Alcoa (NYSE: AA) announced third quarter 2010 income from continuing operations of $61 million, or $0.06 per share, compared with second quarter 2010 income from continuing operations of $137 million, or $0.13 per share, and third quarter 2009 income from continuing operations of $73 million, or $0.07 per share. Third quarter 2010 results included a negative impact for special items of $35 million, or $0.03 per share, compared to a $2 million net charge for special items in the sequential quarter and a positive impact of $34 million, or $0.03 per share, in the year ago quarter.
Quarterly results were impacted by lower London Metal Exchange (LME) prices and negative currency impacts. These were partially offset by higher volumes in Alumina, Flat-Rolled Products, and Engineered Products and Solutions and the continued benefits from Alcoaâ€™s Cash Sustainability Program.
The third quarter 2010 results also reflect the impact of special items such as previously announced recovery costs associated with the SÃ£o LuÃs alumina refinery; a negative impact from the second quarter flood at the AvilÃ©s smelter in Spain; costs associated with the recent debt tender offer; non-cash, mark-to-market impacts of derivatives in several power contracts; and restructuring activities. These items were partially offset by a discrete income tax benefit.
Net income for the quarter was $61 million, or $0.06 per share, compared to $136 million, or $0.13 per share, for the second quarter of 2010. Net income for the third quarter of 2009 was $77 million or $0.08 per share.
Revenues for the quarter were $5.3 billion, a 2 percent increase from $5.2 billion in the second quarter of 2010 and a 15 percent increase from $4.6 billion in the third quarter of 2009. The sequential increase was the result of a 3 percent increase in aluminum shipment volumes and a 7 percent increase in alumina shipments, offset by lower realized third-party prices for alumina (-5 percent) and aluminum (-2 percent). Strong end-market revenue performance in the quarter was achieved in Packaging (+11 percent), Commercial Transportation (+10 percent), Building & Construction (+10 percent), and Aerospace (+3 percent).
Alcoa continued to produce strong results in its Cash Sustainability Program and is on track to reach its goals for the year. Results year-to-date include procurement savings of $2.2 billion of the $2.5 billion target, overhead savings of $431 million toward the $500 million reduction target, capital spending at $785 million toward the $1.25 billion target, and working capital at 42 days, five days better than the same period last year.
Cash from Operations was $392 million, up $92 million from the second quarter of 2010, and an improvement of $208 million from the year ago quarter. Free cash flow was positive at $176 million in the quarter, an increase of $89 million compared to the previous quarter. Adjusted EBITDA was $602 million, a 33 percent increase over the third quarter of 2009.
Capital expenditures for the third quarter were $216 million, flat with the second quarter of 2010 and on target with the Cash Sustainability Program.
Debt-to-Capital at the end of the third quarter stands at 35.7 percent, 270 basis points lower than the previous quarter and a 260 basis point improvement over the prior-year quarter. The decrease was the result of a reduction in debt of $491 million from the sequential quarter and $764 million over the third quarter of 2009.