Alcoa Corporation Q4 FY2025 earnings call

• Safety: Safety incident rates stable in Q4, DART and all injuries rates improved for full year 2025. - Operational performance: Achieved annual production records at five smelters and one refinery in 2025, including 16 consecutive years of increased production at Dechambault smelter and 8 consecutive years of record at Mosjøen smelter. - Strategic initiatives: Progressed negotiations on monetizing a transformation site, ELYSIS successfully started its 450 kA inert anode cell, and advanced Western Australia mine approvals. - Financial results: Revenue increased 15% sequentially to $3.4 billion, net income and EPS discussed with notable items like R&D expense reduction, goodwill impairment, interest expense change, and tax benefit.

In the alumina segment, third-party revenue increased 3% in the fourth quarter, with higher shipments of both bauxite and alumina offsetting lower alumina prices. In the aluminum segment, third-party revenue increased 21% due to an increase in average realized third-party price and higher shipments. Fourth quarter net income attributable to Alcoa was $226 million, with earnings per share down slightly to $0.85 per share. On an adjusted basis, net income attributable to Alcoa was $335 million, or $1.26 per share. Adjusted EBITDA was $546 million.

• 2026 alumina production expected to range 9.7-9.9 million tons, shipments 11.8-12.0 million tons. - Aluminum production expected 2.4-2.6 million tons, shipments 2.6-2.8 million tons. - EBITDA items: Transformation costs $100M, other corporate expense ~$160M, depreciation ~$630M, non-operating pension and OPEB expense ~$35M, interest expense ~$140M. - Cash flow: 2026 pension and OPEB required cash funding ~$60M, capital expenditure estimate $750M. - Segment-specific: Alumina segment expected unfavorable ~$30M, aluminum segment unfavorable ~$70M with alumina cost favorable ~$40M.

• Market volatility impacting alumina and aluminum prices. - Geopolitical factors affecting tariffs and trade. - Challenges with smelter restarts like San Ciprian and Alumar. - Uncertainties around CBAM implementation and its impact on costs. - Potential impacts from foreign currency fluctuations.

Q: When compared to initial guidance, 2025 aluminum production and shipments were below expectations. What gives confidence 2026 is attainable?

A: The 2026 guidance is attainable based on progress in restarts like San Ciprian and strong production in 2025 with five smelters achieving annual production records.

Q: Atlantic Alumina related to increasing alumina and gallium production. Interest in domestic alumina supply? Update on gallium project in WA?

A: Alumina is fungible, so Alcoa would consider U.S.-based alumina supply to cut transport costs. Progress is being made on the gallium project in WA with work ongoing with three governments.

Q: Alumina profitability is under pressure. Plans to reduce costs and improve productivity?

A: Alcoa has a low-cost position and will be aggressive in reducing costs without endangering plants, with other higher-cost plants in China under pressure.

Q: Status of Alumar smelter? Update on San Ciprian EBITDA if at full capacity?

A: Alumar had setbacks in Q4, production in Q1 similar to Q4. For San Ciprian, it will reach profitability after restart in 2026 with EBITDA loss of ~$75-100M in 2026, aiming for cash neutrality in 2027.

Q: Update on Western Australia mine moves and Canada tariff exemption?

A: Progressing well on mine moves with response to public comment period, EPA recommendation expected by end of first half 2026. Canada tariff exemption is hard to call with geopolitical changes, but Midwest premium covers tariff expense currently.