Slide 1: Quarter Earnings Conference
Quarter Earnings Conference January 8, 2013 Exhibit 99.2 th
Slide 2: Cautionary Statement
Cautionary Statement 2 Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “estimates,” “expects,” “forecasts
Slide 3: Chuck McLane, Executive Vice President and Chief Financial Officer
3 Chuck McLane Executive Vice President and Chief Financial Officer January 8, 2013
Slide 4: 4th Quarter 2012 Financial Overview
4 Quarter 2012 Financial Overview See appendix for reconciliations to GAAP and additional information 4 th Income from Continuing Operations of $242 million, or $0.21 per share; Excluding impact of restructuring and other special items: • Income from continuing operations of $64 million, or $0.06 pe
Slide 5: Income Statement Summary
Income Statement Summary 5 4Q11 3Q12 4Q12 Sequential Change $ Millions, except per-share amounts Revenue $5,989 $5,833 $5,898 $65 Cost of Goods Sold $5,228 $5,266 $4,968 ($298) COGS % Revenue 87.3% 90.3% 84.2% (6.1 % pts.) Selling, General Administrative, Other $268 $234 $277 $43 SGA % Revenue 4.5%
Slide 6: Restructuring and Other Special Items
Restructuring and Other Special Items See appendix for Adjusted Income reconciliation 6 3Q12 4Q12 Income Statement Classification Segment [Alcoa Logo] $ Millions, except per-share amounts (Loss)/Income ($143) $242 (Loss)/Income ($0.13) $0.21 Tapoco Asset Sale - $161 Other Income, Net Primary Metals
Slide 7: 4th Quarter 2012 vs. 3rd Quarter 2012 Earnings Bridge
4 th Quarter 2012 vs. 3 rd Quarter 2012 Earnings Bridge See appendix for Adjusted Income reconciliation 7 14 37 13 7 79 25 8 34 th rd [Alcoa Logo] Income from Continuing Operations Excluding Restructuring & Other Special Items ($ millions) +$78m -$1m -$38m Productivity 4Q 2012 Cost Increases Curtail
Slide 8: Alumina 4Q12 Results and 1Q13 Outlook
Alumina 8 1 Quarter Outlook 4 Quarter Performance Bridge 4 Quarter Business Highlights 4 Quarter Results th th th st [Alcoa Logo] Alumina 4Q12 Results and 1Q13 Outlook 4Q 11 3Q 12 4Q 12 Production (kmt) 4,178 4,077 4,079 Party Shipments (kmt) 2,378 2,368 2,440 Party Revenue ($ Millions) ATOI ($ Mill
Slide 9: Primary Metals 4Q12 Results and 1Q13 Outlook
9 4 Quarter Results 4 Quarter Business Highlights 1 Quarter Outlook Quarter Performance Bridge th th st 4 th Production decrease due to completed Italy curtailment Price/Mix improvement as regional premiums rise Productivity of $11 million Seasonal energy price increases Completed Tapoco Hydropower
Slide 10: Global Rolled Products 4Q12 Results and 1Q13 Outlook
4 th Quarter Results 4 Quarter Business Highlights 1 Quarter Outlook 4 Quarter Performance Bridge Global Rolled Products 10 See appendix for Adjusted EBITDA reconciliation th th st ATOI ($ Millions) 4Q 11 3Q 12 4Q 12 Global Rolled Products, excl Russia, China & Other Russia, China & Other (6) Total
Slide 11: Engineered Products and Solutions 4Q12 Results and 1Q13 Outlook
Engineered Products and Solutions See appendix for Adjusted EBITDA reconciliation 11 Quarter Results Quarter Outlook 4 Quarter Performance Bridge Quarter Business Highlights th 4 th 4 th 1 st [Alcoa Logo] Engineered Products and Solutions 4Q12 Results and 1Q13 Outlook $ Millions 4Q 11 3Q 12 4Q 12 Pa
Slide 12: 4th Quarter 2012 Cash Flow Overview
See appendix for Free Cash Flow and Net Debt-to-Capital reconciliations 4 Quarter Cash Flow Overview 12 ($ Millions) 4Q11 3Q12 4Q12 Cash from Operations $1,142 $263 $933 Cash from Financing Activities $49 ($282) ($712) Cash from Investing Activities ($583) ($262) $207 th [Alcoa Logo] Net (Loss) Inco
Slide 13: 2012 Full Year Results
13 [Alcoa Logo] 2012 FULL YEAR RESULTS
Slide 14: Executing and Delivering in a Challenging Environment
