Slide 1: Alcoa Corporation September 2016
Alcoa Corporation September 2016 Exhibit 99.2
Slide 2: Important Information
Important Information 2 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 include thos
Slide 3: Table of Contents
Table of Contents 3 2 3 4 5 Separation Update Key Business Highlights Financial Overview Conclusion
Slide 4: Advancing each generation. ALCOA
Advancing each generation. ALCOA
Slide 5: Separation Culminates Alcoa's Successful Multi-Year Transformation
Separation Culminates Alcoa’s Successful Multi-Year Transformation 1) The rolling mills located at Warrick and Ma’aden will be part of Alcoa Corporation On September 28, 2015, Alcoa Inc. (NYSE:AA) announced its Board of Directors unanimously approved a plan to separate into two standalone, publicly
Slide 6: Executing Separation – On Course for Second Half of 2016
Executing Separation – On Course for Second Half of 2016 Separation Approximate Timeline and Path to Completion 1) Refers to productivity programs in Alcoa Corporation’s Bauxite, Alumina, Aluminum, Cast Products and Energy segments 4Q 2015 1st Half 2016 2nd Half 2016 Launched New Value-Add Name and
Slide 7: Key Business Highlights
Section 3 KEY BUSINESS HIGHLIGHTS
Slide 8: Alcoa Corporation: Cost Competitive Industry Leader
Alcoa Corporation: Cost Competitive Industry Leader 8 ALUMINA ALUMINUM World’s largest bauxite miner, with a solid first-quartile cost curve position Bauxite World’s largest alumina producer, with a highly competitive first-quartile cost curve position Alumina Power production capacity of ~1,470 (1)
Slide 9: Global Strength: Global Footprint in Proximity to Key Strategic Markets
Global Strength: A team of nearly 16,000 employees in 10 countries, generating more than $11 billion in 2015 revenue. More than 25 facilities, representing six business units. Global Strength: A team of nearly 16,000 employees, generating more than $11 billion in 2015 revenue. Six business units, wi
Slide 10: Unrivalled Upstream Aluminum Experience with the Flexibility of a Newly Formed Company
Unrivalled Upstream Aluminum Experience with the Flexibility of a Newly Formed Company Alcoa Corporation’s Significant Competitive Advantages Distinguish Us From Our Peers Solution-oriented customer relationships and programs Establishment of a strong, operator focused culture Operational reliabilit
Slide 11: Premier Global Bauxite Position
Premier Global Bauxite Position Alcoa mines well positioned with bauxite reserves 1) CRU analysis, 2) Including 100% equity interests of AWAC assets, 3) Competitor production information sourced from Wood Mackenzie Largest bauxite miner, 45.3 Mmt production in 2015 1st Quartile Cost curve position(1
Slide 12: World's Most Attractive Alumina Refining Business
World’s Most Attractive Alumina Refining Business Gas supply agreement secures a low cost position for Western Australia refineries through 2032 San Ciprian natural gas solution driving cost footprint improvement Access to growth markets in Asia, Middle East, and Latin America 3rd party shipments of
Slide 13: Alumina Cost Position Moves Points in Years
Alumina Cost Position Moves 7 Points in 5 Years $/MT Production (MMT) Alcoa moves to 23rd Percentile in 2015 ALUMINA 2015: 23rd Percentile 2010: 30th Percentile Source: CRU and Alcoa analysis 2016 Target: 21st Percentile Key 2015 / 2016 actions Saudi Arabia joint venture refinery nameplate capacity
Slide 14: Driving Value Through Substantial Energy Assets
Country Consolidated Capacity (MW) Brazil(2) 492 Canada 132 Suriname 189 United States(3) 657 Driving Value Through Substantial Energy Assets Brazil assets provide optionality between market sales and metal production Approximately 55% of generated power sold externally in 2015 Capturing significant
Slide 15: Aluminum smelting: power and active portfolio management
~70% of smelter power is hydroelectric ~75% of smelter power secured through 2022 ~14% of worldwide smelter power is self-generated; remainder purchased through long-term agreements Recent energy agreements have increased competitiveness of Massena West and Intalco Proven ability to improve, divest,
