Alcoa Q3 2026 Earnings: Net Income More Than Doubles

Alcoa (NYSE: AA) reported third-quarter 2026 revenue of $3.70 billion, up about 24% from $2.995 billion a year earlier, while diluted EPS rose to $1.81 from $0.88. Net income attributable to Alcoa more than doubled year over year, although revenue and adjusted earnings declined sequentially as lower aluminum prices and shipments outweighed better production costs and higher alumina prices. Operating cash flow was $643 million, with free cash flow reaching $472 million.

Core Financial Results

For the quarter ended September 30, 2026, Alcoa’s year-over-year results improved across its main profit measures. Revenue increased by $709 million, while attributable net income rose by $251 million and adjusted EBITDA excluding special items nearly tripled.

The sequential comparison was less favorable. Revenue declined 7% from $3.966 billion in the second quarter, and adjusted EBITDA fell by $112 million as aluminum pricing and shipment pressure more than offset operational cost improvements and stronger alumina pricing.

Adjusted net income, adjusted EPS, adjusted EBITDA, and free cash flow are non-GAAP measures.

Business and Segment Performance

The Alumina segment benefited from improved operating stability at the Pinjarra refinery in Australia. Alumina production increased 11% sequentially to 2.5 million metric tons, third-party shipments rose 2%, and third-party revenue increased 7% on higher realized prices and shipment volumes.

The Aluminum segment showed a different pattern. Production increased 2% sequentially to 649,000 metric tons, supported by capacity restarts completed in the second quarter and the completion of the Alumar smelter restart in Brazil. However, total shipments declined 5% following unusually high second-quarter volumes related to earlier inventory repositioning. Lower shipments and realized prices reduced Aluminum segment third-party revenue by 9% sequentially.

Aluminum production increased for the sixth consecutive quarter. Alcoa also reported year-to-date production records at five smelters and one refinery, indicating that recent operating improvements extended across multiple facilities rather than depending on a single asset.

Profitability, Cash Flow, and the Balance Sheet

Cash provided by operations totaled $643 million. After $171 million of capital expenditures, free cash flow was $472 million. Investing activities used $183 million during the quarter.

Alcoa ended Q3 with $4.4 billion of cash, but $2.6 billion of that balance came from financing obtained for the planned AliGroup acquisition. The company issued $1.5 billion of 6.625% senior notes due in 2034 and $1.1 billion of 6.875% senior notes due in 2036. It plans to combine the proceeds with cash on hand to fund approximately $3.1 billion of cash consideration and related transaction expenses.

Days working capital increased by four days sequentially to 50 days, matching the level reported in Q3 2025. The increase from Q2 primarily reflected higher inventory days associated with higher aluminum volumes. Quarter-end inventories were $2.6 billion, compared with customer receivables of $1.3 billion and trade accounts payable of $1.9 billion.

Alcoa also entered agreements to sell portions of its Massena East site. The company expects $50 million to $65 million at closing and could receive another $60 million to $250 million as approved data-center capacity is expanded and commissioned. Total potential proceeds are therefore up to $315 million, but the timing and amount depend on permitting, regulatory approvals, construction conditions, and future capacity development.

Mark-to-Market Gains Lifted GAAP Profit as Adjusted Earnings Fell Sequentially

GAAP net income attributable to Alcoa increased from $407 million in Q2 to $483 million in Q3, but adjusted net income declined from $562 million to $485 million. Adjusted EBITDA also decreased from $901 million to $789 million. The contrasting directions show that the sequential increase in reported profit did not represent a similar improvement in adjusted operating performance.

Notable Q3 special items included a $32 million mark-to-market gain on energy contracts and a $28 million gain on Alcoa’s Ma’aden shares. These were partly offset by $25 million of demolition and remediation costs at closed locations and $14 million of external costs related to the AliGroup acquisition. After all special items, the net adjustment was only $2 million, leaving Q3 GAAP and adjusted net income close to each other.

Operationally, improved production costs in both segments and higher alumina prices helped results. They were nevertheless more than offset sequentially by lower aluminum prices and shipment volumes, explaining the decline in adjusted EBITDA despite higher production.

2026 Outlook

Alcoa reaffirmed its full-year production and shipment ranges for both segments. For the fourth quarter, management expects higher production and shipments as refinery stability continues and the smelting portfolio generates incremental output, but it also identified new cost pressure in the Aluminum segment.

Alumina shipment guidance exceeds production because it includes trading volumes and externally sourced alumina used to meet customer contracts. The projected increase in fourth-quarter other income reflects interest earned on cash being held for the AliGroup acquisition.

Investor Risks to Monitor

• Aluminum pricing and shipment pressure: Lower realized aluminum prices and shipments reduced segment revenue and adjusted EBITDA sequentially in Q3. Continued weakness could offset the benefits of higher production.
• Fourth-quarter input and maintenance costs: Alcoa expects two approximately $30 million unfavorable Aluminum segment impacts from raw materials and planned maintenance, and from alumina costs.
• Dependence on operational stability: The outlook for higher output assumes sustained refinery stability and continued incremental smelter production following recent restarts.
• AliGroup execution and financing: The transaction remains targeted to close in the first half of 2027. Closing conditions, integration work, and the new debt have direct implications for cash deployment and interest expense.
• Inventory and working capital: Days working capital rose sequentially because of higher inventory days. Further inventory accumulation could absorb cash even if production continues to increase.

Summary

Alcoa’s Q3 2026 results marked a substantial year-over-year improvement in revenue and profitability, supported by higher output, better production costs, and stronger alumina pricing. The sequential picture was more mixed because lower aluminum prices and shipments reduced adjusted earnings despite continued production gains. Investors’ next operating checkpoints are fourth-quarter volume growth, the expected Aluminum segment cost headwinds, working-capital discipline, and progress toward completing the AliGroup acquisition.