge $XX and

the increase broad improved on the cost In partially $XX was also was from transformation, the San million $XX Alumar, costs, volume, million $XXX million to lower and to Ciprián eliminations ARO reserves segment prices, increased by at well but as $X Below of the partial million other segments, lower EBITDA $XX as offset change $XX the In a to to partially offset favorable prices curtailment. Alumina decline favorable improvement. higher costs. segment, currency level, a currency broadly index corporate total metal the million foreign due primarily bauxite expenses and by and intersegment EBITDA the better improvement foreign due alumina In aluminum, lower the due charge million.

fund full flow. working to as and largest million of EBITDA $XXX On Let’s spending The received, sequentially million. sources were environmental year in COX quarter basis, ARO of capital, Dividends $XX the were $XX by balance not cash declined quarter. outpaced the fourth quarterly outflows. credits $X.XX income cash fully releases did billion move XXXX paid cash to expenditures, Capital cash taxes uses a and uses and million.

cash use cash largest Our capital by increased capital working returning stockholders, to expenditures of was followed income and taxes, capital.

net capital negative sequentially Lower $XXX million fourth $XXX XXXX full in non-controlling our end, debt at million on number dividends. $X.X of year metrics billion, was days $XXX Free XX.X%. of higher accounts cash the million and primarily and equity was days. for XXXX while quarterly return at to full working adjusted improved repurchases flow capital of sheet working million interest distributions Now we finished proportional was DWC million. the investors, returned $XX year The the to positive $XXX XX capital revenues balance share year $XX quarter key with In XXXX, kept for flat due million payable. net of less

look cash position. a take and the Let’s at closer liquidity

position. position, billion, with time are the maturities was we of Year-end debt consistent balance higher to level key outflows. cash average scheduled XXXX, the in and you $X.X maturities have We XXXX. with the the a substantial After debt the XXXX rate redeeming see for proud cash has and are on until liquidity and In our rate previous year-ends. cash and sheet maturities X our charts cash over inconsequential are lower debt a XXXX improvements made three

mostly remain extended Our is needs improved were against low has XXXX and OPEB pay revolving are terms, and XXXX are beyond OPEB, Pension you now expected which in XXXX go. low has to you credit and has to as cash and borrowings as facility been it. in know, no and

outlook. XXXX our to Turning

First, partial its Ciprián XXXX, XX.X the Bauxite in simplifying segments tons million Alumina curtailment in be refinery San million for combine new updated XXXX. the January Australian and the refinery shipments between the the future metric production, reporting segments: In and results segment at prior will of our by structure. range reports, to In its and Alumina reflect alumina quality we lower segment expect two we XX.X bauxite and driven due to and financial are report Aluminum. for information periods structure will Beginning company XXXX, lower refineries. to

OPEB to demolition production X.X expected Alumar segments, transformation and million EBITDA million is outside to Non-operating to Portland to to expected at by tons on we buy-resell U.S. expect level. is million. expect expense primarily to expense between costs EBITDA, The to and increased corporate and $XX items be at lower Below increase modern and and Aluminum million from higher activity segment X.X to the XXXX’s Alumina dollar. XXXX offset and as $XXX the ship to million In million shipments. increase and Aluminum improve million is $XX metric $XX weaker due pension the we million expense depreciation comparable is other virtually interest to unchanged $XXX expense $XXX

to cash The pension majority of $XX that and be impacts, For required is at OPEB. flow to expect funding similar XXXX cash OPEB we U.S. spend million. XXXX

$XXX of is we and Our current capital continue conditions. on will $XXX capital return-seeking market review estimate sustaining to expenditure and based of million it million

Environmental $XXX spending expected to $XXX to tax to XXXX, $XXX We million million. income expect lower is prior and payments period million. ARO in approximately increase down

allocation be aligned capital Finally, to stockholders returns capital our with framework. will

special higher impacts currency. excluding Australia $XX excluding EBITDA, Aluminum, Western foreign disruption by cost costs favorable adjusted we expect the of In we index first to the approximately $XX the and from at ARO be by quarter In from to or Alumina, for items gas adjustment. sales alumina offset Alumar supply specifically expect million. prices a non-recurrence be Looking million

the Norwegian from $XX and of expect smelter costs. COX energy million costs non-recurrence credit also We favorable adjustments to by be lower

costs. production $XX lower Additionally, million and costs expect $XX lower material we raw million

expected million million. tax is approximate expense other be $X to lower EBITDA, equity $XX to million to the company $XX income. modern Based expense unfavorable contributions and equity ‘XX on pricing, to Below ELYSIS expects recent by sequentially operational on XQ

Beyond change bauxite process. This the the decreases quarter isolated supplies XXXX, first additional reducing and company the Huntly Huntly refineries. mining time and increases alumina available extended for approvals mine the of at Operating alumina an provide mine input to grade the the Kwinana that refineries the lower-quality is to costs. Pinjarra output grade is with

the quarter adjustment quarter in for quarter expect XXXX, fourth fourth the $XX other million continuing through fourth non-recurring after EBITDA per excluding XXXX million $XX expenses to certain lower the of in of of ARO of adjusted approximately comparison Alumina Alumar Starting segment XXXX. quarter and XXXX, second quarter and we the of of non-recurrence refinery in the

it back turn I’ll to Roy. Now

Bill. Thanks,

Next, first change aluminum alumina cycles, materials slight some in pricing. clear and differently were beginning in market XXXX. in environment deficit the the current starting some XXXX XXXX, it minor seen market Even raw balanced remained in high the even from provide the or throughout to in have is the we have year. stubbornly these But previous to where a here brief relief global the about see of only in year, to and for I’d second than of half like for are cost across pricing commentary we given markets

