Earnings call transcript: Alcoa Q2 2025 sees revenue dip and stock decline

Alcoa Corporation reported its earnings for the second quarter of 2025, revealing a sequential revenue decrease of 10% to $3 billion. The company’s net income stood at $164 million, translating to $0.62 per share, with adjusted net income at $103 million or $0.39 per share. With a robust return on equity of 20% and a P/E ratio of 9.17, InvestingPro analysis suggests the stock is currently undervalued. Despite positive free cash flow and strong fundamentals, Alcoa’s stock fell by 1.05% to $35.65 in premarket trading, reflecting investor concerns over declining revenues and market conditions.

Key Takeaways

• Alcoa’s Q2 2025 revenue decreased by 10% sequentially to $3 billion.
• Net income reached $164 million, with adjusted earnings per share at $0.39.
• The stock price dropped by 1.05% in premarket trading.
• The company completed a significant sale of its stake in Ma’aden Joint Ventures for $1.35 billion.
• Primary aluminum demand is projected to grow outside China, while tariffs impact market conditions.

Company Performance

Alcoa’s performance in Q2 2025 was marked by a notable decline in revenue, down 10% sequentially, which was a significant factor in the stock’s negative reaction. The company maintained profitability with a net income of $164 million, but adjusted earnings per share at $0.39 indicated challenges in maintaining margins. The sale of a 25.1% stake in Ma’aden Joint Ventures for $1.35 billion highlights Alcoa’s strategic moves to optimize its portfolio.

Financial Highlights

• Revenue: $3 billion (10% sequential decrease)
• Net Income: $164 million ($0.62 per share)
• Adjusted Net Income: $103 million ($0.39 per share)
• Adjusted EBITDA: $313 million
• Cash from Operations: $488 million
• Positive Free Cash Flow: $357 million

Market Reaction

Alcoa’s stock experienced a 1.05% decline to $35.65 in premarket trading following the earnings release. This reaction reflects investor concerns over the company’s revenue decrease and the broader market conditions impacting aluminum prices. The stock remains within its 52-week range, yet the decline suggests cautious sentiment among investors.

Outlook & Guidance

Alcoa projects adjusted aluminum shipments between 2.5 and 2.6 million metric tons. The company has lowered other corporate costs to $160 million while increasing interest expenses to $180 million. Return-seeking capital expenditures are reduced to $50 million, with expected quarterly tariff costs around $215 million. These adjustments reflect Alcoa’s strategic response to current market conditions.

Executive Commentary

CEO Bill Oplinger stated, "We delivered strong performance across the areas within our control," emphasizing the company’s operational achievements despite market challenges. CFO Molly Beerman added, "At current pricing, we are near neutral or even slightly positive," indicating a cautiously optimistic outlook for future quarters.

Risks and Challenges

• Tariff impacts: Ongoing tariffs continue to affect aluminum prices and market dynamics.
• Market volatility: Fluctuating LME aluminum prices present challenges for stable revenue.
• Operational delays: The delayed restart of the San Ciprián facility could impact future production capacity.
• Regulatory hurdles: Approval processes for mining operations in Western Australia pose potential delays.
• Competitive pressures: Maintaining a competitive edge in a volatile market remains a key concern.

Q&A

During the earnings call, analysts inquired about the potential impacts of Brazilian tariffs and the delays in Western Australia’s mine approvals. Executives addressed these concerns, emphasizing strategic measures to mitigate risks and optimize operations under current market conditions.

Full transcript - Alcoa Corp (AA) Q2 2025:

Conference Operator: Good afternoon and welcome to the Alcoa Corporation second quarter 2025 earnings presentation and conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Louis Langlois, Senior Vice President of Treasury and Capital Markets. Please go ahead, sir.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: Thank you and good day everyone. I’m joined today by William Oplinger, our Alcoa Corporation President and Chief Executive Officer, and Molly Beerman, Executive Vice President and Chief Financial Officer. We will take your questions after comments by Bill and Molly. As a reminder, today’s discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the Company’s actual results to differ materially from these statements are included in today’s presentation and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today’s presentation. We have not presented quantitative reconciliations of certain forward-looking non-GAAP financial measures for reasons noted on this slide.

Any reference in our discussion today to EBITDA means adjusted EBITDA. Finally, as previously announced, the earnings press release and slide presentation are available on our website. Now I’d like to turn over the call to Bill.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you, Louis, and welcome to our second quarter 2025 earnings conference call. We delivered strong operational performance this quarter, both in terms of safety and stability. This is an important value driver for the company. We maintained a fast pace of execution on our priorities and continued to steer through changing market conditions. Let’s begin with safety. Safety performance remained strong in the second quarter, with no fatal or serious injuries reported. Injury rates continued to trend below our full year 2024 benchmarks, supported by a sustained emphasis on leader time and field. This initiative enables leaders to engage directly with teams, conduct safety observations, and deliver both positive reinforcement and constructive feedback. We continued executing on our strategic priorities. On July 1, we closed the sale.

