Alcoa Corporation · NYSE:AA
Alcoa — Merger or Acquisition (September 2015)
36 slides from Alcoa's merger presentation, Sep 28, 2015
Slide 1: Alcoa to Separate into Two Industry-Leading Public Companies
Alcoa to Separate into Two Industry-Leading Public Companies: Completing Successful Multi-Year Transformation September 28, 2015 1
Slide 2: Important Information
Important Information Forward-Looking Statements This communication 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 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: Launching Two Strong Companies: Driving Value
Launching Two Strong Companies: Driving Value Separating into Value-Add Co. and Upstream Co. Alcoa Value-Add Co. Upstream Co. Lightweight Multi-Material Innovation Powerhouse Globally Competitive Upstream Business Premier supplier of high-performance Robust projected aluminum demand growth of 6.5%
Slide 5: 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 grow in growth markets with significant customer synergies e.g., aerosp
Slide 6: Value-Add Co: Strong Top + Bottom Line Growth
Value-Add Co: Strong Top + Bottom Line Growth Value-Add Co. Revenues, EBITDA, and Margins: 2008 – Pro-Forma LTM 20151 Revenue ($B) Profitability (EBITDA $M) TCS EPS GRP TCS GRP EPS Value-Add Co. Margin Portfolio Actions 15% Organic and inorganic growth (Firth Rixson, RTI, TITAL, 14% 14% Tennessee
Slide 7: Value-Add Co: Key Businesses Hold #1 or #2 Positions
Value-Add Co: Key Businesses Hold #1 or #2 Positions Pro-Forma LTM Value-Add Co. Revenues, Global Market CAGRs, and Business Position 2015 Revenue: Global Revenue % 80%2 of revenue from Pro-Forma $14.5B1 Market CAGR LTM 2015 from #1/#2 #1 or #2 position 2014-20175 Revenue1 position Highlights No.1
Slide 8: Value-Add Co: Positioned for Future Profitable Growth
Value-Add Co: Positioned for Future Profitable Growth Innovation and Growth across Multiple End Markets Commercializing Leadership in Capturing Breakthrough Commercial Transportation Automotive Innovations Lightweighting in Rolling Leading in Green Building and Construction Differentiated Supplier o
Slide 9: Value-Add Co: On Every Major Aircraft, On Every Major Engine
Value-Add Co: On Every Major Aircraft, On Every Major Engine Indexed Revenue Content by Aircraft Type1 and Key Engine Type1 Strong revenue generator on all platforms Better coverage of key engine platforms Pro-Forma Revenue / Aircraft (Indexed to B737) Alcoa Pro-Forma Revenue / Engine (Indexed to CF
Slide 10: Value-Add Co: Benefitting from Automotive Lightweighting
Value-Add Co: Benefitting from Automotive Lightweighting Automotive Demand Drivers for Auto & Brazing Sheet and Alcoa Automotive 2014-2018E Revenue OEMs need fuel economy and consumer benefits Auto & Brazing Sheet: Profitable growth U.S. CAFE Regulations (MPG) Automotive Revenue ($M) +69% 54.5 Brazi
Slide 11: Value-Add Co: Owns Revolutionary Micromill Technology
Value-Add Co: Owns Revolutionary MicromillTM Technology Micromill’s Innovation in Automotive Alloys, Value Proposition, Ford JDA, and Development Progress The World’s Most Advanced Rolling Mill Ford & Alcoa Collaborate on Next-Gen Alloys Breakthrough Materials Micromill Micromill material to debut
Slide 12: Upstream Co: Cost Competitive Industry Leader
Upstream Co: Cost Competitive Industry Leader Upstream Co. Business Operations and Key Attributes Robust projected aluminum demand growth of 6.5% in 2015 and double between 2010 and 2020 Attractive Portfolio: World’s largest, low cost bauxite miner at the 19th percentile1 on cost curve (46M BDM
Slide 13: Upstream Co: Continued Drive for Profitability
Upstream Co: Continued Drive for Profitability Upstream Co. Revenues, EBITDA and Margins: 2008 – LTM 20151 Revenue ($B) Profitability (EBITDA $M) Alumina Primary Metals Alumina All-in Metal Price ($/mt)3 Primary Metals 14.9 2,665 13.4 13.2 13.2 2,311 2,317 2,400 2.9 12.5 2,236 3.1 3.5 3.7 2.8 2,811
