Slide 1: Fourth Quarter Earnings Conference
th Quarter Earnings Conference January 9 th , 2012 Exhibit 99.2
Slide 2: Cautionary Statement
Cautionary Statement 2 Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “estimates,” “expects,” “forecasts
Slide 3: Chuck McLane, EVP and Chief Financial Officer
Chuck McLane Executive Vice President and Chief Financial Officer
Slide 4: 4th Quarter 2011 Financial Overview
4 4 th Quarter 2011 Financial Overview See appendix for reconciliations to GAAP and additional information Loss from Continuing Operations of $193 million, or $0.18 per share; Excluding impact of restructuring and other special items : Loss from continuing operations of $34 million, or $0.03 per sha
Slide 5: Income Statement Summary
5 Income Statement Summary $ Millions, except per-share amounts 4Q’10 3Q’11 4Q’11 Year Change Sequential Change Sales $5,652 $6,419 $5,989 $337 ($430) Cost of Goods Sold $4,538 $5,290 $5,228 $690 ($62) COGS % Sales 80.3% 82.4% 87.3% 7.0 % pts. 4.9 % pts. Selling, General Administrative, Other $282 $
Slide 6: Restructuring and Other Special Items
6 Restructuring and Other Special Items See appendix for Adjusted Income (Loss) reconciliation $ Millions, except for per-share amounts 4Q’10 3Q’11 4Q’11 Income (Loss) from Continuing Operations $258 $172 ($193) Income (Loss) Per Diluted Share $0.24 $0.15 ($0.18) Restructuring Related $8 ($5) ($159)
Slide 7: 4th Quarter 2011 vs. 3rd Quarter 2011 Earnings Bridge
4 th Quarter 2011 vs. 3 rd Quarter 2011 Earnings Bridge 7 See appendix for Adjusted Income (Loss) reconciliation -$125m +$5m -$79m Income (Loss) from Continuing Operations Excluding Restructuring & Other Special Items ($ millions)
Slide 8: Alumina
Alumina 8 4 th Quarter Results 1 st Quarter Outlook 4 th Quarter Business Highlights 4 th Quarter Performance Bridge See appendix for reconciliations to GAAP and additional information 4Q 10 3Q 11 4Q 11 Production (kmt) 4,119 4,140 4,178 rd Party Shipments (kmt) 2,433 2,256 2,378 rd Party Revenue ($
Slide 9: Primary Metals
Primary Metals 9 4 th Quarter Results 4 th Quarter Business Highlights 1 st Quarter Outlook 4 th Quarter Performance Bridge See appendix for reconciliations to GAAP and additional information 4Q 10 3Q 11 4Q 11 Production (kmt) rd Party Shipments (kmt) rd Party Revenue ($ Millions) 1,970 2,124 1,991
Slide 10: Global Rolled Products
10 1 st Quarter Outlook 4 th Quarter Business Highlights 4 th Quarter Results 4 th Quarter Performance Bridge Global Rolled Products See appendix for reconciliations to GAAP and additional information ATOI $ Millions 4Q 10 3Q 11 4Q 11 Flat-Rolled Products, excl Russia, China & Other Russia, China &
Slide 11: Engineered Products and Solutions
Engineered Products and Solutions 11 4 th Quarter Performance Bridge 4 th Quarter Business Highlights 4 th Quarter Results 1 st Quarter Outlook See appendix for reconciliations to GAAP and additional information $ Millions 4Q 10 3Q 11 4Q 11 3 rd Party Revenue 1,215 1,373 1,355 ATOI Adjusted EBITDA M
Slide 12: 4th Quarter 2011 Cash Flow Overview
12 See appendix for Free Cash Flow reconciliation 4 th Quarter 2011 Cash Flow Overview ($ Millions) 4Q’10 3Q’11 4Q’11 Net Income $292 $225 ($163) DD&A $371 $377 $368 Change in Working Capital $569 ($93) $797 Pension Contributions ($43) ($114) ($119) Taxes / Other Adjustments $181 $94 $259 Cash from
Slide 13: Solid Performance in a Turbulent Year
Solid Performance in a Turbulent Year 13 See appendix for Adjusted EBITDA reconciliations
Slide 14: 2011 Actions Compensate for Significant Headwinds
