![]() 2nd Quarter Earnings Conference 1 July 8, 2013 Exhibit 99.2 [Alcoa logo] [Alcoa logo] |
![]() Cautionary Statement 2 [Alcoa logo] [Alcoa logo] 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,” “intends,” “outlook,” “plans,” “projects,” “should,” “targets,” “will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions, or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning global demand growth for aluminum, end-market conditions, supply/demand balances, and growth opportunities for aluminum in automotive, aerospace and other applications, trend projections, targeted financial results or operating performance, and statements about Alcoa’s strategies, outlook, and business and financial prospects. Forward-looking statements are subject to a number of known and unknown risks, uncertainties, and other factors and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa, including automotive and commercial transportation, aerospace, building and construction, distribution, packaging, defense, and industrial gas turbine; (d) the impact of changes in foreign currency exchange rates on costs and results, particularly the Australian dollar, Brazilian real, Canadian dollar, euro, and Norwegian kroner; (e) increases in energy costs, including electricity, natural gas, and fuel oil, or the unavailability or interruption of energy supplies; (f) increases in the costs of other raw materials, including calcined petroleum coke, caustic soda, and liquid pitch; (g) Alcoa’s inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations (including moving its alumina refining and aluminum smelting businesses down on the industry cost curves and increasing revenues in its Global Rolled Products and Engineered Products and Solutions segments) anticipated from its restructuring programs and productivity improvement, cash sustainability, and other initiatives; (h) Alcoa's inability to realize expected benefits, in each case as planned and by targeted completion dates, from sales of non-core assets, or from newly constructed, expanded, or acquired facilities, including facilities supplying aluminum-lithium capacity, or from international joint ventures, including the joint venture in Saudi Arabia; (i) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products, including unfavorable changes in laws and governmental policies, civil unrest, or other events beyond Alcoa’s control; (j) the outcome of contingencies, including legal proceedings, government investigations, and environmental remediation; (k) the business or financial condition of key customers, suppliers, and business partners; (l) adverse changes in tax rates or benefits; (m) adverse changes in discount rates or investment returns on pension assets; (n) the impact of cyber attacks and potential information technology or data security breaches; and (o) the other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2012 and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. 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 U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in the Appendix to this presentation and on our website at www.alcoa.com under the “Invest” section. Any reference during the discussion today to EBITDA means adjusted EBITDA, for which we have provided calculations and reconciliations in the Appendix and on our website. |
![]() Continuing to deliver Strong underlying Operational Performance in 2Q 2013 Strong underlying performance offset by special items 3 2Q 2013 Overview [Alcoa logo] Strong revenue despite lower metal prices Record Profitability in the Downstream; ATOI up 23% YOY Alcoa Value-Add businesses in 1H 2013: 57% total Revenue and 80% Segment ATOI $539 million in Productivity across all business segments Days working capital hits record 2Q low; 6 days lower than prior year [~$400 million cash] Cash from operations of $514 million; Positive free cash flow of $228 million Strong liquidity; $1.2 billion cash on hand including $566 million debt reduction in the quarter Special items offset strong operational results, primarily restructuring related and resolving a legacy legal matter year-over-year |
