Slide 1: 4th Quarter Earnings Conference
4th Quarter Earnings Conference January 11, 2016 Exhibit 99.2
Slide 2: Forward-Looking Statements
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
Slide 3: Important Information (continued)
Important Information (continued) Non-GAAP Financial Measures Some of the information included in this presentation is derived from Alcoa’s consolidated financial information but is not presented in Alcoa’s financial statements prepared in accordance with accounting principles generally accepted in
Slide 4: Klaus Kleinfeld, Chairman and Chief Executive Officer
Klaus Kleinfeld Chairman and Chief Executive Officer January 11, 2016
Slide 5: Growth + Active Portfolio Mgmt + Productivity
Growth + Active Portfolio Mgmt + Productivity $5.2B revenue: ~7% YoY sales increase from aero and acquisitions more than offset by lower alumina and aluminum prices & divestitures and closures (~-25%) $65 million1 adjusted net income and $590M2 EBITDA: Value-Add: ~$3.3B revenue, $215M ATOI and $448M
Slide 6: William Oplinger, Executive Vice President and Chief Financial Officer
William Oplinger Executive Vice President and Chief Financial Officer January 11, 2016
Slide 7: Income Statement Summary
Income Statement Summary $ Millions, except aluminum prices and per-share amounts 4Q14 3Q15 4Q15 Prior Year Change Sequential Change Realized Aluminum Price ($/MT) $2,578 $1,901 $1,799 ($779) ($102) Revenue $6,377 $5,573 $5,245 ($1,132) ($328) Cost of Goods Sold $4,973 $4,559 $4,404 $569 $155 COGS %
Slide 8: Special Items
Special Items See appendix for Adjusted Income reconciliation $ Millions, except per-share amounts 4Q14 3Q15 4Q15 Income Statement Classification Segment Net (Loss) Income $159 $44 ($500) Net (Loss) Income per Diluted Share $0.11 $0.02 ($0.39) Restructuring-Related ($200) ($43) ($287) Restructuring
Slide 9: Net Income excluding Special Items: Adjusted Earnings Down on Lower LME, API and Premiums
Net Income excluding Special Items ($ Millions) Adjusted Earnings Down on Lower LME, API and Regional Premiums Market -$469 Performance +$223 Cost Headwinds -$121 Note: Metal Price = LME + Regional Premium; Regional Premium previously reported in Price/Mix category See appendix for Adjusted Income r
Slide 10: Full Year Adjusted Earnings Down on Lower LME and Premiums
Net Income excluding Special Items ($ Millions) Full Year Adjusted Earnings Down on Lower LME and Premiums Market -$469 Performance +$766 Cost Headwinds -$626 *2014 Net Income of $268M and 2015 Net Loss of $121M. See appendix for Adjusted Income reconciliation Note: Metal Price = LME + Regional Prem
Slide 11: Global Rolled Products: 4Q15 Actual and 1Q16 Outlook
4Q 14 3Q 15 4Q 15 3rd Party Revenue ($ Millions) 1,888 1,527 1,422 ATOI1 ($ Millions) 52 62 52 EBITDA/MT1 ($) 262 330 312 4Q15 Actual and 1Q16 Outlook – Global Rolled Products GRP: Strong Productivity; Capacity, Innovation Investments Continue Revenue up 6% year-over-year excluding divestitures/clos
Slide 12: Engineered Products and Solutions: 4Q15 Actual and 1Q16 Outlook
$ Millions 4Q 14 3Q 15 4Q 15 3rd Party Revenue ($ Millions) 1,114 1,397 1,409 ATOI1 ($ Millions) 124 151 123 EBITDA Margin1 20.6% 20.3% 17.3% 1st Quarter Year-over-Year Outlook 4th Quarter ATOI Performance Bridge 4Q15 Actual and 1Q16 Outlook – Engineered Products and Solutions Aerospace market remai
Slide 13: Transportation and Construction Solutions: 4Q15 Actual and 1Q16 Outlook