Executing and Delivering in a Challenging Environment See appendix for Adjusted EBITDA reconciliation 14 Delivering Results Achieving Our Targets [Alcoa Logo] Productivity & Overhead Working Capital Capital Spend and Investments Maintain Debt-to-Capital Target: $850m Actual: $1.3b Positive Free Cash
Slide 15: Taking Necessary Steps to Maintain Liquidity
Taking Necessary Steps to Maintain Liquidity 15 See appendix for Free Cash Flow reconciliation ($ Millions) 2012 Free Cash Flow $236 $687 [Alcoa Logo] Cash from Operations $1,497 Capital Expenditures ($1,261) Saudi Arabia Investments ($164) Proceeds from sale of assets $615
Slide 16: Generating Positive FCF Amid A Volatile Environment
Generating Positive FCF Amid A Volatile Environment 16 See appendix for Free Cash Flow reconciliation Free Cash Flow ($ millions) -39 -506 -440 1,005 -22 -186 -90 -742 -409 -$257 $1,246 $906 $236
Slide 17: Exceeding $850 Million Productivity and Overhead Target
Exceeding $850 Million Productivity and Overhead Target *All figures are pretax and pre-minority interest. 2009/2010 represent net productivity; 2011/2012 represent gross productivity 17 1 5,542 1,291 1,099 2,410 Total Alcoa Productivity ($millions)*
Slide 18: 2012 Actions More Than Offset Significant Headwinds
2012 Actions More Than Offset Significant Headwinds See appendix for Adjusted Income reconciliation 18 559 91 786 127 92 129 1,014 Income from Continuing Operations Excluding Restructuring & Other Special Items ($ millions) -$885m +$1,005m -$670m Cost Increases / Other Raw Materials Energy Productiv
Slide 19: Achieving Sustainable Days Working Capital Reductions
Achieving Sustainable Days Working Capital Reductions See appendix for days working capital reconciliation 19 3 days lower Days Working Capital since Fourth Quarter 2008 3 days lower 10 days lower -3 days 3 days lower Record Low th Quarter
Slide 20: Significantly Strengthening Our Liquidity Position
Significantly Strengthening Our Liquidity Position See appendix for Net Debt-to-Capital reconciliation 20 8,338 9,816 6,968 7,432 7,622 Net debt reduction of 29% since 2008 Debt to Cap Net Debt Cash Debt, Net Debt and Debt - to - Capital % (millions) Commitment to Investment Grade: Improving Net Deb
Slide 21: New Aggressive Targets Set to Maximize Cash In 2013
New Aggressive Targets Set to Maximize Cash In 2013 21 Overarching 2013 Financial Target Taking the right actions Positive Free Cash Flow Maintain 30%-35% Debt-to-Capital Manage Growth Capital of $550M Generate Productivity Gains of $750M Target Saudi JV Investment of $350M Control Sustaining Capita
Slide 22: Successfully Executing for Cash; Continued Focus in 2013
Successfully Executing for Cash; Continued Focus in 2013 22 Debt to Cap Net Debt Cash
Slide 23: Klaus Kleinfeld, Chairman and Chief Executive Officer
Klaus Kleinfeld Chairman and Chief Executive Officer January 8, 2013
Slide 24: Alcoa End Markets: Current Assessment of 2013 vs. 2012
Source: Alcoa analysis 2013 Market Conditions 24 Alcoa End Markets: Current Assessment of 2013 vs. 2012 North America China Global Europe Aerospace Automotive Heavy Truck & Trailer Beverage Can Packaging Commercial Building and Construction Industrial Gas Turbine
Slide 25: Aluminum Market Fundamentals Are Intact
Aluminum Market Fundamentals Are Intact 25 2012: Aluminum Demand Strong and Outpacing 10-Year Forecast Global Aluminum Demand Grows in 2013 Inventories Stable; Financing Driving Premiums Markets Essentially Balanced
Slide 26: Short Term Demand Exceeding Long Term Expectations
26 Source: Alcoa analysis, Brook Hunt, CRU, Harbor Intelligence Short Term Demand Exceeding Long Term Expectations In 2010, we said demand to roughly double… 25.4 20.7 23.0 16.5 35.7 37.7 23.0 16.5 …run rate ahead of projection 46.1 Rest of World China 39.5 2020 Forecast 39.5 Rest of World China 73.
