Alcoa Corporation · NYSE:AA
Alcoa — Merger or Acquisition (April 2024)
56 slides from Alcoa's merger presentation, Apr 30, 2024
Slide 1: Investor Presentation April / May 2024
1 OUR VALUES Act with Integrity Operate with Excellence Care for People Lead with Courage Investor Presentation April / May 2024
Slide 2: Cautionary Statement regarding Forward-Looking Statements
2 Cautionary Statement regarding 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 stateme
Slide 3: Important information
3 Important information Additional Information and Where to Find It This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities . This communication relates to the proposed transaction . In connection with the proposed transaction, Alc
Slide 4: Comparison of pre- and post-acquisition ownership structures of Alcoa and AWAC
4 Comparison of pre - and post - acquisition ownership structures of Alcoa and AWAC joint venture Alumina Limited acquisition simplifies ownership structure Portland smelter (AWAC) Primary aluminum smelter and casthouse portfolio (ex - AWAC) Alumina Aluminum AWAC mine and refinery assets Upstream as
Slide 5: Benefits of Alcoa's acquisition of Alumina Limited
5 Benefits of Alcoa’s acquisition of Alumina Limited Alumina acquisition offers immediate and significant benefits The right deal for Alumina Limited shareholders Enhances Alcoa’s position as leading pure play, upstream aluminum company globally The right deal for Alcoa stockholders ▪ Diversifies ow
Slide 6: Overview of key facets of combined company
6 Overview of key facets of combined company, 1 of 2 Advances global, pure play, upstream aluminum position Smelting STRONG BALANCE SHEET LOW CARBON PRODUCTS TECHNOLOGY FOCUSED Refining Ba1 BB+ BB 41.0 Mdmt bauxite production (2023) 10.9 Mmt alumina production (2023) 2.1 Mmt aluminum production (202
Slide 7: Overview of key facets of combined company
7 Overview of key facets of combined company, 2 of 2 Advances global, pure play, upstream aluminum position 41.0 15.8 9.9 1.1 1.0 Category 1 10.9 4.0 3.6 0.4 0.2 Category 1 4.1 2.1 1.8 0.7 0.3 Category 1 #1 bauxite producer ( Mdmt ) 1 ▪ Strategic global presence with locations in proximity to Alcoa’
Slide 8: Alcoa global operations by business segment
8 Alcoa global operations by business segment Global pure play aluminum company in two business segments United States: Brazil: Canada : Iceland : Spain: Norway: Saudi Arabia: Australia: Guinea : Alumina Aluminum ISS Governance QualityScore : 1 (highest)
Slide 9: Alcoa commitment and operations in Western Australia
9 Alcoa commitment and operations in a premier region of the aluminum industry Solidifies position in Western Australia ▪ Acquisition of Alumina Limited represents major commitment by Alcoa to continuing to improve environmental performance, maintain significant employment and enhance engagement wit
Slide 10: Production and capacity information
10 Alcoa Corporation annual consolidated amounts as of March 31, 2024 Production and capacity information Bauxite production, Mdmt 2023 Production Country Mine 30.9 Australia Darling Range 5.0 Brazil Juruti 0.4 Brazil Poços de Caldas 3.6 Guinea Boké (CBG) 1.1 Saudi Arabia Al Ba’itha 5 41.0 Total Alu
Slide 11: 1Q24 Market and commercial update
11 1Q24 Market and commercial update Near term market improving; long term remains positive Source: Platts, LME, Alcoa analysis and CRU. Prices are updated through April 15, 2024. Alumina Aluminum $320 $340 $360 $380 09/23 11/23 01/24 03/24 05/24 $2,000 $2,200 $2,400 $2,600 09/23 11/23 01/24 03/24 0
Slide 12: Appendix
12 Appendix
Slide 13: Information as presented on February 25, 2024
13 v Information as presented on February 25, 2024
