Alcoa Corporation · NYSE:AA
Alcoa — Q2 2024 Earnings Presentation
44 slides from Alcoa's earnings presentation, Jul 17, 2024
Slide 1: 2nd Quarter Earnings
nd 2 Quarter Earnings Alcoa Corporation July 17, 2024 1
Slide 2: Cautionary Statement regarding Forward-Looking Statements
Cautionary Statement regarding 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 inclu
Slide 3: Important information
Important information Non-GAAP Financial Measures This presentation contains reference to certain financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States (GAAP). Alcoa Corporation believes that the presentation of thes
Slide 4: William Oplinger
William Oplinger President and Chief Executive Officer 4
Slide 5: Alumina Limited acquisition on track for August closing
Alumina Limited acquisition on track for August 1 closing Benefits and timeline of Alcoa’s acquisition of Alumina Limited ▪ Enhances Alcoa’s position as leading pure play, upstream global aluminum company ▪ Provides Alumina Limited shareholders ASX-listed global aluminum exposure and premium on non-
Slide 6: Progress on many fronts while acquisition nears completion
Progress on many fronts while acquisition nears completion 2Q24 Update ▪ Strong 2Q safety performance on both leading and lagging indicators ▪ Profitability improvement program on track ▪ Half year production records for Canadian smelters and Mosjøen ▪ Completed Kwinana refinery curtailment in June
Slide 7: Molly Beerman
Molly Beerman Executive Vice President and Chief Financial Officer 7
Slide 8: Revenue, EPS, Adjusted EBITDA all rise sequentially
Revenue, EPS, Adjusted EBITDA all rise sequentially Quarterly income statement summary 1Q24 2Q24 Change Third party realized prices ($/mt) Realized primary aluminum price $2,620 $2,858 $238 Realized alumina price $372 $399 $27 Income statement highlights (millions, except per share amounts) Revenue
Slide 9: Higher metal prices and API more than double Adjusted EBITDA
Higher metal prices and API more than double Adjusted EBITDA 2Q24 Sequential changes in Adjusted EBITDA excluding special items, $M 9 66 25 (11) (5) (21) 325 1Q24 2Q24 Change 165 (43) Alumina1 $139 $186 $47 Aluminum1 50 233 183 Transformation (14) (16) (2) 8 132 Intersegment (8) (29) (21) eliminatio
Slide 10: Brazil bauxite transportation a return-seeking capital expenditure
Brazil bauxite transportation a return-seeking capital expenditure 2Q24 YTD cash flow information 2Q24 YTD cash flow information, $M Investment in Brazil bauxite transportation 1,213 Net NCI contributions 33 ▪ Alcoa securing four ~80,000 deadweight tonne Kamsarmax vessels for Juruti mine to Adjusted
Slide 11: Positive 2Q24 cash flow and lower days working capital
Positive 2Q24 cash flow and lower days working capital Key financial metrics and cash flow information, 2Q24 and YTD Key financial metrics 2Q24 Commentary 2Q24 Days ▪ Days working capital decreased six 2024 YTD Return on equity working capital days sequentially to 41 days (5.8)% 41 Days ▪ Free cash
Slide 12: 2024 Outlook
2024 Outlook FY24 Key metrics as of June 30, 2024 Income statement excl. special items impacts Cash flow impacts 2Q24 YTD Actual FY24 Outlook 2Q24 YTD Actual FY24 Outlook Alumina production (Mmt) 5.2 9.8 – 10.0 Pension / OPEB cash funding $34M ~ $70M Alumina shipments (Mmt) 6.6 12.7 – 12.9 Stock rep
Slide 13: William Oplinger
William Oplinger President and Chief Executive Officer 13
Slide 14: Alumina supply currently tight, limited low carbon projects in pipeline
Alumina supply currently tight, limited low carbon projects in pipeline Recent alumina index price history, market dynamics and outlook Platts FOB WA alumina, $/tonne Market dynamics ▪ Chinese refinery curtailments due to domestic bauxite 550 shortage; China bauxite imports and seaborne bauxite pric
Slide 15: Aluminum prices up in 2024, reflect market dynamics
Aluminum prices up in 2024, reflect market dynamics Recent aluminum index price history, market dynamics and outlook LME aluminum + weighted premia1, $/tonne Market dynamics ▪ Limited new projects coming online, China holds to 45Mmt cap, 3,500 some Chinese affiliated projects advance outside of Chin
Slide 16: Improving production/stability and progressing ELYSIS
