Q2 2024 Alcoa Corp Earnings Call

Speaker Change: Good afternoon and welcome to the Alcoa Corporation's second quarter 2024 earnings presentation and conference call. All participants will be in a listen-only mode.

Operator: Good afternoon, and welcome to the Alcoa Corporation's second quarter 2024 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 telephone's keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to James Dwyer, Vice President, Investor Relations and Pension Investments. Please go ahead, sir.

Speaker Change: 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.

Speaker Change: To ask a question, you may press star then 1 on your telephone's keypad.

James Dwyer: To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to James Dwyer, Vice President, Investor Relations and Pension Investments. Please go ahead, sir.

James Dwyer: Thank you, and good day, everyone.

Speaker Change: I'm joined today by William Oplinger, Alcoa Corporation President and Chief Executive Officer, and Molly Beerman, Executive Vice President and Chief Financial Officer.

James Dwyer: Thank you, and good day, everyone. I'm joined today by William Oplinger, Alcoa Corporation President and Chief Executive Officer, and Molly Beerman, Executive Vice President and Chief Financial Officer. We will take your questions after comments from Bill and Molly. 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 filing.

Speaker Change: We will take your questions after comments by Bill and Molly.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: In addition, we have included some non-GAAP financial measures in this presentation.

Speaker Change: For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today's presentation.

Speaker Change: We have not presented quantitative reconciliations of certain forward-looking non-GAAP financial measures for reasons noted on this slide.

Speaker Change: Any reference in our discussion today to EBITDA means adjusted EBITDA.

Speaker Change: Finally, as previously announced, the earnings press release and slide presentation are available on our website.

Bill: With that, here's Bill.

Bill: Thanks, Jim, and welcome everyone to our second quarter of 2024 earnings conference call.

James Dwyer: In addition, we have included some non-GAAP financial measures in this presentation. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today's presentation. We have not presented quantitative reconciliations of certain forward-looking non-GAAP financial measures for reasons noted on this slide. Therefore, any reference in our discussion today to EBITDA means adjusted EBIT. Finally, as previously announced, the earnings press release and slide presentation are available on our website. With that, here's Bill.

Bill: Before we get to all the good work we have done in the quarter, I'm pleased to say that we are nearing completion of the Illumina Limited acquisition. We held the Alcoa stockholder meeting yesterday, and Alcoa stockholders have voted overwhelmingly to approve issuing Alcoa shares for the transaction.

William F. Oplinger: Thanks, Jim, and welcome everyone to our second quarter 2024 earnings conference call. Before we get to all the good work we have done in the quarter, I'm pleased to say that we are nearing completion of the Illumina Limited acquisition. We held the Alcoa stockholder meeting yesterday, and Alcoa stockholders voted overwhelmingly to approve issuing Alcoa shares for the transaction. The Illumina Limited shareholder meeting occurs in a few hours, and we expect a favorable result there as well, which would lead to an expected transaction closing date of August 1st.

Bill: The Illumina Limited shareholder meeting occurs in a few hours, and we expect a favorable result there as well, which would lead to an expected transaction closing date of August 1st.

Bill: As you've heard me say before, we believe that this transaction is the right deal for both sets of shareholders, and we look forward to realizing its benefits and welcoming Illumina Limited shareholders into Alcoa. Now let's move to the quarter.

William F. Oplinger: As you've heard me say before, we believe that this transaction is the right deal for both sets of shareholders, and we look forward to realizing its benefits and welcoming Illumina Limited shareholders into Alcoa. Now, let's move to the quarterly results.

Speaker Change: First, I am pleased that our safety programs continue to drive the right behaviors and are being reflected in both leading and lagging indicators. Safety is the linchpin of our care for people value and the bedrock upon which we build operational excellence.

William F. Oplinger: First, I am pleased that our safety programs continue to drive the right behaviors and are being reflected in both leading and lagging indicators. Safety is the linchpin of our care for people value and the bedrock upon which we build operational equity. Second, our profitability improvement programs are delivering results and remain on track. Third, operational stability is evidenced by smelter production records at the Canadian System and Motion, a safe and timely curtailment of Quenana, and steadily improving stability at the Aliamar smelter.

Speaker Change: Second, our profitability improvement programs are delivering results and remain on track.

Speaker Change: Third, operational stability is evidenced by smelter production records at the Canadian System and Motion, a safe and timely curtailment of Quenana, and steadily improving stability at the Aliamar smelter.

Speaker Change: In addition, we continue to work toward the best possible resolution at San Ciprian as we strive to find competitive energy solutions and also progress the potential sale process.

William F. Oplinger: In addition, we continue to work toward the best possible resolution at San Cyprian as we strive to find competitive energy solutions and also progress the potential sale process. Finally, while we have been actively working on many fronts to improve the company, favorable alumina and aluminum markets have also helped improve our profitability and cash flows. With that, I will turn it over to Molly, who has the details.

Speaker Change: Finally, while we have been actively working on many fronts to improve the company, favorable alumina and aluminum markets have also helped improve our profitability and cash flows. With that, I will turn it over to Molly, who has the details.

Molly S. Beerman: Thank you, Bill. Revenue is up sequentially to $2.9 billion on higher alumina and aluminum prices.

Molly S. Beerman: Revenue was up sequentially to $2.9 billion on higher alumina and aluminum prices. In the Illumina segment, third-party revenue increased 5% due to a higher average realized third-party price partially offset by lower shipments. In the aluminum segment, third-party revenue increased 16% on higher average realized third-party price and increased shipment. Second quarter net income attributable to Alcoa was $20 million versus the loss in the prior quarter of $252 million, with earnings per share improving by $1.52 to $0.11 per share.

Molly S. Beerman: In the Illumina segment, third-party revenue increased 5% due to the higher average realized third-party price partially offset by lower shipments.

Molly S. Beerman: In the aluminum segment, third-party revenue increased 16% on higher average realized third-party price and increased shipments.

Molly S. Beerman: Second quarter net income attributable to Alcoa was $20 million versus the loss in the prior quarter of $252 million, with earnings per share improving by $1.52 to $0.11 per share.

Molly S. Beerman: On an adjusted basis, the net earnings attributable to Alcoa was $30 million, or $0.16 per share.

Molly S. Beerman: On an adjusted basis, the net earnings attributable to Alcoa were $30 million, or $0.16 per share. Adjusted EBITDA increased $193 million to $325 million. Let's look at the key drivers of EBITDA. The second quarter adjusted EBITDA increase was primarily due to higher average realized third-party prices for alumina and aluminum, partially offset by lower volume and other costs. The alumina segment increased $47 million, primarily as higher alumina prices more than offset higher energy and production costs.

Molly S. Beerman: Adjusted EBITDA increased $193 million to $325 million.

Speaker Change: Let's look at the key drivers of EBITDA. The second quarter adjusted EBITDA increase was primarily due to higher average realized third-party prices for alumina and aluminum partially offset by lower volume and other costs.

Speaker Change: The alumina segment increased $47 million, primarily as higher alumina prices more than offset higher energy and production costs.

Speaker Change: The aluminum segment increased $183 million, primarily due to higher metal prices, partially offset by higher alumina costs.

Molly S. Beerman: The aluminum segment increased $183 million, primarily due to higher metal prices, partially offset by higher aluminum costs. Raw material and production cost improvements more than offset volume impacts related to shipments from our restarted OREC and LUMR smelters. Outside the segments, other corporate costs increased primarily due to various labor-related expenses. Intersegment eliminations were unfavorable in the quarter, which is expected as the higher average Illumina price increase requires more profit elimination.

Speaker Change: Raw material and production cost improvement more than offset volume impacts related to shipments from our restarted OREC and ALUMAR smelters.

Speaker Change: Outside the segments, other corporate costs increased primarily due to various labor-related expenses.

Speaker Change: Intersegment eliminations were unfavorable in the quarter, which is expected, as the higher average Illumina price increase requires more profit elimination.

Speaker Change: Let's look at cash movements within the second quarter on the next slide.

Speaker Change: Year-to-date through June , capital expenditures and working capital changes were our largest uses of cash.

Molly S. Beerman: Let's look at cash movements within the second quarter on the next slide. Year-to-date through June, capital expenditures and working capital changes were our largest uses of cash. The first half of 2024 capital expenditures includes an investment of $38 million, which is a portion of our commitment to purchase two vessels to provide bauxite transportation in Brazil. Two additional vessels will be leased.

Speaker Change: The first half of 2024 capital expenditures includes an investment of $38 million, which is a portion of our commitment to purchase two vessels to provide bauxite transportation in Brazil.

Speaker Change: Two additional vessels will be leased.

Speaker Change: We have an opportunity for significant reductions in bauxite freight costs between our Drudy Mine and Al-Yamah Refinery. We estimate savings to be $14 to $16 per ton of alumina.

Molly S. Beerman: We have an opportunity for significant reductions in bauxite freight costs between our Djirouti Mine and the Al-Yamar Refinery. We estimate savings of $14 to $16 per ton of alumina. The first vessel arrived in Brazil this week, with an additional three ships to be received later this year.

Speaker Change: The first vessel arrived in Brazil this week, with an additional three ships to be received later this year.

Speaker Change: We hired a contract operator with considerable expertise in the region to manage the technical operations on our behalf.

Molly S. Beerman: We hired a contract operator with considerable expertise in the region to manage the technical operations on our behalf. Through the first six months of 2024, working capital will be a use of cash. While we normally start to reduce working capital after the first quarter, higher alumina and aluminum prices in the second quarter raised accounts receivable more than the decrease in inventories, leaving the working capital balance close to flat between quarters. We still expect to continue to reduce the working capital balance throughout the remainder of the year. Moving on to other key financial metrics, while improving, the year-to-date return on equity was negative 5.8%.