Supporting Speaker, Alcoa Corporation: Of our 25.1% stake in the Ma’aden.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Joint Ventures for a total value of $1.35 billion, consisting of $1.2 billion of MOD and shares and $150 million of cash. In late April, we successfully concluded a five year tax dispute in Australia with a favorable ruling for Alcoa. The Australian Review Tribunal affirmed our long standing position, determining that no additional tax was owed. This outcome reflects the substantial effort and dedication of our internal and external legal and tax teams, whose strong defense was instrumental in achieving this result. Throughout the quarter, we steered through frequent tariff updates that demanded agile decision making and rapid adjustments across both sales and supply operations. We redirected portions of our Canadian production to serve non-U.S. customers to mitigate Section 232 tariff impacts. In parallel, we sustained active advocacy and engagement with policymakers on both sides of the U.S.-Canada border.

Finally, our recent customer engagements continue to signal encouraging demand trends. We extended our supply agreement with Prysmian.

Supporting Speaker, Alcoa Corporation: A global leader in energy and telecom.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Cable systems, and completed our first North American sale of EcoLum, a value-added low carbon product, further reinforcing our position as a supplier of choice for sustainable aluminum solutions. In summary, we delivered strong performance across the areas within our control while continuing to advocate for trade policies that support both Alcoa Corporation and the broader U.S. aluminum industry. Now I’ll turn it over to Molly to take us through the financial results.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Thank you Bill. Revenue was down 10% sequentially to $3 billion. In the alumina segment, third party revenue decreased 28% on lower average realized third party price, partially offset by increased shipments. In the aluminum segment, third party revenue increased 3% due to increased shipments and favorable currency impacts, partially offset by a decrease in average realized third party price. While the Midwest premium increased during the quarter in response to the increase in U.S. tariffs, the increase was more than fully offset by lower LME, resulting in a decrease in the realized price of aluminum. Second quarter net income attributable to Alcoa Corporation was $164 million versus the prior quarter of $548 million, with earnings per common share decreasing to $0.62 per share. On an adjusted basis, net income attributable to Alcoa Corporation was $103 million or $0.39 per share. Adjusted EBITDA was $313 million.

Let’s look at the key drivers of EBITDA. The sequential decrease in adjusted EBITDA of $542 million is primarily due to lower alumina and aluminum prices and increased U.S. Section 232 tariff costs on aluminum imported into the U.S. from our Canadian smelters. The alumina segment adjusted EBITDA decreased $525 million, primarily due to lower alumina prices. In addition, higher production costs, energy costs, and raw material costs were only partially offset by higher volumes. The aluminum segment adjusted EBITDA decreased $37 million, while lower metal prices and unfavorable currency were more than offset by lower alumina costs. The segment was impacted by $95 million in U.S. Section 232 tariff, which includes the increase in the tariff rate from 25% to 50% effective June 4th. These impacts were only partially offset by price mix improvements and higher volumes.

Outside the segments, other corporate costs increased while intersegment eliminations changed favorably due to lower average alumina price requiring less inventory profit elimination. Moving on to cash flow activities for the second quarter, we ended the quarter with cash of $1.5 billion. Cash from operations was positive again this quarter, providing $488 million along with a working capital release of $251 million. Working capital decreased from the first quarter as accounts receivable came down with the lower prices for alumina. Subsequent to close of the second quarter on July 1, we received approximately 86 million shares of Ma’aden and $150 million of cash for the sale of our interest in the Ma’aden joint ventures. The majority of the cash will be used to pay related taxes and transaction fees. Moving on to other key financial metrics, the year to date return on equity was positive at 22.5%.

Working capital was flat sequentially at 47 days. Our second quarter dividend added $27 million to stockholder capital returns. We had positive free cash flow for the quarter of $357 million. Turning to the outlook, we have 4 adjustments to our full year outlook. First, we are adjusting our annual outlook for aluminum shipments to 2.5 to 2.6 million metric tons, down from our initial estimate of 2.6 to 2.8 million metric tons. The change is due to reduced shipments from the San Ciprián smelter where the restart was disrupted by the nationwide power outage in April. As separately announced earlier this week, the joint venture has decided to resume the restart process in the third quarter. The reduction in aluminum shipments will primarily impact the third quarter due to the timing of the San Ciprián ramp up.

Second, we are lowering other corporate costs to $160 million from our initial estimate of $170 million due to reductions in corporate expenses and favorable currency impacts. Third, we are increasing our outlook for interest expense to $180 million from our prior estimate of $165 million due to unfavorable value added tax assessments. Last, we have adjusted the return seeking CapEx outlook for 2025 to $50 million, down from $75 million as the pace of spend has not matched the original forecast for the third quarter of 2025. In the alumina segment, we expect performance to improve by approximately $20 million with lower maintenance costs and higher production. In the aluminum segment, we expect higher Midwest premium revenue in relation to the increased tariffs. Premium changes can be calculated from the sensitivities provided in the Appendix.

