Alcoa Corporation · NYSE:AA
Alcoa — Bank of America Global Metals, Mining & Steel Conference 2024
57 slides from Alcoa's conference presentation, May 2024
Slide 1: Investor Presentation
Investor Presentation May 2024 OUR VALUES Act with Integrity Operate with Excellence Care for People Lead with Courage 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 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, Alcoa p
Slide 4: Global pure play aluminum company in two business segments
Global pure play aluminum company in two business segments Alcoa global operations by business segment xity Dr ple Iceland: m ive Co Norway: Ret Reduce urns Canada: United States: Spain: dv A an c ly e Sustainab Saudi Arabia: Guinea: Brazil: Alumina Aluminum Australia: ISS Governance QualityScore: 1
Slide 5: Alumina Limited acquisition simplifies ownership structure
Alumina Limited acquisition simplifies ownership structure Comparison of pre- and post-acquisition ownership structures of Alcoa and AWAC joint venture From complex ownership at a sub-segment level… …to streamlined ownership at the wholeco level Current Alcoa shareholders: 68.75%1 Alumina Limited Al
Slide 6: Advances global, pure play, upstream aluminum position
Advances global, pure play, upstream aluminum position Overview of key facets of combined company, 1 of 2 INTEGRATED ACROSS THE VALUE CHAIN ▪ Full value chain integration from upstream bauxite mines to aluminum smelters – Mining Refining Smelting with tier-1 assets at every step ▪ Increased exposure
Slide 7: Advances global, pure play, upstream aluminum position
Advances global, pure play, upstream aluminum position Overview of key facets of combined company, 2 of 2 Bauxite Alumina Aluminum #1 bauxite producer (Mdmt)1 #1 alumina producer (Mmt)1 #2 aluminum producer (Mmt)1 ▪ Strategic global presence with locations in ▪ Refinery portfolio with 1st quartile e
Slide 8: Solidifies position in Western Australia
Solidifies position in Western Australia Alcoa commitment and operations in a premier region of the aluminum industry ▪ Acquisition of Alumina Limited represents major commitment by Alcoa to continuing to improve environmental performance, maintain Perth Alcoa Mineral significant employment and enha
Slide 9: Alumina acquisition offers immediate and significant benefits
Alumina acquisition offers immediate and significant benefits Benefits of Alcoa’s acquisition of Alumina Limited The right deal for Alumina Limited shareholders ▪ Diversifies ownership to a large-scale, global upstream aluminum company ▪ Allows Australian investors access to Alcoa shares via ASX-lis
Slide 10: Key operational activities underway, including at San Ciprián
Key operational activities underway, including at San Ciprián Path forward for near term annual profitability improvement Near term actions San Ciprián solution ▪ Raw materials savings ▪ Pots restarted (6%) in 1Q24 in compliance with − Benefits being realized as expected, or better viability agreeme
Slide 11: Near term market improving; long term remains positive
Near term market improving; long term remains positive Alumina and aluminum commercial update Near term Long term $420 Platts FOB WA $400 ▪ Steady demand ▪ Alumina demand to grow ▪ Chinese refinery alongside aluminum $380 curtailments due to domestic ▪ ~80% of new refining Alumina $360 bauxite short
Slide 12: Heading in a positive direction
Heading in a positive direction Summary ▪ The Alumina Limited acquisition is expected to provide long term value for all shareholders and be complete in 3Q24 ▪ Successfully taking action to improve operating results and generate more EBITDA independent of market cycles ▪ Alumina and Aluminum demand
Slide 13: Appendix
Appendix 13
Slide 14: Production and capacity information
Production and capacity information Alcoa Corporation annual consolidated amounts as of March 31, 2024 Alumina refining, kmt Aluminum smelting, kmt Facility Country Capacity Curtailed Facility Country Capacity Curtailed 1 Kwinana Australia 2,190 438 Portland Australia 197 42 Pinjarra Australia 4,700
Slide 15: Information as presented on February 25, 2024
Information as presented on February 25, 2024 v 15
Slide 16: Agreed terms and process for Alcoa to acquire Alumina Limited
Agreed terms and process for Alcoa to acquire Alumina Limited Transaction to deliver significant value and upside potential for shareholders of both companies AGREED TERMS ▪ Exchange ratio of 0.02854x Alcoa shares for each Alumina Limited share FOR ACQUISITION ▪ Consideration implies a value of A$1.