Speaker Change: Through the first six months of 2024, working capital is a use of cash.

Speaker Change: While we normally start to reduce working capital after the first quarter, higher alumina and aluminum prices in the second quarter raised accounts receivable more than the decrease in inventories, leaving the working capital balance close to flat between quarters.

Speaker Change: We still expect to continue to reduce the working capital balance throughout the remainder of the year.

Speaker Change: Moving on to other key financial metrics.

Speaker Change: While improving, the year-to-date return on equity was negative 5.8%.

Speaker Change: Days working capital decreased six days to 41 days sequentially, primarily due to a decrease in inventory days, partially offset by a decrease in accounts payable days, both on higher sales in the second quarter and favorable changes in the balances.

Molly S. Beerman: Days working capital decreased six days to 41 days sequentially, primarily due to a decrease in inventory days, partially offset by a decrease in accounts payable days, both due to higher sales in the second quarter and favorable changes in the balance. Our second quarter dividend added $18 million to stockholder capital return. Free cash flow less net non-controlling interest distributions was positive for the quarter at $101 million, improving sequentially by $370 million. The cash balance was maintained at $1.4 billion.

Speaker Change: Our second quarter dividend added $18 million to stockholder capital returns.

Speaker Change: Free Cash Flow Less Net Non-Controlling Interest Distributions was positive for the quarter at $101 million, improving sequentially by $370 million.

Speaker Change: The cash balance was maintained at $1.4 billion.

Speaker Change: In connection with the Illumina Limited acquisition, Alcoa will assume approximately $390 million of the debt drawn on their revolver.

Molly S. Beerman: In connection with the Illumina Limited acquisition, Alcoa will assume approximately $390 million of the debt drawn on their revolver. We are looking at de-levering options and expect to reduce debt levels as we continue to focus on maintaining a strong balance sheet and improving operations. As for the outlook for the third corner,

Speaker Change: We are looking at de-levering options and expect to reduce debt levels as we continue to focus on maintaining a strong balance sheet and improving operations.

Speaker Change: On the outlook for the third quarter, other corporate cost is changing from approximately $120 million to approximately $140 million due to the previously mentioned additional labor-related expenses.

Molly S. Beerman: Other corporate costs are changing from approximately $120 million to approximately $140 million due to the previously mentioned additional labor-related expenses. Interest expenses are changing from approximately $145 million to approximately $160 million related to the Illumina Limited debt assumed at acquisition closing. Return-seeking capital is changing from approximately $90 million to approximately $110 million as we are considering several return-seeking projects with attractive rates of return, primarily enhancements to our value-add product capabilities and small CREEP projects.

Speaker Change: Interest expenses changing from approximately $145 million to approximately $160 million related to the Illumina Limited debt assumed at acquisition closing.

Speaker Change: Return-seeking capital is changing from approximately $90 million to approximately $110 million as we are considering several return-seeking projects with attractive rates of return, primarily enhancements to our value-add product capabilities and small CREEP projects.

Speaker Change: Regarding sequential changes for the third quarter, in the alumina segment, we expect unfavorable impacts of approximately $10 million related to Australia bauxite grade. In the aluminum segment, we expect favorable raw material prices of approximately $10 million.

Molly S. Beerman: Regarding sequential changes for the third quarter, in the Illumina segment, we expect unfavorable impacts of approximately $10 million related to Australia's bauxite grade. In the aluminum segment, we expect favorable raw material prices of approximately $10 million. While the higher price of alumina will increase overall Alcoa adjusted EBITDA, alumina costs in the aluminum segment are expected to be unfavorable by $60 million. Below EBITDA, we expect third quarter interest expense to increase by $5 million. Based on last week's pricing, we expect third quarter 2024 operational tax expense to approximate $60 to $70 million.

Speaker Change: While the higher price of alumina will increase overall Alcoa adjusted EBITDA, alumina costs in the aluminum segment are expected to be unfavorable by $60 million.

Speaker Change: Below EBITDA, we expect third quarter interest expense to increase by $5 million.

Speaker Change: Based on last week's pricing, we expect third quarter 2024 operational tax expense to approximate $60 to $70 million.

Speaker Change: Net income attributable to non-controlling interest will be reported through acquisition closing and is expected to approximate $20 million.

Molly S. Beerman: Net income attributable to non-controlling interest will be reported through acquisition closing and is expected to approximate $20 million. In relation to our expected closing of the Illumina Limited acquisition on August 1st, you will see certain changes in our financial statement. In the appendix, we have included June 30 financials with notations on the changes to be made in the third quarter. As expected, the income statement will no longer reflect the portion of net income attributable to non-controlling interest, and the balance sheet will reflect the debt assumed and collapse the non-controlling interest equity into additional capital. On the cash flow statement, the distributions to non-controlling interests will end. Please see the appendix for additional details. Now I'll turn it back to Bill.

Speaker Change: In relation to our expected closing of the Illumina Limited acquisition on August 1st, you will see certain changes to our financial statements.

Speaker Change: In the appendix, we have included June 30 financials with notations on the changes to be made in the third quarter.

Speaker Change: As expected, the income statement will no longer reflect the portion of net income attributable to non-controlling interest, and the balance sheet will reflect the debt assumed and collapse the non-controlling interest equity into additional capital.

Speaker Change: On the cash flow statement, the distributions to non-controlling interests will end.

Speaker Change: Please see the appendix for additional details.

Speaker Change: Now I'll turn it back to Bill.

Bill: Thanks, Molly. Let's start with the markets. In Illumina, prices are up versus the first quarter. Supply is currently tight, and there is a limited supply of low-carbon projects in the pipeline. The Illumina price surged in the second quarter, driven by several supply-side disruptions and continued strong demand from smelters.

William F. Oplinger: Thanks, Molly. Let's start with the markets. In Illumina, prices are up versus the first quarter, supply is currently tight, and there is a limited supply of low-carbon projects in the pipeline. The aluminum price surged in the second quarter driven by several supply-side disruptions and continued strong demand from smelters. Supply issues occurred in both China and the rest of the world. Chinese refineries have curtailed capacity due to shortages of domestic bauxite amid continued environmental and safety inspections.

Bill: Supply issues occurred in both China and the rest of the world. Chinese refineries curtailed capacity due to shortages of domestic bauxite amid continued environmental and safety inspections.

Bill: In response, the volume and price of seaborne bauxite imports into China has increased this year. Outside of China, supply issues due to the Queensland force majeure in eastern Australia reduced Indian alumina exports, and the Kwanana curtailment in western Australia reduced supply.

William F. Oplinger: In response, the volume and price of seaborne bauxite imports into China have increased this year. Outside of China, supply issues due to the Queensland force majeure in eastern Australia have reduced Indian alumina exports, and the Kwanana curtailment in western Australia has reduced supply. Demand increased to seasonally curtailed capacity in Yunnan Province in China, restarted, as well as some capacity in Europe that is still ramping up. All these factors contributed to making the spot market tight.

Bill: Demand increased as seasonally curtailed capacity in Yunnan Province in China restarted, as well as some capacity in Europe that is still ramping up. All these factors contributed to making the spot market tight.

Bill: In the longer term, we expect the demand for alumina to continue to grow in line with primary aluminum supply growth. However, there are supply challenges from both bauxite supply and refinery carbon footprint.

William F. Oplinger: In the longer term, we expect the demand for alumina to continue to grow in line with primary aluminum supply growth. However, there are supply challenges from both bauxite supply and refinery carbon footprint. Refining in China is likely to become more expensive over time. Chinese refineries are expected to increasingly rely on seaborne bauxite as their domestic resources deplete.

Bill: Refining in China is likely to become more expensive over time.

Bill: Chinese refineries are expected to increasingly rely on seaborne bauxite as their domestic resources deplete. In addition, a new policy was put in place this year to add energy efficiency standards for new domestic refineries, requiring additional investment and time to ensure they meet the standards.

William F. Oplinger: In addition, a new policy was put in place this year to add energy efficiency standards for new domestic refineries, requiring additional investment and time to ensure they meet the standards. Another potential supply challenge is the carbon footprint of the refinery projects in the pipeline. For primary aluminum to be truly low carbon, it needs to be low carbon from mine to metal. We offer our low-carbon, eco-loam primary aluminum, which is produced with less than four tons of carbon dioxide equivalents per ton of aluminum produced, including scope one and two emissions from mining, refining, smelting, and casting, and the world's only low-carbon alumina brand, EcoSource, which has a carbon footprint under However, when considering likely alumina refinery projects, there are few low-carbon alumina projects in the global pipeline, and none that we expect to come online before 2030.

Bill: Another potential supply challenge is the carbon footprint of the refinery projects in the pipeline. For primary aluminum to be truly low carbon, it needs to be low carbon from mine to metal.

Speaker Change: We offer our low-carbon, eco-loam primary aluminum, which is produced with less than 4 tons of carbon dioxide equivalents per ton of aluminum produced, including scope 1 and 2 emissions from mining, refining, smelting, and casting.

Speaker Change: and the world's only low-carbon alumina brand, EcoSource, which has a carbon footprint under 0.6 tons of CO2 per ton of alumina, including scope 1 and 2 emissions from mining and refining.

Speaker Change: However, when considering likely alumina refinery projects, there are few low carbon alumina projects in the global pipeline and none that we expect to come online before 2030.

Speaker Change: Let's move to the aluminum market.

Speaker Change: In aluminum, prices have moved higher versus the first quarter, reflecting current market dynamics.

