![]() 3rd Quarter Earnings Conference 1 October 8, 2013 [Alcoa logo] [Alcoa logo] Exhibit 99.2 |
![]() o[Alcoa logo] Cautionary Statement o[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 and premiums, as applicable 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. |
![]() o[Alcoa logo] Strong Operational Performance in 3Q 2013 Increased earnings sequentially and YoY – Downstream: Strong Profitability - ATOI up 22% YoY – Upstream: Improved performance 8 consecutive quarters – Productivity: $825 million across all segments YoY Days Working Capital: Record 3Q low; 5 days lower than prior year [~$300 million cash] Cash from Operations: $214 million; Negative free cash flow: $36 million Executed curtailments swiftly and safely Strong third quarter driven by performance – Repositioning working 3 3Q 2013 Overview |
![]() o[Alcoa logo] [Alcoa logo] William Oplinger Executive Vice President and Chief Financial Officer 4 October 8, 2013 [Alcoa logo] |
![]() o[Alcoa logo] Income Statement Summary 5 See appendix for Adjusted Income reconciliation $ Millions, except aluminum prices and per-share amounts 3Q12 2Q13 3Q13 3 rd Party Realized Aluminum Price ($/MT) $2,222 $2,237 $2,180 Revenue $5,833 $5,849 $5,765 Cost of Goods Sold $5,266 $4,933 $4,798 COGS % Revenue 90.3% 84.3% 83.2% Selling, General Administrative, Other $234 $254 $248 SGA % Revenue 4.0% 4.3% 4.3% Other (Income ) Expense, Net ($2) $19 ($7) Restructuring and Other Charges $2 $244 $151 Effective Tax Rate 15.9% (16.5%) 41.3% Net (Loss) Income ($143) ($119) $24 Net (Loss) Income Per Diluted Share ($0.13) ($0.11) $0.02 Income per Diluted Share excl Special Items $0.03 $0.07 $0.11 Prior Year Change Sequential Change ($42) ($57) ($68) ($84) ($468) ($135) (7.1 % pts.) (1.1 % pts.) $14 ($6) 0.3 % pts. 0.0 % pts. ($5) ($26) $149 ($93) 25.4 % pts. 57.8 % pts. $167 $143 $0.15 $0.13 $0.08 $0.04 |
![]() o[Alcoa logo] Restructuring and Other Special Items See appendix for Adjusted Income reconciliation 6 $ Millions, except per-share amounts 2Q13 3Q13 Income Statement Classification Segment Net (Loss) Income ($119) $24 Net (Loss) Income Per Diluted Share ($0.11) $0.02 Restructuring-Related ($113) ($109) Restructuring and COGS Corporate / Primary Metals Government Investigation Reserve ($62) - Restructuring Corporate Discrete Tax Items ($11) ($7) Income Taxes and Noncontrolling Interest Corporate Mark-to-Market Energy Contracts ($9) $8 Other Expenses (Income), Net Corporate Massena Fire - $12 COGS Primary Metals /EPS /Corporate Special Items ($195) ($96) Net Income excl Special Items $76 $120 Income per Diluted Share excl Special Items $0.07 $0.11 |
![]() o[Alcoa logo] Strong performance drives 58% sequential earnings improvement 7 See appendix for Adjusted Income reconciliation Net Income excluding Restructuring & Other Special Items ($ Millions) Market +$17 Performance +$27 Cost Headwinds $0 120 76 Currency 38 +58% 21 2Q 13 3Q 13 Cost Decreases / Other 22 Raw Materials 1 Energy 23 Productivity 41 Price / Mix 3 Volume 11 LME |
![]() o[Alcoa logo] Earnings rise $88M year-over-year despite LME and cost headwinds 8 See appendix for Adjusted Income reconciliation Net Income excluding Restructuring & Other Special Items ($ Millions) Market +$0 Performance +$206 Cost Headwinds -$118 120 32 LME 62 3Q 12 +275% 108 Raw Materials 9 Energy 19 Productivity 3Q 13 160 Price / Mix 11 Volume 35 Currency 62 Cost Increases / Other |
![]() o[Alcoa logo] 9 Engineered Products & Solutions year-over- year ATOI increase of 22% See appendix for Adjusted EBITDA reconciliation. * Prior period amounts have been revised to conform to the current period presentation. See appendix for additional information. $ Millions Revenue up 5% year-over-year driven by strong share gains across all markets Quarterly ATOI up 22% year-over-year to $192M driven by productivity and volume across all Businesses Highest-ever Quarter for adjusted EBITDA margin, up 2.5 percentage points year -over-year Aerospace remains strong, temporarily impacted by engine market inventory realignment and lower U.S. Defense