Slide 27: Global Aluminum Demand Accelerates to 7% in 2013
27 Source: Alcoa analysis, IMF, OECD Global Aluminum Demand Accelerates to 7% in 2013 23.0 6.5 6.2 5.9 3.8 2.0 1.0 1.0 2013 Primary Aluminum Consumption (mmt), Annualized Growth (%) and Change (% pts) by Region (1) Other includes Middle East, Latin America ex Brazil, Eastern Europe and Rest of World
Slide 28: Markets Essentially Balanced in 2013
2013E Aluminum Supply/Demand Balance 2013E Alumina Supply/Demand Balance Source: Alcoa analysis, Brook Hunt, CRU, CNIA, NBS, Chinese Customs Markets Essentially Balanced in 2013 28 Supply Demand Surplus ‘000 mt China Rest of World ‘000 mt China Rest of World Supply Demand Deficit (200)
Slide 29: Primary Aluminum Inventories Remain Below 2009 Peak
29 Source: Alcoa analysis, LME, SHFE, CRU, IAI, Marubeni Corp. Primary Aluminum Inventories Remain Below 2009 Peak Decline 28 days from the ’09 peak Cancelled Warrants: 1.6M tons above year end 2011; all-time record high China stocks: Only 7 days of global demand Producer stocks : Record low < days
Slide 30: Regional Premiums Continue To Be Strong
Source: Month end pricing - Platts Metals Week and Metal Bulletin Regional Premiums Continue To Be Strong 30 $0 $50 $100 $150 $200 $250 $300 Regional Premiums over time $ per metric ton $ per metric ton
Slide 31: Macro Events Continue to Drive Price Movements
Macro Events Continue to Drive Price Movements 31 Source: LME, Bloomberg Movement in LME Cash Prices After Economic Announcements Nov 20 th Greece Aid Resolution LME $1,952 Dec 7 th Positive U.S. Labor News LME $2,078 Positive China PMI LME $1,916 Dec 31 st Improved Sentiment Cliff Deal Will Be Reac
Slide 32: 2012/2013 Common Thread: Disciplined Execution
2012/2013 Common Thread: Disciplined Execution 32 Solid operating performance in a volatile year Achieving strategic investment milestones Financial targets set to maximize cash
Slide 33: Alumina: Focused on Sustainable Cost Reductions
Alumina: Focused on Sustainable Cost Reductions 33 Alcoa 2010 30 th Percentile Refining Cost Curve Holding Steady -7 points Alcoa 2012 30 th Percentile 2012 Strategic Actions Clear Strategic Direction: Improving cost competitiveness 20,000 40,000 60,000 80,000 100,000 120,000 Cumulative Production (
Slide 34: Primary Metals: Moving Down the Cost Curve
Primary Metals: Moving Down the Cost Curve 34 Smelting Cost Curve Down 4% Points -10 points 2012 Strategic Actions Alcoa 2010 51 st Percentile Alcoa 2012 47 th Percentile Clear Strategic Direction: Improving cost competitiveness Curtailments : 240k mtpy in Spain and Italy Permanent closures: 291k mt
Slide 35: Global Rolled Products: Generating Record Margins
Global Rolled Products: Generating Record Margins See appendix for Adjusted EBITDA reconciliations 35 Revenue growth from new products and share gains GRP-Growing profitability at record levels $7.6 $8.4b $6.3b Midstream Strategy: Profitable Growth $ Billions Adjusted EBITDA per MT 10-YR Average ~ $
Slide 36: Engineered Products & Solutions: Growing Profitably
Engineered Products & Solutions: Growing Profitably See appendix for Adjusted EBITDA reconciliations 36 Downstream Strategy: Profitable Growth Record margins exceeding historical levels $5.6 $5.5 $4.6 Revenue growth from share gains and innovation Adjusted EBITDA Margin $ Billions 8% 9% 12% 11% 12%