William F. Oplinger: Let's move to the aluminum market. In aluminum, prices have moved higher versus the first quarter, reflecting current market dynamics. On the supply side, there are limited new smelting projects in the near term, and China continues to hold to its 45 million ton annualized capacity cap. Some Chinese smelters have relocated to different provinces within China to fully utilize their capacity quota. And as a direct result of the cap, some Chinese-affiliated smelter projects have advanced outside of China in Indonesia and Angola. However, while supply growth has remained limited, global demand continues to increase year on year. This has kept global inventories at historically low levels.

Speaker Change: On the supply side, there are limited new smelting projects in the near term, and China continues to hold to its 45 million ton annualized capacity cap. Some Chinese smelters have relocated to different provinces within China to fully utilize their capacity quotas.

Speaker Change: And as a direct result of the cap, some Chinese-affiliated smelter projects have advanced outside of China in Indonesia and Angola. While supply growth has remained limited, global demand continues to increase year on year. This has kept global inventories at historically low levels.

Speaker Change: Digging deeper on demand, this year several trade defense actions in North America and Europe have been implemented which are likely to support demand in those regions.

William F. Oplinger: Digging deeper on demand, several trade defense actions in North America and Europe have been implemented, which are likely to support demand in those regions. Overall, there is a strong recovery in the packaging segment. Electrical and transportation remain solid, too, even though growth in the automotive segment has slowed in recent months, particularly in Europe. Building and construction remains the most challenged sector.

Speaker Change: Overall, there is a strong recovery in the packaging segment. Electrical and transportation remain solid too, even though growth in the automotive segment has slowed in recent months, particularly in Europe .

Speaker Change: Building and construction remains the most challenged sector, however, the start of interest rate cutting in Europe and anticipated rate cuts in the U.S. later this year could provide uplift for this sector.

William F. Oplinger: However, the start of interest rate cuts in Europe and anticipated rate cuts in the US later this year could provide uplift for this sector. On the pricing side, regional premiums in the second quarter were up sequentially across North America, Europe, and Asia, likely driven by a combination of the U.S. and U.K. sanctions against Russian metal in April and continued supply chain disruptions in the Red Sea. On the green aluminum front, we are excited to note that there are now low carbon aluminum premium pricing indices available in Europe, North America, and Asia, representing 90% of all aluminum demand outside of China.

Speaker Change: On the pricing side, regional premiums in the second quarter were up sequentially across North America, Europe , and Asia, likely driven by a combination of the U.S. and U.K. sanctions against Russian metal in April and continued supply chain disruptions in the Red Sea.

Speaker Change: On the green aluminum front, we are excited to note that there are now low-carbon aluminum premium pricing indices available in Europe , North America, and Asia, representing 90% of all aluminum demand outside of China.

Speaker Change: As a leading supplier of low-carbon aluminum, we believe these premiums support our view that the demand for low-carbon products is rising.

William F. Oplinger: As a leading supplier of low-carbon aluminum, we believe these premiums support our view that the demand for low-carbon products is rising. In the longer term, we see a bright future for aluminum. We remain convinced of a healthy long-term demand picture with growth driven by society's transition towards a low carbon future. Demand for low-carbon primary aluminum should grow steadily as aluminum users focus on meeting their decarbonization targets and minimizing their exposure to carbon emissions-based import duties.

Speaker Change: In the longer term, we see a bright future for aluminum. We remain convinced of a healthy long-term demand picture with growth driven by society's transition towards a low-carbon future.

Speaker Change: Demand for low-carbon primary aluminum should grow steadily as aluminum users focus on meeting their decarbonization targets and minimizing their exposure to carbon emissions-based import duties.

Speaker Change: While both overall and low-carbon aluminum demand are expected to grow, there's a short list of likely smelting projects coming online in the next 5 to 10 years with less than 25% of the projects in the next 5 years using renewable power.

William F. Oplinger: While both overall and low-carbon aluminum demand is expected to grow, there's a short list of likely smelting projects coming online in the next five to ten years, with less than 25 percent of the projects in the next five years using renewable power. So in summary, both the Illumina and LED markets are showing strength, and our long-term outlook remains positive. Let's move to Alcoa-specific topics, including our current operating performance and an exciting announcement for future operations related to LSA. Whenever I visit our operating locations, we discuss three things: safety, stability, and continuous improvement. Safety is a core Alcoa value.

Speaker Change: So in summary, both the alumina and aluminum markets are showing strength, and our long-term outlook remains positive.

Speaker Change: Let's move to Alcoa-specific topics, including our current operating performance and an exciting announcement for future operations related to ELISIS.

Speaker Change: Whenever I visit our operating locations, we discuss three things, safety, stability, and continuous improvement.

William F. Oplinger: It is an indicator of process stability and a perfect place to focus on continuous improvement. We continue to evolve our safety programs, and we judge performance based on leading indicators, such as the roughly 8,300 critical control field verifications that we perform every month. Evidence of our improvement is also clear in our lagging safety indicators, such as the DART and total recordable rates, which are both improving substantially year on year. It's no coincidence, then, that many of our plants are setting production records.

Speaker Change: Safety is a core Alcoa value.

Speaker Change: It is an indicator of process stability and a perfect place to focus on continuous improvement.

Speaker Change: We continue to evolve our safety programs, and we judge performance based on leading indicators, such as the roughly 8,300 critical control field verifications that we perform every month.

Speaker Change: Evidence of our improvement is also clear in our lagging safety indicators, such as the DART and total recordable rates, which are both improving substantially year-on-year.

Speaker Change: It's no coincidence, then, that many of our plants are setting production records. Our Canadian smelting system set a half-year production record, and the Mohsen smelter in Norway set both a quarterly and half-year production record.

William F. Oplinger: Our Canadian smelting system set a half-year production record, and the Mojan smelter in Norway set both a quarterly and half-year production record. In fact, Alcoa's total aluminum production has increased for seven straight quarters starting in the fourth quarter of 2022. That's a sign of both stability and continuous improvement. Turning to a longer-term project, we recently announced further progress on the ELISYS technology program. Our ELISYS partner will build 10 production cells in Quebec using ELISYS technology.

Speaker Change: In fact, Alcoa's total aluminum production has increased for seven straight quarters, starting in the fourth quarter of 2022.

Speaker Change: That's a sign of both stability and continuous improvement.

Speaker Change: Turning to a longer term project, we recently announced further progress on the ELISYS technology program. Our ELISYS partner will build 10 production cells in Quebec using ELISYS technology.

Speaker Change: Alcoa will have offtake rights for up to 40% of the metal, and Alcoa will produce and supply the anodes for the demonstration cells at its technology center near Pittsburgh. Alcoa will also benefit from the technology development that occurs in the project.

William F. Oplinger: Alcoa will have offtake rights for up to 40% of the metal, and it will produce and supply the anodes for the demonstration cells at its technology center near Pittsburgh. Alcoa will also benefit from the technology development that occurs in the project. We're excited for this first large-scale technology demonstration project to get underway and look forward to a successful startup by 2027. Finally, let me provide an update on two key areas of ongoing focus, our Profitability Improvement Programs and our Sanseprian Improvement and Sales Process.

Speaker Change: We're excited for this first large-scale technology demonstration project to get underway and look forward to a successful startup by 2027.

Speaker Change: Finally, let me provide an update on two key areas of ongoing focus, our profitability improvement programs and our Sansepian improvement and sales processes.

Speaker Change: Six months ago, we provided a list of targeted actions to improve adjusted EBITDA by approximately $645 million by the end of 2025 compared to a 2023 baseline.

William F. Oplinger: Six months ago, we provided a list of targeted actions to improve adjusted EBITDA by approximately $645 million by the end of 2025, compared to a 2023 baseline. To date, our year-on-year improvement has already met more than half the target, and just under $300 million remains to be captured over the next 18 months. A large piece of the program, almost half, was raw materials cost savings, which included materials such as caustic, coke, and pitch.

Speaker Change: To date, our year-on-year improvement has already met more than half the target and just under $300 million remains to be captured over the next 18 months.

Speaker Change: A large piece of the program, almost half, was raw materials cost savings, which includes materials such as caustic, coke, and pitch. Thanks to our procurement team's good work and favorable markets, we are ahead of our raw materials savings target.

Speaker Change: While the path is harder from here, we have already achieved three quarters of the raw materials target and expect to exceed it by year end.

William F. Oplinger: Thanks to our procurement team's good work and favorable markets, we are ahead of our raw materials savings target. While the path is harder from here, we have already achieved three quarters of the raw materials target and expect to exceed it by year end. Progress is also being made on the other elements of the program. For example, the Productivity Improvement Program has captured $30 million in year-on-year savings, about a third of its target. Warwick, thanks to its successful potline restart, has captured half of its $60 million internal target, with another $30 million of its $90 million total dependent upon increased IRA funding.

Speaker Change: Progress is also being made on the other elements of the program. The Productivity Improvement Program has captured $30 million in year-on-year savings, about a third of its target.

Warwick: Warwick, thanks to its successful potline restart, has captured half of its $60 million internal target, with another $30 million of its $90 million total dependent upon increased IRA funding.

Warwick: The Alumar smelter restart has captured a third of its target, and we are pleased with its increased operational stability.

William F. Oplinger: The Alumar smelter restart has captured a third of its target, and we are pleased with its increased operational stability. Finally, we are starting to see financial benefits from the full curtailment of the Quinone refinery, although the full benefits are likely to be realized in 2025. So, in total, we are pleased with our progress to date on our profitability improvement program. The final near-term improvement lever we outlined was finding a solution for Sansevieria.

Warwick: Finally, we are starting to see financial benefit of the full curtailment of the Quinone refinery, although the full benefits are likely to be realized in 2025.

Warwick: So, in total, we are pleased with our progress to date on our profitability improvement programs.

Warwick: The final near-term improvement lever we outlined was finding a solution for Sansevieria. Our two-pronged approach has focused on improving the location's competitiveness and on pursuing a potential sale.

