Alcoa (NYSE: AA) reported Q3 EPS of ($1.14), $0.09 worse than the analyst estimate of ($1.05). Revenue for the quarter came in at $2.6 billion versus the consensus estimate of $2.58 billion.

2023 Outlook:

The following outlook does not include reconciliations of the forward-looking non-GAAP financial measures Adjusted EBITDA and Adjusted Net Income, including transformation, intersegment eliminations and other corporate Adjusted EBITDA; operational tax expense; and other expense; each excluding special items, to the most directly comparable forward-looking GAAP financial measures because it is impractical to forecast certain special items, such as restructuring charges and mark-to-market contracts without unreasonable efforts due to the variability and complexity associated with predicting the occurrence and financial impact of such special items. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

The Company expects the outlook for 2023 total alumina and aluminum shipments to remain unchanged between 12.7 and 12.9 million metric tons, and between 2.5 and 2.6 million metric tons, respectively.

Within fourth quarter 2023 Alumina Segment Adjusted EBITDA, the Company expects a $50 million benefit from lower raw material prices, lower production costs and higher volumes, partially offset by $10 million in higher energy costs. Additionally, the Company expects impacts related to lower bauxite grade in Australia to be consistent with the third quarter of 2023.

Within fourth quarter 2023 Aluminum Segment Adjusted EBITDA, the Company expects $35 million in lower raw material prices to be fully offset by unfavorable value add aluminum products sales and higher production costs. Alumina costs in the Aluminum segment are expected to be favorable by $5 million sequentially.

Additionally, the Company expects unfavorable energy impacts of approximately $30 million mainly due to the carbon dioxide compensation changes in Norway. The Norwegian government recently proposed a budget that sets a floor for the carbon dioxide compensation scheme to be paid in 2024 based on 2023 power purchased. Upon approval, the Company expects to record an adjustment of approximately $20 million in the fourth quarter to reverse amounts accrued in cost of goods sold for 2023 credits earned through September 30, 2023. The total impact of this budget proposal on the Company’s full year results would be approximately $25 million.

Other expense for the third quarter 2023 included negative impacts of $35 million, primarily related to foreign currency losses that may not recur.

Based on current alumina and aluminum market conditions, Alcoa expects fourth quarter operational tax expense to approximate $10 million to $20 million, which may vary with market conditions and jurisdictional profitability.

For earnings history and earnings-related data on Alcoa (AA) click here.