Slide 1: A New Arconic
A New Arconic 270 ELLIOTT ®
Slide 2: How Should You Vote?
How Should You Vote? BLUE PROXY CARD WHITE PROXY CARD Vote to remove Dr. Klaus Kleinfeld, the Vote to give the worst performing worst performing continuously tenured continuously tenured CEO in the S&P 500 CEO in the S&P 500, from Arconic more time to run the business Vote to voice your frustration
Slide 3: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 4: Change Culture: Finding Arconic's Next CEO
Change Culture: Finding Arconic’s Next CEO What do you want in Arconic’s next CEO? ime Track record of creating value for shareholders me Successful turn-around experience me Aerospace manufacturing expertise [1 Track record of operational improvements me Tough, no-nonsense approach 4 ELLIOTT*
Slide 5: Consider Larry Lawson
Elliott has engaged Mr. Lawson as a consultant on its investment in Arconic and believes that Mr. Lawson should be a leading candidate to Consider Larry Lawson business TSR AS CEO TSR vs. S&P 500 TSR vs. Proxy Peers 153% 108% 115% -69% Former CEO of Spirit Aerosystems, Inc. (NYSE: SPR) Former Execut
Slide 6: Transition Timeline
Change the Culture: Transition Timeline By the end of 2017, a New Arconic can be poised for sustainable success Board convenes a CEO search committee to be comprised of independent directors who have Arconic no perceivable conflicts of announces interest (e.g., sit on other boards New CEO named loca
Slide 7: First Days, Deep-Dive Financial and Operating Assessment
Change the Culture: First 100 Days, Deep-Dive Financial and Operating Assessment Starting at standard financial and operating results (i.e., EBITDA, RONA, etc.) , going down to the lowest-level possible (factory, program, process, specific contract). Then build back-up so it is clear how underlying
Slide 8: Empower the Plants, Leave NYC
A change in culture is the key to a more Change the Culture: sustainable Arconic. The Company can only Empower the Plants, Leave NYC flourish in a new culture that empowers its employees LEAVE To a person everyone we spoke with stated that leaving NYC is an important potential initial step to improv
Slide 9: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 10: Empower the Plants
Change the Culture: At New Arconic, headquarters will be an afterthought. The plants will be empowered to make decisions and Empower the Plants compensated based on performance Visits to several [PCC] facilities have highlighted the extent to which [PCC] seeks to involve every employee in efforts to
Slide 11: Chris Ayers
Empowering the Plants: Chris Ayers Deep experience in the specialty materials industry and broad institutional knowledge of Arconic Former President and Chief Executive Officer of WireCo WorldGroup, Inc. Former executive at Alcoa Inc., including serving as President of its Global Primary Products Bu
Slide 12: Empower the Plants to Make Decisions
Change the Culture: Empower the Plants to Make Decisions Empower Plant Managers Get More Out of Our People Decentralize Decision-Making: Reduce Internal and External Consultants: Arconic is too big for anyone to manage centrally. Decision- Arconic has good people, but poor management and bad making
Slide 13: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 14: Institute a Culture of Accountability
Institute a Culture of A New Arconic will not tolerate prolonged poor performance. A New Arconic will pay for performance. A New Arconic will Accountability invest in its field personnel and its customers What has been tolerated by the current Board is unacceptable Massive Guidance Misses Failed Acq
Slide 15: New Governance Standards
Instill Accountability: New Governance Standards Shareholders of Arconic have seen what can happen when onerous takeover defenses protect an underperforming management team Reincorporate in Delaware Zero outside boards for the CEO for first two years. Maximum of one thereafter Separate Chairman and
Slide 16: Patrice E. Merrin
Instill Accountability: Patrice E. Merrin Experienced international business executive and corporate director, led multiple CEO searches Former President and Chief Executive Officer of Luscar Former Executive Vice President and Chief Operating Officer of Sherritt International Corporation (TSE:S) Di
Slide 17: Board for Improved Stewardship
Instill Accountability: Board for Improved Stewardship Shareholders have a real chance to change Arconic Current Board: Ideal 2018 Board: Little aerospace experience May 17, 2017 Board: We believe the Arconic Board size of 13 should Numerous conflicts Removes poor preforming CEO be reduced to 11 dir
Slide 18: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 19: Fill the Mill