Warwick: Both the SAIL process and Competitiveness Improvement Initiative rely on finding competitive energy for both the smelter and refinery. While electricity and gas prices are lower than the recent extreme highs, they are still not back in a range that could be considered competitive.

William F. Oplinger: Our two-pronged approach has focused on improving the location's competitiveness and on pursuing a potential sale. Both the sale process and the competitiveness improvement initiative rely on finding competitive energy for both the smelter and refinery. While electricity and gas prices are lower than the recent extreme highs, they're still not back in a range that could be considered competitive. The Spanish government entities could be helpful on multiple fronts, with electricity costs that could provide material CO2 compensation and eliminate the permitting, denials, and delays that have precluded the availability of low-cost renewable power generation.

Warwick: The Spanish government entities could be helpful on multiple fronts. On electricity costs, they could provide material CO2 compensation and eliminate the permitting, denials, and delays that have precluded availability of low-cost renewable power generation.

Warwick: Even with these challenges, we continue to work the sale process and aim to bring it to conclusion this year, but as noted earlier, a successful sale will depend on government and union support.

William F. Oplinger: Even with these challenges, we continue to work the sale process and aim to bring it to conclusion this year, but as noted earlier, a successful sale will depend on government and union support. Summing up, we are close to finalizing the Illumina Limited acquisition. We're excited to welcome the Illumina Limited shareholders to Alcoa and firmly believe that this transaction will enhance Alcoa's position as a leading pure play upstream global aluminum company.

Speaker Change: Summing it up, we are close to finalizing the Illumina Limited acquisition. We are excited to welcome the Illumina Limited shareholder, Stalcoa, and firmly believe that this transaction will enhance Alcoa's position as a leading pure play upstream global aluminum company.

Speaker Change: It will provide Illumina Limited shareholders ASX-listed global aluminum exposure and result in greater operational and financial flexibility and strategic optionality.

William F. Oplinger: It will provide Illumina Limited shareholders with ASX-listed global aluminum exposure and result in greater operational and financial flexibility and strategic optionality. Our safety and operational metrics are continuing to advance as we diligently progress our variance improvement initiatives. We have accomplished a lot, and we are targeting even more. Recent alumina and aluminum market conditions have been favorable, and we believe the mid and long-term outlook for the aluminum industry is bright. It's a great time to be at Alcoa. With that, let's start the question and answer session.

Speaker Change: Our safety and operational metrics are continuing to advance as we diligently progress our various improvement initiatives. We have accomplished a lot and we are targeting even more.

Speaker Change: Recent alumina and aluminum markets have been favorable, and we believe the mid- and long-term outlook for the aluminum industry is bright. It's a great time to be at Alcoa.

Speaker Change: With that, let's start the question and answer session.

Speaker Change: And we will now begin the question and answer session. To ask a question, you may press star then 1 on your phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: And we will now begin the question and answer session. To ask a question, you may press star then 1 on your phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question, please press star then 2. When called upon, please limit yourself to 2 questions.

Speaker Change: And our first question today will come from Carlos de Alba with Morgan Stanley . Please go ahead.

Carlos De Alba: To withdraw your question, please press star then 2. When called upon, please limit yourself to 2 questions. And our first question today will come from Carlos de Alba on behalf of Morgan Stanley. Please go ahead.

Speaker Change: Thank you very much.

Speaker Change: And congratulations on all the progress that you guys have made, Bill and Molly.

Carlos De Alba: Thank you very much and congratulations on all the progress that you guys have made, Bill and Molly. So one question is on the pace of synergies, assuming that everything goes as expected and the transaction closes in early August, the synergies that you have laid out, how quickly can you realize, and what do you expect to see the pace of those synergies once again when the deal is closed? And my second question is related to the decision of Alcoa to not participate in the funding of the LEC's first plant, the industrial plant. I understand that you have the 40% right to purchase 40% of the material, but what was the thought process for not participating in the investment?

Speaker Change: So, one question is, on the pace of synergies, assuming that everything goes as expected and the transaction closes in early August ,

Speaker Change: The synergies that you have laid out, how quickly can you realize, what do you expect to see the pace of those synergies once again the deal is closed?

Speaker Change: And my second question is related to the decision.

Speaker Change: of Alcoa to not participate in the funding of the LEC's first plant, industrial plant. I understand that you have the 40% right to purchase 40% of the material, but what was the thought process for not participating in the investment?

Speaker Change: Hi Carlos, it's Molly. I'll take the first question and then Bill can take the second.

Speaker Change: On the synergies with Illumina Limited, we outlined that we would have overhead savings of $12 million, and that will start immediately.

Molly S. Beerman: Hi Carlos, it's Molly. I'll take the first question, and then Bill can take the second.

William F. Oplinger: On the synergies with Illumina Limited, we outlined that we would have overhead savings of $12 million, and that will start immediately. The other thing that we outlined is the... Capital Allocation Framework improvements that we expect to get by being able to place debt closer to the operations that need it so that within the jurisdictions where we can have a tax advantage. Now that will take time and will move the debt over a period of time, not immediately.

Bill: The other thing that we outlined is the

Speaker Change: Allocation Framework improvements that we expect to get by able to be placed debt closer to the operations that need them so that within the jurisdictions where we can have a tax advantage. Now, that will take time and we'll move debt over a period of time, not immediately.

Speaker Change: On the second question, Carlos, we believe the construct of the

Speaker Change: Solution that we have on this first implementation of LSS is a really smart construct and the reason being is that they're implementing

Carlos De Alba: On the second question, Carlos, we believe the construct of the solution that we have in this first implementation of ELLISIS is a really smart construct, and the reason is that they're implementing 10 ELLISIS smelting pots at 100 kA at our VITA, so it's a good testing ground for that size of the pot. At the same time, we will be building the anodes and the cathodes at the technical center, so it's a good balance between the two partners.

Speaker Change: The 10 Ellison Smelting Pots at 100KA at Arvida.

Speaker Change: So it's a good testing ground for that size of the pot. At the same time, we will be building the anodes and the cathodes at the technical center. So it's a good balance between the two partners.

Speaker Change: I really like this solution also because we have the option of taking 40% of the offtake.

Speaker Change: And so we will have access to the lowest carbon metal in the world once this is up and running. So very pleased with the way we structured this deal and looking forward to the success of this first implementation.

Carlos De Alba: I really like the solution also because we have the option of taking 40% of the offtake, and so we will have access to the lowest carbon metal in the world once this is up and running. So, very pleased with the way we structured this deal and looking forward to the success of this first implementation.

Speaker Change: Great. Thank you very much. Good luck. Thanks, Carlos.

Speaker Change: And our next question will come from Katja Jancic with BMO Capital Markets. Please go ahead.

Katja Jancic: Great. Thank you very much. Good luck.

Katja Jancic: Hi, thank you for taking my question.

Katja Jancic: And our next question will come from Katja Jancic with BMO Capital Markets. Please go ahead.

Katja Jancic: Maybe near term, Molly, you mentioned in the Illumina segment, you have an unfavorable impact from bauxite grade in Australia. Can you provide a little more color in that? I would assume that with Kwinana being shut down, that that could be less of an impact.

Molly S. Beerman: Hi, thank you for taking my question. Maybe near term, Molly, you mentioned in the alumina segment that you have an unfavorable impact from bauxite grade in Australia. Can you provide a little more color on that?

Katja Jancic: I would assume that with Quenana being shut down, that there could be less of an impact.

Molly S. Beerman: Katja, thanks for your question. What we are indicating with the $10 million additional unfavorable costs related to the bath site quality, we are seeing additional maintenance costs.

Molly S. Beerman: Katja, thanks for your question. What we are indicating with the 10 million additional unfavorable costs related to bauxite quality, we are seeing additional maintenance costs. We actually had been operating favorably in comparison to our original estimates on the bauxite quality impacts, higher caustic, higher energy, higher bauxite usage, but now we are starting to face some maintenance. And so we are sorting out the maintenance level that's going to be needed to run at the lower bauxite quality.

Speaker Change: We actually have been operating favorably in comparison to our original estimates on the bauxite quality impacts.

Speaker Change: Higher caustic, higher energy, higher bauxite usage, but now we are starting to face some maintenance. And so we are sorting the maintenance level that's going to be needed to run at the lower bauxite quality.

Speaker Change: How should we think moving forward? Is this something that will continue? Could there be incremental pressures?

Molly S. Beerman: How should we think moving forward? Is this something that will continue? Could there be incremental pressures?

Speaker Change: We will give you additional guidance. Honestly, the teams are sorting that now. So between the maintenance teams and our Center of Excellence, they're working hard to determine what the proper spend level is.

Molly S. Beerman: We will give you additional guidance. Honestly, the teams are sorting that now. So between the maintenance teams and our Center of Excellence, they're working hard to determine what the proper spend level is.

Speaker Change: Okay, thank you. I'll hop back into the queue.

Speaker Change: And our next question will come from Michael Dudas with Vertical Research. Please go ahead.

Operator: Okay, thank you. I'll hop back into the queue. And our next question...

Michael Stephan Dudas: Good morning, gentlemen. Molly.

Michael Stephan Dudas: And our next question will come from Michael Dudas with Vertical Research. Please go ahead.

Michael Stephan Dudas: and Michael.

Michael Stephan Dudas: Phil, maybe you can share your thoughts on the aluminum market, and obviously with all the dynamics that's occurring, how does this...

Speaker Change: environment compared to other environments you've witnessed with spiking and capacity issues. Is this something that has a little bit more sustainability? Is there a

William F. Oplinger: Bill, maybe you can share your thoughts on the aluminum market and, obviously, with all the dynamics that are occurring, how this environment compares to other environments you've witnessed with spiking and capacity issues. Is this something that has a little bit more sustainability? price level, cost pressure that could impact, and how you're planning for those dynamics in your Illumina business, especially as you bring on the folks from Australia.