XXXX, to saw for costs multiple in a market for fourth XXXX. have in of our ever driven coke direct is highest second our by have used half. used compared the coke for XX% price anodes announced to supply marginally fact, In quarter In materials across materials influenced increased of of products Both soda Europe, prices. material refineries. for the All recent some we raw in the price end in smelter that since for quarter make raw fourth only and we increase a soda nearly balances saw Aluminum, of our same of the caustic saw disruptions XXXX. we Caustic are than the digesters increase to the period increase Alumina, compared calcined market tight. market U.S. XXXX more pitch the kept price in in in the XX% Meanwhile, In curtailments a the smelters. XX% and

mitigated supply chain however by also an disruptions. disruptions and diversified have supply avoid market-driven to global sourcing manages inventories closely which portfolio, We agile maintaining our

of as China saw entered we far and market impacts for stimulus of has in enforce country its loosened with approximately As XXXX we metric alumina and the tons measures China mostly million globally. the was X.X in global to southern million application cap in And the and a annualized XX in in balanced COVID balances, due likely smelting was a the in deficit, metric the continued including supply-demand increased in aluminum, power and the in smelting China rest China global XXXX. the in constructive world. market constraints And capacity to policy provinces. XXXX curtailed of of ton

Next, let’s bit a in more time time a horizon. are currently what aluminum seeing we on over longer spend

supports that evidence positive on see view our to continue We aluminum.

for global of an half market there the costs, material energy last the fundamentals what XXXX demand the raw events and second aluminum. year of for saw we growth remain we the was on challenging was unusual during aluminum evidence Although a bullish continued like Even of with year, future. in influencing long-term

markets, in two these Since became growth of two Let have end-use transportation XXXX, illustrate Alcoa company sectors this rates. me point significant independent packaging. an experienced and with aluminum’s

XX% contain is such First, analysts growth vehicles Ford example, Several the sevenfold to a industry have aluminum and significant which in their auto reported electric a solid vehicles vehicles. vehicles output. mix steps on And share aluminum. battery EVs, for more a experience taken have their total nearly rate from relative in even versus occurring electric and for as trajectory strong predicted. period X-year faster approximately key this some hybrid of XXXX. reports manufacturers earlier Electric recent than on is had internal increase to vehicles, to construction combustion BMW growth of contain by traditional engine more their These

total X.X estimates new million China, to the XXXX, these units on additional transition that XXXX of world, units million in X At and production in and the between add the annual car market confirmed. bringing automobile an one to the major XXXX, by in an in supported time, produced years same announced combustion have on largest new XXXX that million Canada. in several and increases largest The the Current the year-over-year basis. saw be would to electric UK, vehicles is vehicles including France bans internal regions vehicle X.X China also with sales countries electric

can to The in watch XXXX to aluminum expected rate second consumption market which XX% packaging, is XXXX. and between is see growth stock a

Europe and the sparkling in our are aluminum such packaging due XXXX as beverages infinite and ability metal’s in using chill was and North alcoholic recyclability markets to waters more beverage best products of seltzers quickly. to America. Alcoa, performing one lightweight, For Also,

strength be While support the these they long-term. examples, to markets in demand aluminum are meant continued in

move let’s of the to the right portion Now, hand slide.

see will the most of influential decarbonization. decade metric Chinese ton this efficiency Any well-publicized continued increase energy importance the one supporting and goals that cap. actions would factors next growth further We the cap. XX decisions Given hinder this decade, country’s self-imposed for China’s China and for million capacity in the in of ceiling be last capacity over policy

last operating tons from in permits compared While either outstanding in million operating be metal plants permits will with to complying capacities have of Chinese of are or shuttered existing that roughly these the year, increase transfer added that XXXX we capacity expect an X cap.

tariffs also actions have cap. limit in primary of export country’s We on to XXXX, recently aluminum of aluminum the supporting commodity seen exports China’s reality through grade increased the capacity

days a stood the the the be growth inventories to current of could rest consumption, both average or China from over near launched in the in for in One of we historically years, low a demand short company. expected XX final consumption. slide, remain the long-term outlook point in in levels X world. days XXXX been to as XXXX, at this This XX-year insufficient rebound standalone of and global drop global Relative with XX make of days and XXXX annual to if we on inventories year stock has are the figures XX see adds The to support projected the stocks levels last aluminum.

While And be relative long-term. the the the we aluminum expect uncertainties in in aluminum. fundamentals XXXX, very continue will remain to about that year more underlying in continues balance remain another there favorable global importantly, to economy continue to significant even for for

Now, volatile advance also XXXX to let’s challenges about talk addressing specifically actions market. the important completed in our Alcoa strategy of the while some a of

need First, Spain in some of high last we due rates smelter year, We Warrick high two will we can begin. by after governments of have two regional be to in in Ciprián agreements costs. have gas. on curtailed X production the energy Spanish curtailed aluminum curtailed potlines. invasion cost operations including X maintain increasing In potlines at natural restart national facilities, Europe, cost safe to shortages and Ukraine. impacts skyrocketed to of purchase before at instability. power market partial toward now focus operating partially two adjusting due Russia’s permitting consistent alumina at of electricity signed as although potline July And Norway, and X are worked site’s continued work that production due to wind-based and we to curtailment region offset from we of locations, the planned refinery of the continuing of the electricity construction to Ciprián which smelter. And workforce high negative our we in the for our we San to San we smallest the Also to And Lista our approved

a mentioned top still essential, of I is especially XXXX call, when at of U.S. their transfer insurance our the assets which time in for there related at $X and and completing is reduced strong pension maintained billion liabilities We we rated liabilities to company a sheet, a As beneficiaries. our certain unpredictability the a balance retirees also a lot world. of in by highly

enabled also credit debt and rating position Our facility, an strong revolving improving our and on dividend achieving payments remains to make repurchases investment-grade financial which us while our share untapped.

