Alcoa (NYSE: AA) reported Q1 EPS of $0.28, $0.02 better than the analyst estimate of $0.26. Revenue for the quarter came in at $5.8 billion versus the consensus estimate of $5.94 billion.

“First quarter results show our transformation is moving at ongoing high speed and is fully on course,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “We are organically and inorganically broadening our innovative, multi-material value-add businesses, bringing new capabilities and materials to our aerospace and automotive offerings, and taking swift action in the upstream, making it more competitive. We are pulling on all levers to create sustainable shareholder value.”

End Market Growth Remains Steady

Alcoa is holding steady its 2015 growth projections for the aerospace, automotive, building and construction, industrial gas turbine and packaging end markets.

The Company expects robust global aerospace sales growth of 9 to 10 percent in 2015 driven by strong deliveries across the large commercial aircraft, regional jet and business jet segments. Alcoa estimates a global automotive production increase of 2 to 4 percent for the year, with a 1 to 4 percent rise in North America. The Company is also projecting 5 to 7 percent global sales growth in the commercial building and construction market, 1 to 3 percent global airfoil market growth in the industrial gas turbine market, and a 2 to 3 percent global sales increase in the packaging market.

Alcoa sees increasing orders in the North American heavy duty truck and trailer market, and projects 6 to 8 percent growth for 2015, up from 3 to 7 percent in the previous forecast. However, with weakness in China, Europe and Brazil, the global heavy duty truck and trailer market is projected to decline 2 to 4 percent for the year.

Given final 2014 worldwide aluminum demand, Alcoa has upwardly revised its view of global aluminum demand growth in 2014 to 9 percent, an increase from the prior forecast of 7 percent. This results in global consumption of 54 million metric tons, or 1.2 million metric tons higher than previously forecast. Alcoa continues to project further robust global aluminum demand growth in 2015 of approximately 3.5 million metric tons, equaling 6.5 percent growth and reaching a new record high of 57.5 million metric tons.

Value-Add Portfolio Transformation

Alcoa advanced its strategy to build its innovative value-add portfolio, both organically and inorganically, in the first quarter.

Alcoa acquired TITAL, expanding the Company’s titanium casting capabilities into Europe, with strong customer relationships. TITAL’s titanium revenues are expected to increase by 70 percent over the next five years; approximately 70 percent of TITAL’s revenues are expected to come from commercial aerospace sales in 2019.

The Company’s integration of Firth Rixson is fully on track. Firth Rixson is expected to increase Alcoa’s revenues by $1.6 billion with an additional $350 million EBITDA in 2016.

Alcoa announced it is acquiring titanium leader RTI International Metals to further grow its titanium offerings and to complement its mid and downstream value chain. RTI will grow Alcoa’s advanced technologies for greater innovation power and broaden the Company’s multi-material product suite to meet growing aerospace demand for titanium. RTI will increase Alcoa’s 2014 pro forma aerospace revenues by 13 percent to $5.6 billion. It is also expected to contribute $1.2 billion in revenues in 2019, up from $794 million that RTI generated in 2014. RTI’s profitability is expected to reach 25 percent EBITDA margin in 2019. Alcoa expects to complete the acquisition in two to five months upon obtaining all required regulatory clearances and RTI shareholder approval.

To meet growing European demand for the Company’s innovative wheels, Alcoa doubled capacity in Hungary to produce lightweight, durable, low-maintenance Dura-Bright® EVO surface-treated aluminum truck wheels. The wheels, which were launched on March 27 in North America after the successful European debut, are 10 times more corrosive resistant than their predecessor, the Dura-Bright wheel with XBR® technology, easier to clean and look newer longer. The total global aluminum commercial vehicle wheel market is expected to increase from 30 percent of the total market in 2010 to 50 percent in 2018.

In the midstream, Alcoa continued to take steps to further optimize and improve the competitiveness and profitability of its rolling mill business. To focus the rolled products segment on selling highly differentiated products in growth markets, the Company sold its Belaya Kalitva, Russia facility to a wholly-owned subsidiary of Stupino Titanium Company. All regulatory approvals were obtained and the sale closed on March 31. Terms of the transaction were not disclosed. In North America, Alcoa’s automotive expansion in Davenport, IA fully ramped up and shipped record amounts of automotive sheet to meet growing customer demand. Alcoa’s automotive expansion in Tennessee is on track to be completed by mid-2015.

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