Those premium gains will be offset by approximately $90 million in sequential expense increase for tariff costs with the increase in the U.S. Section 232 tariff rate from 25% to 50%. We expect quarterly tariff costs to approximate $215 million based on an LME of $2,600 and Midwest premium of $0.67 per pound. While costs related to the San Ciprián restart will be higher sequentially, they are not material and we expect to cover with improvements in other operations. Alumina cost in the aluminum segment is expected to be favorable by $100 million. Our updates exclude impacts from the recently announced tariffs on U.S. Imports from Brazil below EBITDA. Other expenses in the third quarter are expected to remain consistent with the second quarter. Based on last week’s pricing, we expect third quarter operational tax expense of $50 to $60 million.

Tax expense in the third quarter is notably higher than the second quarter, which included a catch up benefit to reflect the annualized effective tax rate when applied to year to date earnings. In the appendix to the earnings materials, you will see that our Midwest paid and Midwest unpaid premium sensitivities have been updated to reflect the expected trade flows as a result of additional tariff impacts. We also revised our regional premium distribution to align with our efforts to redirect tonnes and optimize margins. Currently, approximately 30% of our Canadian aluminum production is available for spot sales and can be redirected to customers outside the U.S. when the premium shipping and tariff netback calculations favor another destination. Additional updates to our sensitivities may be needed as we continue to adjust our trade flows to the tariff structure. Now I’ll turn it back to Bill.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thanks, Molly. While tariffs continue to drive.

Supporting Speaker, Alcoa Corporation: Near term volatility, the broader outlook for.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Aluminum demand remains robust. This slide illustrates Alcoa Corporation’s long-term demand forecast, underpinned by powerful global megatrends across key sectors. Transportation leads as the largest and fastest growing sector, driven by the shift to electric vehicles, lightweighting initiatives, and increased vehicle production. Construction shows more modest growth, tempered by a slowdown in China, though emerging markets and favorable macroeconomic conditions like lower long-term interest rates and increased fiscal spending in Europe offer upside potential. Packaging is expanding rapidly, fueled by consumer preference for recyclable materials.

Supporting Speaker, Alcoa Corporation: Electrical demand is accelerating due to the.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Global energy transition, with aluminum playing a critical role in renewable power generation and grid modernization. Other sectors, including consumer durables and machinery and equipment, are also expected to grow steadily. Importantly, the geography of growth is shifting. Primary aluminum demand is projected to grow significantly faster in markets outside China at a 3% CAGR from 2025 to 2030, while China’s growth slows to just 0.2% CAGR, largely met by recycled metal. Within Alcoa’s core regions, North America is expected to lead with a 3.8% CAGR and Europe is projected to grow at 1.5%. Three structural drivers underpin the overall aluminum growth trajectory. The green and digital transition. Aluminum is essential to electrification, decarbonization, and digital infrastructure, supporting everything from electric vehicles to data centers. Second is the rise of developing economies, the China transition, and reshoring in North America and Europe.

As China’s growth moderates, developing economies are stepping up. Meanwhile, reshoring in North America and Europe, often driven by trade policy, continues to boost regional demand. Third, material substitution. Aluminum’s recyclability and performance make it a preferred alternative to copper, plastics, and other materials, especially in closed loop systems. Despite short term uncertainty, these megatrends provide a resilient and compelling roadmap for long term aluminum demand growth. Now turning to our markets, starting with alumina. After a sharp decline during the first quarter, alumina prices rebounded somewhat in recent months. As noted in our previous earnings update, over 80% of Chinese refineries were operating at a deficit due to high bauxite prices and low alumina prices. In response, approximately 10 million metric tons of refining capacity in China was curtailed or reduced for maintenance during April and May.

These production cuts contributed to a more balanced market and supported the price recovery seen in the second quarter. Looking ahead, market dynamics will continue to be shaped by capacity expansions in Indonesia, India, and China. As new supply comes online, we anticipate further production cuts and plant maintenance in China may be necessary to maintain market balance in the second half of the year. On the bauxite front, prices have remained elevated due to supply uncertainty stemming from mining license withdrawals in Guinea. These disruptions could intensify with the onset of the rainy season, further tightening supply in this dynamic environment. Alcoa’s global refinery network continues to provide reliable aluminum supply to both our smelters and key customers. We’re also capitalizing on high bauxite prices. With our Darutti mine on track to achieve record sales volume this year, let’s.