Slide 14: Upstream Co: Track Record of Cost Leadership and Margin Expansion
Upstream Co: Track Record of Cost Leadership and Margin Expansion Position across the Value Chain Value-Add Casthouse Portfolio Provides Profits Throughout the Cycle Proven Rigorous Cost, Commitment to Productivity, Cost Leadership and Cash Management 1st Quartile1 Alumina Position Positioned to bes
Slide 15: Upstream Co: Mining Unit is the World's Largest Bauxite Miner
Upstream Co: Mining Unit is the World’s Largest Bauxite Miner Mining Global Footprint and Competitive Attributes Highly competitive, low-cost bauxite position... ...and largest global bauxite miner 2014 Bauxite Production2,3 (M BDMT) Alcoa World Alumina and Chemicals 46 40 (AWAC) partnership is the
Slide 16: Upstream Co: The World's Most Attractive Alumina Business
Upstream Co: The World’s Most Attractive Alumina Business Refining Global Footprint and Competitive Attributes Refining has proven its ability to consistently ...and has several success factors ensuring deliver productivity gains... its long-term competitiveness 2015E alumina production from top 10
Slide 17: Upstream Co: Owns Substantial Energy Assets
Upstream Co: Owns Substantial Energy Assets Energy Global Footprint and Competitive Attributes ...are managed to create maximum profitability Energy assets1 in North and South America and Australia... under a variety of situations Power management Power production capacity of Provides optionality be
Slide 18: Upstream Co: Smelting Portfolio Optimized, With More Progress Ahead
Upstream Co: Smelting Portfolio Optimized, With More Progress Ahead Smelting Global Footprint and Competitive Attributes Proven ability to consistently deliver productivity ...is complemented by success factors ensuring gains in aluminum production... long-term competitiveness World’s fourth largest
Slide 19: Upstream Co: Casthouses Offer Value-Add Opportunities
Upstream Co: Casthouses Offer Value-Add Opportunities Casting Global Footprint and Competitive Attributes ...continuously shifting to high value-add products Unique global network of casthouses... serving a broad customer base Serving growing markets ~70% value-add products in 2015E Slab casting sup
Slide 20: Path to Complete the Separation
Path to Complete the Separation Transaction Details Target completion in the second half of 2016 Timing Final approval from Alcoa Board of Directors Critical Closing Receipt of opinion of counsel with respect to the tax-free nature of the transaction Conditions Effectiveness of a Form 10 filing with
Slide 21: Launching Two Strong Companies: Driving Value
Launching Two Strong Companies: Driving Value Creates Two Distinct Global Leaders Premier Provider of High-Performance Multi-Material Solutions Strong Upstream Leader Built for Success Throughout The Cycle Offers Two Top-Tier Investment Choices 21
Slide 22: Appendix
APPENDIX Advancing each generation. '¢9] ALCOA
Slide 23: Substantially Re-Positioned Alcoa ... Future Ready
Substantially Re-Positioned Alcoa ... Future Ready Multi-year Successful Execution and Track Record Profitable Growth Operational Excellence Financial Achievements Organic growth $7.9B of Productivity1 Lowered Upstream Cost Position Automotive Sheet Expansions completed 9 Days Working Capital
Slide 24: Value-Add Co: Leading Diversified Global Footprint
Value-Add Co: Leading Diversified Global Footprint Key Value-Add Co. Global Footprint and Key Financials EPS Power and Pro–Forma LTM 20151 Propulsion Forgings and Extrusions Revenue = $14.5B EBITDA = $2.2B Fastening Systems ~43,000 employees and Rings 157 worldwide locations Titanium Enginee
Slide 25: Upstream Co: Global Footprint in Proximity to Key Markets