![]() William Oplinger Executive Vice President and Chief Financial Officer 4 July 8, 2013 [Alcoa logo] [Alcoa logo] |
![]() Income Statement Summary 5 See appendix for Adjusted Income reconciliation $ Millions, except aluminum prices and per-share amounts 2Q12 1Q13 2Q13 Sequential Change Realized Aluminum Price ($/MT) $2,329 $2,398 $2,237 ($161) Revenue $5,963 $5,833 $5,849 $16 Cost of Goods Sold $5,154 $4,847 $4,933 $86 COGS % Revenue 86.4% 83.1% 84.3% 1.2 % pts. Selling, General Administrative, Other $245 $251 $254 $3 SGA % Revenue 4.1% 4.3% 4.3% 0.0 % pts. Other Expense (Income), Net $22 ($27) $19 $46 Restructuring and Other Charges $15 $7 $244 $237 Effective Tax Rate (216.7%) 27.4% (16.5%) (43.9 % pts.) Net (Loss) Income ($2) $149 ($119) ($268) Net (Loss) Income Per Diluted Share $0.00 $0.13 ($0.11) ($0.24) Income per Diluted Share excl Special Items $0.06 $0.11 $0.07 ($0.04) [Alcoa logo] |
![]() Restructuring and Other Special Items See appendix for Adjusted Income reconciliation 6 $ Millions, except per-share amounts 1Q13 2Q13 Income Statement Classification Segment Income (Loss) from Continuing Operations $149 ($119) Income (Loss) Per Diluted Share $0.13 ($0.11) Restructuring-Related ($5) ($113) Restructuring and COGS Corporate / Primary Metals Government Investigation Reserve - ($62) Restructuring Corporate Discrete Tax Items $19 ($11) Income Taxes and Noncontrolling Interest Corporate Mark-to-Market Energy Contracts $9 ($9) Other Income, Net Corporate Massena Fire $5 - Revenue and COGS Primary Metals/EPS Special Items $28 ($195) Income from Continuing Ops excl Special Items $121 $76 Income per Diluted Share excl Special Items $0.11 $0.07 [Alcoa logo] |
![]() Performance offsets 67% of market and cost headwinds See appendix for Adjusted Income reconciliation 7 Net Income Excluding Restructuring & Other Special Items (millions) Market -$120m Performance +$90m Cost Headwinds -$15m 45 44 24 43 76 121 2Q 2013 Energy Price / Mix 1 150 1Q 2013 Volume 30 LME 4 Cost Increases / Other Raw Materials Productivity Currency [Alcoa logo] |
![]() 8 Record results for Engineered Products and Solutions 2Q13 Actual and 3Q13 Outlook - EPS [Alcoa logo] $ Millions Best ever ATOI Quarter Highest ever Quarter for adjusted EBITDA margin Revenue up 3% year-over-year driven by strong aerospace growth and share gains across all markets ATOI up 23% year-over-year driven by productivity and Aerospace volume offsetting lower Truck build rates and weaker European Non-Residential Construction N.A. Non-Residential Construction sees gradual recovery; deterioration in European market continues European summer slowdown across all sectors Weaker European Industrial Gas Turbine market Share gains through innovation continue across all sectors ATOI expected flat sequentially with continued productivity improvements offset by seasonal cost impacts $ Millions 2Q 12 1Q 13 2Q 13 3 rd Party Revenue 1,420 1,423 1,468 ATOI* 157 173 193 Adjusted EBITDA Margin* 19.2% 20.9% 22.2% 2 nd Quarter Results 2 Quarter Business Highlights 3 Quarter Outlook 2 Quarter Performance Bridge $14 Price / Mix $0 Volume $9 1Q 13 $173 -$3 Cost Increase $193 2Q 13 Productivity nd nd rd See appendix for Adjusted EBITDA reconciliation. * Prior period amounts have been revised to conform to the current period presentation. See appendix for additional information. |
