Slide 1: 2nd Quarter Earnings
nd 2 Quarter Earnings Alcoa Corporation July 20, 2022 1
Slide 2: Cautionary Statement regarding Forward-Looking Statements
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 statements inclu
Slide 3: Important information
Important information Non-GAAP Financial Measures Some of the information included in this presentation is derived from Alcoa Corporation’s consolidated financial information but is not presented in Alcoa Corporation’s financial statements prepared in accordance with accounting principles generally
Slide 4: Roy Harvey
Roy Harvey President and Chief Executive Officer 4
Slide 5: Strong financials and continued progress
Strong financials and continued progress Alcoa values, strategic priorities, and key takeaways for 2Q22 2Q22 Takeaways ▪ No fatal or serious injuries (FSI-As) in the quarter ▪ Strong financial performance and returns to stockholders − Net income attributable to Alcoa of $549 million; Adj. net income
Slide 6: William Oplinger
William Oplinger Executive Vice President and Chief Financial Officer 6
Slide 7: Adjusted EBITDA excluding special items nearly $2 billion YTD
Adjusted EBITDA excluding special items nearly $2 billion YTD Quarterly income statement highlights Prior year Sequential M, Except per share amounts 2Q21 1Q22 2Q22 change change Income statement highlights Revenue $2,833 $3,293 $3,644 $811 $351 Net income attributable to Alcoa Corporation $309 $469
Slide 8: Higher shipments, U.S. dollar, alumina prices are positives
Higher shipments, U.S. dollar, alumina prices are positives Adjusted EBITDA excluding special items sequential changes, $M 50 1,072 43 77 (76) 1Q22 2Q22 Change (56) (53) (64) 913 (28) Bauxite $38 $5 $(33) (52) Alumina 262 343 81 Aluminum 713 596 (117) Segment total 1,013 944 (69) Transformation (14)
Slide 9: Cash returns to stockholders of $387 million 2022 YTD
Cash returns to stockholders of $387 million 2022 YTD Key metrics and cash returned to stockholders, 2016 – 2Q22 YTD Key financial metrics Cash returns to stockholders ($M) and proportional adjusted net debt ($B) 3.8 3.8 387 2Q22 Days 2Q22 YTD 3.3 3.4 37 3.3 working capital (DWC) Return on equity 43
Slide 10: Strong cash flows enabled increased capital returns
Strong cash flows enabled increased capital returns 1H22 and sequential quarter cash flow information YTD Cash flow information, $M 3/31/22 to 6/30/22 Cash changes, $M 2,161 913 2 1,985 237 All other (294) 48 Interest 63 Environmental/ARO (185) (107) (46) 1,638 162 Net distributions to NCI 1,554 (19
Slide 11: Improved revolving credit terms allow greater flexibility
Improved revolving credit terms allow greater flexibility Summary of revolver amendment key terms and benefits; impact on debt maturity profile Amended key terms Debt maturity profile, $M, as of 6/30/2022 ▪ Maturity date extended from November 2023 to June 2027 2,000 ▪ Facility size reduced from $1.
Slide 12: 2022 Outlook
2022 Outlook FY22 Key metrics as of June 30, 2022 Income statement excl. special items impacts Cash flow impacts 2Q22 YTD Actual FY22 Outlook 2Q22 YTD Actual FY22 Outlook Bauxite shipments (Mdmt) 21.5 44.0 – 45.0 Pension / OPEB required cash funding $36M ~ $75M Alumina shipments (Mmt) 6.6 13.6 – 13.
