Alcoa Earnings Call Nuggets: LME Metal Prices and Capital Expenditures
LME Metal Prices
Anthony Rizzuto – Cowen Securities: I have got two questions one is how should we think about the sustainability of the premium over the LME metal prices. you see that it widened out to $0.175 per pound and I know there has been some attempts by the LME to try to change offloading requirements are you concerned by that at all that it could narrow somewhat going forward?
Klaus Kleinfeld – Chairman and CEO: Well I mean the rules have only come out recently, and they are for discussion. And on top of it, LME has said, they won’t apply that before 2014. Not exactly sure what the rule wants to achieve because when you look at these so-called inventories that are stuck in the LME, I mean, we’re really only referring to the cancelled warrants, and the cancelled warrants make up around 2 million of our – we expect the total inventories – I mean, visible and invisible, to be around 10 million. So, we’re talking about 20%. The rest of the metal is really freely moving. And then when you look at the rules, I mean, it’s basically really applying to two warehouses; Detroit – the Metro Detroit and Pacorini in Vlissingen. So, those are the things that come to mind here. And I also believe that probably the majority of the metal that’s getting cancelled is probably waiting in these SKUs is going to lower cost off-warrant storage. I feel that financing of the inventory remains attractive. You mentioned the contango has widened. The interest rates are still low. They might go up a little, but at the same time we’ve talked about that before. I mean, they would only go up if the economy recovers. That’s basically what all of the central bankers have clearly said. And I believe that that’s what they will do. So then physical demand will kick in. So I’m really not too concerned. I mean, what strikes me is that the metal availability which I’ve read in some of the coverage people are complaining about the metal availability, I don’t think that that has ever been an issue in the aluminum market and frankly if there is somebody who hasn’t got metal available, I mean, you can send me an email or give me a call and we will solve that. I mean, I think there are producers that are willing, most of the producers are willing to sign contracts. We’ve also seen that some of the consumers use the lower cost financing to build some consignments stocks and themselves have acted as warehouses. So, I think that that’s probably what I would see there. I mean if I think of the rule by itself or the LME by itself, I mean the economy, in general, is recovering slowly with different speeds in Europe as well as in the U.S. and there is some uncertainty around how the quantitative easing will wind down. I think the interest is that LME really avoids the risk of a disruptive or sudden impact and rather gradually over time adjusts. So, this is our thoughts on this. We will obviously actively participate in the discussion and will provide our view to the LME. So, not particularly concerned, but important to study, important that it’s not too disruptive, no too sudden and rather gradually over time.
Anthony Rizzuto – Cowen Securities: Just a follow-up, if I may, you’ve got some very exciting developments going on in the aero fastener side and I was wondering if you guys could provide some color on the growth rate of the aero fasteners in the quarter, however, you (indiscernible) quarter-on-quarter basis or year-on-year basis, that would be helpful?
Klaus Kleinfeld – Chairman and CEO: Well, we have not provided the fasteners and the breakdown on that. I mean that would be a pretty endless thing, but you’ve seen we have a growth target for our Engineered Products and Solutions business out there and this is the $1.6 billion of additional of organic growth from 2010 on to this year and we said that we are going to do that while we will be achieving profitability above the highs – historic highs and you can see that we are acting against that, again in this quarter when you look at our Engineered Products and systems business, and we will continue that.
Brian Yu – Citigroup: On Page 14 of the presentation slides where you go through the positive free cash flow target, your year-to-date spending is obviously well below the target. I think you mentioned that the Saudi JV that that’s going to be back-half-loaded. Are there any components of the managed growth capital and sustaining capital that would be back-half-loaded too?
William P. Oplinger – EVP and CFO: Brian, we’re essentially not putting out a revised full year estimate for capital expenditures, and we will come in under the target and that’s what we’re trying to signal by way of showing you the half year numbers. But no, we haven’t given guidance on what second half will look like.
Brian Yu – Citigroup: And then if I’d follow-up along those kind of same lines, you’ve got some growth targets that you’re well on track. It doesn’t seem like much of that is tied to capital spending. What is being deferring? Is that something that you would spend the following year?
Klaus Kleinfeld – Chairman and CEO: Yeah, I would say that the growth targets are not at risk. I mean – and frankly, we look at every investment here on a standalone basis. I mean, we believe the way we have to manage our business is owning quite a number of different businesses. Some businesses are under enormous stress from external factors. So, you see that we are shutting down facilities, curtailing them, and restructuring them. At the same time and the same quarter, we are utilizing great opportunities that we see on some ends. I mentioned, two big areas are aerospace and automotive, and we are putting capital in there, and we are growing in this and we’re capturing the opportunities, and we will continue to do that. That’s how we think about it. The capital allocation will have to stand on its own. I mean we will not – I mean, there is no capital investment that has not been grinded very, very substantially through our corporate process. And the capital threshold that we have out there, I mean it’s just the minimum requirement, so which we really get to, to be honest. Usually it’s much, much higher the returns that we are approving.
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