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Arconic Inc. logged profit, as reported, of $322 million or 65 cents per share for the first quarter of 2017. The results in the reported quarter include $153 million of one-time items including a gain on the sale of Alcoa Corp. (AA - Free Report) shares.
Barring one-time items, earnings came in at 33 cents per share for the reported quarter, up from 26 cents per share a year ago. The results topped the Zacks Consensus Estimate of 25 cents. Arconic gained from its cost-saving actions in the quarter that more than offset unfavorable price and mix.
Revenues for the quarter were $3,192 million, up 4.5% year over year, also coming ahead of the Zacks Consensus Estimate of $3,017 million. Revenues were driven by improved volumes across all segments.
Arconic’s shares rallied around 6.8% in extended trading yesterday, reflecting the forecast-topping results. The stock closed 3.4% higher in normal trading yesterday.
Engineered Products and Solutions (EPS) – Revenues from the division came in at $1.5 billion in the first quarter, up 2% year over year. Adjusted EBITDA inched up 0.3% to $306 million in the quarter, helped by volume gains and net cost savings.
Global Rolled Products (GRP) – The division recorded sales of $1.2 billion in the quarter, up 5%. Adjusted EBITDA rose 10% year over year to $171 million, driven by strong volumes in automotive and benefits of cost saving actions.
Transportation and Construction Solutions (TCS) – The segment logged sales of $449 million, up 5%. Adjusted EBITDA increased around 12% to $72 million in the quarter on the back of higher volumes and net cost savings.
Financial Position
Arconic ended the quarter with cash and cash equivalents of roughly $2.6 billion. Long-term debt was around $8 billion at the end of the quarter. The company plans to reduce debt by $1 billion in the first half of 2017. Free cash flow for the first quarter was negative $403 million.
Outlook
Moving ahead, Arconic said that it will remain focused on capital efficiency, growth actions, cost cutting and improving margin in 2017. The company said that it is well placed in the aerospace market that is continuing its transition to new platforms.
Arconic also backed its guidance for full-year 2017 provided at Investor Day last year. The company sees revenues in the range of $11.8 billion to $12.4 billion and adjusted earnings of $1.10 to $1.20 per share for 2017.
Arconic, formerly known as Alcoa Inc., is a global leader in multi-material, precision engineered products and solutions for a variety of industries. The separation of Alcoa Inc. into two independent, publicly traded companies – Arconic Inc. and Alcoa Corp. – was completed and became effective on Nov 1, 2016. Alcoa Inc. changed its name to Arconic Inc. on Oct 31, 2016 in connection with its business separation.
Arconic recently announced that Klaus Kleinfeld has stepped down as its Chairman and CEO by mutual agreement with the company’s board amid intense pressure from hedge fund, Elliott Management. The move follows the findings of Arconic’s board that, without authorization by the board, Kleinfeld sent a letter directly to a senior officer of Elliott Management which the board decided was in poor judgment. Arconic has appointed David P. Hess, an incumbent board member, as Interim CEO.
Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date, aided by strong demand for its products across aerospace and automotive markets and its efforts to improve cost structure through company-wide productivity actions. The company’s shares have gained around 55.3% over this period, compared with roughly 9.3% gain recorded by the industry.
Lundin has an expected long-term earnings growth of 34.1%.
U.S. Steel has an expected long-term earnings growth of 8%.
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Arconic (ARNC) Q1 Earnings & Sales Top, Shares Jump
Arconic Inc. logged profit, as reported, of $322 million or 65 cents per share for the first quarter of 2017. The results in the reported quarter include $153 million of one-time items including a gain on the sale of Alcoa Corp. (AA - Free Report) shares.
Barring one-time items, earnings came in at 33 cents per share for the reported quarter, up from 26 cents per share a year ago. The results topped the Zacks Consensus Estimate of 25 cents. Arconic gained from its cost-saving actions in the quarter that more than offset unfavorable price and mix.
Revenues for the quarter were $3,192 million, up 4.5% year over year, also coming ahead of the Zacks Consensus Estimate of $3,017 million. Revenues were driven by improved volumes across all segments.
Arconic’s shares rallied around 6.8% in extended trading yesterday, reflecting the forecast-topping results. The stock closed 3.4% higher in normal trading yesterday.
Arconic Inc. Price, Consensus and EPS Surprise
Arconic Inc. Price, Consensus and EPS Surprise | Arconic Inc. Quote
Segment Highlights
Engineered Products and Solutions (EPS) – Revenues from the division came in at $1.5 billion in the first quarter, up 2% year over year. Adjusted EBITDA inched up 0.3% to $306 million in the quarter, helped by volume gains and net cost savings.
Global Rolled Products (GRP) – The division recorded sales of $1.2 billion in the quarter, up 5%. Adjusted EBITDA rose 10% year over year to $171 million, driven by strong volumes in automotive and benefits of cost saving actions.
Transportation and Construction Solutions (TCS) – The segment logged sales of $449 million, up 5%. Adjusted EBITDA increased around 12% to $72 million in the quarter on the back of higher volumes and net cost savings.
Financial Position
Arconic ended the quarter with cash and cash equivalents of roughly $2.6 billion. Long-term debt was around $8 billion at the end of the quarter. The company plans to reduce debt by $1 billion in the first half of 2017. Free cash flow for the first quarter was negative $403 million.
Outlook
Moving ahead, Arconic said that it will remain focused on capital efficiency, growth actions, cost cutting and improving margin in 2017. The company said that it is well placed in the aerospace market that is continuing its transition to new platforms.
Arconic also backed its guidance for full-year 2017 provided at Investor Day last year. The company sees revenues in the range of $11.8 billion to $12.4 billion and adjusted earnings of $1.10 to $1.20 per share for 2017.
Arconic, formerly known as Alcoa Inc., is a global leader in multi-material, precision engineered products and solutions for a variety of industries. The separation of Alcoa Inc. into two independent, publicly traded companies – Arconic Inc. and Alcoa Corp. – was completed and became effective on Nov 1, 2016. Alcoa Inc. changed its name to Arconic Inc. on Oct 31, 2016 in connection with its business separation.
Arconic recently announced that Klaus Kleinfeld has stepped down as its Chairman and CEO by mutual agreement with the company’s board amid intense pressure from hedge fund, Elliott Management. The move follows the findings of Arconic’s board that, without authorization by the board, Kleinfeld sent a letter directly to a senior officer of Elliott Management which the board decided was in poor judgment. Arconic has appointed David P. Hess, an incumbent board member, as Interim CEO.
Arconic has outperformed the Zacks categorized Mining-Non Ferrous industry year to date, aided by strong demand for its products across aerospace and automotive markets and its efforts to improve cost structure through company-wide productivity actions. The company’s shares have gained around 55.3% over this period, compared with roughly 9.3% gain recorded by the industry.
Zacks Rank & Key Picks
Arconic is a Zacks Rank #2 (Buy) stock.
Other well-placed companies in the basic materials space include Lundin Mining Corp. (LUNMF - Free Report) and United States Steel Corp. (X - Free Report) , both holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lundin has an expected long-term earnings growth of 34.1%.
U.S. Steel has an expected long-term earnings growth of 8%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>