2011 Actions Compensate for Significant Headwinds 14 See appendix for Adjusted Income reconciliation Income from Continuing Operations excluding Restructuring & Other Special Items ($ millions)
Slide 15: Full Year 2011 Cash Flow Overview
15 See appendix for Free Cash Flow reconciliation Full Year 2011 Cash Flow Overview 2011 Cash from Ops $2.2 billion 2011 Cash on Hand $1.9 billion ($ Millions) 2010 2011 Net Income $392 $805 DD&A $1,451 $1,481 Change in Working Capital $9 ($60) Pension Contributions ($113) ($336) Taxes / Other Adjus
Slide 16: Sustainable Reductions Maintained in Days Working Capital
Sustainable Reductions Maintained in Days Working Capital 16 Generates $1.1B Cash 16 Days Working Capital Reduction 4Q 2009 4Q 2010 4Q 2011 4Q 2008 Days Working Capital: Sustained Improvements
Slide 17: Alcoa Continues to Meet Our Financial Targets
Alcoa Continues to Meet Our Financial Targets 17 *Target is to be free cash flow positive. See appendix for Free Cash Flow reconciliation 2011 Cash Sustainability Financial Targets and Actual Performance
Slide 18: Balance Sheet Is Strong: Alcoa Enters 2012 Managing for Cash
Balance Sheet Is Strong: Alcoa Enters 2012 Managing for Cash 18 See appendix for Free Cash Flow reconciliation
Slide 19: Alcoa Meets Required Funding Status With Cash and Equity
Alcoa Meets Required Funding Status With Cash and Equity 19
Slide 20: Alcoa Enters 2012 Managing for Cash: Cash Sustainability
Alcoa Enters 2012 Managing for Cash: Cash Sustainability 20 3 Strategic Priorities & Key Levers of Cash Sustainability Program 2012
Slide 21: New Aggressive Targets to Maximize Cash Through 2012
Operational Targets Financial Targets New Aggressive Targets to Maximize Cash Through 2012 21 Working Capital DWC reduction Swift Action Taken: Improved Cost Structure and Balance Sheet Capacity Optimization Productivity Gains Cost savings in 2012 Controlled Overhead Cost savings in 2012 Positive Fr
Slide 22: Klaus Kleinfeld, Chairman and Chief Executive Officer
Klaus Kleinfeld Chairman and Chief Executive Officer
Slide 23: 2011 Year in Review
23 2011 YEAR IN REVIEW
Slide 24: Global Demand Remains Strong, 2H11 Experienced Slowdown
5.3 3.3 1.8 1.0 0.9 19.0 6.7 5.7 * Other consists of: Middle East, Latin America ex Brazil and Rest of the World 2011 Projected Primary Aluminum Consumption (mmt) and Growth Rates (%) by Region Global Demand Remains Strong, 2H11 Experienced Slowdown 24 15% 1% 6% 10% 15% 10% 3% 4% China Europe North
Slide 25: Overall Supply/Demand Balance Meets Projections
Overall Supply/Demand Balance Meets Projections 25 Primary Aluminum Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI Alumina (000 mt) China Rest of World Supply 17,800 26,000 Demand (19,000) (24,650) Net Balance (1,200) 1,350 (000 mt) China Rest of World Supply 34,100 52,200 Demand (34,100) (52,2
Slide 26: Solid Performance in a Turbulent Year
Solid Performance in a Turbulent Year 26 See appendix for Adjusted EBITDA reconciliations
Slide 27: Strategic Investments: Driving Profitable Growth
Leveraging Our Strategic Growth Investments Juruti, Brazil – Bauxite Mine Sao Luis – Refinery Estreito – Hydro Dam 27 Saudi Arabia Joint Venture Strategic Investments: Driving Profitable Growth 30% Cash Cost Reduction At Nameplate Capacity Lowest Cost Integrated Facility 277 MW by 2012 On Time On Bu
Slide 28: GRP Growth Projects Capturing Global Opportunity
GRP Growth Projects Capturing Global Opportunity 28 Russia Grows Profitably China Positioned For Growth Davenport Growth Capacity utilization will reach 70% by 2012 Key domestic supplier into growing markets Positive EBITDA in 2011, focusing on differentiation End & Tab Line, Samara Bohai Flat Rolle
