Slide 1: 3rd Quarter Earnings
3rd Quarter Earnings Alcoa Corporation October 14, 2021
Slide 2: Important information
Important information Cautionary statement regarding forward-looking statements This presentation may contain 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
Slide 3: Important information (continued)
Important information (continued) 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 principle
Slide 4: Roy Harvey
Roy Harvey President and Chief Executive Officer
Slide 5: Decisive actions, strong markets: another record quarter
Decisive actions, strong markets: another record quarter Alcoa values, strategic priorities, and key takeaways for 3Q21 3Q21 Takeaways ▪ Continued focus on safety; one serious injury in the quarter ▪ Highest profitability since 2016 inception − For both the quarter and nine months, highest Adjusted
Slide 6: William Oplinger
William Oplinger Executive Vice President and Chief Financial Officer
Slide 7: Quarterly earnings per share record for Alcoa Corporation
Quarterly earnings per share record for Alcoa Corporation Quarterly income statement highlights Prior year Sequential M, Except per share amounts 3Q20 2Q21 3Q21 change change Income statement highlights Revenue $2,365 $2,833 $3,109 $744 $276 Net (loss) income attributable to Alcoa Corporation $(49)
Slide 8: Aluminum segment again drives record Adj. net income
Aluminum segment again drives record Adj. net income Aluminum Segment Adjusted EBITDA and Adjusted net income (loss) attributable to Alcoa Aluminum segment provides 73% of Adjusted …increasing conversion of Adjusted EBITDA to EBITDA in 3Q21 YTD… Adjusted net income attributable to Alcoa All other Ad
Slide 9: Favorable metal prices, currency, outweigh other factors
Favorable metal prices, currency, outweigh other factors Adjusted EBITDA excluding special items sequential changes, $M 176 8 14 (23) 2Q21 3Q21 Change (17) (45) (4) 728 Bauxite $41 $23 $(18) (39) 40 618 Alumina 124 148 24 Aluminum 460 613 153 Segment total 625 784 159 Transformation (13) (10) 3 Inte
Slide 10: Strong Adj. EBITDA, debt redemption, seen in cash flows
Strong Adj. EBITDA, debt redemption, seen in cash flows Sequential quarterly and September 30, 2021 YTD cash flow information 6/30/21 to 9/30/21 Cash changes, $M YTD Cash flow information, $M 3,275 41 Other 1,652 3,075 79 Environmental/ARO 114 Interest payments 115 169 Cash income taxes 626 1,452 De
Slide 11: Return on equity 30.2%, Proportional adj. net debt $1.7B
Return on equity 30.2%, Proportional adj. net debt $1.7B Sequential quarterly and YTD financial information Key financial metrics Days working capital – YTD impacts 2 29 3Q21 Days 2021 YTD 7 working capital (DWC) Return on equity (1) 20 29 Days 30.2% 0 2021 YTD Capital 3Q21 Proportional expenditures
Slide 12: 2021 Outlook
2021 Outlook FY21 Key metrics as of September 30, 2021 Income statement excl. special items impacts Cash flow impacts 2021 YTD 2021 YTD Actual FY21 Outlook Actual FY21 Outlook Bauxite shipments (Mdmt) 35.9 49.0 – 50.0 Pension / OPEB required cash funding $117M ~ $140M Alumina shipments (Mmt) 10.5 14
Slide 13: Roy Harvey
Roy Harvey President and Chief Executive Officer
Slide 14: Prices march higher on solid demand, supply constraints
Prices march higher on solid demand, supply constraints Aluminum and alumina price environment and market commentary 3Q21 Aluminum, alumina prices up Favorable markets, commercial position Aluminum prices ($/tonne) 768 Aluminum 4,000 3,499 800 LME 3,500 SHFE ▪ Market: Continued strength in LME and r
Slide 15: An even stronger, more sustainable aluminum producer
An even stronger, more sustainable aluminum producer Update on key strategic actions; other major announcements/activities in 3Q21 Key strategic actions going well Other recent major activities New operating model – met target ▪ $500 million debt redemption Created a leaner, more integrated, operato
Slide 16: New buyback, dividend authorizations fit current framework
New buyback, dividend authorizations fit current framework Capital allocation framework and considerations ▪ $1 billion target for minimum cash balance; Maintain liquidity throughout the cycle $1.4 billion at Sept. 30, 2021 ▪ Sustaining capital expenditures of ~$375 million, return seeking capital o
Slide 17: An excellent nine months; positioned for more success