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Slide 38: Saudi Arabia JV: Achieving Significant Milestones
Saudi Arabia JV: Achieving Significant Milestones 37 Achieved smelter First Hot Metal Auto capability groundbreaking [Alcoa Logo] Lowest cost, integrated aluminum facility in the world Successful commissioning of first smelting pot s First hot metal in 25 months from first concrete Expected to produ
Slide 39: Focus Remains on Cash In 2013
Focus Remains on Cash In 2013 38 Overarching 2013 Financial Target Taking the right actions Positive Free Cash Flow Maintain 30%-35% Debt-to-Capital Manage Growth Capital of $550M Generate Productivity Gains of $750M Target Saudi JV Investment of $350M Control Sustaining Capital of $1.0B Key Actions
Slide 40: Market and Fundamentals Intact; Sentiment Moves Price
Market and Fundamentals Intact; Sentiment Moves Price 39
Slide 41: Executing Mid-Term Strategy; Continued Cash Focus
Executing Mid-Term Strategy; Continued Cash Focus 40
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Slide 43: Additional Information
Additional Information 42 Kelly Pasterick Director, Investor Relations Alcoa 390 Park Avenue New York, NY 10022-4608 Telephone: (212) 836-2674 www.alcoa.com
Slide 44: Annual Sensitivity Summary
Annual Sensitivity Summary Currency Annual Net Income Sensitivity LME Aluminum Annual Net Income Sensitivity 43 +/- $100/MT = +/- $240 million Australian $ +/- $11 million per 0.01 change in USD / AUD Brazilian $ +/- $ 3 million per 0.01 change in BRL / USD Euro € +/- $ 2 million per 0.01 change in
Slide 45: Revenue Change by Market
Revenue Change by Market 4Q’12 Third-Party Revenue Sequential Change Year-Over-Year Change 44 0% 1% (1%) (7%) (4%) 5% (8%) 37% 5% 5% 3% 7% 5% (11%) 2% 8% 6% (17%) (5%) (5%) 16% 3% 6% 5% 8% 2% 13% 2% 13% 32% Aerospace Automotive B&C Comm. Transport Industrial Products IGT Packaging Distribution/Other
Slide 46: Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa
Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa 45 (in millions) 4Q Q Q12 Q Q $ $ $ $ $ $ $ Unallocated amounts (net of tax): Impact of LIFO Interest expense Noncontrolling interests Corporate expense Restructuring and other charges Discontinued operations Other Alcoa
Slide 47: Reconciliation of Adjusted Income
Reconciliation of Adjusted Income 46 (Loss) income from continuing operations attributable to Alcoa – as adjusted is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding the impacts of restr
Slide 48: Reconciliation of Alcoa Adjusted EBITDA
Reconciliation of Alcoa Adjusted EBITDA 47 ($ in millions) 4Q11 3Q12 4Q12 Net income (loss) attributable to Alcoa 1,310 1,233 2,248 2,564 (74) (1,151) $ $ (191) (143) $ Add: Net income (loss) attributable to noncontrolling interests (29) (32) Cumulative effect of accounting changes (34) – – – – – –
Slide 49: Reconciliation of Alumina Adjusted EBITDA
Reconciliation of Alumina Adjusted EBITDA 48 ($ in millions, except per metric ton amounts ) 4Q11 3Q12 4Q12 After-tax operating income (ATOI) $ 315 $ 415 $ 632 $ 682 $ 1,050 $ 956 $ $ 112 $ 301 $ 607 $ 90 $ 125 $ (9) $ 41 Add: Depreciation, depletion, and amortization Equity (income) loss (1) – (1)