Speaker Change: Price level, cost pressure that could impact, and how you're planning for those dynamics in your Illumina business, especially as you bring on the folks from Australia.

Speaker Change: So the Illumina industry today is in a fairly unique situation.

William F. Oplinger: The Illumina industry today is in a fairly unique situation. We exited the second quarter in a deficit to the tune of around, globally for the industry, about a 3 million metric ton deficit. And for the full year, we're anticipating that Illumina will be in deficit. So it's a situation that is very tight, and we're seeing it around the world.

Speaker Change: We exited the second quarter in a deficit to the tune of around, globally, for the industry, about a 3 million metric ton deficit. And for the full year, we're anticipating that Illumina will be in deficit.

Speaker Change: So, it's a situation that is...

Speaker Change: Very tight, and we're seeing it around the world.

Speaker Change: The only way that deficit gets solved, obviously, is if either smelters curtail or we get ramp-ups in Illumina. There's really two things that drove that deficit in the near term. One was supply issues from some of our competitors.

William F. Oplinger: The only way that deficit gets solved, obviously, is if either smelters curtail production, or we get ramp-ups in Illumina. There's really two things that drive that deficit in the near term. One was supply issues from some of our competitors, specifically in Northern Australia and in China. So as we look forward, that market only comes back into balance if those supply issues are solved. As far as the second question is, when we bring in the Illumina shareholders, and whether this has any impact on our running of our operations, you can understand that these prices we're pushing to get every ton out the door and trying to make sure that we gain the benefit of these higher prices. We will not have any significant operational changes associated with the acquisition since Illumina Limited was a 40% minority partner, but no operational changes there. I hope that answers your question, Michael.

Speaker Change: specifically in Northern Australia and and in China.

Speaker Change: So as we look forward, that market only comes back into balance if those supply issues are solved.

Speaker Change: As far as the second question is, when we bring on the Illumina shareholders and whether this has any impact on our running of our operations.

Speaker Change: You can understand that these prices we're pushing to get every ton out the door and trying to make sure that we

Speaker Change: gain the benefit of these higher prices, we will not have any significant operational changes associated with the acquisition since Alumina Limited was a 40% minority partner, but no operational changes there. I hope that answers your question, Michael.

Michael Stephan Dudas: It does, Bill, and just a quick follow-up.

Michael Stephan Dudas: Regarding pricing of Illumina, spiking, and some of the other issues you've talked about.

William F. Oplinger: It does, Bill, and just a quick follow-up on, so with pricing for alumina spiking and some of the other issues you talked about, given where prices are, is there any suggestion that some smelters could curtail, especially since energy prices kind of worked positively on the other way? Is there any impact that could alleviate the market a bit, you think? It'll depend on...

Speaker Change: Given where prices are, is there any suggestion that some smelters could curtail, especially since energy prices kind of worked positive on the other way? Is there any impact that could alleviate the market a bit, you think?

Speaker Change: It will depend on how long these prices persist, but clearly at $480 a ton, it will depend on what metal prices and forex, but it puts a lot of pressure on marginal smelters.

William F. Oplinger: It will depend on how long these prices persist, but clearly at $480 a ton, it will depend on the metal prices and forex, but it puts a lot of pressure on marginal smelters. So as I look around the world at the smelters that could be exposed to these higher prices and the pressures associated with that, it would be in Southeast Asia and potentially

Speaker Change: So, as I look around the world at the smelters that could be exposed to these higher prices and the pressures associated with that, it would be in Southeast Asia and potentially the Middle East.

Bill: Thank you, Bill.

Bill: And our next question will come from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

John Charles Tumazos: And our next question will come from John Tumazos, with John Tumazos Very Independent Research. Please go ahead.

John Charles Tumazos: Thank you very much.

Speaker Change: with the Kwinana outage and the Queensland gas ship detailments.

John Charles Tumazos: Thank you very much. With the Kwinana outage and the Queensland gas shutdown and World Aluminum Metal Output up 3.4% in the first five months, are there smelters that can't operate because they don't have alumina? or are somehow, work and process inventories or Illumina in transit inventories getting used up?

Speaker Change: and World Aluminum Metal Output up 3.4% in the first five months.

Speaker Change: Are there smelters that can't operate because they don't have aluminum?

Speaker Change: or are somehow

Speaker Change: Work in process inventories or Illumina in transit inventories getting used up.

Speaker Change: So, John , I think you're right in the near term.

John Charles Tumazos: on that question. We are seeing very tight inventories of Illumina.

William F. Oplinger: So, John, I think you're right in the near term on that question. We are seeing very tight inventories of alumina. The deficit that we saw in the second quarter of roughly 800,000 tons in a quarter, which for a full year basis is around 3 million metric tons, really put a strain on inventory levels around the world. To answer the question similarly to what I answered with Michael, the areas of exposure for smelters, and I should have also listed India, but it's really India, Southeast Asia, and the Middle East that may be exposed due to the inability to get alumina. But at this point, we didn't see that in the second quarter, and it will depend on how long this deficit persists and whether there's a ramp-up associated with refining capacity.

Speaker Change: The deficit that we saw in the second quarter of roughly 800,000 tons in a quarter, which for a full year basis is around 3 million metric tons.

Speaker Change: It really put a stress on inventory levels around the world.

Speaker Change: And to answer the question similarly to what I answered with Michael, the areas of exposure for smelters, and I should have also listed India, but it's really India, Southeast Asia and the Middle East.

Speaker Change: that may be exposed to inability to get Illumina. But at this point, we didn't see that in the second quarter and it will depend on how long this deficit persists and whether there's a ramp up associated with refining capacity.

Speaker Change: With a second possible question, thank you. If Sanseprian, Smelter, and Illumina were both off of your books,

John Charles Tumazos: with a second possible question. Thank you. If Sanciprian, Smelter, and Illumina were both off of your book. Not the one-time charge or the severance, but how much would your... EBITDA improve every year with Spain off your book?

Speaker Change: Not the one-time charge or the severance, but how much would your EBIT improve every year?

Speaker Change: with Spain off your books.

Speaker Change: I think the closest that we've probably guided on that was the losses that we saw in 2023.

William F. Oplinger: I think the closest that we've probably guided on that was the losses that we saw in 2023, which I will say, and then Molly will correct me. But I think it was approximately $150 million of EBITDA losses associated with the Spanish assets in 2023. Thanks.

Speaker Change: I will say them and then Molly will correct me, but I think it was approximately $150 million of EBITDA losses associated with the Spanish assets in 2023. That's correct. Thanks.

Speaker Change: Thank you and congratulations on being profitable again.

John Charles Tumazos: Thanks, John.

Speaker Change: And our next question will come from Timna Tanners with Wolf Research. Please go ahead.

John Charles Tumazos: Thank you, and congratulations on being profitable again.

Operator: Thanks, John, and our next question will come from Timna Tanners with Wolf Research. Please go ahead.

Timna Beth Tanners: Hey great, thanks and good afternoon. I wanted to ask if you have any insights into or any updates on the latest regarding the remaining amount that you've been looking into for 45X.

Timna Beth Tanners: And our next question will come from Timna Tanners with Wolf Research. Please go ahead.

Timna Tanners: Great, thanks, and get up and then I wanted to ask if you have any insights into or any updates on the latest regarding the remaining amount that you've been looking into for 45x, and any insights on to possible repeal dial back of the broader lives, starting to get to be a hot topic and be curious to any insights you have there.

Timna Beth Tanners: Hey, great. Thanks again. Good afternoon. I wanted to ask if you have any insights into or any updates on the latest regarding the remaining amount that you've been looking into for 45X and any insights on possible repeal or dial back of the broader law. It's currently starting to get to be a hot topic, and we'd be curious about any insights you have.

Speaker Change: and any insights on to possible repeal, dial back of the broader law. It's starting to get to be a hot topic and we'd be curious to any insights you have there.

Speaker Change: No insights on 45X at this point. We've clearly had dialogue with the administration. They understand how critically important 45X is to the U.S. assets.

Unknown Executive: So no insights on 45x at this point; we've clearly had dialogue with the administration. They understand how critically important 45x is to the US assets. I would reiterate, and I'd reiterate it before. We're very appreciative of what they did around 45x on the first trot, but including the second trot would be important for the competitiveness of Masina and work.

William F. Oplinger: So no insights on 45X at this point, you know, we've clearly had dialogue with the administration. They understand how critically important 45X is to U.S. assets. I would reiterate, and I've reiterated it before, we're very appreciative of what they did around 45X on the first tranche, but including the second tranche would be important for the competitiveness of Messina and Warwick. What was your second question, Timna?

Timna Beth Tanners: I would reiterate, and I've reiterated it before, we're very appreciative of what they did around 45X on the first tranche, but including the second tranche would be important for the competitiveness of Messina and Warwick. What was your second question, Timna?

Timna Beth Tanners: There's also some discussion of a broader repeal of IRA so I don't know if that's on the same vein of what you were just addressing but like 45x in particular and broader IRA.

Unknown Executive: What was your second question, Timna?

Timna Beth Tanners: There's also some discussion of a broader repeal of IRA, so I don't know if that's on the same vein of what you were just addressing, but like 45X in particular and broader IRA.

Timna Tanners: There's also some discussion of a broader repeal of IRA, so I don't know if that's on the same vein of what you were just addressing, but like 45x in particular and broader IRA.

Speaker Change: Yeah, as far as a repeal of IRA, I've not heard anything with this current administration. Clearly, there's been some discussion in the Trump potential administration that they may repeal IRA, but we first have to see who will win the election in November and then what actions they'll take.

