Alcoa Corporation · NYSE:AA
Alcoa — Investor Presentation (September 2017)
29 slides from Alcoa's investor presentation, Sep 11, 2017
Slide 1: Alcoa Corporation Investor Presentation September 2017
Alcoa Corporation Investor Presentation September 2017 Exhibit 99.1
Slide 2: Forward-looking statements
This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes
Slide 3: Non-GAAP financial measures
This presentation includes unaudited “non-GAAP financial measures” (GAAP means accounting principles generally accepted in the United States of America) as defined in Regulation G under the Securities Exchange Act of 1934. Alcoa Corporation believes that the presentation of non-GAAP financial measur
Slide 4: 2Q17 Financial Information as presented on July 19, 2017 and Other Information
2Q17 Financial Information as presented on July 19, 2017 and Other Information
Slide 5: Strategic optionality to maximize profit generation
Strategic optionality to maximize profit generation World class, low cost assets well-positioned for the future Source for cost curve and business position: CRU and Alcoa analysis. Based on 2016 equity production. Includes operating entities and equity interests that comprise the joint venture known
Slide 6: Warrick smelter partial restart rationale and overview
Warrick smelter partial restart rationale and overview Key information and financial impacts Warrick smelter restart announced on July 11 Strategic benefits of an integrated facility Restarting three of five potlines (161 kmt of 269 kmt), first hot metal in January, 2018 Restart expected to be compl
Slide 7: Projected 2017 market balances
Projected 2017 market balances Alumina balance outlook improves on higher demand As presented on July 19, 2017. Source: Alcoa analysis, CRU, Wood Mackenzie, CM Group, IAI, CNIA, NBS, Aladdiny, Bloomberg. Post-trade balances. Bauxite (3rd-party seaborne) Alumina (smelter grade) Aluminum Outlook Relat
Slide 8: Potential primary aluminum supply impacts from Chinese policy-driven curtailments
Potential primary aluminum supply impacts from Chinese policy-driven curtailments Policy initiatives Significant curtailment potential to be realized Ministry of Environmental Protection (MEP) Plan issued in 1Q17 Potential 30% reduction in 28 cities during winter National Development and Reform Comm
Slide 9: 2Q17 Financial summary
2Q17 Financial summary $M Bauxite Alumina Aluminum3,4 Transformation & Legacy Pension / OPEB Costs Impact from LIFO & Metal Price Lag Other Corporate Expenses Alcoa Corporation Total Total revenue1 $288 $1,133 $1,991 $42 - $(595) $2,859 Third-party revenue $80 $749 $1,988 $42 - - $2,859 Adjusted EBI
Slide 10: Adjusted EBITDA sequential comparison
Adjusted EBITDA1,2 sequential comparison, $M Segment EBITDAs total $546 million See appendix for adjusted EBITDA reconciliation. Includes non-Ma’aden equity investment income in adjusted EBITDA. See appendix for equity investments summary. 34.0% 20.0% 11.1% -4.1% pts -7.1% pts -0.3% pts 2Q17 Segment
Slide 11: 2Q17 Adjusted EBITDA excluding special items breakdown by component
1Q17 2Q17 $ Change Segment total adjusted EBITDA $613 $546 $(67) Transformation & legacy pension/OPEB2 (32) (40) (8) Impact of LIFO and metal price lag (9) 3 12 Other corporate expenses3 (39) (26) 13 Total adjusted EBITDA excl. special items 533 483 (50) Add back: all pension/OPEB 41 41 0 Total adju
Slide 12: Sequential quarter cash comparison and cash flows
Sequential quarter cash comparison and cash flows, $M Quarter ending cash balance Strong cash position of $954 million 1Q17 2Q17 Cash Provided From Operations $74 $311 Capital Expenditures (71) (88) Free Cash Flow $3 $223 1Q17 2Q17 Cash Provided From Operations $74 $311 Cash Used For Financing (260)
Slide 13: Balance sheet strengthens
Manage cash position Optimize working capital Key financial metrics as of June 30, 2017 Balance sheet strengthens $46M in return seeking capital expenditures and $113M in sustaining capital expenditures. Annualized; see appendix for 1H17 Annualized ROC reconciliation and calculation. Debt ratings fo
Slide 14: Pension and OPEB overview
Pension and OPEB overview Pension and OPEB summary 2017 Service cost estimates (component of expense) Pension: < $75M (~95%+ in Segments) OPEB: < $10M (~95%+ in Segments) Total $1.2B U.S. $1.2 ROW Total $1.7B U.S. $1.4 $2.9B Net balance sheet liability as of June 30, 2017 2017 Impacts, $M Pension OP