An excellent nine months; positioned for more success 3Q21 Summary • Profiting from long position in all three segments Made record Adj. EBITDA in Aluminum segment; spot price now over $470 per tonne in Alumina segment • Continuing to strengthen the company Drive results and Reduced adjusted net deb
Slide 18: Appendix
Appendix
Slide 19: Well positioned across three product segments
Well positioned across three product segments Alcoa portfolio cost curve position and key factors, 2021 Bauxite Alumina Aluminum 1st Quartile 1st Quartile 2nd Quartile ▪ World’s second largest bauxite ▪ Largest third-party alumina ▪ Driving for 1st quartile through miner with assets across four prod
Slide 20: Strengthening the Company
Strengthening the Company Actions to improve Alcoa, 2017 – 2021 2017 – 2020 2021 Operating Safely and Efficiently Optimizing the Portfolio ▪ Issued $500 million aggregate principal amount of 4.125% senior notes due 2029; redeemed in full ▪ Revitalized safety program; maintained ▪ Restarted Lake Char
Slide 21: Quarterly income statement
Quarterly income statement Quarterly income statement Prior Year Sequential M, Except realized prices and per share amounts 3Q20 2Q21 3Q21 Change Change Realized primary aluminum price ($/mt) $1,904 $2,753 $3,124 $1,220 $371 Realized alumina price ($/mt) $274 $282 $312 $38 $30 Revenue $2,365 $2,833
Slide 22: Special items
Special items Breakdown of special items by income statement classification – gross basis M, Except per share amounts 3Q20 2Q21 3Q21 Description of significant 3Q21 special items Net (loss) income attributable to Alcoa Corporation $(49) $309 $337 Diluted (loss) earnings per share ($0.26) $1.63 $1.76
Slide 23: Quarterly income statement excluding special items
Quarterly income statement excluding special items Quarterly income statement excluding special items Prior Year Sequential M, Except realized prices and per share amounts 3Q20 2Q21 3Q21 Change Change Realized primary aluminum price ($/mt) $1,904 $2,753 $3,124 $1,220 $371 Realized alumina price ($/m
Slide 24: 3Q21 Financial summary
3Q21 Financial summary Three months ending September 30, 2021, excluding special items Intersegment Other Alcoa $M Bauxite Alumina Aluminum3 Transformation eliminations corporate Corporation Total revenue $228 $1,105 $2,303 $2 $(529) - $3,109 Third-party revenue $56 $756 $2,295 $2 - - $3,109 Adjuste
Slide 25: 3Q21 Adjusted EBITDA drivers by segment
3Q21 Adjusted EBITDA drivers by segment Adjusted EBITDA excluding special items sequential changes by segment, $M Adj. Adj. EBITDA Metal Raw Production EBITDA Segment 2Q21 Currency prices API materials Energy Price/mix Volume costs Other 3Q21 Bauxite $41 5 0 0 0 0 1 (11) (6) (7) $23 Alumina $124 26
Slide 26: Aluminum value chain
Aluminum value chain 2021 YTD Alcoa product shipments by segment Bauxite Alumina Aluminum 35.9 Mdmt shipments 10.5 Mmt shipments 2.3 Mmt shipments Third Party Intersegment 0% 11% Intersegment 30% 70% 89% Third Party 100% Intersegment Third Party 26
Slide 27: Composition of alumina and aluminum production costs
Composition of alumina and aluminum production costs Alcoa 3Q21 production cash costs Alumina refining Input Inventory Pricing FY21 Annual Cost Cost Flow Convention Sensitivity Bauxite Caustic Soda 5 - 6 Months Quarterly, Spot $10M per $10/dmt 25% Conversion 41% Quarterly, 85% with Natural Gas 1 Mon
Slide 28: 2021 Business information
2021 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 + $100/mt 0.731 5.221 1.261 1.181 126.041 8.751 Bauxite (4) 2 Alumina 120 (16) 4 (1)
Slide 29: Currency impacts on Adjusted EBITDA
Currency impacts on Adjusted EBITDA Currency balance sheet revaluation and EBITDA sensitivities ($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 12/31/
Slide 30: Additional business considerations
Additional business considerations Items expected to impact Adjusted EBITDA for 4Q21 ▪ At the San Ciprián refinery and smelter, we expect higher energy costs and the strike (if both persist through quarter end) to decrease Adjusted EBITDA ~$100 million sequentially and increase working capital seque
Slide 31: Pension and OPEB summary
Pension and OPEB summary Net pension and OPEB liability and financial impacts Net liability as of September 30, 20211 Estimated financial impacts, $M Expense impact 2021 U.S. $0.3 Segment pension $20 Pension Segment OPEB 5 Total Corporate pension & OPEB - OPEB U.S. $0.6B Total adj. EBITDA impact 25