Slide 13: Roy Harvey
Roy Harvey President and Chief Executive Officer 13
Slide 14: Current market volatile, long term trends remain positive
Current market volatile, long term trends remain positive Current market dynamics and long term market trends Current aluminum market conditions Long term market trends ▪ 2022 market expected to be in deficit ▪ 2021-2030 production CAGR 1.6%; growth from ex-China − Supply: China increased production
Slide 15: Portfolio optimization and investments continue
Portfolio optimization and investments continue Recent changes to operational levels and announced investments Actions across operating assets Restarts − Alumar smelter – restarting 268 kmt/year; 29 kmt/year energized in 2Q22; 100% renewable energy; 1Q23 completion − Portland smelter – restarting 19
Slide 16: Offering full suite of Sustana products
Offering full suite of SustanaTM products Sustainability oriented product offerings and key sustainability metrics Sustana family of products Key sustainability metrics ▪ Sustana product line is the industry’s broadest Smelter grade alumina with carbon emissions suite of green products, seeing growt
Slide 17: Transformative R&D project pipeline
Transformative R&D project pipeline Highlighting our breakthrough technologies under development Breakthrough technologies ▪ ELYSISTM – inert anode solution − Working on scale-up towards 2023 demonstration of commercial sized 450kA cells; detailed planning to scale-up supply chain ▪ Refinery of the
Slide 18: Realizing potential and continuing to progress
Realizing potential and continuing to progress 2Q22 Summary ▪ Delivered strong financial performance − Adjusted EBITDA excluding special items of $913 million − Free cash flow less noncontrolling interest of $0.4B − Proportional adjusted net debt at $1.2 billion with cash of $1.6B Turn raw potential
Slide 19: Appendix
Appendix 19
Slide 20: Maximizing value creation through balanced uses of cash
Maximizing value creation through balanced uses of cash Capital allocation framework considerations Capital allocation framework Maximize value creation Return cash to stockholders: Maintain strong balance sheet ▪ Paid third straight quarterly cash dividend of $0.10/share in 2Q22 through the cycle ▪
Slide 21: Quarterly income statement
Quarterly income statement Quarterly income statement Prior Year Sequential M, Except realized prices and per share amounts 2Q21 1Q22 2Q22 Change Change Realized primary aluminum price ($/mt) $2,753 $3,861 $3,864 $1,111 $3 Realized alumina price ($/mt) $282 $375 $442 $160 $67 Revenue $2,833 $3,293 $
Slide 22: Special items
Special items Breakdown of special items by income statement classification – gross basis M, Except per share amounts 2Q21 1Q22 2Q22 Description of significant 2Q22 special items Net income attributable to Alcoa Corporation $309 $469 $549 Diluted earnings per share $1.63 $2.49 $2.95 Special items $(
Slide 23: Quarterly income statement excluding special items
Quarterly income statement excluding special items Quarterly income statement excluding special items Prior Year Sequential M, Except realized prices and per share amounts 2Q21 1Q22 2Q22 Change Change Realized primary aluminum price ($/mt) $2,753 $3,861 $3,864 $1,111 $3 Realized alumina price ($/mt)
Slide 24: 2Q22 Financial summary
2Q22 Financial summary Three months ending June 30, 2022, excluding special items Intersegment Other Alcoa $M Bauxite Alumina Aluminum3 Transformation eliminations corporate Corporation Total revenue $199 $1,566 $2,547 $9 $(669) $(8) $3,644 Third-party revenue $34 $1,077 $2,539 $2 - $(8) $3,644 Adju
Slide 25: 2Q22 Adjusted EBITDA drivers by segment
2Q22 Adjusted EBITDA drivers by segment Adjusted EBITDA excluding special items sequential changes by segment, $M Adjusted Adjusted EBITDA Metal Raw Production EBITDA Segment 1Q22 Currency prices API materials Energy Price/mix Volume costs Other 2Q22 Bauxite $38 0 0 0 0 (3) 1 (1) (9) (21) $5 Alumina
Slide 26: Aluminum value chain
Aluminum value chain 2022 YTD Alcoa product shipments by segment Bauxite Alumina Aluminum 21.5 Mdmt shipments 6.6 Mmt shipments 1.3 Mmt shipments Third Party Intersegment 7% 0% Intersegment 29% 71% 93% Third Party 100% Intersegment Third Party 26
Slide 27: Composition of alumina and aluminum production costs
Composition of alumina and aluminum production costs Alcoa 2Q22 production cash costs Alumina refining Bauxite Input Inventory Pricing FY22 Annual Cost Conversion Cost Flow Convention Sensitivity 22% 31% Caustic Soda 5 - 6 Months Quarterly, Spot $10M per $10/dmt 15% Quarterly, 85% with Caustic Natur
Slide 28: 2022 Business information
2022 Business information Estimated annual Adjusted EBITDA sensitivities $M AUD BRL CAD EUR ISK NOK LME API Midwest Europe Japan + 0.01 + 0.10 + 0.01 + 0.01 + 10 + 0.10 Segment + $100/mt + $10/mt + $100/mt + $100/mt + $100/mt 0.721 4.901 1.271 1.071 130.251 9.381 Bauxite (4) 2 Alumina 123 (16) 5 (1)
