Alcoa Corp: Form 10-Q for the period ended Mar 31, 2025

(dollars in millions, except per-share amounts, average realized prices, and average cost amounts; metric tons in thousands (kmt); dry metric tons in millions (mdmt))

Business Update

During the first quarter of 2025, Alcoa continued to execute its key operational and capital allocation objectives, including the formation of the joint venture in Spain with IGNIS Equity Holdings, SL (IGNIS EQT) and repositioning debt in Australia closer to its operating assets, which require considerable capital expenditures to complete mine moves over the next several years. Additionally, the Alumina segment and the Aluminum segment experienced operational stability and strong production results, while the Alumar (Brazil) smelter increased operating capacity to approximately 90% as of March 31, 2025.

During the quarter, the United States government imposed a 25% tariff on certain aluminum imports from Canada under Section 232 of the Trade Expansion Act of 1962 (Section 232), which became effective on March 12, 2025. The Section 232 tariff was previously 10%, and Canadian metal imported into the U.S. was exempted. Approximately 70% of the aluminum Alcoa produces in Canada is shipped to U.S. customers. Throughout the first quarter 2025, Alcoa actively engaged with administrations, governments, and policy makers in the U.S. and globally regarding the impact of tariffs on trade flows and the importance of primary aluminum to the U.S. economy through the deeply integrated aluminum supply chain. Additionally, the Company engaged with customers, suppliers, and logistics companies to avoid supply disruptions.

Portfolio Actions

San Ciprián Operations

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement whereby Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations.

Alcoa and IGNIS EQT contributed $81 (€75) and $27 (€25), respectively, to form the joint venture. Additionally, up to approximately $108 (€100) may be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding requires agreement by both partners and would be shared 75% by Alcoa and 25% by IGNIS EQT.

The transaction was accounted for as an equity transaction where IGNIS EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. Under the terms of the joint venture agreement, IGNIS EQT has a put option whereby IGNIS EQT can require Alcoa Corporation to purchase from IGNIS EQT its 25% interest at the then fair market value upon certain change in control provisions. Alcoa classified the Noncontrolling interest within Mezzanine equity on the Consolidated Balance Sheet, as IGNIS EQT’s redemption is not solely within the Company’s control. Alcoa will recognize earnings attributable to IGNIS EQT’s ownership interest within Noncontrolling interest beginning in the second quarter of 2025.

Debt Repositioning

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs. The Company utilized certain proceeds of these transactions to fund contributions to Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation and the issuer of the outstanding $750 aggregate principal amount of 5.500% Notes due 2027 (the Existing 2027 Notes) and $500 aggregate principal amount of 6.125% Notes due 2028 (the Existing 2028 Notes). These contributions were funded through a series of intercompany transactions, including the repayment of intercompany indebtedness and the issuance of intercompany dividends. ANHBV used such funds, along with cash on hand, to fund the purchase price pursuant to the cash tender offers announced and settled in March 2025, including premiums and transaction costs. The net proceeds also support Alcoa’s general corporate purposes.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the Existing 2027 Notes and Existing 2028 Notes were determined to be issuances of new debt and extinguishments of existing debt. As a result, the Company incurred $12 of debt settlement expenses in the first quarter of 2025 in Interest expense, which was comprised of the settlement premiums, transaction costs, and the write-off of unamortized discounts and deferred financing costs.

Other Matters

On April 28, 2025, Alcoa’s San Ciprián complex was impacted by the widespread power outage across Spain. As a result of the outage, both the refinery and smelter at the complex were affected. Due to the preliminary nature of the information, Alcoa is unable to reasonably estimate the impact to the Company’s results of operations until a thorough assessment is complete.

See the below sections for additional details on the above-described actions.

Results of Operations

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the quarterly and year-to-date periods outlined in the table below.

Selected Financial Data:

(1) API (Alumina Price Index) is a pricing mechanism that is calculated by the Company based on the weighted average of a prior month’s daily spot prices published by the following three indices: CRU Metallurgical Grade Alumina Price; Platts Metals Daily Alumina PAX Price; and FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index.

(2) LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange.