spare parts demand Gradual recovery in N.A. Non-Residential Construction continues; European market weakening Softening Global Industrial Gas Turbine market Weaker N.A. Heavy Duty Truck build rates offset by Europe Share gains through innovation continue across all sectors ATOI up ~25% year-over-year; down ~10% sequentially $ Millions 3Q 12 2Q 13 3Q 13 3 rd Party Revenue 1,367 1,468 1,437 ATOI* 158 193 192 Adjusted EBITDA Margin* 20.0% 22.2% 22.5% 3 Quarter Results 3 Quarter Business Highlights 4 Quarter Outlook 3 Quarter Performance Bridge 2Q 13 $193 3Q 13 $192 Massena $2 Cost Increase -$2 Productivity $7 Price / Mix -$2 Volume -$6 3Q13 Actual and 4Q13 Outlook - EPS rd rd rd th |
![]() o[Alcoa logo] 10 See appendix for Adjusted EBITDA reconciliation. * Prior period amounts have been revised to conform to the current period presentation. See appendix for additional information. Volume and price headwinds impact Global Rolled Products Auto demand expected to remain strong Aero plate shipments continue to be impacted by high OEM inventories Seasonal Packaging decline, price pressure continues Price pressures in Europe and China , along with demand decline in Brazing ATOI expected to be down ~25% excluding FX and assuming no change in metal price sequentially Auto and Packaging demand remained strong Unfavorable volume/price impacts from: • Aero plate seasonal declines/OEM inventories • Softening Industrial markets in N.A., Europe, Russia • Packaging price pressures (N.A., China) Low metal prices continued to negatively impact results, albeit less than 2Q Days working capital improved 1 day year-over-year 3Q13 Actual and 4Q13 Outlook - GRP 3 Quarter Business Highlights 4 Quarter Outlook $ Millions 3Q 12 2Q 13 3Q 13 3 rd Party Revenue 1,849 1,877 1,805 ATOI* 89 79 71 Adjusted EBITDA/MT* 365 322 312 $ Millions 3 Quarter Results 3 Quarter Performance Bridge $2 $2 $12 $71 $79 Cost Increase 2Q 13 Volume Other Metal -$4 -$7 Currency Prod- uctivity 3Q 13 -$10 -$3 Price / Mix rd rd rd th |
![]() o[Alcoa logo] Alumina delivers performance improvement 11 Production increase due to additional day Higher 3 rd party shipment volume offsets lower Alumina prices Productivity improvements continued Cost increases driven by higher mining costs in Suriname and two crusher sites operating in Australia Record 3Q days working capital of 20 days ; 11 day improvement year-over-year 53% of 3 party shipments on spot or alumina price index with 30-day lag for 2013 3 party shipment volume to return to normal levels Energy prices increase in Western Australia Productivity improvements to continue $ Millions 3Q13 Actual and 4Q13 Outlook - Alumina Quarter Results 3 rd Quarter Business Highlights 4 th Quarter Outlook Quarter Performance Bridge 3Q 12 2Q 13 3Q 13 Production (kmt) 4,077 4,161 4,214 3 rd Party Shipments (kmt) 2,368 2,328 2,603 3 rd Party Revenue ($ Millions) 764 822 846 ATOI ($ Millions) (9) 64 67 $0 +$3 $13 $5 $5 $28 $67 $64 -$20 Cost Increase 3Q 13 Prod- uctivity Price / Mix Volume Currency LME -$28 2Q 13 Market Performance 3 rd 3 rd rd rd |
![]() o[Alcoa logo] Primary Metals drives productivity gains to the bottom line 12 $ Millions Market Performance -$8 +$42 3Q13 Actual and 4Q13 Outlook – Primary Metals 3 rd Quarter Results 3 rd Quarter Business Highlights 4 th Quarter Outlook Quarter Performance Bridge 3Q 13 $8 Anglesea/ US power outages $23 Cost Decr/RM $12 Energy -$21 Prod- uctivity $24 Price /Mix & Vol. $4 Currency $8 LME -$16 2Q 13 -$32 $6 Massena Curtailments safely executed, taking 274kmt offline Productivity improvements continued; result of aggressive cost cutting initiatives across the segment Increased energy costs due to peak consumer demand in Europe and seasonal hydropower increases in the U.S. Northwest Record 3Q days working capital of 20 days ; 2 day improvement year-over-year Pricing to follow 15-day lag to LME Curtailments to reduce production Productivity improvements to continue Massena fire insurance recovery will not repeat 3Q 12 2Q 13 3Q 13 Production (kmt) 938 896 897 3 rd Party Shipments (kmt) 768 693 686 3 rd Party Revenue ($ Millions) 1,794 1,620 1,600 3 rd Party Price ($/MT) 2,222 2,237 2,180 ATOI ($ Millions) (14) (32) 8 3 rd |