Improving production/stability and progressing ELYSISTM Production improvements and records, and details of ELYSIS announcement Recent achievements in operations Further progress on ELYSIS technology ▪ Safety metrics improving ▪ First industrial-scale demonstration of ELYSIS technology, which elimin
Slide 17: $350 million of program improvement; San Ciprián ongoing
$350 million of program improvement; San Ciprián ongoing Snapshot of profitability improvement program attainment, 2Q24 YTD, $ millions Profitability improvement program status San Ciprián process continues, challenging 645 ▪ Sale process commenced and expected to conclude in 2H24; success of sale a
Slide 18: Advancing initiatives while Alumina Limited deal set to close
Advancing initiatives while Alumina Limited deal set to close 2Q24 Summary Second quarter summary ▪ No Fatal or Serious Injuries (FSIAs); key metrics continue improving as safety programs ongoing ▪ Progressed Alumina Limited transaction; near completion ▪ Furthered profitability improvement initiati
Slide 19: Appendix
Appendix 19
Slide 20: Maximizing value creation through balanced uses of cash
Maximizing value creation through balanced uses of cash Capital allocation framework and value creation considerations Capital allocation framework Maximize value creation Return cash to stockholders Maintain strong balance sheet ▪ 2Q24 dividend payments totaled $18 million through the cycle Transfo
Slide 21: Financial statement impacts of pending acquisition
Financial statement impacts of pending acquisition Income Statement Millions, except realized prices and per share amounts 2Q24 Description of significant 3Q24 impacts, Millions Realized primary aluminum price ($/mt) $2,858 Realized alumina price ($/mt) $399 Revenue $2,906 Cost of goods sold 2,533 S
Slide 22: Financial statement impacts of pending acquisition
Financial statement impacts of pending acquisition Balance Sheet 2Q24 (Millions, except per share amounts) ASSETS Current assets: Description of significant 3Q24 impacts upon acquisition closing Cash and cash equivalents $ 1,396 Receivables from customers 939 Other receivables 135 1. Includes $9 of
Slide 23: Financial statement impacts of pending acquisition
Financial statement impacts of pending acquisition Cash Flows 2Q24 YTD, Millions CASH FROM OPERATIONS Net loss $ (276) Adjustments to reconcile net loss to cash from operations: Description of significant 3Q24 impacts Depreciation, depletion, and amortization 324 Deferred income taxes (75) Equity in
Slide 24: Quarterly income statement
Quarterly income statement Quarterly income statement for 2Q23, 1Q24 and 2Q24 Prior Year Sequential Millions, except realized prices and per share amounts 2Q23 1Q24 2Q24 Change Change Realized primary aluminum price ($/mt) $2,924 $2,620 $2,858 $(66) $238 Realized alumina price ($/mt) $363 $372 $399
Slide 25: Special items
Special items Breakdown of special items by income statement classification – gross basis Millions, except per share amounts 2Q23 1Q24 2Q24 Description of significant 2Q24 special items Net (loss) income attributable to Alcoa Corporation $(102) $(252) $20 (Loss) earnings per share1 $(0.57) $(1.41) $
Slide 26: Quarterly income statement excluding special items
Quarterly income statement excluding special items Quarterly income statement excluding special items for 2Q23, 1Q24 and 2Q24 Prior Year Sequential Millions, except realized prices and per share amounts 2Q23 1Q24 2Q24 Change Change Realized primary aluminum price ($/mt) $2,924 $2,620 $2,858 $(66) $2
Slide 27: 2Q24 Financial summary
2Q24 Financial summary Three months ending June 30, 2024, excluding special items Intersegment Other Alcoa Millions Alumina Aluminum4 Transformation eliminations corporate Corporation Total revenue $1,467 $1,898 $5 $(467) $3 $2,906 Third-party revenue $1,010 $1,895 $3 - $(2) $2,906 Adjusted EBITDA1
Slide 28: 2Q24 Segment Adjusted EBITDA drivers
2Q24 Segment Adjusted EBITDA drivers Segment Adjusted EBITDA sequential changes, $M Segment Segment Adjusted Adjusted EBITDA Metal Raw Production EBITDA 1Q24 Currency prices API materials Energy Price/mix Volume costs Other 2Q24 Alumina $139 7 0 85 4 (10) (11) (1) (23) (4) $186 Aluminum $50 1 165 (2
Slide 29: Aluminum value chain
Aluminum value chain 2024 YTD Alcoa shipments by product type Bauxite Alumina Aluminum 20.8 Mdmt shipments 6.6 Mmt shipments 1.3 Mmt shipments Third party Intersegment 0% 12% Intersegment 30% 70% 88% Third party 100% Intrasegment Third party 29
