Slide 1: 2nd Quarter Earnings
2nd Quarter Earnings Alcoa Corporation July 15, 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’s consolidated financial information but is not presented in Alcoa’s financial statements prepared in accordance with accounting principles generally accepted in
Slide 4: Roy Harvey
Roy Harvey President and Chief Executive Officer
Slide 5: Most profitable quarter, first half since standalone company
Most profitable quarter, first half since standalone company Alcoa values, strategic priorities, and key takeaways for 2Q21 2Q21 Takeaways ▪ Continued focus on safety; two serious injuries in the quarter ▪ Highest ever profitability since 2016 inception − For both the quarter and six months, highest
Slide 6: William Oplinger
William Oplinger Executive Vice President and Chief Financial Officer
Slide 7: Second quarter nearly doubles first quarter adjusted EPS
Second quarter nearly doubles first quarter adjusted EPS Quarterly income statement highlights Prior year Sequential M, Except per share amounts 2Q20 1Q21 2Q21 change change Income statement highlights Revenue $2,148 $2,870 $2,833 $685 $(37) Net (loss) income attributable to Alcoa Corporation $(197)
Slide 8: Aluminum Adjusted EBITDA propels income to bottom line
Aluminum Adjusted EBITDA propels income to bottom line Aluminum segment and Alcoa Adjusted EBITDA and net income, excluding special items Aluminum segment provides 65% of total Adjusted …increasing conversion of Adjusted EBITDA to EBITDA in 1H21… Alcoa net income, excluding special items All other A
Slide 9: Higher metal prices drive higher Adjusted EBITDA
Higher metal prices drive higher Adjusted EBITDA Adjusted EBITDA excluding special items sequential changes, $M 199 27 3 1Q21 2Q21 Change (23) (5) (20) 618 (59) (7) Bauxite $59 $41 $(18) 521 Alumina 227 124 (103) (18) Aluminum 283 460 177 Segment total 569 625 56 Transformation (11) (13) (2) Interse
Slide 10: Strong Adj. EBITDA, corporate actions seen in cash flows
Strong Adj. EBITDA, corporate actions seen in cash flows Sequential quarterly and YTD cash flow information 1Q21 to 2Q21 Cash changes, $M YTD Cash flow information, $M $2,415 Restructuring1 $2,370 Other $86 $24 Environmental/ARO 2,544 $55 Interest payments $114 $109 Non-core $109 Cash income taxes a
Slide 11: Net debt metric well into target range; 1H21 ROE 24.6%
Net debt metric well into target range; 1H21 ROE 24.6% Key financial metrics and components of proportional adjusted net debt through 2Q21 Key financial metrics Components of proportional adj. net debt, $B Net debt OPEB Net pension 2Q21 Days 3.77 1H21 Return on equity 3.75 -1.31 working capital (DWC
Slide 12: 2021 Outlook
2021 Outlook FY21 Key metrics Income statement excl. special items impacts Cash flow impacts 2Q21 YTD 2Q21 YTD Actual FY21 Outlook Actual FY21 Outlook Bauxite shipments (Mdmt) 23.9 50.0 – 51.0 Pension / OPEB required cash funding $98M ~ $140M Alumina shipments (Mmt) 7.0 14.1 – 14.2 Additional pensio
Slide 13: Roy Harvey
Roy Harvey President and Chief Executive Officer
Slide 14: Aluminum realized price up 63% year-over-year
Aluminum realized price up 63% year-over-year Aluminum segment quarterly realized prices and market commentary Third party realized pricing Aluminum market and commercial commentary Aluminum third party price ($/mt) Market factors 3,000 2,753 ▪ Strong global demand driving higher LME and regional pr
Slide 15: China aluminum actions support energy, carbon goals
China aluminum actions support energy, carbon goals Estimated provincial 2021 aluminum production and 1Q21 Dual Control target attainment1 Percentages of estimated FY21 Chinese total primary ▪ China’s 14th Five Year Plan targets an 18% and 13.5% aluminum production, grouped by provincial performance
Slide 16: Improved production stability continuing in all segments
Improved production stability continuing in all segments Quarterly production update, 2Q19 – 2Q21 Average daily production +7% ▪ Bauxite segment continuously Bauxite 125 132 130 128 134 131 133 132 134 increasing production, (kdmt) creeping wholly-owned assets and higher JV tonnes +2% ▪ Alumina cont
