Alcoa Corporation

Good afternoon and welcome to the Alcoa Corporation third quarter 2022 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. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. James Dwyer, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good day, everyone. I'm joined today by Roy Harvey, Alcoa Corporation President and Chief Executive Officer, and William Opplinger, Executive Vice President and Chief Financial Officer. We will take your questions after comments by Roy and Bill. 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. reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today's presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA. Finally, as previously announced, the earnings release and slide presentation are available on our website. With that, here's Roy.

Thank you, Jim, and thanks to everyone for joining our call today. As always, we'll first review the quarterly financial results, then discuss our markets and our company, and finally, we'll answer questions after we conclude our prepared remarks. Before we get into the details, however, I'd like to quickly highlight the work that we've done at Alcoa over these past several years to strengthen our company so we can be successful through all market cycles. We've built a much stronger foundation. Our balance sheet is strong, and we are well-positioned to address current challenges, focusing on driving improvement on items within our direct control. We also remain future-focused, as the long-term fundamentals for the aluminum industry remain bright, and we know that we're the company to deliver in a world where strong ESG performance is required. Now, turning to some thoughts on the quarterly results. First and most importantly, we did not have any fatalities or life-altering serious injuries in the third quarter. Our commitment to safety is an unwavering priority. On our financial results, our quarterly net loss was driven primarily by a non-cash charge for pension annuitization, coupled with a sequential decline in aluminum and alumina prices and higher costs for energy and raw materials. In the quarter, we continued to maintain a strong balance sheet and provided returns to our stockholders. We finished the third quarter with a cash balance of $1.4 billion after paying cash dividends of $18 million and repurchasing $150 million of stock. We completed another pension annuity purchase, which transferred approximately $1 billion in pension obligations and related assets. Next, we're continuing to take actions on our operating levels. Russia's war against Ukraine has created uncertainty and a significant energy crisis, which has impacts globally but is most acutely seen in Europe. This situation is also having dramatic knock-on effects for the global aluminum industry, which requires reliable and affordable energy. While our company has limited overall exposure to spot energy costs, Two of our plants in Europe experienced significant losses in the quarter, driven by the volatility in the European energy market. Our Lista plant in southern Norway is our smallest smelter, and in September, we curtailed a third of its 94,000 metric tons of annual capacity to mitigate spiking electricity costs. We have, however, put in place a new fixed price contract that is expected to improve the situation as we move forward, beginning in the fourth quarter of this year. The other challenge is at our San Ciprian alumina refinery in Spain. Costs for natural gas have been exorbitant and remain volatile. In the third quarter, we reduced production to 50% of the site's capacity. In other operational adjustments, we continued to progress on the full restart at the Alumar smelter in Brazil and on the restart of some modest capacity at the Portland Aluminum Joint Venture in Australia. For those sites, we have competitive medium to long-term energy agreements. Also, the power at Alumar will be fully renewable, and we're working to boost the percentages of renewables for the Australian smelter. From an innovation perspective, we announced last month a new high-performance alloy for the billet market that has advantages for a wide range of markets, including high demanding structural applications in the automotive and construction industries. And from a sustainability standpoint, we are proud to now see all our Brazilian locations certified to the Aluminum Stewardship Initiative's performance standards with the addition of our Poços de Caldas site, which includes bauxite mining, alumina refining, and aluminum casting. Finally, we remain bullish on aluminum's long-term fundamentals. While the industry is certainly seeing challenges in the short term, we continue to believe the future of our commodity is bright. as energy scarcity and decarbonization goals are expected to positively influence the aluminum industry's fundamentals. And in this context, Alcoa's history and focus on our portfolio, our R&D programs, and sustainability credentials can help us realize greater shareholder value. For now, though, let me turn it over to Bill to walk through our third quarter numbers. Bill, please go ahead.