Slide 17: Alumina Limited's sole asset is a minority stake in AWAC
Alumina Limited’s sole asset is a minority stake in AWAC1 Proposed transaction collapses AWAC joint venture 60% ownership 40% ownership ▪ Alumina Limited is ASX-listed ▪ Sole asset is 40% ownership of non-operating interest in AWAC AWAC Joint Venture2 ▪ AWAC assets are operated BAUXITE MINING OPERAT
Slide 18: Proposed transaction offers immediate and significant benefits
Proposed transaction offers immediate and significant benefits Underpinned by strong industrial logic and delivering compelling benefits to both sets of shareholders 1 The right deal for Alumina Limited shareholders ▪ Diversifies ownership to a large-scale, global upstream aluminum company ▪ Allows
Slide 19: Offers a unique opportunity for Alumina Limited shareholders
1 Offers a unique opportunity for Alumina Limited shareholders Pro forma ownership of Alcoa provides several advantages GLOBALLY DIVERSIFIED BUSINESS MIX ACROSS BAUXITE, ALUMINA AND ALUMINUM 1 SECTOR INNOVATION LEADER 2023 Production metrics ▪ Balances exposure to ▪ Full suite of low-carbon and recy
Slide 20: Unites Alcoa's core bauxite and alumina business
3 Unites Alcoa’s core bauxite and alumina business Expands Alcoa’s ownership of one of the world’s largest bauxite and alumina producers AWAC JV PORTFOLIO OPERATED BY ALCOA Increase in Alcoa 2023 production2 Australia 41.0 10.9 8.2 Mmt 24.7 6.8 Global alumina production 10.3 Mmt alumina production1
Slide 21: 100% AWAC ownership unlocks value for stockholders
3 100% AWAC ownership unlocks value for stockholders Simplified structure and governance enables efficiency in executing decisions that maximize returns IMPROVES STRATEGIC & FINANCIAL FLEXIBILITY SIMPLIFIES CORPORATE STRUCTURE Tangible near-term cost synergies with potential for further Aligns inter
Slide 22: Increases Alcoa's flexibility and efficiency in financial decisions
3 Increases Alcoa’s flexibility and efficiency in financial decisions Better positions Alcoa to achieve objectives highlighted in its capital allocation framework MAXIMIZING STOCKHOLDER VALUE CREATION CAPITAL ALLOCATION FRAMEWORK Return cash to stockholders ▪ Consistent with capital allocation frame
Slide 23: Summary historical financials
Summary historical financials Balance sheet as of December 31 US $ in millions 2017 2018 2019 2020 2021 2022 2023 Alcoa $17,447 $16,132 $14,631 $14,860 $15,025 $14,756 $14,155 Total assets Alumina Ltd. $2,343 $2,245 $1,854 $1,797 $1,755 $1,663 N/A AWAC $7,850 $7,151 $6,363 $6,410 $6,371 $6,185 N/A A
Slide 24: Summary historical financials
Summary historical financials Income statement for twelve months ended December 31 US $ in millions 2017 2018 2019 2020 2021 2022 2023 Alcoa $11,652 $13,403 $10,433 $9,286 $12,152 $12,451 $10,551 Revenue Alumina Ltd. $1 $2 $3 $0 $0 $1 N/A AWAC2 $5,274 $6,749 $5,216 $4,330 $5,224 $5,715 N/A Alcoa $27
Slide 25: Summary historical financials
Summary historical financials Statement of cash flows for twelve months ended December 31 US $ in millions 2017 2018 2019 2020 2021 2022 2023 Alcoa $1,224 $448 $686 $394 $920 $822 $91 Cash flows from Alumina Ltd. $260 $641 $365 $154 $175 $347 N/A operations AWAC $1,102 $1,970 $906 $672 $718 $482 N/A
Slide 26: Future facing with a full suite of low carbon and recycled products
Future facing with a full suite of low carbon and recycled products Summary of SustanaTM products and position on carbon emissions curves ALCOA SUSTANA PRODUCT LINE METRIC TONS OF CO2E/MT, BY PRODUCT ▪ Alumina products from a refinery portfolio with average 7 Alumina emissions intensity below 0.6 to
Slide 27: Demonstrating progress along clear path to net zero ambition
Demonstrating progress along clear path to net zero ambition Potential scope 1&2 emissions reduction pathways and current progress ESTIMATED ALCOA SCOPE 1&2 EMISSIONS REDUCTIONS BY SEGMENT, CO2E/TONNE1 EMISSIONS REDUCTION PROGRESS TO DATE -27% ▪ ~27 percent CO2e reduction against 2015 baseline; 7.1
Slide 28: A compelling opportunity for Alcoa and Alumina Limited
A compelling opportunity for Alcoa and Alumina Limited The right deal for Alumina Limited 1 shareholders Bolsters Alcoa’s position as a leading 2 pure play, upstream aluminum company globally 3 The right deal for Alcoa stockholders 28
Slide 29: 1Q24 Financial and other information