Slide 17: Numerous accomplishments in 2021; progress continues
Numerous accomplishments in 2021; progress continues Actions to continue to strengthen the company in 2021 January – June achievements July – December focus areas Asset sales and portfolio review: Asset sales and portfolio review: ▪ Sales of Warrick rolling mill, Eastalco site, and other ▪ San Cipri
Slide 18: An excellent first half of 2021; positioned for more success
An excellent first half of 2021; positioned for more success 2Q21 Summary • Profiting from long position in all three segments Made record profits from Aluminum segment while upstream segments retained stability and profitability • Continuing to strengthen the company Drive results and Reduced adjus
Slide 19: Appendix
Appendix
Slide 20: 2Q21 Summary
2Q21 Summary 2Q21 Financial results and business review ▪ Net income of $309 million, or $1.63 per share; excluding special items, 2Q21 adjusted net income of $281 million, or $1.49 per share Financial results ▪ Adjusted EBITDA excluding special items of $618 million ▪ Cash balance at $1,652 million
Slide 21: 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 ▪ Revitalized safety program; maintained ▪ Restarted Lake Charles, Portland, Béc
Slide 22: Capital allocation framework
Capital allocation framework Capital allocation framework and considerations Maintain liquidity throughout the cycle ▪ $1 billion target for minimum cash balance ▪ Sustaining capital expenditures of ~$375 million, return seeking capital of ~$50 Capital expenditures to sustain and improve operations
Slide 23: Quarterly income statement
Quarterly income statement Quarterly income statement Prior Year Sequential M, Except realized prices and per share amounts 2Q20 1Q21 2Q21 Change Change Realized primary aluminum price ($/mt) $1,694 $2,308 $2,753 $1,059 $445 Realized alumina price ($/mt) $250 $308 $282 $32 $(26) Revenue $2,148 $2,87
Slide 24: Special items
Special items Breakdown of special items by income statement classification – gross basis M, Except per share amounts 2Q20 1Q21 2Q21 Description of significant 2Q21 special items Net (loss) income attributable to Alcoa Corporation $(197) $175 $309 Diluted (loss) earnings per share ($1.06) $0.93 $1.6
Slide 25: Quarterly income statement excluding special items
Quarterly income statement excluding special items Quarterly income statement excluding special items Prior Year Sequential M, Except realized prices and per share amounts 2Q20 1Q21 2Q21 Change Change Realized primary aluminum price ($/mt) $1,694 $2,308 $2,753 $1,059 $445 Realized alumina price ($/m
Slide 26: 2Q21 Financial summary
2Q21 Financial summary Three months ending June 30, 2021, excluding special items Intersegment Other Alcoa $M Bauxite Alumina Aluminum3 Transformation eliminations corporate Corporation Total revenue $218 $1,031 $2,105 3 $(525) 1 $2,833 Third-party revenue $39 $688 $2,102 3 - 1 $2,833 Adjusted EBITD
Slide 27: 2Q21 Adjusted EBITDA drivers by segment
2Q21 Adjusted EBITDA drivers by segment Adjusted EBITDA excluding special items sequential changes by segment, $M Adj. Adj. EBITDA Metal Raw Production EBITDA Segment 1Q21 Currency prices API materials Energy Price/mix Volume costs Other 2Q21 Bauxite $59 (2) 0 0 0 (1) 0 4 (6) (13) $41 Alumina $227 (
Slide 28: Aluminum value chain
Aluminum value chain 1H21 Alcoa product shipments by segment Bauxite Alumina Aluminum 23.9 Mdmt shipments 7.0 Mmt shipments 1.6 Mmt shipments Third Party Intersegment 0% 11% Intersegment 31% 69% Third Party 89% 100% Intersegment Third Party 28
Slide 29: Composition of alumina and aluminum production costs
Composition of alumina and aluminum production costs Alcoa 2Q21 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 26% Conversion 42% Quarterly, 85% with Natural Gas 1 Mon
Slide 30: 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 + $100/mt 0.771 5.311 1.231 1.201 123.741 8.381 Bauxite (4) 2 Alumina 120 (16) 4 (1)