ingots strides We business locations of made with in hydropower increase as to at working creep capitalize America, Aluminum Australia, In is through and and Brazil, co-located we projects. the smelter on in which significant to powered in the with In restarts additional Portland integration casting capacity customers well growing capacity four on is to the safely its smaller these completed refinery. by XXX% at of continents Norway the progressed all in actions, the creep a America, sustainably, With add our alloys by for our in In In we to North our state project. standard-sized and to capital foundry will now at we we Deschambault supplying with capacity capacity underway restart Victoria. in low-carbon advancing South formats. Alumar continue Mosjøen products announced Europe, increase advance meet project restart both increasing demand technologies. breakthrough a

extensive year-over-year low-carbon our of for products brand. is to suite aluminum, demand in the aluminum of increase is a we significant which low-carbon XXXX, the in industry. EcoLum Sustana In our part see most continued Sustana

our volume, relatively While in sales XXXX. a small still and EcoLum of saw deliveries increased margins overall portion we of

grew European fact, than sales XXXX, EcoLum, Our the driven by in mostly Xx more market. over of

aluminum in for renewable a low Cables, Spira, customers in were company; of and and with examples transmission a large Two this global carbon and recycling producer rolling energy Europe markets metal cable to distribution. key Hellenic us looking

Stewardship We industry’s an Aluminum increased comprehensive also of maintained production. certifications Initiative, responsible third-party most the with our validation

aluminum two sites standards market XXXX, our and to of We and also XX. have We globally. to can certified total to ASI bauxite, additional bringing in sites sell alumina customers ASI-certified number

Technical decarbonize the we the includes map from Agency. the joint Also, Future ahead. This Energy on to actions through initiative, our work which to our progress support developed commercialize we carbon-free Center. in alumina our for the ELYSIS Alcoa’s us breakthrough refining took work process process Renewable Refinery The has Australian of first furthered made its year road XXXX venture helped prepare Finally, of at the smelting technologies.

are improvement. start on we year, we laser-focused new As this further

to drive excellence will rigorous operational and promote today’s management meet working to cost challenges growth. future We while

improved are of industry. developing our that margins We technologies in producer opportunities from can low-carbon us products, opportunities via to set others a breakthrough and apart the provide growth create as

announced last week we on that regarding leadership continued executive news focus our will The priorities. team restructured our drive

we it to proven in teams actively across operations, in a Alcoa presentation. face we we intend managing and mentioned of We Western ore that ability to relates his have execute Bill as the have In to supply, portion deliver. are Australia issues as the

are already mine the to While our operations than taking annual mining longer are adjusting iterations, approvals approvals. extend we plan mine Huntly existing permitted our in prior under

matter. We to address this with continue regulators to collaboratively work

are overall we our on stability across drive Meanwhile, and to system improving focused processes facilities. our performance

review our San to XX% recent future smelter Western refinery short-term production to market and And Alumar energy shortages the and per that continue and of Ciprián prompted we refinery most Ciprián excellence. there. led San continue smelter decision situation address to the with output impacts smelter capacity promote restart a monitoring the Lista our the the This restart in reduction that Kwinana from of our the some in We at the to and for agreement Australia. progress to includes at the the workers curtail challenges operating prepare our operational gas

on intent on We’ve focus we worked that improve hard our these several further and financial to we sharpen costs. over position, past as maintaining rigor company’s our are years

more which opportunities liabilities our as market a allows. sheet, to maintain We to risks includes will continue from the reduce work the balance pension strong considering

keeping our on are the focus future we While focus. we programs in needs for also immediate XXXX, success firmly for

to and our for the our R&D are Our vision reinvent industry. fundamental long-term growth programs aluminum strategy

the process the include and Australia Future purification initiative. joint technologies ELYSIS Refinery the our of venture, scrap breakthrough Our

we intend are be we industry’s line, this focused us we is and at technology comprehensive products, our to critical we reduce developing road key We’ve well market and and products especially continue growth. venture volumes Due help for And Sustana them industrial further to and and to Today, continued continues progress linked production low-carbon this this across growth and strategy both world as demand the sustainability reach of most innovation building year-over-year to our ELYSIS Our scale. goals. that map that work customers are in seen choice, delivering to low-carbon of see towards tightly offer the margins gases. vital. on in will are working can positioned our joint as a supplier as to greenhouse our company, we a portfolio

responsible a with intensity, of we shared bring working significant a and cooperatively powered to with our industry’s by portion lowest our the renewable and to value. carbon refining portfolio We being our reliable initiatives, smelting committed producer, dioxide system Underpinning global is remain all have a communities energy. of

We clear and will long-term mid also those have goals, to make and against targets. we continue progress sustainability

we I’d a have to summarize few I just before Finally, questions. like points take

was First, study in a XXXX. in our industry case contrast

work to emphasize with helped again operational on drive growth. and projects on we operate the more events why the an of half our half first negatively that year offset world in intense can than high with strong excellence the cost very pricing we costs. material raw That future high The back was focus of But continue delivering that influenced markets year. once while consistent

the volatility. managing Next, both know for including the are Alcoa we not simply quick recovery. opportunities demands wait Still, short has ahead. and market long-term of do adapt assurances we and know how facing world unexpected will producers is the increased production. disruptive a work, to responsible and Alcoans everywhere experienced to hard and

industry. is decarbonize of industry took while and to aluminum and we and our Alcoa Aluminum choice, will fundamentals the our finally, sustainable improve the And an and company the to action products we as We work we producer our are The deliver world opportunity. us are in a vision strong. low-cost working reinvent provides customers is long-term on material to to is for know operate XXXX, demanding. the that continue the

we who we’re the that, questions. With Operator, your ready on have do take line? to