Overview

Sequential period comparison

Net income (loss) attributable to Alcoa Corporation was $548 in the first quarter of 2025 compared with $202 in the fourth quarter of 2024. The favorable change of $346 is primarily a result of:

• Lower intersegment profit elimination
• Higher average realized price of aluminum
• Lower restructuring charges
• Favorable currency revaluation impacts
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher average alumina input costs in the Aluminum segment
• Lower shipments of alumina and aluminum
• Tariffs on imports of aluminum from Canada

Year-to-date comparison

Net income (loss) attributable to Alcoa Corporation was $548 in the first quarter of 2025 compared with $(252) in the first quarter of 2024. The favorable change of $800 is primarily a result of:

• Higher average realized price of alumina and aluminum
• Lower restructuring charges
• Lower intersegment profit elimination
• Favorable currency impacts
• Absence of Net loss attributable to noncontrolling interest

Partially offset by:

• Higher average alumina input costs in the Aluminum segment
• Higher taxes on higher earnings

Sales

Sequential period comparison

Sales decreased $117 primarily as a result of:

• Lower shipments of alumina and aluminum
• Lower average realized price of alumina
• Unfavorable currency impacts

Partially offset by:

• Higher volumes and price from bauxite offtake and supply agreements
• Higher average realized price of aluminum

Year-to-date comparison

Sales increased $770 primarily as a result of:

• Higher average realized price of alumina and aluminum
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina and aluminum

Cost of goods sold

Sequential period comparison

Cost of goods sold as a percentage of sales decreased 5% primarily as a result of:

• Lower intersegment profit elimination
• Higher average realized price of aluminum

Partially offset by:

• Higher average alumina input costs in the Aluminum segment
• Lower average realized price of alumina

Year-to-date comparison

Cost of goods sold as a percentage of sales decreased 20% primarily as a result of:

• Higher average realized price of alumina and aluminum
• Lower intersegment profit elimination
• Lower production costs in the Aluminum segment

Partially offset by:

• Higher average alumina input costs in the Aluminum segment

Selling, general administrative, and other expenses

Sequential period comparison

Selling, general administrative, and other expenses decreased $9 primarily as a result of:

• Favorable currency revaluation impacts
• Decreased fees for professional services
• Lower information technology services

Partially offset by:

• Higher labor costs

Year-to-date comparison

Selling, general administrative, and other expenses increased $11 primarily as a result of:

• Higher labor costs

Provision for depreciation, depletion, and amortization

Sequential period comparison

The Provision for depreciation, depletion, and amortization decreased $11 primarily as a result of:

• Lower depreciation in Brazil and Australia for mine reclamation and bauxite residue storage asset retirement obligations
• Favorable currency impacts

Year-to-date comparison

The Provision for depreciation, depletion, and amortization decreased $13 primarily as a result of:

• Favorable currency impacts
• Lower depreciation expense related to a group of assets reaching the end of their depreciable lives
• Lower amortization of mine development costs

Interest expense

Sequential period comparison

Interest expense increased $8 primarily as a result of:

• Debt settlement expenses for the Existing 2027 Notes and Existing 2028 Notes extinguished in March 2025

Partially offset by:

• The absence of interest incurred on the Alumina Limited revolving credit facility through November 29, 2024 when Alcoa repaid outstanding amounts under the facility

Year-to-date comparison

Interest expense increased $26 primarily as a result of:

• Debt settlement expenses for the Existing 2027 Notes and Existing 2028 Notes extinguished in March 2025
• Interest incurred on the $750 7.125% Senior Notes issued in March 2024

Other (income) expenses, net

Sequential period comparison

Other (income) expenses, net was ($26) in the first quarter of 2025 compared with $42 in the fourth quarter of 2024. The favorable change of $68 was primarily a result of:

• Favorable currency revaluation impacts primarily due to absence of losses recognized in the fourth quarter of 2024 due to the U.S. dollar strengthening against the Brazilian real, partially offset by gains in the current quarter due to the U.S. dollar weakening against the Brazilian real
• Absence of costs related to site separation commitments associated with the Warrick Rolling Mill sale
• Decrease in equity losses from the Ma’aden aluminum joint venture primarily due to lower production costs

Partially offset by:

• Unfavorable mark-to-market results on derivative instruments due to lower power prices in the current quarter
• Decrease in equity income from the Ma’aden bauxite and alumina joint venture primarily due to lower alumina prices and higher production costs
• Higher ELYSIS capital contributions, increasing loss recognition