Slide 14: Agreed terms and process for Alcoa to acquire Alumina Limited
14 1. Based on Alcoa’s share price of $26.52 as of NYSE close on 02/23/24 and AUD/USD exchange rate of 0.656 2. Based on fully diluted shares outstanding for Alcoa and Alumina Limited as of February 23, 2024 Transaction to deliver significant value and upside potential for shareholders of both compa
Slide 15: Proposed transaction collapses AWAC joint venture
15 Proposed transaction collapses AWAC joint venture Alumina Limited’s sole asset is a minority stake in AWAC 1 ▪ Alumina Limited is ASX - listed ▪ Sole asset is 40% ownership of non - operating interest in AWAC ▪ AWAC assets are operated by Alcoa; AWAC financial results are fully consolidated by Al
Slide 16: Strong industrial logic and benefits to both sets of shareholders
16 Underpinned by strong industrial logic and delivering compelling benefits to both sets of shareholders Proposed transaction offers immediate and significant benefits The right deal for Alumina Limited shareholders 1 Bolsters Alcoa’s position as a leading pure play, upstream aluminum company globa
Slide 17: Pro forma ownership of Alcoa provides several advantages
17 $2,286 $12,451 4.1 10.9 1. Reflects Alumina Limited's exposure to production quantities before and after combination 2. All figures in USD millions 3. Alumina Limited figures shown represent 40% of AWAC reported figures 4. Represents average daily trading volume over past 30 trading days, per Fac
Slide 18: Expands Alcoa's ownership of bauxite and alumina producer
18 Note: Company data for FY2023 1. Excludes alumina production from Ras Al - Khair and Poços de Caldas; includes only attributable production from Alumar 2. Reflects increase in Alcoa production economic interest as a result of the combination Expands Alcoa’s ownership of one of the world’s largest
Slide 19: Simplified structure and governance enables efficiency
19 Simplified structure and governance enables efficiency in executing decisions that maximize returns 100% AWAC ownership unlocks value for stockholders IMPROVES STRATEGIC & FINANCIAL FLEXIBILITY Tangible near - term cost synergies with potential for further organizational optimization SIMPLIFIES C
Slide 20: Better positions Alcoa to achieve capital allocation framework objectives
20 Better positions Alcoa to achieve objectives highlighted in its capital allocation framework Increases Alcoa’s flexibility and efficiency in financial decisions MAXIMIZING STOCKHOLDER VALUE CREATION Return cash to stockholders ▪ Consistent with capital allocation framework, all - stock offer pres
Slide 21: Summary historical financials: balance sheet
21 Balance sheet as of December 31 Summary historical financials 2023 2022 2021 2020 2019 2018 2017 US $ in millions $14,155 $14,756 $15,025 $14,860 $14,631 $16,132 $17,447 Alcoa Total assets N/A $1,663 $1,755 $1,797 $1,854 $2,245 $2,343 Alumina Ltd. N/A $6,185 $6,371 $6,410 $6,363 $7,151 $7,850 AWA
Slide 22: Summary historical financials: income statement
22 Income statement for twelve months ended December 31 Summary historical financials Source: Company filings 2023 2022 2021 2020 2019 2018 2017 US $ in millions $10,551 $12,451 $12,152 $9,286 $10,433 $13,403 $11,652 Alcoa Revenue N/A $1 $0 $0 $3 $2 $1 Alumina Ltd. N/A $5,715 $5,224 $4,330 $5,216 $6
Slide 23: Summary historical financials: statement of cash flows
23 Statement of cash flows for twelve months ended December 31 Summary historical financials Source: Company filings 1. Calculated as Cash flows from operations less Capital expenditures 2. Free cash flow available for dividends as reported by Alumina Limited in its annual reports; For 2019 onwards,