![]() Global Rolled Products impacted by lower metal price 9 2Q13 Actual and 3Q13 Outlook - GRP [Alcoa logo] Aero plate shipments impacted by high OEM inventories Auto demand expected to continue growing strongly Pricing/demand pressures continue in European & N.A. Industrials, Brazing, and China markets Productivity gains to continue ATOI expected to be relatively flat excluding FX and assuming no change in metal price sequentially $ Millions 2Q 12 1Q 13 2Q 13 3 rd Party Revenue 1,913 1,779 1,877 ATOI* 78 81 79 Adjusted EBITDA/MT* 341 385 322 Unfavorable impacts from lower metal price Aerospace and Auto demand remained strong Seasonal demand increased in packaging Productivity improvements continued Days working capital improved 7 days year-over-year $ Millions 2 nd Quarter Results 2 Quarter Business Highlights 3 rd Quarter Outlook 2 Quarter Performance Bridge $6 $30 $81 Metal -$33 1Q 13 2Q 13 $79 Other $5 Productivity Price/Mix -$7 Volume Currency -$3 nd nd See appendix for Adjusted EBITDA reconciliation. * Prior period amounts have been revised to conform to the current period presentation. |
![]() Alumina performance more than offsets market impact 10 2Q13 Actual and 3Q13 Outlook - Alumina [Alcoa logo] 53% of 3 rd party shipments on spot or alumina price index with 30 day lag for 2013 Caustic costs continues to improve Mining costs to continue at higher level due to two crusher locations in Australia and mining costs in Suriname Productivity improvements to continue 2Q 12 1Q 13 2Q 13 Production (kmt) 4,033 3,994 4,161 3rd Party Shipments (kmt) 2,194 2,457 2,328 3rd Party Revenue ($ Millions) 750 826 822 ATOI ($ Millions) 23 58 64 -$31m +$37m $5 $19 $34 $7 $64 $58 -$17 Energy Prod- uctivity Price /Mix Volume Currency $29 1Q 13 -$60 -$11 Cost Increase 2Q 13 Suriname /Myara LME Market Performance $ Millions 2 nd Quarter Results 2 nd Quarter Business Highlights 3 rd Quarter Outlook 2 nd Quarter Performance Bridge Production increase due to additional day in quarter Price Index and spot pricing continued positive trend Productivity improvements continued Record days working capital of 19 days ; 12 day improvement year-over-year Increased costs driven by the Myara crusher move (now complete) and Suriname mining |
![]() Primary Metals performs with price, mix and productivity 11 2Q13 Actual and 3Q13 Outlook – Primary Metals [Alcoa logo] 2Q 12 1Q 13 2Q 13 Production (kmt) 941 891 896 3 rd Party Shipments (kmt) 749 705 693 3 rd Party Revenue ($ Millions) 1,804 1,758 1,620 3rd Party Price ($/MT) 2,329 2,398 2,237 ATOI ($ Millions) (3) 39 (32) $ Millions Market Performance -$68m -$3m 2 nd Quarter Results 2 nd Quarter Business Highlights 3 rd Quarter Outlook 2 nd Quarter Performance Bridge 2Q 13 -$32 -$32 Energy $13 Currency Cost Incr/RM Price /Mix & Vol. $21 LME -$23 -$81 $18 Rockdale/ Anglesea 1Q 13 $39 $13 Prod- uctivity Price/Mix improved as regional premiums rose and value-added product mix strengthened Productivity improvements continued Power plant outages in Australia and U.S. completed Working capital of 19 days ; 2 day improvement YOY Alumina pricing applied cost pressure as alumina index stronger than falling LME aluminum prices Pricing to follow 15 day lag to LME Production to remain flat Increased energy costs due to peak consumer demand in Europe Productivity improvements to continue |
![]() Record second quarter days working capital level Days Working Capital since Fourth Quarter 2008 See appendix for days working capital reconciliation 12 [Alcoa logo] |
![]() See appendix for Free Cash Flow, Net Debt and Net Debt-to-Capital reconciliations 2 Quarter Cash Flow Overview 13 [Alcoa logo] nd |
![]() Key Actions to Execute 2013 Cash Sustainability Program and year-to-date results On track to meet our targets to maximize cash On track to meet our targets to maximize cash 14 Maintain 30%-35% Debt-to-Capital Manage Growth Capital of $550M Generate Productivity Gains of $750M Target Saudi JV Investment of $350M Overarching 2013 Financial Target Taking the right actions Control Sustaining Capital of $1.0B Positive Free Cash Flow $539M YTD: $203M $318M $75M 34.5% [Alcoa logo] |
![]() Market fundamentals are stable 15 Global Aluminum Demand Growth at 7% Market Tightening On Curtailments Inventory is Stable Regional Premiums Remain Strong 2013 Primary Aluminum Consumption (mmt) and Annualized Growth (%) Global Inventories vs. LME Price Over Time $ Supply/Demand analysis See appendix for full scale charts [Alcoa logo] |
![]() Klaus Kleinfeld Chairman and Chief Executive Officer July 8, 2013 [Alcoa logo] [Alcoa logo] |