Slide 31: Currency impacts on Adjusted EBITDA
Currency impacts on Adjusted EBITDA Currency balance sheet revaluation and EBITDA sensitivities ($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 9/30/2
Slide 32: Additional business considerations
Additional business considerations Items expected to impact Adjusted EBITDA for 3Q21 ▪ Sequentially, Adjusted EBITDA in the Bauxite segment is expected to be in line with 2Q21 ▪ In 3Q21, the Alumina segment is expected to see $10 million impact from higher raw materials prices and higher energy cost
Slide 33: Pension and OPEB summary
Pension and OPEB summary Net pension and OPEB liability and financial impacts Net liability as of June 30, 20211 Estimated financial impacts, $M Expense impact 2021 U.S. $0.3 Segment pension $20 Pension Segment OPEB 5 Total OPEB Corporate pension & OPEB - U.S. $0.7B Total $0.7 Total adj. EBITDA impa
Slide 34: 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, 2021 Equity Earnings ELYSISTM Limited Partnership Canada Aluminum smelting technology 48.235% Ma’aden Aluminium C
Slide 35: 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 36: Production and capacity information
Production and capacity information Alcoa Corporation annual consolidated amounts as of June 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 Australia 34.
Slide 37: Valuation framework considerations
Valuation framework LTM ending Valuation framework key considerations 6/30/2021 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 $344M Transformation + Alumina ii. Ownership in certain mines and
Slide 38: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation $M 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Net income (loss) attributable to Alcoa $(197) $(49) $(4) $(170) $175 $309 Add: Net income attributable to noncontrolling interest 47 29 21 156 44 41 Provision for income taxes 45 42 20 187 93 111 Other (income) expenses, net 51 45 44 8
Slide 39: Operational tax reconciliation
Operational tax reconciliation $M 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Provision for income taxes $45 $42 $20 $187 $93 $111 Tax on special items 1 3 1 13 - (3) Discrete tax items - 2 25 26 2 - Interim tax impacts1 (142) 182 (19) - - - Operational tax provision ($96) $229 $27 $226 $95 108 Operational tax ra
Slide 40: Free cash flow reconciliation
Free cash flow reconciliation $M 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 Cash (used for) provided from operations $288 $158 $38 $394 $6 ($86)1 Capital expenditures (77) (74) (111) (353) (75) (79) Free cash flow 211 84 (73) 41 (69) (165) Contributions from noncontrolling interest 16 8 - 24 - - Distributions to
Slide 41: Net debt reconciliation
Net debt reconciliation 2Q20 1Q21 2Q21 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 1 - 1 745 - 745 1 - 1 Long-term debt, less amount due within one year 1,800 31 1,769 2,214 - 2,214 2,2
Slide 42: Days Working Capital
Days Working Capital $M 2Q20 3Q20 4Q20 1Q21 2Q21 Receivables from customers $402 $516 $471 $587 $644 Add: Inventories 1,419 1,398 1,398 1,417 1,547 Add: Net DWC working capital held for sale2 ̶ ̶ 129 - - Less: Accounts payable, trade 1,253 1,360 1,403 1,284 1,392 DWC working capital $568 $554 $595 $
Slide 43: Annualized Return on Equity (ROE)
Annualized Return on Equity (ROE) Reconciliation and calculation information $M 1H20 1H21 (Net Loss/Income Attributable to Alcoa + Special Items) ROE % = X 100 Numerator: (Total Assets – Total Liabilities – Noncontrolling Interest)2 Net (loss) income attributable to Alcoa Corporation $(117) $484 Add
Slide 44: Annualized Return on Capital (ROC)
Annualized Return on Capital (ROC) Reconciliation and calculation information $M 1H20 1H21 (PBT + net interest3 + special items1) x (1 – fixed tax rate4) Numerator: ROC % = X 100 Net (loss) income attributable to Alcoa Corporation $(117) $484 (Total assets – cash5 – current liabilities + short-term
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” $