William F. Oplinger: Yeah, as far as a repeal of IRA, I've not heard anything with this current administration. Clearly, there's been some discussion in the Trump potential administration that they may repeal IRA, but we first have to see who will win the election in November and then what actions they'll take.

Unknown Executive: Yeah, as far as a repeal of IRA, I've not heard anything with this current administration.

Unknown Executive: Clearly, there's been some discussion in the Trump potential administration that they may repeal IRA, but we first have to see who will win the election in November and then what actions they'll take.

Speaker Change: Totally fair, and if I could on the

Speaker Change: Spanish situation. If you were in our seat, how would you think about any exit costs? Is there a range of potential outcomes? Or how do we think about budgeting or, you know, modeling for that, you know, by the end of the year when there will be a decision made?

Timna Beth Tanners: If I could, on the Spanish situation, if you were in our seat, how would you think about any exit costs? Is there a range of potential outcomes, or how do we think about budgeting or modeling for that by the end of the year when a decision is made?

Timna Tanners: And if I could on the Spanish situation, if you were in our seat, how would you think about any exit costs? Is there a range of potential outcomes, or how do we think about budgeting or modeling for that, you know, by the end of the year when there will be a decision made.

Tymna: Unfortunately, I can't give you a great answer, Timna. We are working down two work streams.

Speaker Change: The first is to try to make the plan as competitive as we can. And as you well know, competitiveness for a refinery and a smelter comes down largely to energy cost and energy solution. So we're going down that path. The second path that we're going down is the sale process.

William F. Oplinger: Unfortunately, I can't give you a great answer, Timna. We are working on two work streams. The first is to try to make the plan as competitive as we can. And, as you well know, competitiveness for a refinery and a smelter comes down largely to energy cost and energy solution.

Unknown Executive: Unfortunately, I can't give you a great answer, Timna. We are working down to two work streams. The first is to try to make the plan as competitive as we can. And as you will know, competitiveness for a finer and a smarter comes down largely to energy cost and energy solution. So we're going down that path.

Speaker Change: Thank you.

William F. Oplinger: So we're going down that path. The second path that we're going down is the sale process. To give you a little color on the sale process, we had around six companies that showed an expression of interest. We narrowed that down to a subset of those companies, got a second round, and are now in the process of going through a final round with a subset of those bidders. So we will see whether we can come out with a successful solution in the sale process.

Speaker Change: To give you a little color on the sale process, we had around six companies that showed an expression of interest.

Unknown Executive: The second path that we're going down is the sale process. To give you a little color on the sale process, we had around six companies that showed an expression of interest. We'd narrowed that down to a subset of those companies, got a second round, and are now in the process going through a final round with a subset of those better. So we will see whether we can come out with a successful solution on the sale process. If both of those work streams were to fail, the cash we believe will run out towards the end of the year.

Speaker Change: We narrowed that down to a subset of those companies, got a second round.

Speaker Change: and are now in the process of going through a final round with a subset of those bidders. So we will see whether we can come out with a successful solution on the sale process.

Speaker Change: If both of those work streams were to fail, the cash, we believe, will run out towards the end of the year. Obviously, that is dependent on what the market environment looks like, and we'll have to make some pretty hard decisions. I've made it clear since the beginning of the year, we're not willing to put cash into the entity, so some real hard decisions will have to be made then.

William F. Oplinger: If both of those work streams were to fail, the cash, we believe, will run out towards the end of the year. Obviously, that is dependent on what the market environment looks like, and we'll have to make some pretty hard decisions. I've made it clear since the beginning of the year that we're not willing to put cash into the entity, so some really hard decisions will have to be made then.

Unknown Executive: Obviously, that is dependent on what the market environment looks like. And we'll have to make some pretty hard decisions. I've made it clear since the beginning of the year. We're not willing to put cash into the entity, so some of the hard decisions will have to be made that.

Speaker Change: Okay, fair, I appreciate the color. Thanks again. Thanks, Timna.

Speaker Change: And our next question will come from Alex Hacking with Citi. Please go ahead.

Timna Beth Tanners: Okay, sir. I appreciate the color. Thanks, Ian.

Unknown Executive: Okay, very appreciate the color.

Unknown Executive: Thanks, Ian. Thanks, Timna.

Alexander Nicholas Hacking: Yeah, thanks. I guess two questions. First question would be for Molly. In your prepared remarks, you talked about options.

Operator: And our next question will come from Alex Hacking with City. Please go ahead.

Alexander Nicholas Hacking: And our next question will come from Alex Hacking with Citi. Please go ahead.

Alexander Nicholas Hacking: Yeah, thanks. I guess I have two questions. My first question would be for Molly. In your prepared remarks, you talked about options for deleveraging. Could you maybe lay out what's on the table there? and then secondly, just following up on San Cyprian. Is the fate of the smelter and the refinery tied together? Is there a world where you, you know, sell one and not the other? Is there a world where you close one and not the other?

Alex Hacking: Yeah, thanks.

Alexander Nicholas Hacking: for deleveraging. Could you maybe lay out what's on the table there? And then secondly, just following up on San Cyprian,

Unknown Executive: I guess two questions. First question would be from Molly. In your prepared remarks, you talked about options for de-leveraging. Could you maybe lay out what's on the table there?

Speaker Change: Is the fate of the smelter and the refinery tied together? Is there a world where you, you know, sell one and not the other? Is there a world where you close one and not the other? Just anything there would be helpful. Thanks.

Alex Hacking: And then secondly, just following up on San Ciprian, is the fate of the smelter and refinery tied together? Is there a world where you, you know, sell one and not the other? Is there a world where you close one and not the other? Is there anything there would be helpful?

Speaker Change: So Alex, on the first question on our de-levering.

Molly S. Beerman: Just anything there would be helpful. Thanks.

Alexander Nicholas Hacking: We no longer have an externally stated net debt target. However, right now we're at $1.9 billion, and that is higher than the levels that we were able to achieve in 2021 and 2022, right around $1.1 billion.

Unknown Executive: So Alex, on the first question on our de-levering, we no longer have an externally stated net debt target. However, right now we're at 1.9 billion, and that is higher than the levels that we were able to achieve in 2021 and 2022, right around 1.1 billion. So we do expect to de-lever. It will take us some time.

Alexander Nicholas Hacking: So, Alex, on the first question about our delevering, we no longer have an externally stated net debt target. However, right now, we're at $1.9 billion, and that is higher than the levels that we were able to achieve in 2021 and 2022, right around $1.1 billion. So, we do expect to delever, but it will take us some time. We've done this in the past, but we expect to really focus on getting back to a strong balance sheet, and that puts us in the best position for acting on future growth.

Alexander Nicholas Hacking: So we do expect to delever. It will take us some time. We've done this in the past, but we expect really to focus on getting back to the strong balance sheet, and that puts us in the best position for acting on future growth options.

Unknown Executive: We've done this in the past, but we expect really to focus on getting back to the strong balance sheet, and that puts us in the best position for acting on future growth options.

Alexander Nicholas Hacking: As far as Sanseprene goes, I would not rule out any options, Alex.

Alexander Nicholas Hacking: It is difficult to sell part of the plant because the plant is connected between the two.

William F. Oplinger: As far as Sanseprian goes, I would not rule out any options, Alex. It is difficult to sell part of the plant because the plant is connected between the two, and there would need to be incremental capital put in place to operate the two independently, so I think that makes it difficult to sell separately. But as far as your second question is about potential curtailment, I hate to speculate on where we could get to, but I wouldn't rule out any options.

Unknown Executive: Our San Ciprian goes; I would not roll out any options, Alex. It is difficult to sell part of the plant because the plant is connected between the two, and there would need to be incremental capital put in place to operate the two independently.

Alexander Nicholas Hacking: And there would need to be incremental capital put in place to operate the two independently. So I think that makes it difficult to sell separately.

Alexander Nicholas Hacking: But as far as your second question about potential curtailment, I hate to speculate on where we could get to, but I wouldn't rule out any options at this point.

Unknown Executive: So I think that makes it difficult to sell separately, but as far as your second question is about potential entailment, I hate to speculate on where we could get to, but I wouldn't rule out any options at this point.

Alexander Nicholas Hacking: one.

Alexander Nicholas Hacking: Okay, thanks. Just a follow-up for Molly, if I could. Is that okay?

Speaker Change: I mean, in terms of de-levering, I assume, you know, free cash flow generation is option number one, right?

Alexander Nicholas Hacking: Okay, thanks. Just a follow-up call for Molly, if I could. Is that okay? Yes, sure.

Alexander Nicholas Hacking: I mean, I mean, in terms of de-levering, I assume, you know, free cash flow generation is option number one, right? But, what else is potentially on the table? Asset sales, other things, I guess. I guess in your prepared remarks, you just said you're looking at options. I'm just curious what those options are.

Speaker Change: What else is potentially on the table? Asset sales? Other things? I guess in your prepared remarks you just said you're looking at options. I'm just curious what the options are.

Alex Hacking: Okay, thanks.

Alex Hacking: Just to follow, generation is option number one, right? But what else is potentially on the table? Lasted sales, other things, I guess, I guess you're prepared remarks. You just said you're looking to option. So just curious what the options are.

Speaker Change: Yeah, we have a number of things we're looking at. We do, again, we're assuming the 390 million debt.

Speaker Change: In Australia, so we have options we want to look at placing debt there. We also are looking at options to delever elsewhere in our debt. What we want to do, Alex, is get a look at the cash flows through the end of the year and evaluate all our options based on the strength of the flows over the next quarter or two.