Slide 29: Currency impacts on Adjusted EBITDA
Currency impacts on Adjusted EBITDA Currency balance sheet revaluation and EBITDA sensitivities ($M, except currencies) Balance sheet revaluation impact Currency annual sensitivity and actual impact +0.01 +0.10 +0.01 +0.01 + 10 +0.10 AUD BRL CAD EUR ISK NOK Total AUD BRL CAD EUR ISK NOK Total 2Q21 r
Slide 30: Additional business considerations
Additional business considerations Items expected to impact Adjusted EBITDA for 3Q22 ▪ Expected sequential impacts on Adjusted EBITDA excluding special items, excluding indexed sales prices or currency impacts: − In Bauxite, we expect Adjusted EBITDA to improve approximately $10 million, as growing
Slide 31: Pension and OPEB summary
Pension and OPEB summary Net pension and OPEB liability and financial impacts Net liability as of June 30, 20221 Estimated financial impacts, $M Expense impact 2022 ROW Pension Segment pension $15 $0.2 Total $0.2B Segment OPEB 5 Corporate pension & OPEB - Total adj. EBITDA impact 20 Non-operating 65
Slide 32: Investments summary
Investments summary Investments listing and income statement location Ownership Carrying Value as of Income Statement Location of Investee Country Nature of Investment4 Interest June 30, 2022 Equity Earnings ELYSISTM Limited Partnership Canada Aluminum smelting technology 48.235% Ma’aden Aluminium C
Slide 33: Alcoa sustainability goals
Alcoa sustainability goals Alcoa strategic long-term sustainability goals, baseline and progress Goal Description 2015 Baseline 2021 Progress Zero fatalities and serious injuries (life-threatening, life-altering injury or 5 fatal or serious Safety 0 fatal or serious injury/illness illness) injuries/
Slide 34: Production and capacity information
Production and capacity information Alcoa Corporation annual consolidated amounts as of June 30, 2022 Bauxite production, Mdmt Alumina refining, kmt Aluminum smelting, kmt 2021 Mine Country Production Facility Country Capacity Curtailed Facility Country Capacity Curtailed Darling Range Australia 34.
Slide 35: Valuation framework
Valuation framework Valuation framework key considerations LTM ending 6/30/22 Adj. EBITDA excl. special items + Bauxite Economic value using market multiple of: i. AWAC joint venture, minus small portions of AWAC JV in Aluminum and $115M Transformation + Alumina ii. Ownership in certain mines and re
Slide 36: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation $M 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 Net income (loss) attributable to Alcoa $309 $337 $(392) $429 $469 $549 Add: Net income attributable to noncontrolling interest 41 33 23 141 84 125 Provision for income taxes 111 127 298 629 210 234 Other income, net (105) (18) (298) (4
Slide 37: Free cash flow reconciliation
Free cash flow reconciliation $M 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 Cash (used for) provided from operations $(86)1 $435 $565 $920 $34 $536 Capital expenditures (79) (83) (153) (390) (74) (107) Free cash flow (165) 352 412 530 (40) 429 Contributions from noncontrolling interest - 8 13 21 46 37 Distributi
Slide 38: Net debt reconciliation
Net debt reconciliation 2Q21 1Q22 2Q22 Alcoa Alcoa Alcoa $M Cons. NCI Prop. Cons. NCI Prop. Cons. NCI Prop. Short-term borrowings $77 $31 $46 $75 $30 $45 $75 $30 $45 Long-term debt due within one year 1 - 1 1 - 1 1 - 1 Long-term debt, less amount due within one year 2,216 - 2,216 1,727 - 1,727 1,725
Slide 39: Net debt reconciliation
Net debt reconciliation FY16 FY17 FY18 FY19 FY20 FY21 2Q22 Alcoa Alcoa Alcoa Alcoa Alcoa Alcoa Alcoa Cons. NCI Cons. NCI Cons. NCI Cons. NCI Cons. NCI $M Prop. Prop. Prop. Prop. Prop. Cons. NCI Prop. Cons. NCI Prop. Short-term borrowings $1 $- $1 $8 $- $8 $- $- $- $- $- $- $77 $31 $46 $75 $30 $45 $7
Slide 40: Days working capital reconciliation
Days working capital reconciliation $M 2Q21 3Q21 4Q21 1Q22 2Q22 Receivables from customers $644 $769 $757 $952 $898 Add: Inventories 1,547 1,702 1,956 2,495 2,556 Less: Accounts payable, trade 1,392 1,482 1,674 1,645 1,752 DWC working capital $799 $989 $1,039 $1,802 $1,702 Sales $2,833 $3,109 $3,340
Slide 41: Annualized Return on Equity (ROE)
Annualized Return on Equity (ROE) ROE Reconciliation and calculation information as of June 30, 2022 $M 1H21 1H22 (Net Loss/Income Attributable to Alcoa + Special Items) Numerator: ROE % = X 100 Net (loss) income attributable to Alcoa Corporation $484 $1,018 (Total Assets – Total Liabilities – Nonco
Slide 42: Glossary of terms
Glossary of terms Abbreviations listed in alphanumeric order Abbreviation Description Abbreviation Description % pts Percentage points FOB WA Freight on board Western Australia 1H## Six months ending June 30 FY## Twelve months ending December 31 1Q## Three months ending March 31 GAAP Accounting prin
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