Supporting Speaker, Alcoa Corporation: Now move on to aluminum.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: LME prices dipped in April, coinciding with the reciprocal tariffs announced on April 2, but regained momentum over the course of the quarter. Despite this recovery, prices remained below first quarter levels, reflecting ongoing market volatility. U.S. Midwest premium initially surged in early June following the implementation of the 50% Section 232 tariffs, reaching $0.68 per pound and now stands at $0.67 as of late last week. This remains below analysts’ estimates of approximately $0.75 per pound to fully offset the tariff cost. The Midwest duty unpaid index, calculated by subtracting the tariff from the duty paid premium, has shown negative or near zero values at times. This theoretical index only holds when the market is priced on marginal imports, which hasn’t consistently been the case. In response, we sold over 100,000 metric tons of Canadian metal normally destined for the U.S. to non-U.S.

customers since March and will continue this strategy until the Midwest premium fully reflects the new tariff structure. From a demand perspective, conditions remain steady in both Europe and North America, although sector performance is mixed. Electrical and packaging continue to perform well, construction appears to be stabilizing, and automotive remains the most affected by tariff-related uncertainty. In China, easing trade tensions with the U.S. are providing a modest boost to demand. On the supply side, growth was limited in the second quarter with only marginal increases from smelter restarts and expansions. Global production remains constrained, particularly outside of China. Specific to Alcoa Corporation in North America, our value-added product order book remains stable with strong demand for slab, billet, and rod. In Europe, VAP volumes improved slightly in the second quarter with billet demand strengthening and rod and slab demand holding firm.

However, foundry orders softened in both regions largely due to uncertainty in the automotive sector tied to tariff impact. We are progressing the approvals for our next major mine regions in Western Australia, Myra North and Holyoke, as well as our current mine plan which had been referred by a third party. The 12-week public comment period for both approvals, which began in late May, is a statutory part of the environmental impact assessment process. It enables individuals, communities of communication and engagement. The focus of the campaign is to ensure that the public has access to accurate information and facts about our environmental performance in Australia and understands our commitment to responsible mining in the northern Jarrah forest.

Some key highlights include over 55 years of rehabilitation experience, only 2% of the northern Jarrah forest has been cleared for mining, no mining in old growth forests, operations are limited to areas previously cleared for timber, and 75% of cleared forest has been rehabilitated. The campaign also showcases the expertise and dedication of our Alcoa professionals who apply a science-based approach to biodiversity and rehabilitation. Given the complexity of advancing two mine approvals at the same time, the volume.

Supporting Speaker, Alcoa Corporation: Of documentation submitted by Alcoa and independent.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Experts and the anticipated effort to review and respond to public submissions, the original timeline for mine approvals is no longer feasible. While ministerial approval was initially targeted in the first quarter of 2026, it is now expected that the process will extend beyond that time frame. Following the public consultation period, we expect the Western Australia EPA will publish a revised timeline. We remain committed to working collaboratively with the Western Australia EPA and other stakeholders to support secure ministerial decisions as early as possible in 2026. In the meantime, we have developed multiple contingency plans and expect to continue accessing bauxite of similar grade until the new.

Supporting Speaker, Alcoa Corporation: Mine regions are operational.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We will continue to engage with stakeholders to fulfill our responsibilities as a trusted miner and to sustain our right to mine for decades to come. To conclude, in the second quarter, Alcoa Corporation delivered strong safety results and operational performance in areas within our control. We also made meaningful progress on our strategic priorities. Looking ahead, we remain focused on executing at pace across our 2025 priorities, enhancing.

Supporting Speaker, Alcoa Corporation: Operational competitiveness, navigating market dynamics to deliver.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Long term value for our stockholders.

Supporting Speaker, Alcoa Corporation: Advancing the approval process for our Western Australia mine plan.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: With that, let’s open the floor for questions. Operator, please begin the Q&A session.

Conference Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your phone. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. When called upon, please limit yourself to two questions and our first question comes from Katja Yankic with BMO Capital Markets. Please go ahead.

Hi, thank you for taking my questions. Maybe starting on the tariff side, Molly, I think you mentioned that the current outlook doesn’t include anything for potential, I guess, 50% tariffs on Brazil. How would, if that does happen, is there any way you get impacted from that? Potentially.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: It depends on if alumina is indeed excluded. Our read of it now is that it’s covered under the annex, but until we see the executive order that would be related to Brazil, we can’t assure that. If that were the case, we are sourcing our U.S. smelters with Brazilian alumina. We could redirect supply and provide them from Western Australia, but obviously that will take time and cost more in terms of shipping. We have that option and depending on how that executive order is written, we can adapt.

Okay, thank you. Maybe just another question, Bill, on the Western Australia contingency plans. Can you discuss what some of those plans could be, and how could that impact your cost?

Supporting Speaker, Alcoa Corporation: At this point, as far as an impact on cost, we don’t anticipate.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Any impact in 2025 or 2026.

Supporting Speaker, Alcoa Corporation: The expectation that we would be into the new mine areas in late 2027 has now slipped out into 2028.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We have a series of contingency plans.

Supporting Speaker, Alcoa Corporation: That cover different mining areas, potentially going deeper in the pits that we’re in, that allow us to be comfortable that we are working through the process.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We’ll get the right approvals.

Okay, thank you.

Conference Operator: Your next question today will come from Alex Hacking with Citi. Please go ahead.

Supporting Speaker, Alcoa Corporation: Yeah, thanks. Bill and Molly, just following up on Katja’s question there on Western Australia. If the delays to the new mine areas are extended, can you keep mining?