GRP Opportunity: Fill the Mill Focus on Utilization and Cost Measure and Disclose Since Pursue free cash Maintenance Increase Utilization Even Capex Is Similar flow and ROIIC, If 80% Utilized If Lower EBITDA/MT not EBITDA/MT vs. 60%, Much Higher FCF Higher Utilization to Drive Incremental Absolute E
Slide 20: Filling the Mill Trumps EBITDA/MT
Take two hypothetical identical mills GRP Opportunity: 500ktpa capacity; $50 million in maintenance Filling the Mill Trumps EBITDA/MT capex, one focused on EBITDA/MT, one focused on utilization EBITDA/MT Maintenance Capex $300 $50 $50 $275 1 2 Mill A Mill B Mill A Mill B Utilization Free Cash Flow 8
Slide 21: GRP Opportunity: Elliott Case
GRP Opportunity: Arconic can boost EBITDA dollars and generate higher Elliott Case Key Points 2016A 2017P 2018P 2019P Market growth and revenue mix shift in-line with Revenue $ 4,864 $ 5,009 $ 5,570 $ 5,998 management assumptions EBITDA 577 670 788 879 Contribution margins built-up product-by-produc
Slide 22: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 23: Create the Flywheel/Positive Feedback Loop
EPS Opportunity: Create the Flywheel/Positive Feedback Loop Gain leverage through either price and innovation. Use leverage to drive volume or price Leverage Positions of Establish Positions Strength and Cost of Strength and Areas Leadership to Obtain of Cost Leadership Incremental Volume (and/or Pr
Slide 24: Closing the Margin Gap
EPS Opportunity: Closing the Margin Gap Improving operating performance sounds good, but how do you actually do it? 1 Measure 2 Align Company Goals at Each Plant 3 Build Momentum 4 Aim Higher 2 ELLIOTT ®
Slide 25: Closing the Margin Gap: Measure
EPS Opportunity: Closing the Margin Gap Meticulous measuring is the first step 1 Financial and Operating Assessment Go direct to the plant managers and factory floor Deep-dive to the lowest possible unit to identify the drivers of performance End product: Build the ledger of risks and opportunities
Slide 26: Closing the Margin Gap (cont.): Align Goals
EPS Opportunity: Closing the Margin Gap (cont.) Once measured, time to assign plant-specific goals 2 Install New Operating Metrics and Incentives; Align Organization Make sure there is clear ownership for everything in the organization (e.g., quality; inventory; repair times; machine-down time; vari
Slide 27: Closing the Margin Gap (cont.): Build Momentum
EPS Opportunity: Closing the Margin Gap (cont.) Ensuring momentum is key to employee morale and creating incremental leverage Build Momentum: Achieve Key Early Wins 3 Focus on a few key processes where immediate improvement can be demonstrated Early wins serve to begin changing the culture Employees
Slide 28: Closing the Margin Gap (cont.): Aim Higher
EPS Opportunity: Closing the Margin Gap (cont.) With the operating machinery gaining momentum, try and be the best 4 At the start of the original review, on every product, every process Do not just look at problems, find opportunities. Often the better Benchmark every financial, operating and underl
Slide 29: Bernd F. Kessler
Operating Execution: Bernd F. Kessler Strong background in engineering, operational excellence and organizational development Former Chief Executive Officer of SRTechnics AG Former President and Chief Executive Officer of MTU Maintenance, a subsidiary of MTU Aero Engines AG (ETR:MTX) Former manager
Slide 30: EPS Opportunity: Elliott Case
EPS Opportunity: We believe there is a significant margin opportunity that is both larger than management projects and can Elliott Case be achieved more quickly EBITDA Margin +750 bps from 2016 Key Points 2016A 2017P 2018P 2019P Firth Rixon $ 925 $ 985 $ 1,118 $ 1,250 Firth Rixson and RTI growth rat
Slide 31: Disciplined M&A Creates Value
EPS Opportunity: Disciplined M&A Creates Value PCC acquired 41 companies between 2005-2015 PCC vs. S&P 500 Jan 2005 Jan 2016 636% = PCC Acquisition 103% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Source: Bloomberg, TSR Dates, 1/1/2005 1/29/2016 Aerospace is a
Slide 32: Growth M&A, Elmer L. Doty
EPS Opportunity: Growth M&A, Elmer L. Doty 40 years of leadership experience in aerospace industry Operating Executive at The Carlyle Group LP (NASDAQ:CG), Aerospace, Defense & Government Services Former President and Chief Executive Officer of Accudyne Industries LLC Former President, Chief Executi
Slide 33: Long-Term Growth Platform
Working with industry professionals, Elliott has EPS Opportunity: identified multiple opportunities for Arconic to add Long-Term Growth Platform key products and capabilities to enhance its position on next-generation platforms Forgings and castings add scale, technical expertise, put more parts ove
Slide 34: Long-Term Growth Platform (cont.)