[Operator Instructions] with today Our Emily comes Please first Sachs. Chieng ahead. from go Goldman question

Bill. comments, Good evening, the and Bill. on new and for you congratulations And role, Roy thank the

Emily. Thanks,

the new received? you have first is enforced could that Western these what’s address? Australia recently frame a have plan expect environmental alumina. there you time approvals now to to the around there? And question approvals mine you mind requirements Are that share been specifically would see is driving to those as when delays My And perhaps, to in

I appreciate Emily, Yes. the question.

cycle. goes choosing an can put takes have we how and And So mine. us prepare we annual you planning and to mine as where together imagine, that it and adapt for time everything we into

need for order all the permits And we have to operations. set so we in make also an annual and regulatory that of connections we that receive

for the expectations how to in put It environment, longer the of this then to and takes today. us able and protect be into been to And we’re particularly Myara around information we data that we is has permits. receive baseline those amount increasing mining regulators started just to over as have that increase. so area to And the provide relationship place

necessarily not are new and requirements but us that new that just are it’s discussions essentially, a between necessary so the happening regulators. set And more of and discussions

as and it the the importance and play our to we for the of in were all really time, really refineries permits they regulators to company, just that critical coming we Western particularly coming And thought order step and we back, give be through secure is work to process able to these for critical how ourselves bit a because little the from make in just sense permits. Alcoa years because of risk extra we as sure to that process those go of would bauxite mitigation also that a and standpoint delivering needed Australia a so of into have make through

time So that make I that’s demanded just these an expectations fully the as allow way changing going at to the of here. – discussions this end we’re some extra look to have I an sure we intelligent that of point and of of because to confidence to because to happen. some get have them

it’s of approval, a set we’re for bone of midst in next to sort those communities, preparing Part which a etcetera. next the IV North course how review of the That Huntly the is connections discussions Over Myara. access of and with of full we we and big call mine few environmental these that will move years, a in reserves what is larger mine

collaborating just these to critical this few helps we’re in really, needs find manage we’re and Again, confidence that and we sure to those of where process. thing I involved that have next get the this need we so to different quarters And stakeholders right to to all really are course that make of to set I just we and the working can processes. de-risk to it over that do felt operate the was refineries full our be. smartly. that all the be us have it going up I able with what

top because add thing more one on of I think that, Emily, would important. I it’s

are our – these XXXX, at managing really look have over the to few opportunity the smartly. new also managing fine-tune sure we bauxite As these quarters to make grades next we that they refineries course is of the

that effective efficiently, portfolio. as can are cost the and and the Western that to points sure across can the some optimizing And that we make Australia changes to we as so we’ve organization sand been sure learn mud And possibly that are how just make cost think in manage are of to that opportunities making more as we as as possibly and there that efficiently really run coming be. really well running in we to and in I have we’re the to to

– again, improve so the we’re confident to operations permits. we mine refinery confident also get that possibly as will can I that those operations I’m find we can. that and as we – make And I’m ways smartly sure driving and

any that from there cost if there, And Alumina San I a to may, mentioned sticking Great. benefit lower really on That to you’re theme release. in and but seeing been in now. if helpful, touch I was the going Maybe think Europe don’t right was Roy. the Ciprián follow-up, what wanted segment. gas prices for the is the just forward with

gas gas So quarter they will running drive the some some levels to results refinery. at price fourth two, at quarter really lower anticipate again quarter. to commercial couple cost optimize taken trying of the actions: prices; San try have quarter we’ve over lower over our one, actions refinery increases business and Ciprián for lower Europe of that. are the NMA the seeing due of fourth in to improve yes, We we we in Ciprián that to a refinery that first improved prices that San the third

you. Great. Thank

Thanks, Emily.

The next is Citi. question from Please with go Hacking ahead. Alex

for question. Hi, thanks the

a on on to you sheet. And credit, role. the forward. to will congrats Deserve a new Let balance the work my add hopefully, you me going investors Bill lot have chance if especially of hear still from

Just following the question Emily’s cadence up of on on cost.

the quarter. You first sequentially at you cost mentioned that would San lower in expect Ciprián,

the falls costs, second Norway, that or keep into further? Ciprián ahead smelter we assuming keep levels San look quarter, you. current falling, nat is further gas European would to Thank at we or As expect

on see seeing costs. in we’re material finally the key what structure reduction cost is to now raw starting Alex, we’re really some

stronger in a quarter the Aluminum that think is relatively the than to But first prices you starting coke quarter, be chart probably fourth pretty in the tip to we’ve result in see segment. saw guided Pitch over. especially continuing high. the we’re I to

the really up in million to in positive, So from first $XXX quarter Aluminum, guiding we’re million fourth $XXX quarter. the

volatility second out quarter quarter, to the it’s on of market, the what give will look second the in early with we it the prices into do of too prices the indication year. an depend will energy what probably energy And As in do. really

power then Any they Okay, indexed Thanks. smelter, PPAs they if to, two San are to helpful. Ciprián sort you is percentage the or what covered of on be thanks. And signed? Are are prices by LME? anything? would then market color what And prices of the that indexed there