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: The lower grade areas for a period.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: Of additional years.

It would be more urgent than that.

Supporting Speaker, Alcoa Corporation: Thank you. We will continue to mine the areas that we’re in today. As I said to Katya, there is no impact on 2025 or 2026. As we said, we expect to be in the new mines in late 2027.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: That slips out until 2028 at this point.

Supporting Speaker, Alcoa Corporation: We do have contingency plans in place that can go all the way up to a 15-month delay if needed.

Conference Operator: Okay.

Supporting Speaker, Alcoa Corporation: What if it’s longer than 15 months? We’ll work through that and we’ll look at what implications it has on operating rates in Pinjarra. We’ll work through that when we get there. Okay, thanks. Just following up on the tariff math, I mean, Molly, you mentioned that I think it was $250 million a quarter in Section 232 cost. Is that being more than offset by what you’re getting on the additional Midwest premium at the moment? Thanks.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Yeah. Alex, let me give you the numbers of what we experienced for the second quarter. If you look at, in our bridge discussion, we talked about the tariffs being $95 million more in the second quarter. That’s on top of the $20 million that we paid in the first quarter. The cost in the second quarter was about $115 million. We only saw a Midwest premium uptick of about $60 million. We had margin compression of about $55 million, and that’s related to our Canadian tonnes. Obviously, we’re getting a benefit on our U.S. tons, but I’m giving you the compression that we felt on the Canadian.

Supporting Speaker, Alcoa Corporation: Sorry, the $60 million additional is that.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: That’s just on the Canadian tonnes, or.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: That includes the U.S. tons just on the Canadian tonnes. Alex, let me just give you a little bit more color. If you look at the pricing today, with LME at $2,600 and Midwest Premium at $0.67 a pound, we are near neutral or even slightly positive if you look at the volumes as a whole because the higher uptick in Midwest Premium on the U.S. tons would be more than the net negative on our Canadian tons. At this current pricing, if this were to hold from a whole year perspective, we would be about neutral to slightly positive.

Conference Operator: Thank you. Perfect.

Supporting Speaker, Alcoa Corporation: Exactly.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: Very helpful.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you. The one point that we continue.

Supporting Speaker, Alcoa Corporation: To make is, and I think other analysts that follow the space make it, the current Midwest doesn’t support the overall.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Tariff costs coming out of Canada.

Supporting Speaker, Alcoa Corporation: Current Midwest is sitting at $0.67, $0.68.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We think it needs to be between.

Supporting Speaker, Alcoa Corporation: $0.70 and $0.75 depending on how.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: You look at it to cover total tariff costs.

Supporting Speaker, Alcoa Corporation: We have moved repositioned metal going that was expected to go into the U.S. that is now going into destinations outside of the U.S.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Because that math doesn’t work currently.

Supporting Speaker, Alcoa Corporation: Anywhere we can take advantage of that, we will and move tons for other destinations.

Conference Operator: Your next question today will come from Daniel Major with UBS. Please go ahead.

Hi, thanks for the questions. Just very quick first one, just to clarify the maths on the tariff costs, you had $115 million cost in the second quarter and you said it’s going to be a negative $90 million delta. So it’s $205 million. The run rate of cost in the second quarter, is that correct?

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: That’ll be the third quarter cost, yes. We’re saying again at latest pricing, so if you dialed forward that would be the $215 that we guided to in tariff cost.

Sorry, you said latest pricing. You mean spot pricing or like?

Sorry. The $205 is what we gave as the outlook for the third quarter. That’s the $90 sequential change. We were also saying that our quarterly tariff cost at today’s pricing is $215.

Got it. Clear. That’s very good, thanks.

Conference Operator: Yeah.

Second question just on San Ciprián. You updated the respective net income drag and cash burn this year. Can you give us any sense of expectations for 2026? At this point, my guess would be the refinery will continue to burn cash. Is there any guidance you can give on either the cash burn or not at the smelter and the refinery?

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Yeah, Daniel, we’re not giving the guide there yet. You’re right. At recent market prices, the Spanish operations are challenged from the smelter. The delay to the restart after the power outage has driven the full ramp up into 2026. We do expect after full ramp up that the smelter will be profitable. The refinery, while having a first quarter 2025 income, will move into a loss position for the rest of the year and will struggle still at this API level into 2026.

Okay, at spot you can confirm that the smelter would be cash neutral.

The smelter had fully ramped up. A level would be profitable.

Supporting Speaker, Alcoa Corporation: Remember, it won’t be fully ramped up in 2026.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: I mean it will hit.

Supporting Speaker, Alcoa Corporation: Our anticipation is that it will hit the ramp up schedule for 2026.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: For the full year, it still will.

Supporting Speaker, Alcoa Corporation: You know, it will be going through the process of ramping up.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: We won’t be fully ramped up till mid year 2026.

Very helpful, thanks.

Conference Operator: Your next question today will come from Nick Giles with B. Riley. Please go ahead.