$ Millions 4Q 14 3Q 15 4Q 15 3rd Party Revenue ($ Millions) 500 475 444 ATOI1 ($ Millions) 38 44 40 EBITDA Margin1 12.6% 15.2% 14.6% 1st Quarter Year-over-Year Outlook 4th Quarter ATOI Performance Bridge 4Q15 Actual and 1Q16 Outlook – Transportation and Construction Solutions TCS: Strong Productivit
Slide 14: Alumina: Lower Prices Impact Result
Alumina: Lower Prices Impact Result 4Q15 Actual and 1Q16 Outlook – Alumina API pricing down 24% sequentially, 43% in 2015 Announced 2.2 MMT, or 15%, of annual capacity curtailments Higher Australian production partially offsets Suriname curtailment Continued productivity gains through strong cost co
Slide 15: Primary Metals: Lower Cost Position Improving Performance
Primary Metals: Lower Cost Position Improving Performance $ Millions 4Q15 Actual and 1Q16 Outlook – Primary Metals Price / Mix Cost Incr. / Other Prod-uctivity 1 Realized price declined ~5% sequentially; Midwest transaction price down 28% in 2015 Announced 642 KMT, or 23%, of annual capacity curtail
Slide 16: Upstream Revenues and EBITDA: Five Business Units
$ 1 $ 2 Upstream Revenues and EBITDA: Full year 2015 Actual Upstream: Five Business Units Diversify Revenue and EBITDA Sources Revenue ($B) $7.8 3rd Party Revenue exposed to LME ~50% Profitability (EBITDA %, $B) Total Revenue Inter-Co. Revenue e.g., GPP -> GRP Inter-BU Revenue e.g., Mine -> Refinery
Slide 17: Average Days Working Capital
6 days lower Base Business DWC +2 days Year-over-Year, Acquisitions Add 14 days Average Days Working Capital since Fourth Quarter 2010 1 day lower See appendix for days working capital reconciliation 2 days lower 15 days higher Acquisitions (14 days) Alcoa ex-Acquisitions (29 days) 29 8 days Lower f
Slide 18: Strong Cash Generation; Cash Balance at $1.9 Billion
($ Millions) 4Q14 3Q15 4Q15 Net Income (Loss) before Noncontrolling Interests $114 $106 ($564) Depreciation, Depletion and Amortization $336 $318 $321 Change in Working Capital $656 $38 $591 Pension Expense in Excess of Contributions $47 ($72) $13 Other Adjustments $305 $30 $504 Cash from Operations
Slide 19: Debt, Net Debt, and Debt-to-LTM EBITDA
($ Millions) 3.27 3.39 2.87 LTM = last twelve months; See appendix for Net Debt and LTM EBITDA reconciliations. Debt, Net Debt, and Debt-to-LTM EBITDA Leverage Within Target Range of 2.25x to 2.75x Excluding RTI 2.49 4.20 2.80 2.71 excluding RTI
Slide 20: 2015 Full Year Results Against Targets
$1,199M $603M $604M 2.71 excluding RTI Generated $402M Free Cash Flow in 2015 Productivity $900M Return-Seeking Capital $750M Sustaining Capital $725M Debt-to-EBITDA 2.25-2.75 Generated Free Cash Flow Actual Delivered Strong Results in 2015 2015 full year results against Targets $402M See appendix f
Slide 21: China Aluminum Dynamic Improving, But More Action Still Required
China’s dependency on import bauxite is rising China Aluminum Dynamic Improving, But More Action Still Required Alumina curtailments response is substantial Aluminum curtailments equally substantial Semis exports are higher, but fake share down China 2016 aluminum curtailments in 000 mt China semis
Slide 22: Chinese Refining Curtailments Contribute To A 2016 Alumina Deficit
Chinese Refining Curtailments Contribute To A 2016 Alumina Deficit Source: Alcoa analysis, CRU, Brook Hunt, CNIA, IAI, NBS, SMM, Platts Alumina fundamentals overview 2016 Alumina Forecast (as of Q42015) China Rest of World 2016 Prod. at Beginning Run Rate 56,807 56,900 2016 Prod. to be Added/Restart
Slide 23: Aluminum Market Fundamentals Are Solid
