Alcoa Q2 Results Showcase the Company’s Reliance on Metal 3D Printing

Widely considered as a global leader in engineering and manufacturing lightweight metals, the New York City-headquartered company Alcoa has been paving their own path through the additive manufacturing industry. Over the last year or so, the company has invested millions towards implementing 3D printing technology into their manufacturing process, their latest being the newly opened $60 million 3D printing metal powder production facility at the Alcoa Technology Center in Pittsburgh. With this enhanced access to additive manufacturing technology through their facilities, Alcoa will begin supplying 3D printed airplane components to the aerospace company Airbus this year.

Thus far, Alcoa’s investment in 3D printing technology seems to be showing a formidable return, as their Q2 financial results showcase an agile company prepared to evolve alongside the rapidly changing manufacturing industry. During Q2 2016, Alcoa brought in a new income of $135 million ($0.09 per share), as well as $5.3 billion in revenue. Although their revenue is technically down 10% year-over-year, the decrease can be chalked up to the 14% revenue decline due primarily to lower aluminum and alumina pricing. As far as acquisitions and organic growth goes, however, Alcoa showed a 4% increase in their revenue, proving that the company is still expanding their reach into metal-based 3D printing, among other things. In addition, Alcoa ended Q2 with $1.9 billion cash in hand and $332 million in cash from operations.

Klaus Kleinfeld

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“As markets ever more rapidly evolve, we have made Alcoa increasingly agile; results continue to improve,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “In the face of a transforming aerospace market, we moved quickly to bring our costs down while capturing new opportunities. Contract wins continued as did our innovation leadership with the opening of a state-of-the-art metals powder plant geared toward rising demand for 3D-printed parts.”

Since last year, Alcoa has been on the track towards becoming two separate companies, Arconic (Value-Add) and Alcoa Corporation (Upstream). With the planned separation, Arconic will be in charge of getting innovations out of the ground, while Alcoa Corporation will be engaged in more downstream-type operations, turning those innovations into a workable product for their customers. The profit from their 2016 Q2 combined with Arconic segments show year-over-year growth, which in turn strengthens the segments of Alcoa Corporation as well.

When their Q2 numbers are adjusted to exclude the impact of special items, which are primarily related to separation costs, restructuring-related charges, and associated tax impacts, Alcoa brought in $213 million ($0.15 per share) in net income. Although the $375 million brought in by all Alcoa segments helped to partially offset the lowered pricing of aluminum, the company still showed a decrease in net income compared to their 2015 Q2. Still, Alcoa managed to move a number of assets during this quarter to strengthen their balance sheet and maximize their cash flow through sales of non-essential assets.

Their announced sales for 2016 are projected to ring in around $1.2 billion, $815 million of which has already been received. All in all, Alcoa is projecting improvement in the coming financial quarters, particularly through the aerospace and automotive industries. The company expects large commercial aircraft deliveries to rise by 6% in the second half of 2016, and also projects further growth in the global automotive production as well. As a result, Alcoa forecasts that the remainder of 2016 will show very subtle growth, if any, but expects strong double-digit growth by the time 2017 rolls around.

The projected future of Alcoa is of course contingent on certain factors in the global market, such as fuel prices, sustained demand, stable consumer confidence, and the recovery of global economies. The company is also heavily dependent on their access to aluminum and alumina, both of which are expected to remain in a global deficit for the foreseeable future. Overall, it seems that Alcoa is still in a sort of incubated state, preparing to expand their services across the aerospace and automotive industries. Thus far, they’ve earned hefty contracts with aerospace companies like Airbus and Embraer, while also developing proprietary titanium, nickel, and aluminum powders in their new Alcoa Technical Center, all of which will be optimized for 3D printed aerospace parts. Although their Q2 numbers might not show it at first glance, their recent investment in metal 3D printing technology and big-name contracts set them up for success in the tail-end of 2016 and beyond. Discuss further in the Alcoa Q2 Results forum over at 3DPB.com.