![]() Source: Alcoa analysis Alcoa End Markets: Current Assessment of 2013 vs. 2012 Growth continues in global end markets 17 North America China Global Europe 9% - 10% sales growth 1% - 2% sales growth 4% - 5% sales growth 3% - 5% airfoil market growth rate 7% - 10% prod growth 8% - 12% sales growth 8% - 10% sales growth 2% - 3% sales growth 4% - 6% sales decline 2% - 5% prod decline 3% - 8% prod decline 2% - 5% prod growth 2% - 3% sales decline Aerospace Automotive Heavy Truck & Trailer Beverage Can Packaging Commercial Building and Construction Industrial Gas Turbine 9% - 13% prod decline 12% - 16% prod growth 1% - 2% sales growth 1% - 4% prod growth 3% - 8% prod growth [Alcoa logo] |
![]() Alcoa shines at the Paris Air Show 18 Commercial Aerospace cycle remains robust Alcoa announces achievements 900+ new orders and commitments for Airbus and Boeing valued at ~$135B • 8 year backlog • Demand driven by emerging markets and fuel efficiency Boeing B787-10 launched with 102 commitments • Will compete head-on against A350-900 Significant order for Airbus A380 • MOU for 20 A380s from Doric Finance Corp Boeing B737 Max timeline accelerated by 3 to 6 months Strong engine orders and commitments • Pratt: 1,000+ engines; GE & Partners: $26B in deals; Rolls: $5B in deals Fastening Systems contract with Aircelle for engine nacelle latches Formed ‘Closed-Loop’ program with Boeing to boost aluminum recycling Alcoa Kitts Green facility Aluminum Lithium expansion complete Source: The Wall St Journal; 6/20, Aviation International News, 6/17, Seattle Times, 6/19, Reuters, 6/17, Leeham News & Comment 6/19 [Alcoa logo] |
![]() Alcoa Blue flies from nose to tail 19 [Alcoa logo] |
![]() Alcoa technology enables strong position on CFRP aircraft 20 Note: CFRP refers to carbon fiber reinforced plastic fastened panels [Alcoa logo] |
![]() Innovation drives higher Alcoa content on CFRP aircraft 21 [Alcoa logo] |
![]() Alcoa’s content runs from bumper to bumper Alcoa participation in automotive parts 22 [Alcoa logo] |
![]() Smart utilization of an existing rolling mill Source: Ducker Worldwide , IHS , Alcoa analysis *Extrapolated based on IHS 2020 forecast 23 [Alcoa logo] |
![]() 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 do not restart pots Targeted smaller curtailments based upon cost & strategic situation Full curtailment of selected plants Permanent shutdowns of selected plants Smelting curtailment steps Production Curtailments: Tiered Approach Reviews follow guiding principles Upstream taking actions to improve cost position 24 Dependent on business conditions Refining system also under review Fusina Baie Comeau Soderberg 13% of capacity currently idle 291kmt permanently closed in 2012 Announced 460kmt under review: Includes Baie Comeau 105kmt closure Additional shutdown: Fusina 44kmt [Alcoa logo] |
![]() Multiple levers capture savings across the organization 25 Productivity levers and year-over-year productivity* savings, $M GPP: Combined Alumina and Primary Metals segments; GRP: Global Rolled Products; EPS: Engineered Products and Solutions; COR: Corporate *All figures are pretax and pre-minority interest. 2009/2010 represent net productivity; 2011-2013 represent gross productivity [Alcoa logo] Shared Services Leverage Manage SG&A spend Purchasing Advantage Spend Reduction Teams/ Specifications Supplier Summits Productivity Levers Overhead Cost Reductions Procurement Savings Process Productivity Process Technology Lean Manufacturing Lower Cost Countries 250 109 172 8 750 2012 1,291 2011 1,099 2010 742 2009 2,410 1H13 Actual 539 2013 Target EPS (32%) GRP (20%) GPP (46%) 72% of target captured in 1H 2013 COR (2%) |