Molly S. Beerman: Yeah, we have a number of things we're looking at. We do, again, assume the $390 million debt in Australia, so we have options we want to look at placing debt there. We are also looking at options to deleverage elsewhere in our debt. What we want to do, Alex, is get a look at the cash flows through the end of the year and evaluate all our options based on the strength of the flows over the next quarter.

Unknown Executive: Yeah, we have a number of things we're looking at. We do, again, we're assuming the 390 million debt in Australia. So we have options. We want to look at placing debt there. We also are looking at options to de-lever elsewhere in our debt.

Unknown Executive: What we want to do, Alex, is get a look at the cash flows through the end of the year and evaluate all our options based on the strength of the flows over the next quarter or two. And if I could just add to that, when we, when she referred to options, it's really the options of what debt to pay down, where to have debt. It's not necessarily; she wasn't signaling to you that there are options of vast asset sales. It's really looking at today's market prices and the fact that we typically take working capital to down in the second half of the year.

Speaker Change: And if I could just add to that, when she referred to options, it's really the options of what debt to pay down.

William F. Oplinger: And if I could just add to that, when she referred to options, it's really the options of what debt to pay down, where to have debt. It's not necessarily, she wasn't signaling to you that there are options of vast asset sales. It's really looking at today's market prices and the fact that we typically take working capital down in the second half of the year.

Speaker Change: where to have debt. It's not necessarily, she wasn't signaling to you that there are options of vast asset sales. It's really...

Speaker Change: looking at today's market prices.

Speaker Change: And the fact that we typically take working capital down in the second half of the year, what are our options? She's strategically looking at the options for where do we de-lever, how do we de-lever, not necessarily the source of cash for de-levering.

Unknown Executive: What are our options? She's strategically looking at the options for where do we do de-lever? How do we de-lever? Not necessarily the source of cash for de-levering.

Molly S. Beerman: What are our options? She's strategically looking at the options for where do we de-lever? How do we de-lever? Not necessarily the source of cash for de-levering.

Speaker Change: I got you. That's a helpful clarification. Thank you so much.

Speaker Change: And our next question will come from Bill Peterson with J.P. Morgan. Please go ahead.

Alex Hacking: I got you. That's the helpful clarification. Thank you so much.

Alexander Nicholas Hacking: I got you. That's a helpful clarification. Thank you so much.

Benadon: Hi Bill and Molly, this is Benadon for Bill Peterson.

Operator: And our next question will come from Bill Peterson with JP Morgan. Please go ahead.

William Chapman Peterson: And our next question will come from Bill Peterson with J.P. Morgan. Please go ahead.

Benadon: On San Cipriano, are you able to give any context, at least at a very high level, to the types of parties that have indicated interest so far?

Unknown Executive: Hi, Bill and Molly.

Bennett: Hi, Bill and Molly. This is Bennett on for Bill Peterson. On San Cyprian, are you able to give any context, at least at a very high level, to the types of parties that have indicated interest so far?

Ben Adon: This is Ben Adon for Bill Peterson.

Ben Adon: On San Ciprion, are you able to give any context, at least at a very high level, to the types of parties that have indicated interest so far? It spans the gamut of financial and strategics and nontraditional. So the expressions of interest were really from a variety of different types of parties. We cast a very wide net when we started this process. We wanted to make sure that there was, that we really look at every opportunity to ensure the viability of this site. So when we looked at selling the asset, I think we sent out memorandums, information memorandums to 60, I was going to say over 50, 60 or so parties.

Speaker Change: It spans the gamut of financial and strategics.

Speaker Change: and non-traditional. So, the expressions of interest.

William F. Oplinger: It spans the gamut of financial and strategic and non-traditional. So, the expressions of interest were really from a variety of different types of parties. We cast a very wide net when we started this process. We wanted to make sure that there was, that we really looked at every opportunity to ensure the viability of this site. So, when we looked at selling the asset, I think we sent out memorandums, information memorandums to 60, I was going to say over 50, 60 or so parties. And the half a dozen that produced an expression of interest were across those three areas.

Speaker Change: We're really from a variety of different types of parties.

Speaker Change: We cast a very wide net when we started this process. We wanted to make sure that we really look at every opportunity to ensure the viability of this site.

Speaker Change: So, when we looked at selling the asset, I think we sent out memorandums, information memorandums to...

Speaker Change: 60, I was going to say over 50, 60 or so parties and the half a dozen that produced an expression of interest were across those three areas.

Ben Adon: And the half of dozens that produced an expression of interest were across those three areas. Great, thanks to that.

Speaker Change: All right, thanks for that. And then one quick one on Illumina. Wanted to get your thoughts on marginal cost support from Chinese refineries and whether this could be impacted over time, given your points about potentially having to import more bauxite going forward.

Bennett: All right, thanks for that. And then, on Illumina, wanted to get your thoughts on marginal cost support from Chinese refineries and whether this could be impacted over time, given your points about potentially having to import more bauxite going forward.

Unknown Executive: And then one quick one on that. I wanted to get your thoughts on marginal cost support from Chinese refineries and whether this could be impacted over time, given your point style, potentially having to import more box site going forward.

Speaker Change: So, it's very, it's obviously a very fluid situation and my view and our latest thinking

Unknown Executive: So it's very, it's obviously a very fluid situation. And my view in our latest thinking is that marginal cost, whether that's in China or outside of China, probably approximates close to $400 a ton. Now that will depend on where it is and what the cost price assumption is and the currencies, but it's probably close to that.

William F. Oplinger: So, it's obviously a very fluid situation, and my view and our latest thinking is that the marginal cost, whether that's in China or outside of China, probably approximates close to $400 a ton. Now, that will depend on where it is and what the cost of price assumption is and currencies, but it's probably close to that.

Speaker Change: is that marginal cost, whether that's in China or outside of China,

Speaker Change: probably approximates close to $400 a ton. Now, that will depend on where it is and what the caustic price assumption is and the currencies, but it's probably close to that.

Speaker Change: Understood. Thank you very much.

Speaker Change: And our last question today will come from Lucas Pipes with Bea Riley. Please go ahead.

Unknown Executive: Understood. Thank you very much.

Bennett: I understand. Thank you very much.

Lucas Nathaniel Pipes: Thank you very much, Operator. Good afternoon, everyone. My first question is on the cost side. So, first, on the vessel purchase in Brazil, the right way to think about it, that it's about a $30 million annual cost saving. And then, secondly, on slide 17, going back to the profitability improvement program, the $295 million, I think in your prepared remarks, Bill, you mentioned kind of

Operator: And our last question today. We'll come from Lucas Pipes with Be Rally. Please go ahead.

Lucas Nathaniel Pipes: And our last question today will come from Lucas Pipes with Bea Riley. Please go ahead.

Lucas Pipes: Thank you very much, operator.

Lucas Nathaniel Pipes: Thank you very much, operator. Good afternoon, everyone.

Lucas Pipes: Good afternoon, everyone.

William F. Oplinger: My first question is on the cost side. So, first, on the vessel purchase in Brazil, the right way to think about it is that it's about a $30 million annual cost saving. And then secondly, on slide 17, going back to the profitability improvement program, the $295 million. I think in your prepared remarks, Bill, you mentioned kind of when you went through the different buckets that have been achieved, kind of what percentage has been achieved. But I wondered if you could maybe just speak to the $295 million and what the major components are.

Lucas Pipes: My first question is on the cost site. So first on the vessel purchase in Brazil, the right way to think about it, that it's about a 30 million annual cost saving. And then secondly, on slide 17, going back to the profitability improvement program, the 295. I think in your prepared remarks, Bill, you mentioned, kind of, when you went through the different buckets that have been achieved, kind of what percentage has been achieved. But I wondered if you could maybe just speak to the 295 and what the major components are that you still can realize.

Speaker Change: When you went through the different buckets that have been achieved, kind of what percentage has been achieved, but I wondered if you could maybe just speak to the 295 and what the major components are that we're still looking to realize. Thank you very much.

Speaker Change: So first, the question on...

Speaker Change: Sorry, I wanted to say Project Condor. Yeah, Project Condor. Internally, we call it Project Condor. It's on the vessels in Brazil. Yeah, so on the ship purchases in Brazil, you're right. It's just over $30 million a year in savings.

Unknown Executive: Thank you very much.

Unknown Executive: So first, the question on, sorry, I want to say Project Condor. Yeah, certainly we call it Project Condor. It's on the vessels in Brazil. Yeah, so on the ship purchases in Brazil, you're right; it's just over 30 million a year in saving for that effort. And before you go into the next part of the question, I want to make sure that people understand we're not going into the global shipping business. This is this was an opportunity where our cost structure was just fundamentally too high due to the market situation down in Brazil. While we tried to address that through market negotiations, we weren't able to get there.

William F. Oplinger: So first, the question on. Sorry, I wanted to say Project Condor.

William F. Oplinger: And before you go on to the next part of the question, I want to make sure that people understand we're not going into global shipping. This was an opportunity where our cost structure was just fundamentally too high due to the market situation down in Brazil. While we tried to address that through market negotiations, we weren't able to get there. And that's why we've made this strategic investment in these four vessels. I don't want our investors or our sell-side analysts thinking that we are more broadly going into the shipping business. We are not.

Speaker Change: for that effort. And before you go on to the next part of the question, I wanna make sure that people understand we're not going into the global shipping business.

Speaker Change: This was an opportunity where our cost structure was just fundamentally...

Speaker Change: Too high due to the market situation down in Brazil. While we tried to address that through market negotiations, we weren't able to get there.

Speaker Change: And that's why we've made this strategic investment in these four.

Speaker Change: vessels. I don't want our investors or our sell-side analysts thinking that we are more broadly going into the shipping business. We are not. This is, as I've described internally, this is almost like having a conveyor belt, but it just happens to be on the water.