6% 2016E Demand Growth Aluminum Market Fundamentals Are Solid Aluminum deficit increasing Global Inventories at 60 days; -4 days YoY Regional Premiums Stable Average 4Q15 vs. 4Q14 Europe -66% Japan -78% Midwest USA -65% Region 4Q15 Average Europe $170/MT Japan $92/MT Midwest USA $180/MT Global Inven
Slide 24: Klaus Kleinfeld, Chairman and Chief Executive Officer
Klaus Kleinfeld Chairman and Chief Executive Officer January 11, 2016
Slide 25: Aerospace Remains Strong; Continued Growth in Automotive
Aerospace Remains Strong; Continued Growth in Automotive End Market 2016 Growth Global and Regional Commentary Aerospace 8% to 9% Global sales growth Large Commercial Aircraft segment growth of 15% as ramp-up increases continue for such programs as the A320, A350 and B787 Strong Commercial Jet engin
Slide 26: HDT and Packaging End Markets
HDT – N.A.: Relative Decline, Strength in Europe; Packaging Stable End Market 2016 Growth Global and Regional Commentary Alcoa End Markets: Current Assessment of 2016 vs. 2015 Source: Alcoa analysis. HDT = Heavy Duty Truck. Packaging: 2016 Projections Heavy Duty Truck and Trailer -3% to +1% Global p
Slide 27: Commercial B&C and Global Airfoil Market Continue to Grow
Commercial B&C and Global Airfoil Market Continue to Grow End Market 2016 Growth Global and Regional Commentary Source: Alcoa analysis B&C = Building and construction. Alcoa End Markets: Current Assessment of 2016 vs. 2015 Building and Construction Industrial Gas Turbines 2% to 4% Global airfoil mar
Slide 28: Upstream: Cost Competitive Industry Leader
Upstream: Cost Competitive Industry Leader MINING REFINING CASTING SMELTING ENERGY World’s largest bauxite miner1 Flexibility to profit from market cycles 1st quartile3 cost curve refiner Strategic global footprint Value-add products in key markets ALUMINA ALUMINUM Key Attributes Robust projected al
Slide 29: Upstream: Track Record to Drive Profitability
Upstream: Track Record to Drive Profitability Alumina, Al pricing ($/MT), Portfolio Drivers for Upstream EBITDA from 2010 to 2015, Portfolio Improvements $B $B $2.8B Productivity2 Maintaining earnings in unfavorable market conditions Alumina Price ($/MT) $333 $314 -6% All-In Metal Price ($/MT)1 $2,3
Slide 30: Upstream: $600M Business Improvement Program
Business Programs Procurement Overhead Margin Improvement $600M Program: $550M of Productivity Plus $50M of Margin Improvement Actions 2016 Upstream EBITDA Improvement Program, $US Millions Upstream: $600M Business Improvement Program to Counteract Market Headwinds Drive labor productivity improveme
Slide 31: Value-Add Co: Premier Provider of Innovative Solutions to Growing Markets
Value-Add Co: Premier Provider of Innovative Solutions to Growing Markets Value-Add Co. Business Operations and Key Attributes Premier supplier of high-performance advanced multi-material products and solutions Positioned to strengthen in growth markets with significant customer synergies e.g., aero
Slide 32: Value-Add Co: Meaningful Synergies Create Value
Value-Add Co: Meaningful Synergies Create Value Value-Add Co. Operating Model and Synergies between EPS, TCS, and GRP Businesses 1) 2015 Revenues 2) Alcoa Customer Experience Survey 2015 3) Mid-level positions and above Purchasing: Talent3: Technology: Customers: ~20% ~80% / Promotions Operating Mod
Slide 33: Multi-Year Contracts Drive Future Value-Add Profits