Slide 30: Composition of alumina and aluminum production costs
Composition of alumina and aluminum production costs Alcoa 2Q24 production cash costs Alumina refining Input Inventory Pricing FY24 annual cost Bauxite cost flow convention sensitivity Conversion 25% 36% Caustic soda 5 - 6 Months Quarterly, Spot $9M per $10/dmt1 Quarterly, 91% with 15% Natural gas 1
Slide 31: 2024 Business information
2024 Business information Estimated annual Segment Adjusted EBITDA sensitivities $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 + $100/mt 0.661 5.201 1.371 1.081 139.211 10.761 Alumina 862 (16)2 7
Slide 32: Currency impacts on Segment Adjusted EBITDA
Currency impacts on Segment Adjusted EBITDA Currency balance sheet revaluation and EBITDA sensitivities impact ($M, except currencies) AUD BRL CAD EUR ISK NOK Total 06/30/24 currencies 0.67 5.52 1.37 1.07 139.11 10.65 2Q24 currency average 0.66 5.20 1.37 1.08 139.21 10.76 2Q24 Balance sheet revaluat
Slide 33: Additional business considerations
Additional business considerations Items expected to impact Adjusted EBITDA and Adjusted net income for 3Q24 Expected sequential impacts on Adjusted EBITDA excluding special items, excluding indexed sales prices or currency impacts: ▪ In the Alumina segment, we expect unfavorable impacts related to
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, 2024 equity earnings ELYSIS Limited Partnership Canada Aluminum smelting technology 48.235% Ma’aden Aluminium Com
Slide 35: Alcoa sustainability goals
Alcoa sustainability goals Alcoa strategic long-term sustainability goals, baseline and progress Goal Description 2015 Baseline 2022 Progress Zero fatalities and serious injuries (life-threatening, life-altering injury or 5 fatal or serious 0 fatalities and 1 serious Safety illness) injuries/illness
Slide 36: Production and capacity information
Production and capacity information Alcoa Corporation annual consolidated amounts as of June 30, 2024 Alumina refining, kmt Aluminum smelting, kmt Facility Country Capacity Curtailed Facility Country Capacity Curtailed Kwinana1 Australia 2,190 2,190 Portland Australia 197 35 Pinjarra Australia 4,700
Slide 37: Valuation framework considerations
Valuation framework Valuation framework key considerations LTM ending 06/30/24 Adj. EBITDA excl. special items Economic value using market multiple of: i. AWAC joint venture, minus small portions of AWAC JV in Aluminum and + Alumina segment Transformation $462M ii. Ownership in certain mines and ref
Slide 38: Adjusted EBITDA reconciliations
Adjusted EBITDA reconciliations Millions 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 Net (loss) income attributable to Alcoa $(102) $(168) $(150) $(651) $(252) $20 Add: Net (loss) income attributable to noncontrolling interest (19) (25) (77) (122) (55) 11 Provision for (benefit from) income taxes 22 (35) 150 189
Slide 39: Free cash flow reconciliation
Free cash flow reconciliation Millions 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 Cash provided from operations $(13) $69 $198 $91 $(223) $287 Capital expenditures (115) (145) (188) (531) (101) (164) Free cash flow (128) (76) 10 (440) (324) 123 Contributions from noncontrolling interest 36 42 24 188 61 4 Distrib
Slide 40: Net debt reconciliations
Net debt reconciliations 2Q23 1Q24 2Q24 Alcoa Alcoa Alcoa $M Cons. NCI Prop. Cons. NCI Prop. Cons. NCI Prop. Short-term borrowings $10 $- $10 $52 $- $52 $31 $- $31 Long-term debt due within one year 1 - 1 79 31 48 79 31 48 Long-term debt, less amount due within one year 1,808 32 1,776 2,469 - 2,469
Slide 41: DWC working capital and Days working capital reconciliations
DWC working capital and Days working capital reconciliations Millions 2Q23 3Q23 4Q23 1Q24 2Q24 Receivables from customers $702 $691 $656 $869 $939 Add: Inventories 2,400 2,190 2,158 2,048 1,975 Less: Accounts payable, trade 1,491 1,472 1,714 1,586 1,619 DWC working capital $1,611 $1,409 $1,100 $1,33
Slide 42: Annualized Return on Equity (ROE)
Annualized Return on Equity (ROE) ROE Reconciliation and calculation information as of June 30, 2024 Millions 1H23 1H24 (Net Loss/Income Attributable to Alcoa + Special Items1) Numerator: ROE % = X 100 Net loss attributable to Alcoa Corporation $(333) $(232) (Total Assets – Total Liabilities – Nonco
Slide 43: 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
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