Year-to-date comparison

Other (income) expenses, net was ($26) in the first quarter of 2025 compared with $59 in the first quarter of 2024. The favorable change of $85 was primarily a result of:

• Favorable currency revaluation impacts primarily due to the absence of losses recognized in the prior year due to the U.S. dollar strengthening against the Brazilian real, partially offset by gains in the current year due to the U.S. dollar weakening against the Brazilian real
• Increase in equity income from the Ma’aden bauxite and alumina joint venture primarily due to higher alumina prices and lower production costs
• Favorable mark-to-market results on derivative instruments primarily due to higher power prices in the current year
• Absence of costs related to site separation commitments associated with the Warrick Rolling Mill sale

Partially offset by:

• Increase in equity losses from the Ma’aden aluminum joint venture primarily due to higher alumina input costs, partially offset by higher aluminum prices

Restructuring and other charges, net

Sequential period comparison

In the first quarter of 2025, Restructuring and other charges, net of $5 primarily related to:

• $3 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter
• $2 for take-or-pay contract costs at a previously closed site

In the fourth quarter of 2024, Restructuring and other charges, net of $91 primarily related to:

• $82 for increase in costs related to the curtailment of the Kwinana (Australia) refinery
• $6 for take-or-pay contract costs at a previously closed site

Year-to-date comparison

In the first quarter of 2025, Restructuring and other charges, net of $5 primarily related to:

• $3 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter
• $2 for take-or-pay contract costs at a previously closed site

In the first quarter of 2024, Restructuring and other charges, net of $202 primarily related to:

• $197 for the curtailment of the Kwinana refinery

Provision for (benefit from) income taxes

Sequential period comparison

The Provision for income taxes in the first quarter of 2025 was $120 on income before taxes of $668 or 18%. In comparison, the fourth quarter of 2024 Provision for income taxes was $136 on income before taxes of $338 or 40.2%.

The decrease in tax expense of $16 is primarily due to the impact of the annualized effective tax rate when applied to current period earnings and decreased income in a jurisdiction where the Company maintains a full tax valuation allowance but is limited in net operating loss usage, partially offset by higher income in certain jurisdictions where taxes are paid.

Year-to-date comparison

The Provision for income taxes in the first quarter of 2025 was $120 on income before taxes of $668 or 18%. In comparison, the first quarter of 2024 Benefit from income taxes was $(18) on a loss before taxes of $(325) or 5.5%.

The increase in tax expense of $138 is primarily attributable to higher income in the jurisdictions where taxes are paid.

Noncontrolling interest

Noncontrolling interest previously related to Alumina Limited’s 40% ownership interest in the AWAC joint venture. Upon completion of the acquisition by Alcoa on August 1, 2024, Alumina Limited and, as a result, ownership in the AWAC joint venture, became wholly-owned by Alcoa Corporation.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement. Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations. Alcoa will recognize earnings attributable to IGNIS EQT’s ownership interest within Noncontrolling interest beginning in the second quarter of 2025.

Sequential period comparison

Net income (loss) attributable to noncontrolling interest was $0 in the first quarter of 2025 and the fourth quarter of 2024.

Year-to-date comparison

Net income (loss) attributable to noncontrolling interest was $0 in the first quarter of 2025 compared with $(55) in the first quarter of 2024.

Net income (loss) attributable to noncontrolling interest of $(55) in the first quarter of 2024 reflects unfavorable restructuring costs and production costs, partially offset by favorable raw material and energy costs.

Segment Information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. The primary measure of performance is Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for each segment.

The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The Chief Operating Decision Maker regularly reviews Segment Adjusted EBITDA to assess performance and allocate resources.

Alumina

Business Update. The average API of $612 per metric ton decreased 5% compared to the fourth quarter of 2024, when API reached an all-time high driven primarily by supply disruptions. Compared to the first quarter of 2024, average API increased by 72%. The majority of third-party alumina sales are linked to the API and higher prices have resulted in strong results for the segment.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián refinery (see Portfolio actions above).

Capacity. The Alumina segment had a base capacity of 13,843 kmt with 3,204 kmt of curtailed refining capacity. There was no change in curtailed capacity during the quarter.

In the table below, total alumina shipments include metric tons that were not produced by the Alumina segment. Such alumina was purchased to satisfy certain customer commitments. The Alumina segment bears the risk of loss of the purchased alumina until control of the product has been transferred to this segment’s customers.