Multi-Year Contracts Drive Future Value-Add Profits … Aerospace Portfolio Capabilities and Highlights of Aerospace Multi-Year Contracts Signed in 2015 Aerospace Portfolio World class producer of Ti aero ingot, mill products; subassemblies/ adv. technologies leader Multi-Year Contracts ~$100 Million
Slide 34: Increasing Content on Every High Growth Jet Engine
...Increasing Content on Every High Growth Jet Engine… Indexed Revenue by Key Engine Type CFRP = Carbon Fiber Reinforced Polymer. Better Coverage of Key Engine Platforms Pro forma Revenue / Engine (Indexed to CFM56) 100% Alcoa Firth Rixson RTI Airbus Twin Aisle Boeing Twin Aisle Single Aisle B737 NG
Slide 35: Increasing Content on Every High Growth Aircraft Platform
...and Increasing Content on Every High Growth Aircraft Platform Indexed Revenue by Aircraft Type CFRP = Carbon Fiber Reinforced Polymer. Strong Revenue Generator on All Platforms Pro forma Revenue / Aircraft (Indexed to B737 NG) 100% Alcoa Firth Rixson RTI B737 NG B737 Max B767 B787 B777 B777X B747
Slide 36: Innovation, Investments and Productivity Drive Past and Future Growth
Innovation, Investments and Productivity Drive Past and Future Growth Value-Add Portfolio Drivers to EBITDA and Margin Growth from 2008 to 2015 (in $B), Future Drivers 2.0 +700 basis point Margin Improvement Delivering Results 15% 1) 2009-2010 represent net productivity; 2011-2015 represent gross pr
Slide 37: Executing Separation – On Course for Second Half of 2016
Executing Separation – On Course for Second Half of 2016 Separation Approximate Timeline and Path to Completion 4Q 2015 1st Half 2016 2nd Half 2016 Launch New Value-Add Name and Brand Separate Supplier/Partner Contracts Form 10 Filing - e.g., 3-Year Carve-Out and 1-Year Pro-Forma Financials Form of
Slide 38: Value-Add Geared for Profitable Growth; Significant Aero, Auto Traction
Value-Add Geared for Profitable Growth; Significant Aero, Auto Traction Robust Business Improvement Programs to Strengthen Both Portfolios Pulling All Upstream Levers to Improve Profitability On Track to Separate into Two Strong Companies On Track for Completing Separation 2nd Half of 2016
Slide 39: Additional Information: Investor Relations
Nahla Azmy Vice President, Investor Relations Alcoa 390 Park Avenue New York, NY 10022-4608 Telephone: (212) 836-2674 Email: nahla.azmy@alcoa.com www.alcoa.com Additional Information
Slide 40: 2016 Modeling Support
2016 modeling support 2016 Modeling Support Operational, Investment, and Financial Business Improvement Programs Operational Tax Rate Capital Expenditures Pension Contribution Sustaining: $700M Return Seeking: $700M ~$300M 32% Net Income Sensitivities1 Currencies Commodity Prices Change Impact to Ne
Slide 41: Composition of Regional Premium Pricing Convention
Composition of Regional Premium Pricing Convention 2015 Shipments Regional Premiums Estimated Pricing Convention 54% Midwest – Platts 15-day lag 35% Rotterdam DP – Metal Bulletin 15-day lag 10% CIF Japan – Platts Month prior to Quarter start 1% Negotiated Annual
Slide 42: Value-Add Co. Segment Bridges – 4Q 2015
$ Millions $ Millions EPS Sequential Quarter Bridge Value-Add Co. Segment Bridges – 4Q 2015 GRP Sequential Quarter Bridge EPS = Engineered Products and Solutions GRP = Global Rolled Products TCS = Transportation and Construction Solutions Currency $ Millions TCS Sequential Quarter Bridge
Slide 43: Upstream Co. Segment Bridges – 4Q 2015
$ Millions $ Millions Upstream Co. Segment Bridges – 4Q 2015 Currency $ FX Alumina Year-over-Year Bridge Primary Metals Year-over-Year Bridge
Slide 44: Special Items