Working with industry professionals, Elliott has EPS Opportunity: identified multiple opportunities for Arconic to Long-Term Growth Platform (cont.) add key products and capabilities to enhance its position on next-generation platforms Machining get closer to the customer, add scrap/revert COMPANY D
Slide 35: A New Arconic
A New Arconic Changing the Culture New CEO The Leadership Arconic Needs Empower the Plants Create Organizational Alignment, Entrepreneurial Culture Instill Accountability Ensure Culture of High Ethical Standards and Good Governance Improve the Business GRP Opportunity Fill the Mill EPS Opportunity A
Slide 36: Improving the Business, Aiming Higher
Improving the Business, Aiming Higher Empower the Plants Culture of Organic R&D at Plants Accountability ROIIC Discipline Pay for Performance at Plant Level Fill the Mill Operating (Asset Turns) Execution Higher Profits Pursue Absolute Higher Margins EBITDA Gains Scale/Cost Growth M&A M&A
Slide 37: 3-Year Organic Targets
Aiming Higher: 3-Year Organic Targets New Arconic should be able to achieve four key goals Operating Discipline + Improved Asset Utilization Significantly Greater FCF, Higher RONA GRP EBITDA EPS in-line with dollars of at $1.2+ billion of historic PCC + least $800 = FCF + 16%+ RONA margins million 3
Slide 38: Focus on Returns
Aiming Higher: it needs to understand how its business generates returns on capital and Focus on Returns cost of capital Key Principles Measure Returns (Both Before & After): Arconic needs to exercise far more capital discipline. The issue is not how much money Arconic spends, but the return it gets
Slide 39: Discounted Cash Flow
Aiming Higher: Discounted Cash Flow Cash Flows Value 2017P 2018P 2019P 2020P Total Enterprise Value $25,945 Total Revenue $12,980 $14,212 $15,345 $15,652 Less Debt $8,084 EPS Revenue $6,135 $6,706 $7,304 $7,523 Preferred Stock $55 GRP Revenue $5,009 $5,570 $5,998 $5,998 Non-Controlling Interest $26
Slide 40: Upside to Better Operating Performance Is Massive
Aiming Higher: Upside to Better Operating Performance Is Massive Illustrating the Value of Improving Utilization and Cost Cuts Closing the Margin Gap vs. PCC at GRP (2016 Revenue) EBITDA Dollar Sensitivity Peer Avg. 80% Target Fixed Asset Turn Level 2016 Revenue $842 2.22x 2.30x 2.40x 2.50x 2.60x 2.
Slide 41: How Should You Vote?
How Should You Vote? BLUE PROXY CARD WHITE PROXY CARD Vote to remove Dr. Klaus Kleinfeld, the Vote to give the worst performing worst performing continuously tenured continuously tenured CEO in the S&P 500 CEO in the S&P 500, from Arconic more time to run the business Vote to voice your frustration
Slide 42: Contact Information
Contact Information Arconic Shareholders 1212 Avenue of the Americas, 24th Floor New York, NY 10036 Tel: +1.212.297.0720 Toll Free: +1.877.796.5274 Fax: +1.212.297.1710 Email: info@okapipartners.com Media Inquiries Stephen Spruiell 212-478-2017 sspruiell@elliottmgmt.com ELLIOTT ®
Slide 43: Disclaimer
Disclaimer THIS PRESENTATION IS FOR DISCUSSION AND GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT HAVE REGARD TO THE SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY, OR THE PARTICULAR NEED OF ANY SPECIFIC PERSON WHO MAY RECEIVE THIS PRESENTATION, AND SHOULD NOT BE TAKEN AS ADVICE O