Adjusted operating costs include all production related costs for alumina produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity, the purchase of bauxite from offtake or other supply agreements, and commercial shipping services; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

Production

Sequential period comparison

Alumina production decreased 1% in comparison to the fourth quarter of 2024.

Year-to-date comparison

Alumina production decreased 12% primarily as a result of:

• Full curtailment of the Kwinana refinery in June 2024

Third-party sales

Sequential period comparison

Third-party sales decreased $132 primarily as a result of:

• Lower shipments of alumina primarily due to timing of shipments and decreased trading activity
• Unfavorable currency impacts
• Lower average realized price of $61/ton principally driven by a lower average API

Partially offset by:

• Higher volumes and price from bauxite offtake and supply agreements

Year-to-date comparison

Third-party sales increased $502 primarily as a result of:

• Higher average realized price of $203/ton principally driven by a higher average API
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina primarily due to the full curtailment of the Kwinana refinery, timing of shipments, and decreased trading activity, partially offset by increased sales of externally sourced alumina to satisfy certain customer contracts
• Unfavorable currency impacts

Intersegment sales

Sequential period comparison

Intersegment sales decreased $134 primarily as a result of:

• Lower alumina shipments primarily due to timing of shipments
• Lower average API on sales to the Aluminum segment

Year-to-date comparison

Intersegment sales increased $317 primarily as a result of:

• Higher average API on sales to the Aluminum segment
• Higher alumina shipments primarily due to the Alumar smelter and Warrick (Indiana) smelter restarts

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $52 primarily as a result of:

• Lower average realized price
• Lower shipments
• Unfavorable currency impacts

Partially offset by:

• Higher volumes and price from bauxite offtake and supply agreements
• Lower production costs primarily related to the absence of a write down of certain inventories to their net realizable value

Year-to-date comparison

Segment Adjusted EBITDA increased $525 primarily as a result of:

• Higher average realized price
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher production costs primarily related to operating certain of the Australia refineries with lower grade bauxite, higher labor costs, and increased maintenance

Forward Look. For the second quarter of 2025 in comparison to the first quarter of 2025, the Alumina segment expects to maintain the strong operational performance delivered in the first quarter of 2025, with the benefit from higher shipments offsetting higher production costs.

Alcoa expects total 2025 Alumina segment production and shipments to remain unchanged from its prior projection, ranging between 9.5 to 9.7 million metric tons, and between 13.1 and 13.3 million metric tons, respectively. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery.

Aluminum

Business Update. Aluminum prices increased sequentially with LME prices on a 15-day lag averaging $2,607 per metric ton in the first quarter of 2025. In the first quarter of 2025, the average Midwest premium (United States and Canada) increased by 57% sequentially following the introduction of 25% tariffs on aluminum imports from Canada, which became effective on March 12, 2025.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián smelter (see Portfolio actions above). The joint venture agreement allows for the planned restart of the San Ciprián smelter in 2025, a commitment included in the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021, and subsequently updated in February 2023. In connection with terms of the updated viability agreement, the Company has restricted cash of $75 remaining at March 31, 2025, to be made available for capital improvements at the site and smelter restart costs. In the first quarter of 2025, $11 was released from restricted cash related to smelter restart and capital expenditures incurred in the fourth quarter of 2024 and first quarter of 2025.

During the first quarter of 2025, the Company maintained the controlled pace for the restart of the Alumar smelter and continued actions to improve the smelter’s overall performance. The site was operating at approximately 90% of the site’s total annual capacity of 268 kmt (Alcoa share) as of March 31, 2025.

In the third quarter of 2024, Alcoa entered into a share purchase and subscription agreement with Ma’aden, pursuant to which Alcoa agreed to sell its full ownership interest of 25.1% in the Saudi Arabia joint venture to Ma’aden in exchange for issuance by Ma’aden of approximately 86 million shares and $150 in cash. In accordance with the announced transaction, the metal offtake agreement with Ma’aden was terminated in the first quarter of 2025.

In the table below, total aluminum third-party shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. The Aluminum segment bears the risk of loss of the purchased aluminum until control of the product has been transferred to this segment’s customer. Additionally, Total shipments include offtake from a joint venture supply agreement.