Slide 29: Innovation and Acquisitions Drive Profitable Growth
Innovation and Acquisitions Drive EPS Profitable Growth 29 Innovative Solutions Bolt On Acquisitions Fastener Acquisitions Expand global aerospace fastener footprint 4% pt increase in EBITDA margins 4% - 7% market share gains across different product categories Traco Most comprehensive product portf
Slide 30: Achieved 2011 Financial Targets
Achieved 2011 Financial Targets Met Aggressive Targets for Third Consecutive Year 30 • Sustaining Capex • Growth Capex • Saudi Arabia JV • Debt to Capital • Free Cash Flow Target: $1.0b Actual: $924m Target: $500m Actual: $363m Target: $400m Actual: $249m Target: 30-35% Actual: 35% Target: $0 Actual
Slide 31: 2012 Outlook
31 2012 OUTLOOK
Slide 32: 2012 Market Conditions
2012 Market Conditions 32 Source: Alcoa analysis Alcoa End Markets: Current Assessment of 2012 vs. 2011
Slide 33: 2012 Demand Growth Continues, But at a Slower Pace
21.3 6.7 5.9 5.8 3.4 1.9 1.0 0.9 * Other consists of: Middle East, Latin America ex Brazil and ROW 2012 Projected Primary Aluminum Consumption (mmt) Growth Rates (%) by Region 2012 Demand Growth Continues, But at a Slower Pace 33 0% 6% 3% 2012 15% 12% 1% 3% 10% 10% 5% 9% 10% 4% 4% 2011 5% China Euro
Slide 34: Regional Premiums and Aluminum Inventories
Inventories 4 Days Higher Year-on-Year Premiums Off Highs But Strong Historically Premiums Decline But Remain Strong, Inventory Increases 34 Source: Alcoa estimates, LME, SHFE, IAI, Marubeni, Platt’s Metals Week and Metal Bulletin $112 /MT $170 /MT $163 /MT LME at 40 days Non-LME at 17 days Global I
Slide 35: Demand Slowdown, Shift in Ownership Increases LME Inventories
Demand Slowdown, Shift in Ownership Increases LME Inventories 35 Total Global Inventories (mmt) Source: Alcoa analysis Off-warrant China Japan Port Producer-held LME on-warrant 9.4 9.8
Slide 36: 2012 Primary Aluminum Moves into Deficit, Alumina Balanced
2012 Primary Aluminum Moves into Deficit, Alumina Balanced 36 Primary Aluminum Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI Alumina (000 mt) China Rest of World 2011 Production Run Rate 17,800 26,000 2012 Production Additions 3,750 2012 Capacity Curtailments (1,100) (700) Total Supply 20,450
Slide 37: More Than 1/3 of Chinese Smelters Operating Under Water
Chinese Primary Metal Production by Full Operating Cost (million, tonnes) Unprofitable Smelter Production by Province (million, tonnes) Estimate More Than 1/3 of Chinese Smelters Operating Under Water at End of 2011 * 17% VAT inclusive in the price and cost ** Full operating cost excludes depreciati
Slide 38: Aluminum Continues to Be an Attractive Asset Class
Aluminum Continues to Be an Attractive Asset Class Sources: Bloomberg, Dow UBS, Reuters, Marketwatch 38 Asset Allocation By Commodity Sector Dow UBS Commodity Index $90B Composition of Base Metal Sector
Slide 39: Macro Environment Putting Downward Pressure on Prices
Macro Environment Putting Downward Pressure on Prices 39 Sources: Bloomberg, *Confidence figures set at 100 in January 2011 for comparability ; 1 EC Commission EU Confidence, 2 National Bureau of Statistics China Consumer Confidence, 3 University of Michigan Consumer Sentiment . PMI: Institute for S
Slide 40: Combination of Factors Signals Likely Pricing Rebound
Combination of Factors Signals Likely Pricing Rebound 40 7% global aluminum demand growth in 2012 Primary aluminum balance moves to deficit Aluminum continues to be an attractive asset class Macro economic indicators showing positive signals
Slide 41: Taking Decisive Action With Cash Sustainability Program