Slide 24: Sustana products and position on carbon emissions curves
24 Sources: IAI, CRU, Alcoa analysis 1. Considering the same emission scopes for comparison purposes 2. Third - party verified 3. Al coa’s third - party verified EcoLum cradle - to - gate carbon footprint numbers have been calculated using a location - based scope 2 reporting approach aligned with E
Slide 25: Scope 1&2 emissions reduction pathways and current progress
25 Potential scope 1&2 emissions reduction pathways and current progress Demonstrating progress along clear path to net zero ambition ESTIMATED ALCOA SCOPE 1&2 EMISSIONS REDUCTIONS BY SEGMENT, CO 2 E/TONNE 1 1.0 1.0 6.1 4.2 2015 2 (1.9) Portfolio & energy 2023E (2.0) Portfolio & energy (1.9) ELYSIS
Slide 26: A compelling opportunity for Alcoa and Alumina Limited
26 A compelling opportunity for Alcoa and Alumina Limited The right deal for Alumina Limited shareholders 1 Bolsters Alcoa’s position as a leading pure play, upstream aluminum company globally 2 The right deal for Alcoa stockholders 3
Slide 27: 1Q24 Financial and other information as presented on April 17, 2024
27 v 1Q24 Financial and other information as presented on April 17, 2024
Slide 28: Update on recent and ongoing key initiatives
28 Update on recent and ongoing key initiatives Key actions continue, in addition to Alumina Limited transaction Key achievements in 1Q24 ▪ No fatal or serious injuries (FSI - As) ▪ Signed agreement to acquire Alumina Limited ▪ Continued San Ciprián discussions; started sale process ▪ Completed Warr
Slide 29: Quarterly income statement summary
29 Quarterly income statement summary 1Q24 EPS of $(1.41), Adjusted EPS of $(0.81) Change 1Q24 4Q23 Third party realized prices ($/mt) $(58) $2,620 $2,678 Realized primary aluminum price $28 $372 $344 Realized alumina price Income statement highlights (millions, except per share amounts) $4 $2,599 $
Slide 30: 1Q24 Sequential changes in Adjusted EBITDA
30 1Q24 Sequential changes in Adjusted EBITDA excluding special items, $M Lower energy, raw materials costs improve Adjusted EBITDA 89 132 9 15 50 4 63 4Q23 Currency Metal prices API Raw materials Energy Price/mix Volume Production costs Other 1Q24 (13) (16) (61) (8) Change 1Q24 4Q23 $55 $139 $84 Al
Slide 31: Working capital build the largest use of cash
31 Working capital build the largest use of cash 1Q24 sequential quarter cash flow information ▪ Sources include $750 million debt issuance, net of discount and fees ▪ Working capital was $239 million use of cash due to typical 1Q increase in accounts receivable and decrease in accounts payable ▪ Ca
Slide 32: Debt issue increases cash balance
32 Debt issue increases cash balance Key financial metrics and cash flow information, 1Q24 and YTD 1. Excludes $97 million in restricted cash Key financial metrics 2024 YTD Return on equity (14.5)% 1Q24 Days working capital 2024 YTD Capital returns to stockholders 1Q24 Proportional adjusted net debt
Slide 33: FY24 Key metrics and 2024 Outlook
33 1. Estimate will vary with market conditions and jurisdictional profitability 2. AWAC portion of FY24 outlook: ~60% of return - seeking and sustaining capital expenditures 3. Net of pending tax refunds 4. As of March 31, 2024, the environmental remediation reserve balance was $ 261 M and the ARO
Slide 34: Path forward for near term annual profitability improvement
34 Path forward for near term annual profitability improvement Key operational activities underway, including at San Ciprián ▪ Raw materials savings − Benefits being realized as expected, or better ▪ Productivity and competitiveness program − Fully deployed; some savings realization starting in 2Q24
Slide 35: 1Q24 Summary