![]() Rigorous tracking from Idea to Cash 26 Standardized system for productivity management and system advantages Cascaded throughout Alcoa Incorporated into daily operations Integrated stakeholder accountability ~12,900 action plans identified for 2013 Visibility on plan progress Results monitored from shop floor to corporate finance Degrees of Implementation Process Enforcing discipline to capture savings and enhance cash flow [Alcoa logo] Savings targets for each business and resource Specific parties held accountable to implement steps and ensure results Steps to achieve savings are filled in as idea takes shape System captures productivity ideas at “brainstorm” stage Target Setting Action Plan Idea Generation Monitoring & Reporting |
![]() Recycling & Casting On-site at Barberton Smelting and Casting Massena 27 On-site recycling & casting facility lowers cost and emissions Third-party scrap recycling New York, Ontario, Michigan Supply chain simplification New Process Benefits Supply chain simplification drives cost and environmental benefits Forging Facility Cleveland Machining, Finishing Barberton Process: Forgings Billet Scrap 100M lbs. scrap recycled on-site Casting 1/3 of annual billet demand 5% savings on annual billet cost Lower 3rd party recycling costs Improved casting yields Lower processing costs • 50% less labor • 25% less energy Reduced transportation costs 17.3M lbs. lower CO2 emissions Offsets carbon footprint of ~500 U.S. households [Alcoa logo] |
![]() Portfolio Management Supplier Diversification Specification Optimization Challenge current positions with alternative supplier programs Procurement pulls different levers to generate savings 28 Examples of savings levers & impacts Direct cost savings: carbon strategy Indirect cost savings: facility maintenance Optimize product mix; arbitrage make or buy Saved 14% of YTD spend AND $30M working capital improvement Saved 8% of YTD spend Optimize costs while balancing efficiencies Supplier Base Optimization Work Scope Standardization Drive Services Strategy Reduce service usage by standardizing scope of work Consolidate supplier base and perform frequent re-bidding process Optimize planned maintenance and improve service provider utilization [Alcoa logo] |
![]() “Four Plants, One Business” project drives overhead savings 29 Spain upstream operations and the building blocks to a leaner organization [Alcoa logo] |
![]() Creating value by focusing on the things we can control 30 Continuing focus on productivity and cash generation Executing cost competitive strategy to win in commodity market Building strong growth platforms in our Value-Add businesses [Alcoa logo] |
![]() 31 [Alcoa logo] |
![]() Kelly Pasterick Director, Investor Relations Alcoa 390 Park Avenue New York, NY 10022-4608 Telephone: (212) 836-2674 www.alcoa.com Additional Information 32 [Alcoa logo] |
![]() Annual Sensitivity Summary Currency Annual Net Income Sensitivity +/- $100/MT = +/- $240 million LME Aluminum Annual Net Income Sensitivity 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 USD / EUR Canadian $ +/- $ 5 million per 0.01 change in CAD / USD Norwegian Kroner +/- $ 5 million per 0.10 change in NOK / USD 33 [Alcoa logo] |
![]() Revenue Change by Market 3% 9% 9% 3% 1% (2%) 10% (0%) (0%) (8%) 5% 9% 6% (11%) (3%) 7% (1%) (30%) 10% (10%) 17% 3% 7% 6% 8% 2% 14% 1% 14% 28% Aerospace Automotive B&C Comm. Transport Industrial Products IGT Packaging Distribution/Other Alumina Primary Metals 2Q’13 Third-Party Revenue Sequential Change Year-Over-Year Change 34 [Alcoa logo] |
![]() Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to Alcoa (in millions) 1Q12 2Q12 3Q12 4Q12 2012 1Q13 2Q13 Total segment ATOI* $ 304 $ 255 $ 224 $ 574 $ 1,357 $ 351 $ 304 Unallocated amounts (net of tax): Impact of LIFO – 19 (7) 8 20 (2) 5 Interest expense (80) (80) (81) (78) (319) (75) (76) Noncontrolling interests (5) 17 32 (15) 29 (21) 29 Corporate expense (64) (69) (62) (87) (282) (67) (71) Restructuring and other charges (7) (10) (2) (56) (75) (5) (211) Other* (54) (134) (247) (104) (539) (32) (99) Consolidated net income (loss) attributable to Alcoa $ 94 $ (2) $ (143) $ 242 $ 191 $ 149 $ (119) * On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products and Engineered Products and Solutions segments, which affects the determination of the respective segment’s profitability measure, ATOI. Management made the change in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change. 35 [Alcoa logo] |