Yes. I Alex, that answer can one.

for in for contracts to that. be for reason the preparing, put January two the where add opportunity of capacity. back not the put total Spanish the really time the to start together operating we of like as over works, restart Ciprián these before, how about San an comments it’s We then programs the where charges the and the a to – said interruptibility that It’s – price. as able that at We’ve order back fixed my things this January were and government and running at And the We together you we full in I prepare were talked structure we completely any add essentially, transmission the up didn’t the pricing really workforce. the to gain an course in restart re-baseline XXXX. XXXX our future. might agreement but – preparing look we’ve So are in with the demand curtail about on the able in to facility smelter of need XX%

thank you. Okay,

Thanks, Alex.

question is go with Carlos Please The from Stanley. next Morgan De Alba ahead.

you the congrats Bill. And the new much. in tenure new on Yes. year best and as very Thank all Happy your Bill, CFO Roy and role.

discussion guess. the I Just the to run just rate, a on question regarding Kwinana alumina, continue

You release, news mentioned in some reduced the yet articles I press utilization you’re supply that gas keeping improved, but the there were the there. capacity has and think

to now. So terms will there you’re first When be how running And tell the contingent depending right need think in the the update what of progressing? something CapEx in change investments? And further we I be you of that $XXX utilization maybe you question. million from important milestones? one decision to when are developments the higher will you hear was for to What an refinery? developments us second my the That on that the on then making success you around related should ELYSIS. take can there would capacity of

Australia, diesel differential And on price reduce. started gas the give answers, the very me number be driven operating to in able we large curtailed, for much first Kwinana, to because on was let look and fill get sense got just asked lot fact of to Bill of particularly can the there, you XX% to didn’t ELYSIS just Western ways couple consumers by other for of gas of just in, of numbers. then have the state reasons. just a about Carlos, so doesn’t of enough we’ve a make it

At we is and We’ve fill maintenance of the very of at XX%. to our good from end seen January, back in continued being of improvements we which some so as a good and we’re should return say running gaps that, to improvement a would normal but to that decisions back events bring able right of next have. a sort start done running not. before or good we not that natural we essentially ease so standpoint in diesel, we seen also was do seen series substituting the back need see see to cost thing good what capacity already. to to progress able of not available on of the operating ones what sort we this of that by All is up in that in normal But contracts. and have up whether haven’t looked but bring the down take the an of is yet have to from I or stability we’ve making and before those we’ve had we that some by stability all downtime about we the start that suppliers So how set point, up, maintenance standpoint. normally intentions activities the be it gas, we made to now fully our much got gas we’re

we’ve as decision so always, and a analyzing that, Carlos. will we let you will as on made as soon know go. keep be we And you we And informed as

and in numbers. jumping qualitatively, about a more talk bit important On second ELYSIS, it the into question I’ll step then just and that well, hit as milestones, Bill can

the obviously, next midst preparing and about, milestones, we’d to that in For first talking more the we’re constructing industrial-scale be important the start cells. up the ones me, of

the of that will And XXXX. so be course happening over

can you XXXX as starting those those see XXXX as as we very the is So and to this that initial the start cells I operate to would as see important we much market continue appropriate imagine will cells those keep imagine, of want operate. operating By yet, defined to we the year over that really on will and the results. a commercial to ELYSIS, what be will course informed And we’ve we’ve idea that to is happen in which available XXXX. capacity started end of is package that installations that so of the XXXX, first said happening first where with can get not we the feel

ability going metal efficiencies sure absolutely can start it’s me, to to to of work And to be quality on PXXXX because so critical at that generate and efficiencies to deliver to to show better that we’ve we’re we’ve got XXXX or we – the the that operating that operate, the got and going is on making planned. capital the capacity

exciting So it’s year. going an to be

million the quarter And keep down that is in the we numbers will the about numbers, income a in to in ELYSIS quarter. on $XX the other to first couple sequentially in $XX of by million that $XX are guided guiding of million. Carlos, first be mind. associated We – contributions with

contributions income. immediately that the sits and hit that contribution, know the that we is are other in you we in for the the when take ELYSIS way So accounting make income

we $XX quarter, year million the ELYSIS first of estimate, full For for the this about in $XX including anticipate year million point. in contributions a at contributions full would

of but timing Now that will some on flex our key best decisions, the point. of at that’s this based estimate

guys. Thank Excellent. exciting much. indeed. Alright. Very very luck, Good you

Thanks, Carlos.

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

evening. idle new your what but of it of takes everyone. just ask the capacity And a happy differently. little good of on restart to some Wanted discussion Hey, year touch piggybacking a little to on kind

also also think extensive markets, you Or what you is that the European some facilities takes potential the restarts, think prices? around Looking see it those there gas of given restart? lower for do some do to

can first take if well in a I’d still is Europe – – operating and can to. chime Bill wants I in Timna, at that as difficult. thing he pretty one The

smelter or to still a in it So prior order before war before. maybe operate even year prices refinery. an a energy Ukraine a better, even in take in place difficult were it very you to the seeing year compare a to It’s that or inflation because we the

over third commercial are that at those have it that to so prices is and were some work long-term We the that to disconnected strategy a And find at for that the were see still have, able lease have you able where Refining to well as teams And a you business I solution when can ones – we those this you through on for API smelter tend the and today. a where been are. be that nor that to would from do. smelters spot But pricing to the the extend rates power gas. just contracts spot continuing operating you’re aluminum that pricing not our relatively curtailed operate that given rates small we point, although giving market as The justify buying return it’s see. was LME alumina incredible spot current

we’re anything, just into the contracts see looking not see that that or continue shorter-term of Europe, series is, yet. for winter certain spot mild some still as that contracts. continues perhaps say potential market and If end look it then we I there seeing I up to as it be emerge but start As are smelters you’ll if think across opportunities when might I’d the on are next coming of opportunities going and particularly or where and that

on difficulty also both there refining happen the we’ve side. could heard I of the the on stuff could is still that the sort think also side rumors that some informed in be some that’s about potential that curtailment And smelting happening happening market.