35 1Q24 Summary Alumina Limited deal, key activities progress, better markets First quarter summary ▪ Strong safety performance and ongoing programs ▪ Signed agreement to acquire Alumina Limited ▪ Completed restart at Warrick ▪ Issued $750 million green bond Going forward ▪ Progress and close Alumin
Slide 36: Capital allocation framework and value creation considerations
36 Capital expenditures to sustain and improve existing operations Maintain strong balance sheet through the cycle Return cash to stockholders Position for growth Transform portfolio Maximize value creation Capital a llocation f ramework Maximize value creation Return cash to stockholders ▪ 1Q24 div
Slide 37: Quarterly income statement for 1Q23, 4Q23 and 1Q24
37 Quarterly income statement for 1Q23, 4Q23 and 1Q24 Quarterly income statement Sequential Change Prior Year Change 1Q24 4Q23 1Q23 Millions, except realized prices and per share amounts $(58) $(459) $2,620 $2,678 $3,079 Realized primary aluminum price ($ /mt) $28 $1 $372 $344 $371 Realized alumina
Slide 38: Breakdown of special items by income statement classification
38 Breakdown of special items by income statement classification – gross basis Special items Description of significant 1Q24 special items 1Q24 4Q23 1Q23 Millions, except per share amounts $(252) $(150) $(231) Net loss attributable to Alcoa Corporation $(1.41) $(0.84) $(1.30) Loss per share 1 $107 $
Slide 39: Quarterly income statement excluding special items
39 Quarterly income statement excluding special items for 1Q23, 4Q23 and 1Q24 Quarterly income statement excluding special items Sequential Change Prior Year Change 1Q24 4Q23 1Q23 Millions, except realized prices and per share amounts $(58) $(459) $2,620 $2,678 $3,079 Realized primary aluminum price
Slide 40: 1Q24 Financial summary
40 Three months ending March 31, 2024, excluding special items 1Q24 Financial summary Alcoa Corporation Other corporate Intersegment eliminations Transformation Aluminum 4 Alumina Millions $2,599 - $(406) $7 $1,642 $1,356 Total revenue $2,599 $(3) - $3 $1,638 $961 Third - party revenue $132 $(35) $(
Slide 41: 1Q24 Segment Adjusted EBITDA drivers
41 Segment Adjusted EBITDA sequential changes, $M 1Q24 Segment Adjusted EBITDA drivers Segment Adjusted EBITDA 1Q24 Other Production costs Volume Price/mix Energy Raw materials API Metal prices Currency Segment Adjusted EBITDA 4Q23 $139 1 (7) (15) 1 13 6 47 0 9 $84 Alumina $50 2 (54) (1) 3 37 9 (11)
Slide 42: 2024 YTD Alcoa shipments by product type
42 2024 YTD Alcoa shipments by product type Aluminum value chain 10.5 Mdmt shipments 3.3 Mmt shipments 0.6 Mmt shipments Aluminum Alumina Bauxite 91% 9% Intrasegment Third party 28% 72% Intersegment Third party 100% 0% Intersegment Third party
Slide 43: Composition of alumina and aluminum production costs
43 Alcoa 1Q24 production cash costs Composition of alumina and aluminum production costs FY24 annual cost sensitivity Pricing convention Inventory flow Input cost $11M per $ 10/dmt 1 Quarterly, Spot 5 - 6 Months Caustic soda $9M per $0.10/GJ 1 Quarterly, 91% with CPI adjustment 1 Month Natural gas $
Slide 44: Estimated annual Segment Adjusted EBITDA sensitivities
44 1. Average 1Q24 exchange rates 2. Upon full curtailment of the Kwinana refinery, sensitivities will be reviewed for API and AUD Estimated annual Segment Adjusted EBITDA sensitivities 2024 Business information NOK + 0.10 10.49 1 ISK + 10 137.12 1 EUR + 0.01 1.09 1 CAD + 0.01 1.35 1 BRL + 0.10 4.95
Slide 45: Currency impacts on Segment Adjusted EBITDA
45 Currency balance sheet revaluation and EBITDA sensitivities impact ($M, except currencies) Currency impacts on Segment Adjusted EBITDA Total NOK ISK EUR CAD BRL AUD 10.77 138.20 1.08 1.36 4.99 0.65 03/31/24 currencies 10.49 137.12 1.09 1.35 4.95 0.66 1Q24 currency average 1Q24 Balance sheet reval