![]() Reconciliation of Adjusted Income 36 [Alcoa logo] Net income attributable to Alcoa – as adjusted is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding the impacts of restructuring and other charges, discrete tax items, and other special items (collectively, “special items”). There can be no assurances that additional special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Net (loss) income attributable to Alcoa determined under GAAP as well as Net income attributable to Alcoa – as adjusted. * Discrete tax items include the following: • for the quarter ended June 30, 2013, a charge related to prior year taxes in Spain and Australia ($10), a benefit for a tax rate change in Jamaica ($2), and a net charge for other miscellaneous items ($3); • for the quarter ended March 31, 2013, a benefit related to the reinstatement under the American Taxpayer Relief Act of 2012 of two tax provisions that will be applied in 2013 to Alcoa’s U.S income tax return for calendar year 2012 ($19); and • for the quarter ended June 30, 2012, a charge related to prior year U.S. taxes on certain depletable assets ($8) and a net charge for other miscellaneous items ($2). ** Other special items include the following: • for the quarter ended June 30, 2013, a net unfavorable change in certain mark-to-market energy derivative contracts ($9) and the write off of inventory related to the permanent closure of two potlines at a smelter in Canada and a smelter in Italy; • for the quarter ended March 31, 2013, a net favorable change in certain mark-to-market energy derivative contracts ($9) and a net insurance recovery related to the March 2012 cast house fire at the Massena, NY location ($5); and • for the quarter ended June 30, 2012, a litigation reserve ($18), uninsured losses related to fire damage to the cast house at the Massena, NY location ($12), and a net increase in the environmental reserve related to the Grasse River remediation in Massena, NY and remediation at two former locations, East St. Louis, IL and Sherwin, TX ($13). |
![]() Reconciliation of Alcoa Adjusted EBITDA 37 [Alcoa logo] Alcoa’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 Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. |
![]() Reconciliation of Alumina Adjusted EBITDA 38 [Alcoa logo] Alcoa’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 Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. |
![]() Reconciliation of Primary Metals Adjusted EBITDA 39 [Alcoa logo] Alcoa’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 Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. |
![]() Reconciliation of Global Rolled Products Adjusted EBITDA 40 [Alcoa logo] Alcoa’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 Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. * On January 1, 2013, management revised the inventory-costing method used by certain locations within the Global Rolled Products segment, which affects the determination of the segment’s profitability measure, ATOI. Management made the change in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change. |
![]() Reconciliation of Engineered Products and Solutions Adjusted EBITDA 41 [Alcoa logo] Alcoa’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 Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other nonoperating items. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies. * On January 1, 2013, management revised the inventory-costing method used by certain locations within the Engineered Products and Solutions segment, which affects the determination of the segment’s profitability measure, ATOI. Management made the change in order to improve internal consistency and enhance industry comparability. This revision does not impact the consolidated results of Alcoa. Segment information for all prior periods presented was revised to reflect this change. |