Special Items Pre-tax, Before NCI After-tax, After NCI $ Millions, except per-share amounts 3Q15 4Q15 3Q15 4Q15 Income Statement Classification Segment Income from Continuing Operations $206 ($520) $44 ($500) Income per Diluted Share - - $0.02 ($0.39) Restructuring-Related ($94) ($522) ($43) ($287 R
Slide 45: Revenue Change by Market - 4Q 2015
Revenue Change by Market - 4Q 2015 1% (8%) (9%) (9%) (6%) (5%) (8%) (7%) (8%) (20%) (1%) 21% (2%) (11%) (25%) (5%) (37%) 5% (23%) (6%) (28%) (33%) 4Q15 Third-Party Revenue Sequential Change Year-Over-Year Change
Slide 46: Revenue Change by Market – FY 2015
Year-Over-Year Change Revenue Change by Market – FY 2015 24% 60% (8%) (21%) 3% (34%) 3% (18%) 17% (2%) (18%) FY 2015 Third-Party Revenue
Slide 47: Composition of Upstream Production Costs
Composition of Upstream Production Costs Input Cost Inventory flow Pricing convention Annual ATOI Sensitivity Fuel oil 1 – 2 months Prior month $2m per $1/bbl Natural gas1 N/A N/A N/A Caustic soda 3 - 6 months Spot & semi-annual $8m per $10/DMT Refining Cost Structure Smelting Cost Structure Input C
Slide 48: Alcoa Upstream capacity closed, sold and idled
Alcoa Upstream capacity closed, sold and idled Facility Year kmt Baie Comeau 2008 53 Eastalco 2010 195 Badin 2010 60 Warrick 2010 40 Tennessee 2011 215 Rockdale 2011 76 Baie Comeau 2013 105 Fusina 2013 44 Massena East 2013 41 Massena East 2014 84 Point Henry 2014 190 Portovesme 2014 150 Mt. Holly (s
Slide 49: Reconciliations
Reconciliations [Alcoa logo]
Slide 50: Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa
Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa(1) (in millions) 1Q14 2Q14 3Q14 4Q14 2014 1Q15 2Q15 3Q15 4Q15 2015 Total segment ATOI(2) $320 $408 $581 $659 $1,968 $656 $567 $410 $273 $1,906 Unallocated amounts (net of tax): Impact of LIFO (7) (8) (18) (21) (54) 7 36 5
Slide 51: Reconciliation of ATOI to Consolidated Net (Loss) Income – Supplemental View
Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa(1) – Supplemental View (in millions) 1Q14 2Q14 3Q14 4Q14 2014 1Q15 2Q15 3Q15 4Q15 2015 Total segment ATOI(2) $320 $408 $581 $659 $1,968 $656 $567 $410 $273 $1,906 Unallocated amounts (net of tax): Impact of LIFO (7) (8) (
Slide 52: Reconciliation of Adjusted Income (Loss)
Reconciliation of Adjusted Income (Loss) (in millions, except per-share amounts) Income (Loss) Diluted EPS(3) Quarter ended Quarter ended December 31, September 30, December 31, December 31, September 30, December 31, 2014 2015 2015 2014 2015 2015 Net income (loss) attributable to Alcoa $159 $44 $(5
Slide 53: Reconciliation of Adjusted Income (Loss), continued
Reconciliation of Adjusted Income (Loss), continued (in millions, except per-share amounts) Income (Loss) Diluted EPS(3) Year ended Year ended December 31, December 31, December 31, December 31, 2014 2015 2014 2015 Net income (loss) attributable to Alcoa $268 $(121) $0.21 $(0.15) Restructuring and o
Slide 54: Reconciliation of Alcoa Adjusted EBITDA
Reconciliation of Alcoa Adjusted EBITDA ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4Q14 3Q15 4Q15* Net income (loss) attributable to Alcoa $1,233 $2,248 $2,564 $(74) $(1,151) $254 $611 $191 $(2,285) $268 $(121) $159 $44 $(500) Add: Net income (loss) attributable to noncon
Slide 55: Reconciliation of Alumina Adjusted EBITDA
Reconciliation of Alumina Adjusted EBITDA ($ in millions, except per metric ton amounts) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4Q14 3Q15 4Q15 After-tax operating income (ATOI) $682 $1,050 $956 $727 $112 $301 $607 $90 $259 $370 $746 $178 $212 $98 Add: Depreciation, depletion, and amo