The average realized third-party price per metric ton of aluminum includes three elements: a) the underlying base metal component, based on quoted prices from the LME; b) the regional premium, which represents the incremental price over the base LME component that is associated with the physical delivery of metal to a particular region (e.g., the Midwest premium for metal sold in the United States); and c) the product premium, which represents the incremental price for receiving physical metal in a particular shape (e.g., billet, slab, rod, etc.) or alloy.

Adjusted operating costs include all production related costs for aluminum produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity and energy assets; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

(1) Other includes third-party sales of energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

Production

Sequential period comparison

Production decreased 1% primarily as a result of:

• Two fewer days in the period

Partially offset by:

• Alumar smelter restart

Year-to-date comparison

Production increased 4% primarily as a result of:

• Alumar smelter and Warrick smelter restarts

Third-party sales

Sequential period comparison

Third-party sales increased $6 primarily as a result of:

• Higher average realized price of $207/ton driven by a higher average LME (on a 15-day lag) and higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 57%

Partially offset by:

• Lower shipments primarily due to the absence of volumes from a joint venture supply agreement and the timing of shipments

Year-to-date comparison

Third-party sales increased $263 primarily as a result of:

• Higher average realized price of $593/ton driven by a higher average LME (on a 15-day lag) and higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 83%

Partially offset by:

• Lower shipments primarily due to the absence of volumes from a joint venture supply agreement

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $60 primarily as a result of:

• Unfavorable raw material costs primarily on higher average alumina input costs due to the consumption of alumina purchased in the previous periods when prices were higher
• Higher production costs primarily related to the absence of the full year 2023 and 2024 Inflation Reduction Act benefits recorded in the fourth quarter 2024
• Tariffs on imports from Canada, which was subjected to a 25% tariff under U.S. Section 232 effective March 12, 2025
• Lower shipments

Partially offset by:

• Higher average realized price

Year-to-date comparison

Segment Adjusted EBITDA increased $84 primarily as a result of:

• Higher average realized price
• Lower production costs primarily due to efficiencies at higher production rates
• Favorable currency impacts

Partially offset by:

• Unfavorable raw material costs primarily on higher average alumina input costs, partially offset by lower market prices for carbon materials
• Tariffs on imports from Canada, which was subjected to a 25% tariff under U.S. Section 232 effective March 12, 2025

The following table provides consolidated capacity and curtailed capacity (each in kmt) for each smelter owned by Alcoa Corporation:

(1) These figures represent Alcoa Corporation’s share of the facility Nameplate Capacity based on its ownership interest in the respective smelter.

(2) In the fourth quarter of 2024, the Company completed the restart of 16,000 metric tons per year (mtpy) of previously curtailed capacity at the Portland smelter in Australia that began in the fourth quarter of 2023.

(3) In 2021, the Company announced the restart of its 268,000 mtpy share of capacity at the Alumar smelter in São Luís, Brazil. Production began in the second quarter of 2022. Curtailed capacity decreased from March 31, 2024 as a result of the restart process.

Forward Look. For the second quarter of 2025 in comparison to the first quarter of 2025, the Aluminum segment expects increased costs associated with tariffs on imports of aluminum from Canada and the restart of the San Ciprián smelter.

Alcoa expects 2025 total Aluminum segment production and shipments to remain unchanged from its prior projection, ranging between 2.3 and 2.5 million metric tons, and between 2.6 and 2.8 million metric tons, respectively.

Reconciliations of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation

(1) Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

(2) Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

(3) Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.

Environmental Matters

See the Environmental Matters section of Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Liquidity and Capital Resources

Management believes that the Company’s cash on hand, projected cash flows, and liquidity options, combined with its strategic actions, will be adequate to fund its short-term (at least 12 months) and long-term operating and investing needs. The Company plans to opportunistically access liquidity sources to support its cash position and ongoing cash needs. Further, the Company has flexibility related to its use of cash; the Company has debt maturities of $141 on the Existing 2027 Notes and $219 on the Existing 2028 Notes and no other significant debt maturities until 2029. Additionally, the Company has no significant cash contribution requirements related to its pension plan obligations.

Although management believes that Alcoa’s projected cash flows and other liquidity options will provide adequate resources to fund operating and investing needs, the Company’s access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) Alcoa Corporation’s credit rating; (ii) the liquidity of the overall capital markets; (iii) the current state of the economy and commodity markets, and (iv) short- and long-term debt ratings. There can be no assurances that the Company will continue to have access to capital markets on terms acceptable to Alcoa Corporation.

