Alcoa Inc (AA) Earnings: Misses On EPS, Beats On Revenue

Alcoa Inc (AA) Earnings: Misses On EPS, Beats On Revenue
By Alcoa ( [Public domain], <a href="">via Wikimedia Commons</a>

Alcoa Inc (NYSE:AA) kicks off earnings season with a near miss on consensus for fourth quarter earnings per share. However, the company delivered on revenue in a big way. Alcoa reported a net loss of $2.19 per share. Excluding items, Alcoa earned 4 cents per share. Revenue was reported to be $5.6 billion in spite of 7% lower realized aluminum prices year over year. Analysts had been expecting the aluminum maker to report earnings of 5 cents per share on revenue of $5.43 billion for the quarter.

Shares of Alcoa Inc (NYSE:AA) slumped slightly in after-house trading, falling as much as 3%.

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Breaking down Alcoa’s numbers

The company reported a $1.7 billion non-cash goodwill impairment in connection with legacy smelting acquisitions. It also reported record after-tax operating income for its Engineered Products and Solutions divisions, which increased 20% year over year. Alcoa Inc (NYSE:AA) also reported improved performance for its upstream business for the ninth quarter in a row.

Cash from operations was reported to be $920 million, a $706 million increase sequentially. The aluminum maker had positive free cash flow of $498 million and strong liquidity with $1.4 billion in cash on hand. Alcoa also reported having the lowest year-end net debt since December 2006 and a record low 20 days working capital. That’s a year over year decrease of four days and amounts to about $240 million in cash.

Examining Alcoa’s full year

For the full fiscal 2013 year, Alcoa Inc (NYSE:AA) reported a net loss of $2.3 billion or $2.14 per share. Excluding items, the company reported net income of 33 cents per share—a 36% year over year increase. Full-year revenue was reported as $23 billion, while cash from operations was $1.6 billion. Like in its fourth quarter results, the company also saw record results from its Engineered Products and Solutions division.

Alcoa settles bribery charges

As reported earlier today, Alcoa took a charge against its fourth quarter earnings to settle bribery charges filed by U.S. agencies. The company agreed to pay $175 million to settle the charges, although it will receive credit for the $14 million forfeiture payment that was part of the resolution with the Department of Justice. The total cash to be paid to the Securities and Exchange Commission will be $161 million, payable in five installments over four years. The first $32.2 million installment will be paid to the SEC in the current quarter. The other four installments will be paid in each of the first quarters of 2015 through 2018. The DoJ did not allege and the SEC did not find that anyone at Alcoa “knowingly engaged in the conduct at issue.”

Alcoa also settled charges in connection with AWA, its joint venture with Alumina Limited.

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