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 September 30, 2021 Equity Earnings ELYSISTM Limited Partnership Canada Aluminum smelting technology 48.235% Ma’aden Alumin
Slide 33: Alcoa sustainability goals
Alcoa sustainability goals Alcoa strategic long-term sustainability goals, baseline and progress Goal Description 2015 Baseline 2020 Progress Zero fatalities and serious injuries (life-threatening, life-altering injury 5 fatal or serious 1 fatal or serious Safety or illness) injuries/illnesses injur
Slide 34: Production and capacity information
Production and capacity information Alcoa Corporation annual consolidated amounts as of September 30, 2021 Bauxite production, Mdmt Alumina refining, kmt Aluminum smelting, kmt 2020 Mine Country Production Facility Country Capacity Curtailed Facility Country Capacity Curtailed Darling Range Australi
Slide 35: Valuation framework considerations
Valuation framework LTM ending Valuation framework key considerations 9/30/2021 Adj. EBITDA excl. special items Economic value using market multiple of: + Bauxite i. AWAC joint venture, minus small portions of AWAC JV in Aluminum and $243M Transformation + Alumina ii. Ownership in certain mines and
Slide 36: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation $M 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 Net income (loss) attributable to Alcoa $(49) $(4) $(170) $175 $309 $337 Add: Net income attributable to noncontrolling interest 29 21 156 44 41 33 Provision for income taxes 42 20 187 93 111 127 Other (income) expenses, net 45 44 8 (24
Slide 37: Segment Adjusted EBITDA reconciliation
Segment Adjusted EBITDA reconciliation $M FY17 FY18 FY19 FY20 3Q21 YTD Net income (loss) attributable to Alcoa $279 $250 $(1,125) $(170) $821 Add: Net income attributable to noncontrolling interest 329 643 272 156 118 Provision for income taxes 592 732 415 187 331 Other expenses (income), net 27 64
Slide 38: Adj. net income (loss) attributable to Alcoa reconciliation
Adj. net income (loss) attributable to Alcoa reconciliation $M FY17 FY18 FY19 FY20 3Q21 YTD Net income (loss) attributable to Alcoa $279 $250 $(1,125) $(170) $821 Special items: Restructuring and other charges, net 309 527 1,031 104 73 Other special items (9) 39 50 (103) (69) Discrete tax items and
Slide 39: Operational tax reconciliation
Operational tax reconciliation $M 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 Provision for income taxes $42 $20 $187 $93 $111 $127 Tax on special items 3 1 13 - (3) 3 Discrete tax items 2 25 26 2 - (2) Interim tax impacts1 182 (19) - - - - Operational tax provision $229 $27 $226 $95 108 128 Operational tax rate
Slide 40: Free cash flow reconciliation
Free cash flow reconciliation $M 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 Cash (used for) provided from operations $158 $38 $394 $6 ($86)1 435 Capital expenditures (74) (111) (353) (75) (79) (83) Free cash flow 84 (73) 41 (69) (165) 352 Contributions from noncontrolling interest 8 - 24 - - 8 Distributions to n
Slide 41: Net debt reconciliation
Net debt reconciliation 3Q20 2Q21 3Q21 Alcoa Alcoa Alcoa $M Cons. NCI Prop. Cons. NCI Prop. Cons. NCI Prop. Short-term borrowings $- $- $- $77 $31 $46 $77 $31 $46 Long-term debt due within one year 2 - 2 1 - 1 1 - 1 Long-term debt, less amount due within one year 2,538 31 2,507 2,216 - 2,216 1,724 -
Slide 42: Days Working Capital
Days Working Capital $M 3Q20 4Q20 1Q21 2Q21 3Q21 Receivables from customers $516 $471 $587 $644 $769 Add: Inventories 1,398 1,398 1,417 1,547 1,702 Add: Net DWC working capital held for sale2 ̶ 129 - - - Less: Accounts payable, trade 1,360 1,403 1,284 1,392 1,482 DWC working capital $554 $595 $720 $
Slide 43: Annualized Return on Equity (ROE)
Annualized Return on Equity (ROE) ROE Reconciliation and calculation information as of September 30, 2021 $M 2020 YTD 2021 YTD (Net Loss/Income Attributable to Alcoa + Special Items) ROE % = X 100 Numerator: (Total Assets – Total Liabilities – Noncontrolling Interest)2 Net (loss) income attributable
Slide 44: Annualized Return on Capital (ROC)
Annualized Return on Capital (ROC) ROC Reconciliation and calculation information as of September 30, 2021 $M 2020 YTD 2021 YTD (PBT + net interest3 + special items1) x 4/3 x (1 – fixed tax rate4) Numerator: ROC % = X 100 Net (loss) income attributable to Alcoa Corporation $(166) $821 (Total assets
Slide 45: 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
Slide 46: The Element of Possibility” $
The Element of Possibility” $