Slide 50: Reconciliation of Primary Metals Adjusted EBITDA
Reconciliation of Primary Metals Adjusted EBITDA 49 ($ in millions, except per metric ton amounts) 4Q11 3Q12 4Q12 After-tax operating income (ATOI) $ 650 $ 657 $ 808 $ 822 $ 1,760 $ 1,445 $ 931 $ (612) $ 488 $ 481 $ 309 $ (32) $ (14) $ 316 Add: Depreciation, depletion, and amortization Equity (incom
Slide 51: Reconciliation of Global Rolled Products Adjusted EBITDA
Reconciliation of Global Rolled Products Adjusted EBITDA 50 ($ in millions, except per metric ton amounts) 4Q11 3Q12 4Q12 After-tax operating income (ATOI) $ 225 $ 222 $ 254 $ 278 $ 233 $ 178 $ (3) $ (49) $ 220 $ 266 $ 358 $ 26 $ 98 $ 69 Add: Depreciation, depletion, and amortization Equity loss – –
Slide 52: Reconciliation of Engineered Products and Solutions Adjusted EBITDA
Reconciliation of Engineered Products and Solutions Adjusted EBITDA 51 ($ in millions) 4Q11 3Q12 4Q12 After-tax operating income (ATOI) $ 63 $ 124 $ 156 $ 271 $ 365 $ 435 $ 533 $ 315 $ 415 $ 539 $ 612 $ 122 $ 160 $ 137 Add: Depreciation, depletion, and amortization Equity loss (income) – – – – – – (
Slide 53: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 52 (in millions) Quarter ended Year ended March 31, June 30, September 30, December 31, March 31, June 30, September30, December 31, December 31, December 31, Cash from operations $ (236) $ 798 $ 489 $ 1,142 $ (236) $ 537 $ 263 $ 933 $ 2,193 $ 1,497 Capital expenditu
Slide 54: Reconciliation of Free Cash Flow, con't
Reconciliation of Free Cash Flow, con’t 53 Cash from operations $ 608 $ (271) $ $ $ 1,124 $ 199 $ 300 $ 392 $ 1,370 Capital expenditures Free cash flow $ (409) $ (742) $ (90) $ (186) $ 761 $ (22) $ 87 $ 176 $ 1,005 (418) (221) (213) (216) (365) (471) (370) (363) (1,017) Free Cash Flow is a non-GAAP
Slide 55: Days Working Capital
Days Working Capital 54 ($ in millions) Quarter ended December 31, March 31, June 30, September 30, December 31, Receivables from customers, less allowances $ 1,571 $ 1,526 $ 1,575 $ 1,619 $ 1,322 Add: Deferred purchase price receivable* – Receivables from customers, less allowances, as adjusted 1,5
Slide 56: Reconciliation of Net Debt
Reconciliation of Net Debt 55 (in millions) December 31, Short-term borrowings $ 46 $ 563 $ 478 $ 176 $ 92 $ 62 $ 53 Commercial paper 1,535 – – – Long-term debt due within one year Long-term debt, less amount due within one year 5,909 6,371 8,509 8,974 8,842 8,640 8,311 Total debt 7,2 7,992 10,578 9
Slide 57: Reconciliation of Net Debt-to-Capital
Reconciliation of Net Debt-to-Capital 56 ($ in millions) Debt-to-Capital Cash and Cash Net Debt-to- Capital Total Debt $ Commercial paper – one year due within one year 8,311 Numerator 1,861 $ 6,968 Total Capital Total debt $ Total equity Denominator Ratio December 31, 2012 Short-term borrowings Lon
Slide 58: Composition of Upstream Production Costs
Composition of Upstream Production Costs 57 Refining Cost Structure Smelting Cost Structure Natural gas information corresponds to Point Comfort, as Australia is priced on a rolling 16 quarter average Fuel Oil 14% Natural gas 10% Caustic 11% Bauxite 23% Conversion 42% Alumina 32% Carbon 15% Power 25