Upstream Co: Global Footprint in Proximity to Key Markets Upstream Co. Global Footprint and Key Financials LTM1 Performance Revenue = $13.2B EBITDA = $2.8B ~17,000 employees 64 worldwide locations Key Smelter Mine Refinery Energy Casthouse Other 1) Refers to Last Twelve Months ending June 30
Slide 26: Reconciliations
RECONCILIATIONS Advancing each generation. '¢9] ALCOA
Slide 27: Reconciliation of Segment ATOI to Alcoa Net Income (Corporate & Other)
Reconciliation of Segment ATOI to Alcoa Net Income (Corporate & Other) Annual LTM June (in millions) 1Q14 2Q14 3Q14 4Q14 2014 1Q15 2Q15 2015 Total segment ATOI* $320 $408 $581 $659 $1,968 $656 $567 $2,463 Unallocated amounts (net of tax): Impact of LIFO (7) (8) (18) (21) (54) 7 36 4 Metal price lag
Slide 28: Reconciliation of Alumina Adjusted EBITDA
Reconciliation of Alumina Adjusted EBITDA LTM ($ in millions, except per metric ton amounts) 2008 2009 2010 2011 2012 2013 2014 2015(1) After-tax operating income (ATOI) $727 $112 $301 $607 $90 $259 $370 $676 Add: Depreciation, depletion, and amortization 268 292 406 444 455 426 387 347 Equity (inco
Slide 29: Reconciliation of Primary Metals Adjusted EBITDA
Reconciliation of Primary Metals Adjusted EBITDA LTM ($ in millions, except per metric ton amounts) 2008 2009 2010 2011 2012 2013 2014 2015(1) After-tax operating income (ATOI) $931 $(612) $488 $481 $309 $(20) $594 $766 Add: Depreciation, depletion, and amortization 503 560 571 556 532 526 494 459 E
Slide 30: Reconciliation of Upstream Co. Adjusted EBITDA
Reconciliation of Upstream Co.(1) Adjusted EBITDA LTM (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 $1,442 Add: Depreciation, depletion, and amortization 771 852 977 1,000 987 952 881 806 Equity (income) loss (9) 1
Slide 31: Reconciliation of Global Rolled Products Adjusted EBITDA
Reconciliation of Global Rolled Products Adjusted EBITDA(1) Recast LTM LTM ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015(2) PFA(2) 2015(2) After-tax operating income (ATOI) $(3) $(49) $220 $266 $358 $292 $245 $251 $(4) $247 Add: Depreciation, depletion, and amortization 216 227 238 237 229
Slide 32: Reconciliation of Engineered Products and Solutions Adjusted EBITDA
Reconciliation of Engineered Products and Solutions(1) Adjusted EBITDA(2) Recast LTM LTM ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015(3) PFA(3) 2015(3) After-tax operating income (ATOI) $465 $321 $355 $436 $484 $569 $579 $600 $125 $725 Add: Depreciation, depletion, and amortization 118 11
Slide 33: Reconciliation of Transportation and Construction Solutions Adjusted EBITDA
Reconciliation of Transportation and Construction Solutions(1) Adjusted EBITDA(2) LTM ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015(3) After-tax operating income (ATOI) $82 $5 $73 $109 $126 $167 $180 $170 Add: Depreciation, depletion, and amortization 53 65 48 45 42 42 42 42 Equity income
Slide 34: Reconciliation of Value Add Co. Adjusted EBITDA
Reconciliation of Value Add Co.(1) Adjusted EBITDA(2) Recast LTM LTM ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015(3) PFA(3) 2015(3) After-tax operating income (ATOI) $544 $277 $648 $811 $968 $1,028 $1,004 $1,021 $121 $1,142 Add: Depreciation, depletion, and amortization 387 410 400 402 39
Slide 35: Days Working Capital
Days Working Capital ($ in millions) Quarter ended 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 Receivables from customers, less allowances $1,709 $1,650 $1,600 $1,573 $1,704 $1,483 $1,427 $1,383 $1,391 $1,401 $1,526 $1,513 A
Slide 36: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow Year ended (in millions) December 31, December 31, December 31, December 31, December 31, December 31, Total 2009 2010 2011 2012 2013 2014 2009-2014 Cash from $1,365 $2,261 $2,193 $1,497 $1,578 $1,674 $10,568 operations Capital expenditures (1,622) (1,015) (1,287) (1