Taking Decisive Action With Cash Sustainability Program 41 3 Strategic Priorities & Key Levers of Cash Sustainability Program 2012
Slide 42: Curtailments Improve Cost Position and Competitiveness
Curtailment Steps Guiding Principle Curtailments Improve Cost Position and Competitiveness 42 Maximize cash position for ramp down and ramp up, considering: • Operational flexibility • Power flexibility • Repowering impact • Community impact Smelting : Utilize material in inventory to reline , but d
Slide 43: New Aggressive Targets to Maximize Cash Through 2012
Operational Targets Financial Targets New Aggressive Targets to Maximize Cash Through 2012 43 Working Capital DWC reduction Swift Action Taken: Improved Cost Structure and Balance Sheet Capacity Optimization Productivity Gains Cost savings in 2012 Controlled Overhead Cost savings in 2012 Positive Fr
Slide 44: Alcoa
Alcoa Lago [Alcoa logo]
Slide 45: Additional Information
Additional Information 45 Kelly Pasterick Director, Investor Relations Alcoa 390 Park Avenue New York, NY 10022-4608 Telephone: (212) 836-2674 www.alcoa.com
Slide 46: Annual Sensitivity Summary
Annual Sensitivity Summary 46 Currency Annual Net Income Sensitivity LME Aluminum Annual Net Income Sensitivity +/- $100/MT = +/- $220 million Australian $ +/- $11 million per 0.01 change in USD / AUD Brazilian $ +/- $ 3 million per 0.01 change in BRL / USD Euro € +/- $ 2 million per 0.01 change in
Slide 47: Reconciliation of Effective Tax Rate
Reconciliation of Effective Tax Rate 47 Effective tax rate, excluding discrete tax items is a non-GAAP financial measure. Management believes that the Effective tax rate, excluding discrete tax items is meaningful to investors because it provides a view of Alcoa’s operational tax rate. ($ in million
Slide 48: Revenue Change by Market
Revenue Change by Market 4Q’11 Third-Party Revenue Sequential Change Year-Over-Year Change 48 5% (2%) (15%) (8%) (15%) 1% (17%) (7%) (4%) (6%) 21% 22% (7%) 30% 2% (6%) 2% (8%) 12% 1%
Slide 49: Reconciliation of ATOI to Consolidated Net Income Attributable to Alcoa
Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to Alcoa 49 (in millions) 4Q10 2010 1Q11 2Q11 3Q11 4Q11 2011 Total segment ATOI $ $ 1,424 $ $ $ $ $ 1,893 Unallocated amounts (net of tax): Impact of LIFO (16) (24) (27) (38) Interest expense (76) (321) (72) (106) (81) (81) (340)
Slide 50: Reconciliation of Adjusted Income
Reconciliation of Adjusted Income 50
Slide 51: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 51 (in millions) Quarter ended Year ended December 31, 2010 September 30, 2011 December 31, 2011 December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011 Cash provided from operations $ 1,370 $ 489 $ 1,142 $ 1,234 $ 1,365 $ 2,261 $ 2,193 Capital expend
Slide 52: Reconciliation of Alcoa Adjusted EBITDA
Reconciliation of Alcoa Adjusted EBITDA 52
Slide 53: Reconciliation of Alumina Adjusted EBITDA
Reconciliation of Alumina Adjusted EBITDA 53
Slide 54: Reconciliation of Primary Metals Adjusted EBITDA
Reconciliation of Primary Metals Adjusted EBITDA 54
Slide 55: Reconciliation of Flat-Rolled Products Adjusted EBITDA
Reconciliation of Flat-Rolled Products Adjusted EBITDA 55
Slide 56: Reconciliation of Engineered Products and Solutions Adjusted EBITDA
Reconciliation of Engineered Products and Solutions Adjusted EBITDA 56
Slide 57: Reconciliation of Net Debt
Reconciliation of Net Debt 57 (in millions) Quarter ended December 31, 2008 September 30, 2011 December 31, 2011 Short-term borrowings $ 478 $ 57 $ 62 Commercial paper 1,535 Long-term debt due within one year Long-term debt, less amount due within one year 8,509 8,658 8,640 Total debt 10,578 9,311 9