Slide 56: Reconciliation of Primary Metals Adjusted EBITDA
Reconciliation of Primary Metals Adjusted EBITDA ($ in millions, except per metric ton amounts) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4Q14 3Q15 4Q15 After-tax operating income (ATOI) $822 $1,760 $1,445 $931 $(612) $488 $481 $309 $(20) $594 $155 $267 $(59) $(40) Add: Depreciation, de
Slide 57: Reconciliation of Upstream Adjusted EBITDA
Reconciliation of Upstream(1) Adjusted EBITDA (in millions) 2008 2009 2010 2011 2012 2013 2014 2015(2) After-tax operating income (ATOI) $1,658 $(500) $789 $1,088 $399 $239 $964 $901 Add: Depreciation, depletion, and amortization 771 852 977 1,000 987 952 881 725 Equity (income) loss (9) 18 (11) (18
Slide 58: Reconciliation of Global Rolled Products Adjusted EBITDA
Reconciliation of Global Rolled Products Adjusted EBITDA(1) ($ in millions, except per metric ton amounts) 2005 2006 2007 2008 2009 2010(2) 2011(2) 2012(2) 2013 2014 2015 4Q14 3Q15 4Q15 After-tax operating income (ATOI) $278 $233 $178 $(3) $(49) $220 $266 $358 $292 $245 $244 $52 $62 $52 Add: Depreci
Slide 59: Reconciliation of Engineered Products and Solutions Adjusted EBITDA
Reconciliation of Engineered Products and Solutions(1) Adjusted EBITDA(2) ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4Q14 3Q15 4Q15 After-tax operating income (ATOI) $183 $237 $351 $465 $321 $355 $436 $484 $569 $579 $595 $124 $151 $123 Add: Depreciation, depletion, and am
Slide 60: Reconciliation of Transportation and Construction Solutions Adjusted EBITDA
Reconciliation of Transportation and Construction Solutions(1) Adjusted EBITDA(2) ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4Q14 3Q15 4Q15 After-tax operating income (ATOI) $94 $129 $94 $82 $5 $73 $109 $126 $167 $180 $166 $38 $44 $40 Add: Depreciation, depletion, and amo
Slide 61: Reconciliation of Value Add Adjusted EBITDA
Reconciliation of Value Add(1) Adjusted EBITDA(2) ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015 After-tax operating income (ATOI) $544 $277 $648 $811 $968 $1,028 $1,004 $1,005 Add: Depreciation, depletion, and amortization 387 410 400 402 393 392 414 503 Equity (income) loss – (2) (2) 2 6
Slide 62: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow (in millions) Year ended Quarter ended December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2014 September 30, 2015 December 31, 2015 Cash from operations $2,261 $2,193 $1,497 $1,578 $1,674 $1,582 $1
Slide 63: Days Working Capital
Days Working Capital Days Working Capital = Working Capital divided by (Sales/number of days in the quarter). (1) The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial institutions on a recurring basis. Alcoa is adding back this re
Slide 64: Reconciliation of Net Debt
Reconciliation of Net Debt Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Alcoa’s leverage position after factoring in available cash that could be used to repay outstanding debt. (in millions) December 31, 2010
Slide 65: Reconciliation of Debt-to-Adjusted EBITDA Ratio
Reconciliation of Debt-to-Adjusted EBITDA Ratio ($ in millions) 2010 2011 2012 2013 2014 2015* Net income (loss) attributable to Alcoa $254 $611 $191 $(2,285) $268 $(121) Add: Net income (loss) attributable to noncontrolling interests 138 194 (29) 41 (91) 125 Loss from discontinued operations 8 3 –
Slide 66: Advancing each generation.
Advancing each generation. [Alcoa logo]