Supporting Speaker, Alcoa Corporation: Thank you, operator, and good afternoon, everyone.

Conference Operator: This is Henry Hurl on for Nick Giles today. Thank you for taking my question. On our estimates, you have about 50,000 metric tons of spare annual capacity at Warwick. The Midwest premium has increased sharply to reflect that tariffs may be sticking more than originally thought. By my math, the spare capacity at Warwick could generate over $100 million of EBITDA annually. What prevents you guys from restarting this capacity today? Thank you.

Supporting Speaker, Alcoa Corporation: Thanks for the question, and it’s a great question. We’re currently running three lines at Warwick.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We have a fourth line at Warwick.

Supporting Speaker, Alcoa Corporation: That would produce approximately 50,000 tons. The issue in Warwick is that that fourth line needs a lot of work.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: It will take some time to get restarted.

Supporting Speaker, Alcoa Corporation: Our estimate is that it would be about $100 million investment to restart that fourth line, and it would take us about a year to get it up and running. We will certainly continue to run.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: The numbers on Warwick.

Supporting Speaker, Alcoa Corporation: We would need to ensure that the tariffs will stick around for quite a while, given that ramp up curve in.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Warwick, before we made the decision of.

Supporting Speaker, Alcoa Corporation: Investing another $100 million in a restart in Warwick.

Conference Operator: Thank you.

That definitely makes sense.

Thanks for the color there and continued best of luck.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you. Thanks.

Conference Operator: Your next question today will come from Bill Peterson with JP Morgan. Please go ahead.

Yeah, hi, good afternoon and thanks for taking the questions. On the mid-2026 restart of San Ciprián, it still implies 75%. Can you remind us of, I guess, when the term of the agreement with the workforce comes in at and whether the delayed restart has any impact on that.

Supporting Speaker, Alcoa Corporation: Thank you, Bill, for the question. After the power outage occurred in Spain.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We declared force majeure.

Supporting Speaker, Alcoa Corporation: On that contract because it limited our ability to be.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Able to meet the deadlines that are included in the contract.

Supporting Speaker, Alcoa Corporation: Recall that we had anticipated a full restart by October 1, 2025. From there, we had some flexibility on how we run the plant after that full restart because of the power outage. We have said that we were not.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Going to meet that October 1 deadline.

Supporting Speaker, Alcoa Corporation: We have moved it back to the.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Middle part of 2026.

Okay, thanks for that. Kind of a different angle on the tariffs. Last quarter I asked you about conversations with the U.S. Government, but I guess in light of the tariffs remaining where they are now, how should we think about the commercial strategy, things like tariff cost sharing, and maybe perhaps you can share additional color on your shifting flows to non-U.S. customers? How should we think about that in the coming months? Finally, is there any opportunities for relief from the Canadian government in the meantime?

Supporting Speaker, Alcoa Corporation: We have had extensive conversations on both sides of the border. I’ve been talking to the Carney administration often. I’ve been talking to the U.S. administration often. At a 50% tariff, you saw us take action to redirect 100,000 tons.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: To non-U.S. customers, as Molly said in her prepared remarks.

Supporting Speaker, Alcoa Corporation: We have the ability of about 30% of the Canadian volume to be able to redirect that to non-U.S. destination, and we will do so as long as the netbacks make more sense to ship it to other places than the U.S. We’ve been very dynamic and handled the situation very quickly and will continue to do so in the future. I felt like that was a multi-part question. Did I miss any of that?

Yeah, just anything on tariff cost sharing that you might add?

When you say tariff cost sharing, we, through the Midwest premiums, the Midwest premium is largely passing on the higher.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Tariffs to our customers.

Supporting Speaker, Alcoa Corporation: Just to be clear, we are saying the Midwest premium needs to be at, let’s say, $0.75.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Fully cover the tariffs. We’re able to pass through 90% of.

Supporting Speaker, Alcoa Corporation: That flows through a higher Midwest premium to our customers. While we’re not particularly thrilled with it.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: The tariffs, our customers are paying significantly.

Supporting Speaker, Alcoa Corporation: Higher prices for aluminum in the U.S.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: States than they would pay anywhere else in the world.

Understood. Thanks, Bill.

Thanks.

Conference Operator: Your next question today will come from Chris Lafemina with Jefferies. Please go ahead.

Hey, thanks for taking my question, and it might be a dumb question, but isn’t it the case that the tariffs are really just a net neutral for you? Because if you’re diverting tons away from the U.S. because you can get better prices elsewhere, the Midwest premium goes up. Unless the Midwest premium is high enough for you to sell to the U.S., then you won’t sell there. At the end of the day, it’s really, I mean, in equilibrium, it should be a net neutral, and it’s the customers in the U.S. will pay the premium. I’m not really sure why the guidance should be for any net impact other than if you only consider where Midwest premium is today and where the LME price is today. Over time, shouldn’t it be a wash? That’s my first question.

