Alcoa Inc Q1 Conference Call Highlights

Alcoa Inc AA reported its Q1 earnings on Thursday. Shares of the company are down 4 percent.

Below are some key highlights and takeaways from its conference call:

Operational and Financial Highlights:

• Very strong operational performance, earnings increased in every one of our groups.
• Downstream, highest ever quarterly profits, as well as margins. And the midstream, the profits are up 45% year-over-year.
• On the upstream side, improved performance now 12 consecutive quarters.
• And also good news, productivity, $862 million across all segments year over year.
• Revenue increased over $400 million on a sequential-quarter basis.
• Approximately half of the revenue growth is organically driven.
• You'll note that the effective tax rate of 60% includes a non-cash charge related to a tax holiday initiated in Brazil where we received approval for a 10-year reduction in one of our subsidiary's tax rates.
• EPS once again delivered its 18th consecutive quarter of year-over-year ATOI improvement, with the best ever quarterly ATOI of $209 million.
• This segment reported a record adjusted EBITDA margin of 23.5%, compared to 23.1% in the second quarter and 22.5% in the third quarter last year.
• Overall, results for the quarter are a net gain of $0.12 per share.
• Included in net income is an after-tax charge of $221 million or $0.19 per share primarily for restructuring.
• During the quarter, we permanently closed the Portovesme smelter which accounts for $167 million of the restructuring related charges.
• Overall performance for the quarter was $36 million positive, driven by strong productivity across all businesses and rising regional and value-add product premiums in our primary business.
• EPS continues to demonstrate significant productivity improvements from every area of the business, and you see it again in this quarter.
• We're ending the quarter with $3.3 billion in cash
• As we look to the fourth quarter, we expect another year-over-year improvement in this segment, 8% to 12% increase driven by continued productivity and growth versus the fourth quarter of last year.
• Moving on to the cash flow statement and liquidity, cash from operations totaled $249 million for the quarter, leading to negative free cash flow of $34 million.
• September 11, most of you are aware of it, over $1 billion multi-year Boeing contract basically touching on every platform, sole supplier for wing skins, all-metallic aircraft affected by it.

Aerospace:

• We continue to see a very strong aerospace market and believe growth between 8% to 9% for this year.
• And if you go to large commercial aircraft, we see this even stronger with 12.1% growth.
• And we see a rebounding regional jet market, plus 30.2%, and the highest order book in five years, so that's very good.
• North America, we take our projection for this year up to 3% to 5%.
• We had it before at a little bit wider range, between 2% to 5%.
• We could see the sales are up, $1.2 million in September. And if you look at the year-to-date numbers, I mean up 5.4% from the prior year.
• And if you look at the numbers of Firth Rixson, we project $1.6 billion revenues in 2016 with $350 million EBITDA.