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Better-Than-Expected Earnings and Guidance Couldn’t Lift Arconic

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Nov. 20 2020, Updated 11:59 a.m. ET

Better-than-expected earnings

Arconic (ARNC) reported its 2Q17 earnings on July 25. Alcoa (AA) reported its 2Q17 earnings on July 19. You can read Alcoa’s 2Q17 Earnings: What Made Investors Nervous? for more about Alcoa’s 2Q17 earnings.

Arconic, like Alcoa, reported better-than-expected earnings in 2Q17. However, even an earnings beat failed to instill enthusiasm in Arconic investors. Although the stock was trading higher in pre-market hours on July 24, it closed with marginal losses on the day.

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2Q17 earnings

  • Arconic reported revenues of $3.3 billion in 2Q17, a 0.8% rise compared to the corresponding period last year. However, revenues have risen 5.4% year-over-year if we exclude the impact from Tennessee Packaging. Arconic plans to exit its packaging business, which has lower margins (XME) (NHYDY).
  • In 2Q17, Arconic generated adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $444 million, up 3% as compared to the corresponding period last year. After adjusting for special items, Arconic posted adjusted EBITDA of $486 million in the quarter.
  • Arconic generated free cash flows of $91 million in 2Q17. The company had a cash balance of $1.8 billion as of June 30, 2017.
  • Arconic had a net debt of $5.0 billion as of the end of 2Q17 as compared to $6.2 billion as of the end of 2016. We should remember that Arconic has monetized its stake in Alcoa and raised ~$1.4 billion, which has helped the company bring down its leverage ratios.

While Arconic’s 2Q17 earnings were better than expected, the company also revised its 2017 guidance upwards. Continue to the next part for a detailed analysis of Arconic’s 2017 guidance.

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