Supporting Speaker, Alcoa Corporation: Let me address this. Molly can certainly feel free to jump in with all the numbers that Molly gave us earlier in the call. In the end, if the Midwest premium.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Reacts accordingly, it’s a net neutral to Alcoa Corporation.

Supporting Speaker, Alcoa Corporation: However.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: There’s a big however there.

Supporting Speaker, Alcoa Corporation: Our customers in the U.S. are seeing significantly higher prices than anywhere else in the world. If you assume that they can pass that on to their customers, then I guess the net neutral to them.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Somebody ends up eating that tariff cost, and there are dedicated supply chains from.

Supporting Speaker, Alcoa Corporation: Canada to our customers, literally trains that go from door to door from our.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Plants to our customers.

Supporting Speaker, Alcoa Corporation: Our belief is that it makes.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: The most sense for the industry to.

Supporting Speaker, Alcoa Corporation: Have metal being able to flow from Canada to the U.S. with either a.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Lower tariff or no tariff at all.

Supporting Speaker, Alcoa Corporation: That’s the best thing.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: We think for our customers and for our industry to be able to do that, right?

In that case, the impact of the tariffs is really on total demand, in which case LME prices would go down. The net impact, I mean, other than the overall kind of price, global LME price impact, the impact on Alcoa should still be neutral.

Supporting Speaker, Alcoa Corporation: Right?

Because either way, the Midwest premium’s got to equal the tariffs over time.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Chris, you have to remember that we do have customer contracts, so we don’t have full flexibility to move the metal dynamically. 70% of our Canadian metal is on contract, so that needs to flow into the U.S. for customer commitments. Okay, thanks.

Sorry, just a second question on the ATO, which I think you owe $225 million in taxes now by the middle of next year. Is any of that provisioned on the balance sheet yet? How do we think about the kind of cash flow impact of and the balance sheet impact of that?

Thank you.

Yeah, that is fully reserved on the balance sheet now as a tax payable.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Great, thanks. Chris, I’m just going to add.

Supporting Speaker, Alcoa Corporation: That is a major win for Alcoa. That was a large overhang on the company and on the stock. We have been battling that for five years now. To get that behind us is a really big deal. I’ll give some credit to our tax and legal team here that stuck with it and really presented a great case. I’m pleased that we’re able to.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Put that behind us. Thank you. Thanks.

Conference Operator: Your next question today will come from Carlos de Alba with Morgan Stanley. Please go ahead.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: Yeah, thank you very much. Hello, Molly and Bill. On the last point you made, Molly, that 70% of your Canadian smelting output is on the contract to be sold to U.S. customers. When can you start renegotiating potentially those contracts so that that 70% decreases?

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Those are annual contracts. Also, understand we have firm customer relationships that we’re not going to jeopardize. Carlos, you could see some flexibility, but it’s going to be a careful balance of respecting our strong customer relations as well as moving the metal to get the best margin.

Conference Operator: All right.

Supporting Speaker, Alcoa Corporation: Okay.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: If I may, just on the progress on the Alumar smelter in Brazil, what is the capacity utilization at which you are running, and when do you expect to get sort of a steady state?

Supporting Speaker, Alcoa Corporation: We continue to struggle with the IMR restart, and we’re sitting at about 92% capacity today. Net net, we moved a little bit forward over the last quarter. The issue there, Carlos, is some of.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: The patched pots that we had not anticipated having to reline are failing faster.

Supporting Speaker, Alcoa Corporation: Than what we had anticipated. It’s a battle we take, I would say, a step and a half.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Forward and a step backward just about.

Supporting Speaker, Alcoa Corporation: Every day in Alumar. We’re anticipating that we’ll have that restarted completely this year. However, I’ve told you that before, and I think you know that’s my target, but I’ve missed my target before, so take that with a grain of salt.

All right.

Conference Operator: Good luck. Thank you very much.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you.

Conference Operator: Your next question today will come from Lawson Winder with Bank of America. Please go ahead.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you, operator.

Hello, Bill and Molly, thank you for today’s update.

Supporting Speaker, Alcoa Corporation: Just wanted to follow up on the Ma’aden closing and whether there’s any new thinking on the potential to monetize that amount or, you know, even just simply lower your overall borrowing cost using that as collateral.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thanks for that.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: While we have the option to monetize those shares during the lockup period, recall the lockup period, we cannot sell shares until the third, fourth, and fifth anniversary, the third each year. To monetize those would be complex transactions, and that would be classified as debt on our balance sheet. It might not really be a cost-effective source of liquidity either. While we don’t expect to hold the shares for an extended period of time after each lockup period expires, we don’t have plans to monetize in advance right now. We don’t have a specific use for the cash that would have us add that debt to our balance sheet.

Supporting Speaker, Alcoa Corporation: As you report those gains and losses going forward, I assume you’ll be adjusting those out.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Yes, it will be mark to market, and you’ll see special items to remove that from our regular operations.

Great.

Louis Langlois, Senior Vice President of Treasury and Capital Markets, Alcoa Corporation: Thank you very much.