Changes in market conditions caused by U.S., global, or macroeconomic events, such as ongoing regional conflicts, high inflation, and changing U.S. or global monetary or trade policies could have adverse effects on Alcoa’s ability to obtain additional financing and cost of borrowing. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of liquidity or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the Company. Additionally, the impact on market conditions from such events could adversely affect the liquidity of Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the collectability of outstanding receivables and our cash flows.

Cash from Operations

Cash provided from operations was $75 in the three-month period of 2025 compared with cash used for operations of $223 in the same period of 2024. Notable changes to sources and (uses) of cash included:

• $658 favorable change in net income, excluding the impacts from restructuring charges, primarily due to higher alumina and aluminum pricing and lower intersegment profit elimination, partially offset by higher alumina input costs in the Aluminum segment; partially offset by,
• ($207) in certain working capital accounts, primarily an increase in inventories in the three-month period of 2025 due to higher raw materials prices and volumes mainly in the Alumina segment and timing of aluminum shipments, a decrease in accounts payable in the three-month period of 2025 on lower alumina trading, partially offset by an increase in receivables in the three-month period of 2024 on less favorable payment terms due to a change in product mix and timing of shipments; and,
• ($47) higher income taxes paid on higher current year earnings, in the jurisdictions where taxes are paid, as well as on prior year earnings.

On April 30, 2025, the Administrative Review Tribunal of Australia (ART) issued its decision related to the proceedings Alcoa of Australia Limited (AofA) filed against the Australian Taxation Office (ATO) in April 2022 to contest the Notices of Assessment issued by the ATO in July 2020 related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter. The ATO has 28 days to appeal the ART’s decision. Should the ATO choose not to appeal, the disputed tax claims (and additional related interest and penalties) will be withdrawn. With a withdrawal of the ATO’s claims, the prepaid tax asset of $67 (A$107) would be expected to be refunded to AofA in June 2025, and accrued cash taxes of $216 (A$343) related to the interest deductions would be payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes would be approximately $149 (A$236) through June 2026. See description of the tax dispute in Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

The Company utilizes a Receivables Purchase Agreement facility to sell up to $150 of certain receivables through an SPE to a financial institution on a revolving basis. Alcoa Corporation guarantees the performance obligations of the Company subsidiaries, and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. At March 31, 2025, the SPE held unsold customer receivables of $331 pledged as collateral against the sold receivables.

The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash. In the three-month period of 2025, the Company sold gross customer receivables of $199 and reinvested collections of $199 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In the three-month period of 2024, the Company sold gross customer receivables of $307 and reinvested collections of $291 from previously sold receivables, resulting in net cash proceeds from the financial institution of $16. Cash collections from previously sold receivables yet to be reinvested of $90 were included in Accounts payable, trade on the accompanying Consolidated Balance Sheet as of March 31, 2025. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. See Note I to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

During the first quarter of 2025, Alcoa entered into financial contracts with multiple counterparties to mitigate financial risks associated with changes in aluminum prices, natural gas prices, and foreign currency exchange rates. The aluminum and natural gas financial contracts qualify for cash flow hedge accounting. The foreign exchange financial contracts do not qualify for hedge accounting treatment. These contracts are held by a separate wholly-owned subsidiary of Alcoa Corporation and are intended to limit the Company’s net cash outlays to the committed funding under the San Ciprián joint venture agreement. The associated realized gains or losses have no impact on the results of the San Ciprián operations.

Financing Activities

Cash provided from financing activities was $77 in the three-month period of 2025 compared with $754 in the same period of 2024.

The source of cash in the three-month period of 2025 was primarily $985 net proceeds from the bond issuance (see below), $27 of contributions from IGNIS EQT (see Noncontrolling interest above), partially offset by $890 used to settle cash tender offers on existing debt (see below), and $26 of dividends paid on common stock.

The source of cash in the three-month period of 2024 was primarily $737 net proceeds from the debt issuance for $750 aggregate principal amount of 7.125% Senior Notes due 2031 and $55 of net contributions from Alumina Limited (see Noncontrolling interest above), partially offset by $19 of dividends paid on common stock.