Unknown Executive: And that's why we've made this strategic investment in these four vessels. I don't want our investors or our South Side analysts thinking that we are more broadly going into the shipping business. We are not.

Unknown Executive: This is, as I've described internally, this is almost like having a conveyor belt, but it just happens to be on the water.

William F. Oplinger: As I've described internally, this is almost like having a conveyor belt, but it just happens to be on the water.

Speaker Change: All right, so go ahead, Molly.

Molly S. Beerman: So on the improvement programs, a couple more points on the raw materials.

Molly S. Beerman: There aren't necessarily additional actions that we have to take. We are negotiating now on the purchase prices.

Unknown Executive: So on the improvement programs, a couple more points on the raw materials. There aren't necessarily additional actions that we have to take. We are negotiating now in a purchase price that we're seeing now are going to deliver the year-over-year improvement. Recall we're on those legs in inventory. So the six months in caustic and the three months on cook and pitch. So good line of sight to realize that with the contracts that we have in place now.

William F. Oplinger: So on the improvement programs, a couple more points on the raw materials, there aren't necessarily additional actions that we have to take. We are negotiating now, and the purchase prices that we're seeing now are going to deliver the year-over-year improvement. Recall, we're on those lags and inventory. So the six months in caustic and the three months on coke and pitch.

Molly S. Beerman: that we're seeing now are going to deliver the year-over-year improvement. Recall we're on those lags in inventory, so the six months in Caustic and the three months on Coke and Pitch. So good line of sight to realize that with the contracts that we have in place now.

Molly S. Beerman: As far as the Productivity and Competitiveness Program, we have already identified lists of hundreds of initiatives. They are being executed now. Internally, we're tracking that against revised budgets. Everyone across the company, all the budget managers have lost about 6% of their budgets.

Unknown Executive: As far as the productivity and competitiveness program, we have already identified lists of hundreds of initiatives. They are being executed now internally or tracking that against revised budgets. Everyone across the company, all the budget managers, have lost about six percent of their budgets. So they are adhering to those, and so that's how we're monitoring the $100 million program there. As far as Warwick, they hit about half of their run rate already, and that's with improved cost absorption after their restart. And they do still have a series of initiatives to implement their traditional productivity. And then remember with Warwick, we also had $30 million of IRA funding that were waiting a word on there.

William F. Oplinger: So it is a good line of sight to realize that with the contracts that we have in place now. As far as the Productivity and Competitiveness Program is concerned, we have already identified lists of hundreds of initiatives. They are being executed now.

William F. Oplinger: Internally, we're tracking that against revised budgets. Everyone across the company, all the budget managers have lost about 6% of their budgets, so they are adhering to those, and so that's how we're monitoring the $100 million program there. As far as Warwick is concerned, they have hit about half of their run rate already, and that's with improved cost absorption after their restart. And they do still have a series of initiatives to implement there for additional productivity. And then remember, with Warwick, we also have the 30 million pounds of IRA funding that we're waiting for a word on there.

Molly S. Beerman: So they are adhering to those, and so that's how we're monitoring the $100 million program there.

Molly S. Beerman: As far as Warwick, they hit about half of their run rate already, and that's with improved cost absorption after their restart, and they do still have a series of initiatives.

Molly S. Beerman: to implement there for additional productivity. And then remember with WARC, we also have the 30 million of IRA funding that we're waiting a word on there.

Molly S. Beerman: on Eleomar Smelter.

Molly S. Beerman: A similar story to Warwick, with them increasing their production, their cost absorption has already gotten about a third of their target, so improvement on the higher tons coming through. They are operating at just above 70% now, so we believe they're on track for the full year by the end of 2025.

Unknown Executive: On Eleomarch Smelter, a similar story to work with them increasing their production; their cost absorption has already gotten about a third of their target. So improvement on the higher tons coming through. They are operating at just above 70 percent now. So we believe they're on track for the full year by the end of 25.

William F. Oplinger: On Eleomar Smelter, a similar story to Warwick, with them increasing their production, their cost absorption has already gotten about a third of their target, so improvement on the higher tons coming through. They are operating at just above 70% now, so we believe they're on track for the full year by the end of 2025. And then Quenana, they are obviously completely down now.

Molly S. Beerman: And then Quenana, they are obviously completely down now. We are seeing some higher ramp-down costs as well as higher initial holding costs.

Unknown Executive: And then Kwinana, they are obviously completely down now. We are seeing some higher ramp down costs as well as higher initial holding costs. So for them, they will get to the full cost reduction, but it won't be until 2025. You'll see some minimal savings coming there in the second half of 2004, but we won't hit that full run rate till 25.

Molly S. Beerman: So, for them, they will get to the full cost reduction, but it won't be until 2025. You'll see some minimal savings coming there in the second half of 2024, but we won't hit that full run rate until 2025.

William F. Oplinger: We are seeing some higher ramp-down costs as well as higher initial holding costs. So for them, they will get to the full cost reduction, but it won't be until 2025. You'll see some minimal savings coming there in the second half of 24, but we won't hit that full run rate till 25.

Speaker Change: Thank you very much for this.

Speaker Change: My second question is a clarification on the additional business considerations. You're citing the unfavorable impact of higher alumina costs in the aluminum segment to the tune of $60 million. Is that over and above the usual sensitivity, or how should we think about that $60 million? Thank you very much.

Lucas Pipes: Thank you very much for this.

Lucas Nathaniel Pipes: Thank you very much for this. My second question is a clarification on the additional business considerations. You're citing the unfavorable impact of higher alumina costs in the aluminum segment to the tune of $60 million. Is that over and above the usual sensitivity? Or how should we think about that $60 million?

Lucas Pipes: My second question is the clarification on the additional business considerations.

Lucas Pipes: You're citing the unfavorable impact of higher aluminum costs and the aluminum segment to the $2.60 million.

Unknown Executive: Is that over and above the usual sensitivity, or how should you think about that? Thank you very much.

Speaker Change: So that $60 million is not within your sensitivities, that's why we give that to you separately.

Lucas Nathaniel Pipes: Thank you very

Speaker Change: So obviously the higher alumina price is going to benefit us overall dramatically, but then we call out for you how much of that will show up in the aluminum segment as an additional cost.

Molly S. Beerman: So that $60 million is not within your sensitivities; that's why we give that to you separately. So obviously, the higher alumina price is going to benefit us overall dramatically, but then we call out for you how much of that will show up in the aluminum segment as an addition.

Unknown Executive: So that $60 million is not within your sensitivity. That's why we give that to you separately. So obviously the higher aluminum price is going to benefit us overall dramatically, but then we call out for you how much of that will show up in the aluminum segment as an additional cost. But there is nothing operationally that would drive those higher costs. It's really just the price. Just the price. Just the flow through it, and we only provide that for you because some people struggle with the modeling. And so it allows you to clearly understand what the aluminum cost is in the aluminum business.

Speaker Change: But there's nothing operationally that would drive those at higher cost. It's really just the price.

Speaker Change: Just the price. Correct, just the price. Just the flow-through, and we only provide that for you because some people struggle with the modeling, and so it allows you to clearly understand what the aluminum cost is in the aluminum business.

Molly S. Beerman: But there's nothing operationally that would drive those at higher costs. It's really just the price sensitivity. Just the price. Correct. Just the price. Just the flow-through. And we only provide that for you because some people struggle with the modeling. And so it allows you to clearly understand what the aluminum cost is in the aluminum.

Speaker Change: In effect, Lucas, that's the number that would show up on the quarterly bridge, in effect.

Luke: for this segment.

Unknown Executive: In fact, look, that's a number that would show up on the quarterly bridge.

William F. Oplinger: In effect, Lucas, that's the number that would show up on the quarterly bridge for this segment.

Luke: Very good. I appreciate that clarification. Thank you and best of luck.

Unknown Executive: In effect.

Lucas Pipes: Thank you very much. Very good. I appreciate that clarification.

Luke: And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Oplinger for any closing remarks.

Lucas Nathaniel Pipes: Very good. I appreciate that clarification. Thank you and best of luck.

Unknown Executive: Thank you, and best of luck. Thank you.

William F. Oplinger: Thank you. Just a couple of closing remarks. As you can see from the results, we made a lot of progress in the quarter. We improved both the safety and the operational operations across the company. We're about to close on the Illumina Limited transaction.

Unknown Executive: And this concludes our question-and-answer session.

Operator: And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Oplinger for any closing remarks.

William Oplinger: I'd like to turn the conference back over to Mr. Oplinger for any closing remarks.

William F. Oplinger: Thank you. I have just a couple of closing remarks. As you can see from the results, we made a lot of progress in the quarter. We improved both safety and operations across the company. We're about to close on the Illumina Limited transaction on August 1st, and we've already captured over half of the improvement from the improvement programs that we're anticipating for 2025. So overall, it was a busy quarter, and we made a lot of progress. I'd like to thank you for joining our call. Molly and I look forward to sharing further progress when we speak again in October.

William Oplinger: Thank you.

William Oplinger: Just a couple of closing remarks. As you can see from the results, we made a lot of progress in the quarter. We improved both the safety and the operational operations across the company. We're about to close on the aluminum-limited transaction on August 1st. And we've already captured over half of the improvement from the improvement programs that we're anticipating for 2025. So overall it was a busy quarter, and we made a lot of progress.

William F. Oplinger: on August 1st, and we've already captured over half of the improvement from the improvement programs that we're anticipating for 2025. So, overall, it was a busy quarter, and we made a lot of progress.

William F. Oplinger: I'd like to thank you for joining our call. Molly and I look forward to sharing further progress when we speak again in October .

William Oplinger: I'd like to thank you for joining our call. Molly and I look forward to sharing further progress when we speak again in October.

Speaker Change #100: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect your lines at this time.