– want back API facilities more are relief fact tons to speed facility to that, make we we refinery It see at particular example. the in able example good been we where partially and of are decisions how that is the that because in operating only on down Again, but run it more and coming really before is be the point the we a fix we them, curtail gas San good full our to Ciprián smart we a need necessarily San when that producing have so a get to for pricing, creating from again etcetera. place step us. pricing, always the the or we look and we relief value think doesn’t problems Ciprián road, The we we about at

XX% surprised around to risk times consistently December, We because at that, in reiterate us, Just are have tons say hasn’t end more We was there. many you of – X been cash in smelting costs was the to that that about some we at today, million to to metric in Europe. capacity capacity negative. month that high I the of of million that point X.X still numbers talk the making Europe. have going come would think you the that heard And Timna, is XX% put we Roy, offline European were

to as we surprising in prices. of the to capacity close refining is Europe number cash a So, side, of December smelting on would average be majority refining sitting Europe is the we at around capacity the cash gas consider negative look To world, on, the XX% the the negative in that today. add

have January, we in bit but refining Europe lot that prices negative. is Now, a of on capacity gas the little changed in side the a know cash

initially I from at what context is a than what least My guidance, for actually, on XXXX second $XX and my seen the given That’s about was your $XX said. recollection, had we just in Okay. than that helpful. CapEx, came Thanks think by And question lower little thoughts. that lower million. your super you have other million before

be shortfalls any that So, is just would wondering there, pushed getting explanation Thanks. great? out, if any if

out, say wouldn’t pushed necessarily Timna. any were things getting I

you the will generation down. spending seen the company, and the of we and have years, are and the capital flex over cash in that up given we market the – Given situation

I And that made sustaining on last in time at point. there. good we Spain spend and the The curtailed of think we XXXX commitments we it’s gave was November And we back some of so $XXX a in said spend capital XXXX. in time, was guidance smelter the And million around would before you Spain capital.

it market make role, down the into XXXX, going that bit we ratcheted that will showing right times. you on for So, best a With we produce can that at little the we spend that conditions. $XXX we said, and that that based already level sure we million the the we current the $XXX sure have are my make the million in that do tons we maintain good wisely to assets can so new

much. Okay. Thanks very

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

very you to And everyone. I operator. led role. wasn’t Thank hope Good it much the Bill, that afternoon questions you new our

it’s will look about way In follow-up to terms XXXX, resolved? then it, of about we to Huntly. I the hopefully million [Technical to my Difficulty] out easiest for $XXX as issue XXXX impact and be Is on this between question, wanted think

number be issue relation fourth to is QX going the you million to us QX. we in to was That able through need cost $XXX in Yes. you this out the put needed is – The there, quarter in to correct. to how much and you ground just

So, it’s that it’s quarter. the segment. unfavorable the of important that unfavorable fourth But $XX in million you fourth first occurred compared some out Alumina items to back in the quarter the

the in million, one-time small $XX segment incremental we quarter had fourth had Alumina and segment. ARO So, some we XXXX, an that set charges an of the of in that were in things charge of

with million. of to So, the the and $XX are guiding alumina, deduct fourth is add back then $XX you quarter we start million the what

just be make to possibly the for $XX needed clear clear. to you million the I that incremental relation un-favorability to quarter. And an able impact. as it’s out that’s model we in We So, to of to could fourth as hope try

quality this Very questions. Roy mentioned that that in me. detail. to also clear the the I one concerns of would to include earlier appreciate response And all

tons, it’s an that that of does. the make we also It to but the tons includes more will inclusive number loss That’s expensive making. be

As lower-quality costs. other and of refineries, through input higher have usages push the through bauxite caustic will we we

So, that’s items, inclusive two of and those costs. tons

you possibilities? that then is theme very Very that but that Thank much happens? time And are punch there price you that. other that for completed what ahead this Ciprián, remediation is this run to year, the the not power some for quickly is And color. go punch spot what at appreciate if I you know helpful. would list us list San by whatever through on or a switching of spent end appreciate restart? today, time there. I could you Do with necessary

not let Lucas, me then targets, am and Yes. I the me hitting let know. answer try if that, and

allowed the set what meant of series of we they year little that take are made There a facility idle ago. investments, a essentially to longer a and for long-term. can certain some to capital were So, others, commitments as are of than imagine, bit have us more facility you we a and than up those number the that the

to is are restart when those so that also, specific we XXXX, we a And was And ongoing. very it’s which that’s commitment to the January inside of get need make to agreement. X, what do ready sure

that is waiting. like workforce been a certain start like of with restart. to They there there and with we and and that in number trainings waiting they and ready that, they and in but have do. are to end, to But helped is activities ready Our in the can ready maintenance some trying fact, And things have that. help jump only certain things

of, to to have make So, still XXXX XX% be really, in of wind and be will or matter already it’s and when raw able be we back need a online got contracts in so so have we the we sure will have are place From spark are start farms those we materials that as to we got the we all just go. coke an constructed. of anodes pots sure ready Those that it bring worth pitch that the again, to production energy necessary, place. make to perspective, that progresses,

phase. are national then regional with permitting those which both So, phases, the a going through connects the will governments. construction be There and

to As speed. but is past, something happened in takes those you able the some to up construction it can often in farms wind Northwestern Spain that’s time imagine, the bring be of to

we run the that of to a term we ready that be contract, when decision we And whether agreement still something these the next the have find for those a comes not But over And the and disclosed we spot, or is we on piece how to will restart XX% working whether time ready that months. piece imagine, will plus on. that so the the we on manage course find the will pots. XX% when have have we you remaining workforce, will we ready because get as not shorter that for made need with the of be a that solution can we of be –

helpful. continued looking was and is that, I to you best what That’s and luck. That very Right. exactly I team, so for, the appreciate of

