0001193125-26-197447
SEC filingNet income rose sequentially on higher aluminum prices and Ma'aden gains but fell year-over-year due to lower alumina prices and tariffs.
For the first quarter of 2026, Alcoa reported net income attributable to Alcoa Corporation of $425 million, up $212 million sequentially from $213 million in Q4 2025, but down $123 million from $548 million in Q1 2025. Revenue of $3,193 million decreased $256 million sequentially (7.4%) and $176 million year-over-year (5.2%). The sequential improvement in net income was driven by higher aluminum prices (average realized price up $460/mt QoQ), favorable mark-to-market on Ma'aden shares, absence of goodwill impairment, and net favorable currency impacts. These gains were partially offset by higher taxes (including a $22 million valuation allowance in Canada) and lower seasonal shipments. Year-over-year, the decline was primarily attributable to lower alumina prices (average API down 50% to $309/mt), tariffs on U.S. aluminum imports from Canada, higher restart costs at San Ciprián, and unfavorable currency, despite higher aluminum prices and Ma'aden gains.
Gross margin fell to 21.3% from 27.6% in Q1 2025, reflecting lower alumina profitability and tariff impacts. Cost of goods sold as a percentage of sales increased 6 percentage points year-over-year. Diluted EPS of $1.60 compared to $2.07 in the prior-year quarter.
Alumina segment third-party sales dropped 55% year-over-year to $657 million, with Adjusted EBITDA turning negative (-$40 million vs. +$664 million a year ago). The decline reflected a 50% drop in average API (to $309/mt), lower bauxite offtake volumes/price, and shipment delays from Middle East conflict and Cyclone Narelle. Sequential performance also worsened: third-party sales fell $322 million, and segment EBITDA decreased $52 million.
Aluminum segment third-party sales rose 33% year-over-year to $2,536 million, and Adjusted EBITDA surged to $694 million from $134 million, a $560 million improvement. The gains came from a $996/mt increase in average realized price (driven by higher LME and Midwest premium up 215% YoY), favorable raw material costs, and higher shipments from the San Ciprián restart. Sequential performance also improved: EBITDA up $174 million on higher prices and lower alumina costs, despite the absence of carbon dioxide compensation and seasonal shipment dip.
For Q2 2026, the Alumina segment expects lower bauxite offtake revenue and higher energy costs (diesel due to Middle East conflict). The Aluminum segment anticipates benefits from inventory repositioning, higher shipments and value-add sales, and lower production costs from the completed San Ciprián restart, partially offset by lower third-party energy sales and increased tariff costs on Canadian imports. Management maintained full-year 2026 guidance: Alumina production 9.7–9.9 million metric tons and shipments 11.8–12.0 million metric tons; Aluminum production 2.4–2.6 million metric tons and shipments 2.6–2.8 million metric tons. On April 7, 2026, Alcoa completed the San Ciprián smelter restart. The company also announced redemption of the remaining $219 million 2028 Notes using cash on hand. Key risks include ongoing Middle East disruption, currency volatility, and tariff policy.
Alcoa's balance sheet remains solid with cash and equivalents of $1,353M and noncurrent marketable securities (Ma'aden shares) valued at $1,485M, providing substantial liquidity. Total debt stood at $2,551M, including $109M in short-term borrowings from inventory repurchase agreements. Shareholders' equity increased to $6,826M from $6,118M at year-end 2025, driven by net income and higher other comprehensive income. The company has $1.25B in undrawn revolving credit facilities, and no borrowings were outstanding under the main revolver.
The filing does not disclose a total purchase commitment figure; however, Note D details take-or-pay power contract costs of $18M in restructuring charges. Environmental remediation reserves total $283M, with expected cash outflows of $76M for the remainder of 2026. The company also has supplier finance program obligations of $115M included in accounts payable.
In Q1 2026, Alcoa paid $27M in common dividends ($0.10 per share). There were no share buybacks. Debt activity was minimal: net borrowings of $100M from inventory repurchase agreements, and the company subsequently announced the redemption of $219M in 6.125% notes due 2028 (to occur in May 2026). Capital expenditures were $119M (3.7% of sales), with the Alumina segment spending $64M and Aluminum $46M. The company did not announce any new buyback authorization.
The Alumina segment saw a dramatic reversal, reporting negative Adjusted EBITDA of $(40)M versus $664M a year earlier, largely due to lower alumina prices and sales volumes (third-party sales fell from $1,463M to $657M). The Aluminum segment more than compensated, with Adjusted EBITDA surging to $694M from $134M, driven by higher aluminum prices and sales. Segment assets at quarter-end totaled $12,510M (Alumina $5,806M, Aluminum $6,704M), up from $11,822M at year-end 2025.