1Q24 Financial and other information as presented on April 17, 2024 v 29
Slide 30: Key actions continue, in addition to Alumina Limited transaction
Key actions continue, in addition to Alumina Limited transaction Update on recent and ongoing key initiatives 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 Warrick r
Slide 31: 1Q24 EPS of $(1.41), Adjusted EPS of $(0.81)
1Q24 EPS of $(1.41), Adjusted EPS of $(0.81) Quarterly income statement summary 4Q23 1Q24 Change Third party realized prices ($/mt) Realized primary aluminum price $2,678 $2,620 $(58) Realized alumina price $344 $372 $28 Income statement highlights (millions, except per share amounts) Revenue $2,595
Slide 32: Lower energy, raw materials costs improve Adjusted EBITDA
Lower energy, raw materials costs improve Adjusted EBITDA 1Q24 Sequential changes in Adjusted EBITDA excluding special items, $M 4 50 63 132 (16) 4Q23 1Q24 Change Alumina1 $84 $139 $55 15 89 Aluminum1 88 50 (38) 9 (8) Transformation (26) (14) 12 (13) (61) Intersegment (12) (8) 4 eliminations Other c
Slide 33: Working capital build the largest use of cash
Working capital build the largest use of cash 1Q24 sequential quarter cash flow information 1Q24 YTD Cash flow information, $M 1Q24 Commentary 937 6 ▪ Sources include $750 million debt Restricted cash used Net NCI contributions 55 issuance, net of discount and fees Adjusted EBITDA ▪ Working capital
Slide 34: Debt issue increases cash balance
Debt issue increases cash balance Key financial metrics and cash flow information, 1Q24 and YTD Key financial metrics 1Q24 Commentary ▪ Working capital build increased 1Q24 Days Days working capital 8 days and 2024 YTD Return on equity working capital drove negative Free cash flow plus (14.5)% 47 Da
Slide 35: 2024 Outlook
2024 Outlook FY24 Key metrics as of March 31, 2024 Income statement excl. special items impacts Cash flow impacts 1Q24 YTD Actual FY24 Outlook 1Q24 YTD Actual FY24 Outlook Alumina production (Mmt) 2.7 9.8 – 10.0 Pension / OPEB cash funding $19M ~ $70M Alumina shipments (Mmt) 3.3 12.7 – 12.9 Stock re
Slide 36: Alumina Limited deal, key activities progress, better markets
Alumina Limited deal, key activities progress, better markets 1Q24 Summary 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 Alumina L
Slide 37: Maximizing value creation through balanced uses of cash
Maximizing value creation through balanced uses of cash Capital allocation framework and value creation considerations Capital allocation framework Maximize value creation Return cash to stockholders Maintain strong balance sheet ▪ 1Q24 dividend payments totaled $19 million through the cycle Transfo
Slide 38: Quarterly income statement
Quarterly income statement Quarterly income statement for 1Q23, 4Q23 and 1Q24 Prior Year Sequential Millions, except realized prices and per share amounts 1Q23 4Q23 1Q24 Change Change Realized primary aluminum price ($/mt) $3,079 $2,678 $2,620 $(459) $(58) Realized alumina price ($/mt) $371 $344 $37
Slide 39: Special items
Special items Breakdown of special items by income statement classification – gross basis Millions, except per share amounts 1Q23 4Q23 1Q24 Description of significant 1Q24 special items Net loss attributable to Alcoa Corporation $(231) $(150) $(252) Loss per share1 $(1.30) $(0.84) $(1.41) Special it
Slide 40: Quarterly income statement excluding special items
Quarterly income statement excluding special items Quarterly income statement excluding special items for 1Q23, 4Q23 and 1Q24 Prior Year Sequential Millions, except realized prices and per share amounts 1Q23 4Q23 1Q24 Change Change Realized primary aluminum price ($/mt) $3,079 $2,678 $2,620 $(459) $
Slide 41: 1Q24 Financial summary
1Q24 Financial summary Three months ending March 31, 2024, excluding special items Intersegment Other Alcoa Millions Alumina Aluminum4 Transformation eliminations corporate Corporation Total revenue $1,356 $1,642 $7 $(406) - $2,599 Third-party revenue $961 $1,638 $3 - $(3) $2,599 Adjusted EBITDA1 $1
Slide 42: 1Q24 Segment Adjusted EBITDA drivers
1Q24 Segment Adjusted EBITDA drivers Segment Adjusted EBITDA sequential changes, $M Segment Segment Adjusted Adjusted EBITDA Metal Raw Production EBITDA 4Q23 Currency prices API materials Energy Price/mix Volume costs Other 1Q24 Alumina $84 9 0 47 6 13 1 (15) (7) 1 $139 Aluminum $88 (10) (13) (11) 9
