Alcoa Corporation · NYSE:AA
Alcoa — BMO Capital Markets 26th Global Metals & Mining Conference 2017
23 slides from Alcoa's conference presentation, Feb 28, 2017
Slide 1: BMO Capital Markets Global Metals & Mining Conference
BMO Capital Markets Global Metals & Mining Conference Roy Harvey, Chief Executive Officer Alcoa Corporation February 27, 2017 – March 1, 2017
Slide 2: Important information
Important information 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
Slide 3: Important information (continued)
Important information (continued) 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, including Adjus
Slide 4: Alcoa Corporation: a compelling investment
Alcoa Corporation: a compelling investment Today’s conversation Global network of world-class aluminum assets and operations Key 2016 financial metrics and 2017 outlook Potential impacts from the China Ministry of Environmental Protection’s draft proposal Strategic priorities for Alcoa Corpo
Slide 5: Global portfolio encompassing the aluminum value chain
Global portfolio encompassing the aluminum value chain Global Strength: Global Strength: 16,000 employees Over 14,000 employees 25 manufacturing facilities 43 operating locations 10 countries 10 countries 5
Slide 6: World class, low cost assets well-positioned for the future
World class, low cost assets well-positioned for the future 2016 cost curve and business position Bauxite Alumina Aluminum 1st 1st Mid 2nd Quartile Quartile Quartile World’s largest World’s largest Global network of bauxite miner1 alumina refiner1 16 aluminum smelters Source for cost curve and busin
Slide 7: Growing and profitable 3rd party bauxite business
Growing and profitable 3rd party bauxite business Bauxite 3rd party shipments and growth initiatives 3rd party shipments Key long-term growth initiatives M bdmt1 +220% 0.5M mt – Estimated production increase 6.4 starting in late 2017 from Phase II of the Juruti mine expansion project 2.5M mt – A
Slide 8: Diverse earnings drivers fueled by improving market prices
Diverse earnings drivers fueled by improving market prices Adjusted EBITDA information and considerations 2016 Segment Adjusted EBITDA1, $M Total Adjusted EBITDA excl. 2017 Considerations3 special items, $B Tax rate $375 $351 Based on adjusted EBITDA of $2.1 to $2.3B, $2.1 to $2.3 estimated effect
Slide 9: Balance sheet ready for any cycle
Balance sheet ready for any cycle Key metrics as of December 31, 2016 Net Debt-to-FY16 4Q16 Days Debt-to-Capital2 Adjusted EBITDA1 Working Capital3 Current business operations Appropriate capital structure Efficient working capital are ready to support our and financial flexibility management
Slide 10: Stable market outlook in 2017
Stable market outlook in 2017 Projected global market balances Bauxite – Relative balance Alumina – Relative balance Aluminum – Modest surplus 2017E Bauxite Balance (3rd Party Seaborne) (Mmt) 2017E Alumina1 Balance (Mmt) 2017E Primary Aluminum Balance (Mmt) 60 to 70 0.2 to 0.6 2.1 to 2.3 Surplus Bal
Slide 11: Potential China curtailments could create alumina deficit
Potential China curtailments could create alumina deficit Effects on the aluminum supply chain from potential curtailments Situation & background Estimated potential impact from China curtailments Draft proposal issued by the China Ministry of Environmental Protection (MEP) Potential 30% reducti
Slide 12: Alcoa Corporation: a compelling investment
Alcoa Corporation: a compelling investment Key takeaways Reduce complexity, simplify the business Drive returns, create value for our stockholders Strengthen the balance sheet 12
Slide 13: The Element of Possibility
The Element of Possibility”
Slide 14: Appendix
Appendix Including reconciliations
Slide 15: Outlook for 2017
Outlook for 2017 FY17 Key metrics Estimated shipments Key financial measures Pension & OPEB ~ $175M INCOME STATEMENT Bauxite (Mbdmt)1 47.5 – 48.5 Interest ~ $110M IMPACTS Transformation4 ~ $150M Alumina (Mmt) 13.8 – 13.9 Other Corporate spending5 ~ $150M Minority interest 40% of AWAC Net Income Alum
Slide 16: Aluminum value chain
Aluminum value chain Product shipments by business (2016 shipments in millions of metric tons) Smelting & Mining Refining Rolling Casting 0.4 4% Rolled 100% 3rd Party Products 3.1 96% Cast Products 3rd Party 34% Aluminum 13.8 86% 66% Alumina 3rd Party 46.91 14% Bauxite 3rd Party 1. Does not include
Slide 17: Pension and OPEB summary
Pension and OPEB summary Pension and OPEB overview $3.1B in unfunded liability as 2017 Impacts, $M of December 31, 20161 Pension OPEB < $250 ~ $175 ~50% OPEB U.S. Pension ~15% $1.3 Corporate Total U.S. Total ~15% $1.5 $1.3B $1.8B ~15% Segments ~50% ROW ~55% $0.3 Expense Cash Pension funding status 2
Slide 18: Composition of production costs
Composition of production costs FY 2016 Production cost information Alcoa alumina refining cost structure Pricing Estimated Annual Fuel Oil Natural Gas Input Cost Inventory Flow Convention EBITDA Sensitivity 5% 14% Caustic Fuel Oil 1 - 2 Months Prior Month $3M per $1/bbl 10% 41% Natural Gas1 N/A N/A
Slide 19: 2017 Business sensitivities
2017 Business sensitivities Estimated annual EBITDA sensitivities $ in 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 USD/AUD BRL/USD CAD/USD USD/EUR ISK/USD NOK/USD Bauxite (3) 4 Alumina
Slide 20: Capacity closed, sold and curtailed
Capacity closed, sold and curtailed Smelting capacity Refining capacity Closed / Sold since December 2007 Curtailed Closed / Sold since December 2007 Curtailed Facility Year kmt Facility Year kmt Facility Year kmt Facility Year kmt Baie Comeau 2008 53 Intalco 2007 49 Jamalco (sale) 2014 779 Point Co
Slide 21: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation (in millions) 4Q16 FY16 Net Loss attributable to Alcoa Corporation $(125) $(400) Add: Net (loss) income attributable to noncontrolling interest (4) 54 Provision for income taxes 6 184 Other expenses (income), net 1 (89) Interest expense 46 243 Restructuring and other c
Slide 22: FY16 Segment adjusted EBITDA reconciliation
FY16 Segment adjusted EBITDA reconciliation ($ in millions) For the year ended December 31, 2016 Cast Rolled Alcoa Corporation – Segments Bauxite Alumina Aluminum Products Products Energy After-tax operating income (ATOI) $212 $102 $(19) $176 $(41) $76 Add: Depreciation, depletion, and amortization
Slide 23: The Element of Possibility
The Element of Possibility”
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