Conference Operator: Your next question today will come from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Thank you for taking the question. I’m curious as to the confidence you have in Spain restarting this week that the utility will deliver electricity. Presumably the population grows something like 10% in July and August with tourism, and then there’s air conditioning, electricity demand in the heat of the summer. Are there any guarantees of power delivery or something that’s different than August 28th when the wind didn’t blow?

Supporting Speaker, Alcoa Corporation: John, it’s a question that we’ve been wrestling with since the wind didn’t blow on the date earlier in the year. We’ve been working with the national and regional representatives of the country, and they have developed, and obviously not just to our prompting but prompting from other industry in Spain. They’ve approved a list of 65 actions.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: In the energy sector that are designed.

Supporting Speaker, Alcoa Corporation: To make the electricity grid more resilient, they are incorporating additional tools in the.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Networks like voltage control, working on stability.

Supporting Speaker, Alcoa Corporation: In the face of oscillation, they are working to strengthen the electrical system. There’s no guarantees in life, but they are taking, we believe, the right measures.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: To ensure that the power stays on.

As you start up Monday the 14th, how many pots per week do you energize? Is the circumstance in late July and August where you’re really not drawing very much electricity because of the gradual nature of the process?

Yes.

Supporting Speaker, Alcoa Corporation: It’s a gradual ramp up process and we should hit the target by the middle part of next year. My recollection is there’s 500 pots in Spain, so we’ll be starting, you can do the math on how many pots we have to start to hit total production by the middle part of next year. We’ll be starting a few pots a week to get that restart done.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you. Thanks.

Conference Operator: Your next question today will come from Glen Lecock with Berenberg. Please go ahead.

Supporting Speaker, Alcoa Corporation: Afternoon, Bill and Molly.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Firstly, Bill, just wondering if you could.

Share any thoughts on how discussions with the government are going regarding the tariff. I had heard that maybe Canada could be in line for a reduction relative to the rest of the world. Secondly, I don’t want to put the cart before the horse, but you know, net debt came down. You’re almost within sight of that $1 billion to $1.5 billion range. Just your thoughts on timing for when we may hear some words on capital management and what you’re potentially thinking if it’s not too early.

Thanks, Glenn.

Supporting Speaker, Alcoa Corporation: On the tariff discussion, I want to emphasize exactly how much advocacy and engagement we’ve been doing over the last three or four months. I’ve spent time in Ottawa, I’ve spent a lot of time in D.C. I have met with Mr. Hassett, Mr. Lutnick, Mr. Greer. I even had a very brief, very, very brief discussion with President Trump while I was in Saudi Arabia. We’re talking like a 15 second discussion with President Trump while I was in Saudi Arabia. We’re doing really two things. One is an underlying education of how short the U.S. market is for aluminum.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: How long it would take to.

Supporting Speaker, Alcoa Corporation: Replenish that via building plants in the U.S. and recall, and I know you know this, but building a smelter in the U.S. would probably take us at least five years. In order to replace the 4 million metric tons of aluminum that comes from outside of the U.S., we need 6 gigawatts of energy. That’s not gigawatt hours, that’s 6 gigawatts of energy. It would probably cost $30 billion to put 4 million metric tons here. We’re educating the government on those facts. Secondly, we’re educating them on how tight the supply chains are between the U.S. and Canada and the fact that we think it makes a lot of sense to have metal coming out of Canada to support our downstream customers. There’s one last data point. There’s something like 12 or 13 jobs in the downstream that are supported by every Canadian primary upstream job.

The relationship between how much jobs can be created in the upstream is really outweighed by how many jobs there.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Already are in the downstream processing business in the U.S. Do you want to.

Supporting Speaker, Alcoa Corporation: Address the capital flows?

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa Corporation: Glenn, thanks for the question on cap allocation. We made good progress this quarter on our adjusted net debt target. At the end of the second quarter, we were at $1.7 billion. That’s an improvement from the $2.1 billion from the first quarter. We are about $200 million away from the high end of our target at $1.5 billion. When we reach the top end of the range, we will look across our capital allocation priorities, so returns to shareholders, portfolio actions, as well as any growth opportunities. We do recognize that we have a bit more work to do inside the target. The adjusted debt, which we define as including the gross debt plus the pension, is at $3.2 billion, and that’s above the high end of that range that we’ve targeted at $2.1 billion. We will work on some delevering. We do have our 2027 notes.

A portion of those remain, about $141 million. Those are now callable at par. We also have a portion of our 2028 notes that are now callable with a small premium. That’s about $219 million. We’ll look at keeping in mind that our cash target is $1 billion to $1.5 billion. We’ll work on some delevering.

Thank you.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Oplinger for any closing remarks.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: Thank you for joining our call.

Supporting Speaker, Alcoa Corporation: Molly and I look forward to sharing further progress when we speak again in October.

Bill Oplinger, President and Chief Executive Officer, Alcoa Corporation: That concludes the call. Thank you.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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