Slide 16: Aluminum Cost Position Moves Points in Years
Aluminum Cost Position Moves 8 Points in 5 Years $/MT Production (MMT) Cost-per-metric-ton declines as we hold 43rd position 2015: 43rd Percentile 2010: 51st Percentile 2016 Target: 38th Percentile ALUMINUM Key 2015 / 2016 actions Saudi Arabia joint venture smelter at nameplate (740 kmt) Curtailment
Slide 17: Aluminum Market Misconceptions: Setting the Record Straight
Global demand on track to double between 2010 and 2020 Progressively tightening market is leading to global deficit for 2016 Inventories are low based on days of consumption China not exporting primary aluminum Exports of fake semis declining Fact… Fiction… The fundamental outlook of aluminum is wea
Slide 18: Unique Global Network of Casthouses Offering Value-Add Opportunities
Unique Global Network of Casthouses Offering Value-Add Opportunities Innovative new foundry alloys for automotive market Alloys qualified with top tier OEM; 8 trials ongoing; 20 more planned 18(1) casthouses providing value-add products Casthouse Center of Excellence driving continuous improvement a
Slide 19: Leading Can Sheet Supplier in North America
Leading Can Sheet Supplier in North America Warrick Operations: Food Stock, Beverage End & Tab Stock, Lithographic Sheet, Body Stock and Bottle Stock Ma’aden Rolling Company(2): Wide Body Stock, Beverage End & Tab #1 Position (> 90% Share) in North America Aluminum Food Can segment #2 Position in No
Slide 20: Experienced Management Team with Substantial Industry Expertise
Experienced Management Team with Substantial Industry Expertise 20 Name Future Alcoa Corp. Title Title at Alcoa Inc. Years with Alcoa Roy C. Harvey CEO President of Global Primary Products Tómas Már Sigurdsson COO COO of Global Primary Products William F. Oplinger CFO EVP & CFO Renato Bacchi VP & Tr
Slide 21: Track Record of Cost Leadership and Margin Expansion
Track Record of Cost Leadership and Margin Expansion Prepares Alcoa Corporation to Shine in a Volatile Commodity Environment Rigorous Cost, Productivity, and Cash Management Largest Global Bauxite Supplies Ensure Alumina Strength for the Future 1) CRU and Alcoa analysis Positioned to best Capitalize
Slide 22: Financial Overview
Section 4 FINANCIAL OVERVIEW
Slide 23: Six Strong Business Segments Each with Unique Financial Drivers
Six Strong Business Segments Each with Unique Financial Drivers… 23 ALUMINA ALUMINUM • 1st quartile cost curve position • Significant upside in 3rd party business • Secured contracts valued at more than $410M of sales in 2016/17; pricing is contract specific Bauxite Alumina • 1st quartile cost curve
Slide 24: Providing Significant Earnings Diversification for Alcoa Corporation
…Providing Significant Earnings Diversification for Alcoa Corporation Alcoa Corporation Revenues and Adjusted EBITDA: Full year 2015 Actual 1) Before Intersegment Eliminations; 2) Conversion Margin removes pass through metal cost from margin calculation See appendix for adjusted EBITDA reconciliatio
Slide 25: Re-based Cost Footprint, Built for Success in a Commodity Industry
Re-based Cost Footprint, Built for Success in a Commodity Industry Total Sales ($M) Adjusted EBITDA ($M) and Adjusted EBITDA Margin (%) Capital Expenditures ($M) Adjusted EBITDA-Capex ($M) and Cash Flow Conversion (%) 10.3% $2,089/MT $2,316/MT $1,938/MT $1,724/MT All-in Metals Price ($/MT) ~$1Bn of
Slide 26: Pro Forma Adjustments Remove Non-Recurring Costs
Pro Forma Adjustments Remove Non-Recurring Costs; Multiple Levers Available to Drive Further Improvement 26 98 12 2015 Pro Forma Adjusted EBITDA (1) Bridge ($M) LTM EBITDA Considerations 1 2 1) See appendix for Adjusted EBITDA and pro forma Adjusted EBITDA reconciliations; 2) Pro forma Adjusted EBIT
Slide 27: Disciplined Financial Policy Focused on Prudent Capital Allocation
Disciplined Financial Policy Focused on Prudent Capital Allocation Leverage Maintain prudent leverage through the business cycle Liquidity Operating cash flow is the primary source of liquidity Very significant credit capacity for working capital needs Aggressive Asset Portfolio Management Alcoa Cor