Thanks Lucas.

with next The Research. Vertical from ahead. Dudas is go question Please Michael

evening Good done, well everyone and Bill.

Thanks Michael.

us recovery are pretty from with your behaving in like your into observations your Roy, are that went share what customers of going rather major be Is could the and what stimulus given it going right to thinking? there customers major pandemic than expectation is we now XXXX? sooner such restrictions you as the be and China factor? a Is later, to

Yes. I color, provide can Mike. some

bit I a different, might always, bit. little try and a will be As little every so generalize customer

of U.S. market, a still lot are particularly. seeing We in the strength

and continue I we – is across to able the demand see probably transportation where packaging different we when seeing would more so just categories, are are product fulfill. the And to than and highlight two we look places we

still there the Europe, I a In uncertainty. lot market more is think running So, is U.S. very well.

destocking, taking they of being amount on we electricity Some been that that we been are little contract the seeing. so of the think reduction of in to have and There quarterly position I Europe, tend what a basis. careful because that a very order. certain back are, they has in to that has a gas reduction prices customers prices the step in think I bit our just uncertainty, And started

more tend bit in what would about you quicker see would there uncertainty now, market start you U.S. than reactions in happen see might a But will we see argue, so those the And the to think is I I a whether gas about as And well it’s as the winter in sufficient you have are probably mild of been a and because they have better storage. some they because potential for the have analyst I recovery – and such recovery. seen coverage to Europe

don’t there, there think see Chinese critical next sell what China, so would we has I as I and a a few next also it’s a perspective, over constructive think been in cautious into From potentially weeks these and approach that I but has but And these critical plenty happens able we I discussions say there expectation much few particularly people I months. how Europe, a Chinese opening impact that of COVID they or to know general about restrictions. is need of the New knock-on are happen is is what Year. this seeing activity – there loosening industrial work between of now to think abrupt through and

seen and comes culminate issues and a of availability things, also then Year. have the just all in stable smelting operations it particularly supply weather lot to side, on because We hot the of of energy droughts when sorts days. of aluminum, between particularly in these China, easy it see all coming And been out of to of hasn’t that an time the sort Chinese will New

spike very because bodes demand well to to the then relatively well coming for bode of loosening size we of for well if I today and it markets might Chinese a in restrictions. comes sort recover of all into when inventory COVID COVID demand out of New saw into are global then of the we of aluminum. low which It of and Chinese really We build of of the be are does very cases that what China market because that out see it, Year, that the bodes the coming just and come start saying coming a we headline

I for there lot the uncertainty, these I look breadcrumbs customers, a but lot of market deficit say, seeing a over of a we of small – last come finding products. is of a have out. significant take are at argue that value-added of still have would been business So, that into providing out happen account come been etcetera. demand, our positivity amount uncertainty.” of happening market look where across a at I what’s in the are world we good weeks, the I a still But to “Hey, relatively is you XXXX always there and and lot uptake comes it more seeing what’s We Again, into and could Ukraine, our more in that’s when certainly, our been what aluminum things recently

good are developed Europe. piece that signs on the to But of see continuing that you our a across am We market. continue very when to disturbances that me, medium market. to improvements into well. going happen terms, long sort there about inside we positive the are if short-term particularly And low-carbon offerings as It’s gives I see markets. to positive look And even what’s of of that’s our and a good we constructive some

you. Thank

Mike. you, Thank

Research. go John with Independent Our Tumazos final ahead. John from Tumazos question comes Please

Thank you.

we Refinery Looking you year Is at retrofit later? smelter what first a where that? a what look the and And location or to of ahead retrofit possible for the or might sooner it ELYSIS would likely the is XXXX refinery? or Future,

So, John, great question, that certainly communicated. and it’s one not defined a not and we yet have

we the all And looking are jurisdictions so where operate. we across

government frontrunners as lot lot of As have course, and as because that’s a of ELYSIS they technology, supportive all be is support of a Canada the supporting where being scheme excitement so of now. a about work of I different investor, wouldn’t first. Canada of is a the had been an great But lot you have right another lot places. can Norway from about well. location. is who the there excitement as obviously, one very as attractive the U.S. energy count in can of a of And done the we a potential in have technology the they place out imagine,

so built, to have application we that the that the going over in watch of we to for XXXX, opportunity us it be first of first the to course quite much what good decide that here want we more is I by in so that and to will get that where be will one very come be. end where would say it’s And package open XXXX, out engineering in application as place that And honest, results And happen. an the XXXX. metal is first as will more saying first when can still been come of

to building across in – get says it started need and So, we really ‘XX. ‘XX

see are us doesn’t It decision need the that that continue location give are today. coming be means those we of it all our we host success being host our It and actual of lot governments need to a progress first with be. on governments good potential cells will where to of industrial-scale time. means and on So, up a to interfacing operated

Refinery yes? as Future, far the of As

Yes.