![]() Reconciliation of Free Cash Flow 42 [Alcoa logo] Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. |
![]() Reconciliation of Free Cash Flow, con’t 43 [Alcoa logo] Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. |
![]() Days Working Capital 44 [Alcoa logo] Days Working Capital = Working Capital divided by (Sales/number of days in the quarter). * The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to a financial institution on a recurring basis. Alcoa is adding back this receivable for the purposes of the Days Working Capital calculation. |
![]() Reconciliation of Net Debt 45 [Alcoa logo] Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Alcoa’s leverage position after factoring in available cash that could be used to repay outstanding debt. |
![]() Reconciliation of Net Debt-to-Capital 46 [Alcoa logo] Net debt-to-capital is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Alcoa’s leverage position after factoring in available cash that could be used to repay outstanding debt. |
![]() Composition of Upstream Production Costs 47 1 Natural gas information corresponds to Point Comfort, as Australia is priced on a rolling 16 quarter average [Alcoa logo] Fuel Oil 14% Natural gas 10% Caustic 11% Bauxite 23% Conversion 42% Input Cost Inventory flow Pricing convention Annual ATOI Sensitivity Fuel oil 1 – 2 months Prior month $4m per $1/bbl Natural gas N/A Spot¹ $16m per $1/GJ 1 Caustic soda 3 - 6 months Spot & semi- annual $9m per $10/DMT Refining Cost Structure Alumina 33% Carbon 14% Power 24% Materials 6% Conversion 23% Smelting Cost Structure Input Cost Inventory flow Pricing convention Annual ATOI Sensitivity Coke 1 - 2 months Spot, quarterly & semi-annual $9m per $10/MT Pitch 1 - 2 months Spot, quarterly & semi-annual $2.5m per $10/MT |
![]() Global Aluminum Demand Growth of 7% 48 2013 Primary Aluminum Consumption (mmt), Annualized Growth (%) 6% 5% 4% 4% 6% 4% 9% 10% 9% 11% 1% 13% -1% -2% 11% 9% 2% 2% 4% 4% 2012 2013E 23.0 6.5 6.2 4.0 2.0 1.9 1.9 1.0 1.0 49.4 mmt (1) Other includes Africa, E.Europe, Latin America ex Brazil and Oceania China Europe North America North Asia India SE Asia MENA Russia Brazil Other ¹ 1.9 2013 Global Demand Growth Rate 7% (World ex China 4%) [Alcoa logo] |
![]() ![]() ![]() 49 2013E Aluminum Supply/Demand Balance 2013E Aluminum Supply/Demand Balance ‘000 mt China Rest of World 2013 Production (May annualized) 22,120 25,490 2013 Production to be added 1,180 1,035 2013 Capacity to be curtailed (590) (130) Total supply 22,710 26,395 Demand (23,000) (26,420) Net Balance (290) (25) 2013E Alumina Supply/Demand Balance 2013E Alumina Supply/Demand Balance ‘000 mt China Rest of World 2013 Production (Apr annualized) 41,160 54,070 2013 Production to be added - 1,550 2013 Capacity to be curtailed - (150) Imports/(exports) 3,400 (3,400) Total supply 44,560 52,070 Demand (44,560) (51,940) Net Balance 0 130 Source: Alcoa analysis, Brook Hunt, CRU, CNIA, NBS, Chinese Customs Market Continues to Tighten On Curtailments 1Q2013 Deficit (100) 1Q2013 Surplus 155 Supply Demand Deficit (315) Supply Demand Surplus 130 [Alcoa logo] |
![]() Inventory is Stable 50 Global Inventories vs. LME Price Over Time $ $1,250 $1,450 $1,650 $1,850 $2,050 $2,250 $2,450 $2,650 $2,850 $3,050 $3,250 7 14 21 28 35 42 49 56 63 70 77 84 91 98 105 Producer Japan Port Off Exchange China Incl SRB LME On Warrant Cancelled Warrants LME 3 Mon Days of Consumption 108 days LME Price $2,214/MT Days of Consumption 83 days LME Price $2,686/MT Global Inventories Decline 31 days from the ’09 peak Days of Consumption Days of Consumption 77 days LME Price $1,857/MT $ per metric ton [Alcoa logo] |
![]() Regional Premiums Remain Strong 51 Source: Month end pricing - Platts Metals Week and Metal Bulletin $0 $50 $100 $150 $200 $250 $300 $0 $50 $100 $150 $200 $250 $300 Regional Premiums over time $ per metric ton $ per metric ton Region End of Q2’13 Europe $285/MT Japan $250MT Midwest USA $261/MT Year on Year Change Europe +12% Japan +6% Midwest USA +16% [Alcoa logo] |