Slide 43: Aluminum value chain
Aluminum value chain 2024 YTD Alcoa shipments by product type Bauxite Alumina Aluminum 10.5 Mdmt shipments 3.3 Mmt shipments 0.6 Mmt shipments Third party Intersegment 9% 0% Intersegment 28% 72% 91% Third party 100% Intrasegment Third party 43
Slide 44: Composition of alumina and aluminum production costs
Composition of alumina and aluminum production costs Alcoa 1Q24 production cash costs Alumina refining Input Inventory Pricing FY24 annual cost Bauxite cost flow convention sensitivity 25% Conversion 37% Caustic soda 5 - 6 Months Quarterly, Spot $11M per $10/dmt1 Quarterly, 91% with 14% Natural gas
Slide 45: 2024 Business information
2024 Business information Estimated annual Segment Adjusted EBITDA sensitivities $Millions 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 + $100/mt 0.661 4.951 1.351 1.091 137.121 10.491 Alumina 1012 (22)2 7
Slide 46: Currency impacts on Segment Adjusted EBITDA
Currency impacts on Segment Adjusted EBITDA Currency balance sheet revaluation and EBITDA sensitivities impact ($M, except currencies) AUD BRL CAD EUR ISK NOK Total 03/31/24 currencies 0.65 4.99 1.36 1.08 138.20 10.77 1Q24 currency average 0.66 4.95 1.35 1.09 137.12 10.49 1Q24 Balance sheet revaluat
Slide 47: Additional business considerations
Additional business considerations Items expected to impact Adjusted EBITDA and Adjusted net income for 2Q24 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 mi
Slide 48: 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 March 31, 2024 equity earnings ELYSIS Limited Partnership Canada Aluminum smelting technology 48.235% Ma’aden Aluminium Co
Slide 49: Alcoa sustainability goals
Alcoa sustainability goals Alcoa strategic long-term sustainability goals, baseline and progress Goal Description 2015 Baseline 2022 Progress Zero fatalities and serious injuries (life-threatening, life-altering injury or 5 fatal or serious 0 fatalities and 1 serious Safety illness) injuries/illness
Slide 50: Valuation framework key considerations
Valuation framework Valuation framework key considerations LTM ending 03/31/24 Adj. EBITDA excl. special items Economic value using market multiple of: i. AWAC joint venture, minus small portions of AWAC JV in Aluminum and + Alumina segment Transformation $309M ii. Ownership in certain mines and ref
Slide 51: Adjusted EBITDA reconciliations
Adjusted EBITDA reconciliations Millions 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 Net loss attributable to Alcoa $(231) $(102) $(168) $(150) $(651) $(252) Add: Net loss attributable to noncontrolling interest (1) (19) (25) (77) (122) (55) Provision for (benefit from) income taxes 52 22 (35) 150 189 (18) Other
Slide 52: Free cash flow reconciliation
Free cash flow reconciliation Millions 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 Cash provided from operations $(163) $(13) $69 $198 $91 $(223) Capital expenditures (83) (115) (145) (188) (531) (101) Free cash flow (246) (128) (76) 10 (440) (324) Contributions from noncontrolling interest 86 36 42 24 188 61 Dis
Slide 53: Net debt reconciliations
Net debt reconciliations 1Q23 4Q23 1Q24 Alcoa Alcoa Alcoa $M Cons. NCI Prop. Cons. NCI Prop. Cons. NCI Prop. Short-term borrowings $25 $- $25 $56 $- $56 $52 $- $52 Long-term debt due within one year 1 - 1 79 31 48 79 31 48 Long-term debt, less amount due within one year 1,806 32 1,774 1,732 - 1,732
Slide 54: DWC working capital and Days working capital reconciliations
DWC working capital and Days working capital reconciliations Millions 1Q23 2Q23 3Q23 4Q23 1Q24 Receivables from customers $753 $702 $691 $656 $869 Add: Inventories 2,395 2,400 2,190 2,158 2,048 Less: Accounts payable, trade 1,489 1,491 1,472 1,714 1,586 DWC working capital $1,659 $1,611 $1,409 $1,10
Slide 55: Annualized Return on Equity (ROE)
Annualized Return on Equity (ROE) ROE Reconciliation and calculation information as of March 31, 2024 Millions 1Q23 1Q24 (Net Loss/Income Attributable to Alcoa + Special Items1) Numerator: ROE % = X 100 Net loss attributable to Alcoa Corporation $(231) $(252) (Total Assets – Total Liabilities – Nonc
Slide 56: 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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Alcoa — Bank of America Global Metals, Mining & Steel Conference 2024 on 6ix