Slide 15: Aluminum value chain: 1H17 product shipments by segment
Bauxite 1H17 Alcoa product shipments by segment, Mmt Aluminum value chain Bauxite Alumina Aluminum 3rd Party 23.1 87% 13% 6.7 3rd Party 31% 69% Alumina 3rd Party 100% Aluminum 1.6
Slide 16: Alcoa 2Q17 production cash costs
Alcoa 2Q17 production cash costs Alumina refining Composition of alumina and aluminum production costs Natural gas information related to Point Comfort will no longer apply as we have curtailed the plant. Australia is priced on a rolling 16 quarter average. Input Cost Inventory Flow Pricing Conventi
Slide 17: Estimated annual EBITDA sensitivities
$ in millions Segment LME + $100/mt API + $10/mt Midwest + $100/mt Europe + $100/mt Japan + $100/mt AUD + 0.01 USD/AUD BRL + 0.10 BRL/USD CAD + 0.01 CAD/USD EUR + 0.01 USD/EUR ISK + 10 ISK/USD NOK + 0.10 NOK/USD Bauxite (3) 4 Alumina 11 110 (16) 5 (1) Aluminum 215 (41) 105 104 23 (1) (3) 3 (4) 8 3 A
Slide 18: Capacity closed, sold and curtailed
Capacity closed, sold and curtailed Smelting capacity Refining capacity Smelting and Refining capacity information as of June 30, 2017 Closed / Sold since December 2007 Facility Year kmt Baie Comeau 2008 53 Eastalco 2010 195 Badin 2010 60 Tennessee 2011 215 Rockdale 2011 76 Baie Comeau 2013 105 Fusi
Slide 19: FY17 Key metrics: 2017 progress and outlook
FY17 Key metrics 2017 Progress and outlook Outlook as of July 19, 2017. Based on actual results for 1H17; outlook for 2H17 at $1,900 LME, $305 API, and updated regional premiums and foreign currencies. Includes volume tolled through Tennessee. Does not include Transformation & legacy pension / OPEB
Slide 20: Appendix & Reconciliations
Appendix & Reconciliations
Slide 21: Equity investments summary
Source: Alcoa Corporation 2016 Annual Report, Quarterly Report for period ended June 30, 2017. Carrying value as of June 30, 2017. Alcoa Corporation has an investment in a joint venture related to the ownership and operation of an integrated aluminum complex (bauxite mine, alumina refinery, aluminum
Slide 22: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation $M 2Q16 1Q17 2Q17 LTM Net (loss) income attributable to Alcoa Corporation ($55) $225 $75 $165 Add: Net (loss) income attributable to noncontrolling interest 43 83 63 162 Provision for income taxes 68 110 99 307 Other expenses / (income), net (23) (100) 6 (199) Interest
Slide 23: Free Cash Flow reconciliation
Free Cash Flow reconciliation $M 2Q16 1Q17 2Q17 Cash from operations ($82) $74 $311 Capital expenditures (86) (71) (88) Free cash flow1 ($168) $3 $223 Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flow
Slide 24: Net Debt reconciliation
Net Debt reconciliation $M 2Q17 Short-term borrowings $4 Long-term debt due within one year 19 Long-term debt, less amount due within one year 1,418 Total debt 1,441 Less: Cash and cash equivalents 954 Net debt1 $487 Net debt is a non-GAAP financial measure. Management believes that this measure is
Slide 25: Days Working Capital
Days Working Capital $M 1Q17 2Q17 Receivables from customers $708 $789 Add: Inventories 1,294 1,287 Less: Accounts payable, trade 1,434 1,508 Working Capital $568 $568 Revenue $2,655 $2,859 Number of Days in the Quarter 90 91 Days Working Capital1 19 18 Days Working Capital = Working Capital divided
Slide 26: 1H17 Annualized ROC
1H17 Annualized ROC $M 1H17 Numerator: Net income attributable to Alcoa Corporation 300 Add: Net income attributable to non-controlling interest 146 Add: Provision for income taxes 209 Profit Before Taxes (PBT) 655 Add: Interest expense 51 Less: Interest income 5 Add: Special items1 (71) ROC Earning
Slide 27: 2016 Baseline ROC for Long-Term Incentive Plan (LTIP)
2016 Baseline ROC for Long-Term Incentive Plan (LTIP) $M FY 16 Numerator: Net loss attributable to Alcoa Corporation (400) Add: Net income attributable to non-controlling interest 54 Add: Provision for income taxes 184 Profit Before Taxes (PBT) (162) Add: Interest expense 243 Less: Interest income 6
Slide 28: Glossary of terms
Abbreviations listed in alphabetical order Glossary of terms Abbreviation Description % pts Percentage points 1H## Six months ending June 30 1Q## Three months ending March 31 2H## Six months ending December 31 2Q## Three months ending June 30 3Q## Three months ending September 30 4Q## Three months e
Slide 29: The Element of Possibility
The Element of Possibility”