Slide 28: Advancing each generation. ALCOA
Advancing each generation. ALCOA
Slide 29: Alcoa Corporation: Cost Competitive Industry Leader
Alcoa Corporation: Cost Competitive Industry Leader Superb legacy of talent, reputation, and performance – 128 year history in upstream aluminum Diversified business segments with 1st and 2nd quartile assets Cash flow generation even at cyclical lows; material upside with any rebound in prices $1.5B
Slide 30: Advancing each generation. ALCOA
Advancing each generation. ALCOA
Slide 31: Alcoa Corporation Pro Forma Adjusted EBITDA and Adjusted EBITDA Reconciliation
Alcoa Corporation Pro Forma Adjusted EBITDA and Adjusted EBITDA Reconciliation Alcoa Corporation’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is equivalent to
Slide 32: 2015 Alcoa Corporation - Segments
($ in millions) 2015 Alcoa Corporation - Segments Bauxite Alumina Aluminum Cast Products Energy Rolled Products After-tax operating income (ATOI) $258 $476 $1 $110 $145 $20 Add: Depreciation, depletion, and amortization 94 202 311 42 61 23 Equity (income) loss - 41 12 - - 32 Income taxes 103 191 (77
Slide 33: Detailed Segment Adjusted EBITDA Reconciliation
Detailed Segment Adjusted EBITDA Reconciliation Segment performance under Alcoa Corporation's management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the after-tax operating income (ATOI) of each segment. Certain items such as the impact
Slide 34: Detailed Historical Segment Adjusted EBITDA Reconciliation
Detailed Historical Segment Adjusted EBITDA Reconciliation Segment performance under Alcoa Corporation's management reporting system is evaluated based on a number of factors; however, the primary measure of performance is the after-tax operating income (ATOI) of each segment. Certain items such as
Slide 35: 2016 Alcoa Inc. Market Sensitivities by Segment
2016 Alcoa Inc. Market Sensitivities by Segment Alcoa Inc. Segment Annual ATOI1 Sensitivities LME API AUD BRL EUR CAD NOK Benchmark +/- $100/MT +/- $10/MT +/- 0.01 USD/AUD +/- 0.01 BRL/USD +/- 0.01 USD/EUR +/- 0.01 CAD/USD +/- 0.10 NOK/USD Primary Metals $169M ($28M) $2M Min $3M $2M $2M GRP(2) $1M N
Slide 36: Positioned for Future Market Scenarios
Positioned for Future Market Scenarios 36 Improved cost position by closing, divesting or curtailing higher cost smelting and refining capacity Enhanced portfolio with ~25% investment in Alcoa Corporation-Ma’aden joint venture, the lowest-cost integrated aluminum complex in the world Revolutionized
Slide 37: Key Value-Add Products Serve An Array Of End-Markets
Key Value-Add Products Serve An Array Of End-Markets Transportation = auto and commercial transportation; global market share based on global volume ex China 37 Cast Products key markets, uses and value-add products Slab Billet Foundry Rod End markets • Automotive, industrial Main uses • Wheels, ste
Slide 38: Overview of 2Q 2016 Results – Alumina and Primary Metals Segments
Overview of 2Q 2016 Results – Alcoa Inc. Alumina and Primary Metals Segments 38 Note: After the separation, Warrick and Saudi Arabia rolling mill operations (currently in Arconic GRP segment) will be in Alcoa Corporation. 2Q 2016 Overview of Alcoa Inc. Alumina and Primary Metals Segments Total reven
Slide 39: Alumina Segment: Earnings Lifted by Pricing and Performance
Alcoa Inc. Alumina Segment: Earnings Lifted by Pricing and Performance 2Q16 Actual – Alumina API pricing up 22% sequentially, down 26% year-over-year Production down vs. Q1 on Pt Comfort curtailment, partially offset by higher production in Sao Luis, Kwinana and San Ciprián Productivity gains throug
Slide 40: Primary Metals Segment: Benefit from Pricing and Portfolio Actions
Alcoa Inc. Primary Metals Segment: Benefit from Pricing and Portfolio Actions $ Millions 2Q16 Actual – Primary Metals ($18) Productivity ($5) (1) Realized price up 3% sequentially Production down 60 kmt following Warrick closure Benefit from productivity, lower carbon costs and the Warrick closure A
Slide 41: Advancing each generation. ALCOA
Advancing each generation. +o] ALCO A