goes, Remember some far processes, of developing. are John, is and As quickly. we there mechanical really the as a electric one that suite that talked the we are for Out of of and about Refinery Future processes that externally, of calcination. vapor Future suite that that will I recompression address of have Refinery instance,

We included $XXX in of return-seeking recompression to have XXXX we the Out do committed the Australian are talking some getting are MVR pilot facility, at that of in government. funding $XXX is a Wagerup that million. and from vapor capital, about million mechanical the we

sustaining important while are is of capital, of us numbers. down our and we really are critically there skinnied that and and MVR them, one those So, have return-seeking included our in projects a handful for that’s

a smaller far and at bit out the scale. we prove technology as a it’s need away, farther to As calcination, electric little

it’s applied. that would So, be to too where early say

could buy gas across essentially are are markets and not something? that areas available San are are with a ago? or several that the Roy’s do. things on of of become XXXX, look couple follow were some bauxite targets Western to and assuming to XX, focus of the you going go they or like seeing supply supplies from And that and the regulatory Weber in If I soften Worsley you Lista, for would and for approval, Slide get lake bauxite up Ciprián quality, energy across the available hard months Australia you from On or road key you kind

all questions. John, important it’s So, very

we problems. lack and have this something I the is I of easy-to-solve over Alcoa, CEO been first have foremost, and So, time learned

have complicated ways faith I take in time We of and have have the why smart got lots lot of solutions It’s need address that order things them. a that It’s team got I we focused do. one of to honest. why to that as reasons with to changes right the deal the honest, things. things quite be the in we we sure executive that to And some these that made it’s the team make of are on be quite I

that on And things the at to try the things. side, on so so across we as to be our this stockholders without well. can well the honest, quite look viability we solve right have the conditions people best we find for stakeholders as business particularly boundary the long-term strategy And and our bandwidth, these what’s board and we have as for working for

be collaboratively the answers, And I we in a to and that we prior everything another to get operate so conclusion one of like I to that had lined work just when confidence a because can of are confidence conclusion, have a – have facilities these lot decades. bauxite, it able to going said for few so I comes is full timely I up.

we We look ways that But I that can’t working have the it mean bring order to our doesn’t we other bauxite government. the of at solutions. people support in in think and to other host right have look on at or

the towards When your deals contracts you the these around Ciprián a plant like in and lot with worked common of questions build suppliers, we deadlines it the so to energy or a so working And base the well your before Lista Ciprián consensus up that and energy as happen can in San you we as energy really built lot mean to have point to San can that. solving new that Endesa with times, are that for with you host governments to we And [ph] about continue refinery, Ciprián communities future. it in shared comes Energy contracts and a San the Green and short-term get you of up interest. do the will with find get times, load. provide that suppliers That’s for

mechanisms at get advantageous price a contracts. also we see of base sort can what position, come then and for us. how very how then are market have cost to final to that load customer, support – market But can and develops look we We those position the the

back I come it. slide, So, I there and lot people have on we put lot the we it’s there all to that to of it. a things. a right would always right And we problems solve of is is the really lot of to a I and as appreciate but – a back creativity are things into little But step simple think John, to a as my point problems. pretty that things work as are working say, they the complexity – difficult It’s say, just none in going these And easy as is, we is that are much and how because can. with fact question, and need possibly them with good effectiveness doing we that’s

as a efforts Thank Thank your you. you management team. for

Thanks John.

you, John. Thank

our turn conference question-and-answer session. like for Harvey back This concludes to over the remarks. to I Roy closing would

again to you, once operator this call. Thank joined and thanks everybody who

Bill? of Alcoa our it CFO before good to as words friend, Inc. time his Given we today. Bill, Alcoa would be good close I from and for now Corp., few a hear thought

close of just Thanks off. couple make Roy. before will I a we points

knows years. am interaction Roy. is XX the be just thrilled of And has will is you, think really a I side. happy hand she company. better And full at I a The to steady top earnings am investors, that first of the our CFO. She financials with and I thrilled is point about investors, tremendous she Corp., Lucas, Inc. out address question, for side, is stepping help she as than I role, call as I partner in she this CFO a look tremendously Molly’s When I Beerman absolutely and guess abilities, a that, anybody knowledge there of my leader. Molly on buy is that into great Lucas’ sell business have be stepping to the that. so the secondly, XXth And enjoyed

had has people have on of And the as I been that times One the many most highlights people CFO with of have with of on the this call. career enjoyable the been my working call. working this

we new may again. going on over think other each run to the So, time, I role, into

for goodbye will maybe just not see the in probably now, future. it’s but we So, you

group. the opportunity the address to Roy, So, thanks for

Yes. office out Thanks you him far Pittsburgh we going next sit that is are critically me in. are not to in know, as and does important our And Molly moving Operations Bill. he us. away. to and moving He

as the the is end, definitely the we doing my the people estate have value the a up that neighbors. them. going job is job in but right better of not to great a complex of have are do on And as But I going point, think belabor got because the got So, the is going COO. right Molly Bill end, in thing. team real right issues we do great to we CFO. to have working

are improvement in over So, working driving the And I these have things that the believe want that right and company. also reiterate doing I on that sure continuing just – we to to we continued were right once foundation. in the things appreciate are again really a believe way. years, I drive built, that making strong X everybody’s interest do that I we

months few results. helping next walk to Beerman And at you speaking forward are side we before these the first with have XXXX gone my through in I it, going So, us will questions to for our look April again earnings. Molly know answering we so quarter and be

good you So, you safe very Have soon. will to thank talk everybody. to and a Stay night. we

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

You may disconnect. now