Short-term Borrowings

The Company entered into inventory repurchase agreements whereby the Company sold aluminum to a third party and agreed to subsequently repurchase substantially similar inventory. The Company did not record sales upon each shipment of inventory and the net cash received of $45 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of March 31, 2025.

During the three-month period of 2025, the Company recorded borrowings of $44 and repurchased $49 of inventory related to these agreements. During the three-month period of 2024, the Company recorded borrowings of $21 and repurchased $25 of inventory related to these agreements.

The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

144A Debt

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase.

See Note K to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Credit Facilities

Revolving Credit Facility

The Company and ANHBV, a wholly-owned subsidiary of Alcoa Corporation and the borrower, have a $1,250 revolving credit and letter of credit facility in place for working capital and/or other general corporate purposes (the Revolving Credit Facility). The Revolving Credit Facility, established in September 2016, most recently amended and restated in June 2022 and amended in January 2024, is scheduled to mature in June 2027. Subject to the terms and conditions under the Revolving Credit Facility, the Company or ANHBV may borrow funds or issue letters of credit. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Revolving Credit Facility.

As of March 31, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at March 31, 2025 and no amounts were borrowed during the three-month periods of 2025 and 2024 under the Revolving Credit Facility.

Japanese Yen Revolving Credit Facility

The Company and ANHBV have a $250 revolving credit facility available to be drawn in Japanese yen (the Japanese Yen Revolving Credit Facility). Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds. The Japanese Revolving Credit Facility, established in April 2023 and amended in January 2024 and April 2024, includes covenants that are substantially the same as those included in the Revolving Credit Facility. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Japanese Yen Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Japanese Yen Revolving Credit Facility.

As of March 31, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Japanese Revolving Credit Facility. There were no borrowings outstanding at March 31, 2025. During the three-month period of 2025, no amounts were borrowed. During the three-month period of 2024, $201 (29,686 JPY) was borrowed and $196 (29,686 JPY) was repaid under the Japanese Yen Revolving Credit Facility.

In April 2025, the Company and ANHBV entered into an amendment to the Japanese Yen Revolving Credit Facility, reducing the aggregate commitments from $250 to $200 and extending maturity from April 2025 to April 2026.

Other

In April 2025, the Company amended a $74 term loan extending maturity from May 2025 to November 2025.

Dividend

On February 20, 2025, the Board of Directors declared a quarterly cash dividend of $0.10 per share of the Company’s common stock (including common stock underlying CDIs) and Series A convertible preferred stock, to stockholders of record as of the close of business on March 4, 2025. In March 2025, the Company paid cash dividends of $26.

Ratings

Alcoa Corporation’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Alcoa Corporation’s debt by the major credit rating agencies.

On March 3, 2025, Standard and Poor’s Global Ratings affirmed the rating of Alcoa Corporation’s long-term debt as BB and revised the outlook from stable to positive.

On March 3, 2025, Moody’s Investor Service affirmed the rating of ANHBV’s long-term debt as Ba1 and affirmed the outlook as stable and published Alumina Pty Ltd’s long-term debt rating as Ba1 with a stable outlook.

On March 3, 2025, Fitch Ratings published Alumina Pty Ltd’s long-term debt rating as BB+ with a stable outlook.

On February 28, 2025, Fitch Ratings affirmed the rating for Alcoa Corporation and ANHBV’s long-term debt as BB+ and affirmed the outlook as stable.

Ratings are not a recommendation to buy or hold any of Alcoa’s securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

Investing Activities

Cash used for investing activities was $108 in the three-month period of 2025 compared with $117 for the same period of 2024.

In the three-month period of 2025, the use of cash was primarily attributable to $93 related to capital expenditures and $15 of cash contributions to the ELYSIS partnership.

In the three-month period of 2024, the use of cash was primarily attributable to $101 related to capital expenditures and $17 of cash contributions to the ELYSIS partnership.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, https://www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, media broadcasts, and webcasts.

See Part II Item 7A Quantitative and Qualitative Disclosures About Market Risk of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024. Our exposure to market risk has not changed materially since December 31, 2024. Refer to Part I Item 1 of this Form 10-Q in Note M to the Consolidated Financial Statements under caption Derivatives for additional information.

(a) Evaluation of Disclosure Controls and Procedures

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures were effective as of March 31, 2025.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the first quarter of 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A full discussion of our risk factors can be found in Part I Item 1A. Risk Factors of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.