Slide 46: Additional business considerations for 2Q24
46 Items expected to impact Adjusted EBITDA and Adjusted net income for 2Q24 Additional business considerations Expected sequential impacts on Adjusted EBITDA excluding special items, excluding indexed sales prices or currency impacts: ▪ In the Alumina segment, we expect impacts of approximately $20
Slide 47: Ownership interests in investees and facilities
47 1. Alcoa Corporation has an investment in a joint venture related to the ownership and operation of an integrated aluminum compl ex (bauxite mine, alumina refinery, and aluminum smelter) in Saudi Arabia. The joint venture is owned 74.9% by the Saudi Arabian Mining Company ( Ma’aden ) and 25.1% by
Slide 48: Alcoa strategic long-term sustainability goals, baseline and progress
48 Source: 2022 Sustainability Report; 2023 Sustainability Report expected to be issued in 2Q24 Alcoa strategic long - term sustainability goals, baseline and progress Alcoa sustainability goals 2022 Progress 2015 Baseline Description Goal 0 fatalities and 1 serious injury/illness 5 fatal or serious
Slide 49: Valuation framework key considerations
49 1. Dollar amounts reflect Alcoa Corporation’s consolidated balance sheet values as of March 31, 2024. The “Alcoa” percentages ex clude amounts attributable to Alcoa Corporation’s partner in the AWAC JV. Valuation framework key considerations Valuation framework Business Operations + - = + Financi
Slide 50: Adjusted EBITDA reconciliations
50 Adjusted EBITDA reconciliations 1Q24 FY23 4Q23 3Q23 2Q23 1Q23 Millions $(252) $(651) $(150) $(168) $(102) $(231) Net loss attributable to Alcoa Add: (55) (122) (77) (25) (19) (1) Net loss attributable to noncontrolling interest (18) 189 150 (35) 22 52 Provision for (benefit from) income taxes 59
Slide 51: Free cash flow reconciliation
51 Free cash flow reconciliation 1Q24 FY23 4Q23 3Q23 2Q23 1Q23 Millions $(223) $91 $198 $69 $(13) $(163) Cash provided from operations (101) (531) (188) (145) (115) (83) Capital expenditures (324) (440) 10 (76) (128) (246) Free cash flow 61 188 24 42 36 86 Contributions from noncontrolling interest
Slide 52: Net debt reconciliations
52 Net debt reconciliations 1Q24 4Q23 1Q23 Alcoa Prop. NCI Cons. Alcoa Prop. NCI Cons. Alcoa Prop. NCI Cons. $M $52 $ - $52 $56 $ - $56 $25 $ - $25 Short - term borrowings 48 31 79 48 31 79 1 - 1 Long - term debt due within one year 2,469 - 2,469 1,732 - 1,732 1,774 32 1,806 Long - term debt, less a
Slide 53: DWC working capital and Days working capital reconciliations
53 DWC working capital and Days working capital reconciliations 1Q24 4Q23 3Q23 2Q23 1Q23 Millions $869 $656 $691 $702 $753 Receivables from customers 2,048 2,158 2,190 2,400 2,395 Add: Inventories 1,586 1,714 1,472 1,491 1,489 Less: Accounts payable, trade $1,331 $1,100 $1,409 $1,611 $1,659 DWC work
Slide 54: ROE Reconciliation
54 X 100 ROE Reconciliation and calculation information as of March 31, 2024 Annualized Return on Equity (ROE) 1Q24 1Q23 Millions Numerator: $(252) $(231) Net loss attributable to Alcoa Corporation 107 190 Add: Special items 1 $(145) $(41) ROE Adjusted Net income (loss) YTD $(580) $(164) ROE Adjuste
Slide 55: Glossary of terms
55 Abbreviations listed in alphanumeric order Glossary of terms Description Abbreviation Percentage points % pts Six months ending June 30 1H## Three months ending March 31 1Q## Six months ending December 31 2H## Three months ending June 30 2Q## Three months ending September 30 3Q## Three months end
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