Alcoa 1Q14 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Strength in aircraft

“We see a continued strong performance from the large commercial aircraft segment. We believe it’s up by 12.1%. If you look at Boeing and Airbus, the backlog stands now at 10,675 aircraft units, this is well over eight years of backlog.”

substantially increasing forecast for heavy trucks in North America

“Another good story comes from the heavy trucks and trailer market in North America. We are seeing substantially – we are substantially increasing our production forecast to 5% to 9% growth range.”

Slow orders in the US were completely due to weather

“Let me also address one other thing that has been discussed quite a bit and we also saw it in our order intake in the first quarter here in the U.S. where it slowed down, it slowed down, the order intake there slowed down. This has pretty much single handedly been driven by the extremely cold weather so what do we see now? We are seeing on those sides now as this sites got delayed with concrete couldn’t get poured people are now trying to catch up and trying to make the days that they had projected for their project, so we continue to be optimistic in the recovery of that market and don’t believe that there is any substantial change in this, it was really weather that hit there.”

In commodities, it’s all about where you are on the cost curve

“In 2010, the alumina business where at the 30s percentile on the cost curve and really in the commodity business, it’s all about where you are in the cost curve. In 2013, we knock that down to 27th percentile and we announced that we will knock it down another 6 percentage points until 2016 to the 21st percentile.”

Shaping technology opens lots of aluminum form factors

“That’s why we invest it in shaping technology. So what you – what I showed today this Bud Light bottle, we see the Bud Light bottle as a great example. It’s a great example of that, but it’s only one example because the technologies that we are using to make this bottle, you can equally well use to make other types of forms and packaging, it doesn’t have to be receivable all the time. You can also have a shaped can, right? And there is a huge degree of flexibility.”

Klaus Kleinfeld buttering up a new analyst

“Well, first of all, Josh welcome to Alcoa. And really appreciate you starting the coverage on us and I think everybody will benefit from it because you know the automotive and the aerospace industry very, very well. So and I really enjoyed your comments on the first coverage in those industries, right?”