![]() o[Alcoa logo] Record third quarter days working capital level See appendix for days working capital reconciliation 13 5 days lower Days Working Capital since Fourth Quarter 2008 5 days lower 5 days lower 28 27 28 33 33 32 38 38 39 43 44 41 48 50 55 24 27 30 33 43 5 days lower 20 days; $1.3 Billion |
![]() o[Alcoa logo] 3 Quarter Cash Flow overview 14 See appendix for Free Cash Flow and Net Debt reconciliations ($ Millions) 3Q12 2Q13 3Q13 Net (Loss) Income before Noncontrolling Interests ($175) ($148) $44 DD&A $366 $363 $348 Change in Working Capital $88 $72 ($61) Pension Contributions ($163) ($98) ($173) Other Adjustments $147 $325 $56 Cash from Operations $263 $514 $214 Dividends to Shareholders ($32) ($33) ($33) Change in Debt ($273) ($531) ($5) Distributions to Noncontrolling Interests ($1) ($2) ($53) Contributions from Noncontrolling Interests $22 ($3) $0 Other Financing Activities $2 $1 ($2) Cash from Financing Activities ($282) ($568) ($93) Capital Expenditures ($302) ($286) ($250) Other Investing Activities $40 $10 ($54) Cash from Investing Activities ($262) ($276) ($304) 1,481 1,543 1,939 1,861 1,555 1,202 1,017 3Q13 8,344 7,327 2Q13 8,359 7,157 1Q13 8,925 7,370 2012 8,829 6,968 2011 9,371 7,432 2010 9,165 7,622 2009 9,819 8,338 2008 10,578 9,816 762 Debt to Cap Net Debt Cash 34.7% 42.5% 38.7% 34.9% 35.3% 34.8% -to -Cap stable ($ millions) (36) 228 (305) 535 (39) 246 (506) 656 164 526 (440) 1,005 176 87 (22) 761 (186) (90) (742) (409) ($ millions) 34.5% 34.5% rd Free Cash Flow near breakeven target in 3Q Debt 3 rd Quarter 2013 Cash Flow Overview |
![]() o[Alcoa logo] On track to meet all of our targets 15 Key Actions to Execute 2013 Cash Sustainability Program and year-to-date results 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 $825M YTD: $289M $482M $146M 34.5% |
![]() o[Alcoa logo] Market Fundamentals are stable; pricing pressure continues 16 Global Aluminum Demand Growth at 7% Market Essentially Balanced Inventory is Stable 12% -1% 4% 4% 7% 9% 8% 5% 6% 6% 2013E 23.1 6.5 6.2 4.0 2.0 1.9 1.9 1.0 1.0 49.5 mmt (1) Other includes Africa, E.Europe, Latin America ex Brazil and Oceania 2013 Primary Aluminum Consumption (mmt), Annualized Growth (%) China Europe North America North Asia India SE Asia MENA Russia Brazil Other ¹ 1.9 2013 Demand +7% Rest of World +4% $0 $50 $100 $150 $200 $250 $300 $0 $50 $100 $150 $200 $250 $300 Regional Premiums over time $ per metric ton Region End of 3Q 13 Europe $240/MT Japan $246/MT Midwest USA $216/MT Year on Year Change Europe -17% Japan -4% Midwest USA -11% Global Inventories vs. LME Price Over Time $ Supply/Demand Analysis Lower Regional Premiums |
![]() o[Alcoa logo] o[Alcoa logo] |
![]() o[Alcoa logo] [Alcoa logo] [Alcoa logo] Klaus Kleinfeld Chairman and Chief Executive Officer 18 October 8, 2013 [Alcoa logo] |
![]() o[Alcoa logo] Source: Alcoa Analysis Growth continues in global end markets 19 Alcoa end markets: Current assessment of 2013 vs. 2012 |
![]() o[Alcoa logo] 20 Contributions from Value-Add businesses continue to grow Value-add 3 Party Revenue, Adjusted EBITDA and Adjusted EBITDA margin – 2003, 2012 and 2013 Annualized 1) Pro forma 2003 amounts reflect current structure of EPS and GRP; 2) YTD results annualized; does not represent a forecast of 4Q 2013 results; 3) ATOI for the respective periods: 2003 $358M, 2012 $956M and 2013 annualized $1,056M 13,324 13,156 8,785 1,955 1,799 855 14.7% 13.7% 9.7% Revenue ($M) Adjusted EBITDA (3) ($M) Adjusted EBITDA Margin 2003 (1) 2012 2013 Annualized (2) rd |
![]() o[Alcoa logo] Aero, Auto and Commercial B&C account for $5.9B of value-add revenue Breakdown of 2012 Alcoa value-add revenue by market ($B) 21 8% End Market CAGR (2012 - 2015) ~8 year production backlog (’12 rates) for large commercial aircraft segment From 2012 - 2015: 30-35% CAGR for N. America auto sheet 3.6x increase in auto sheet revenue 3.2% CAGR for N. America (2012 - 2015) 55% of non-residential starts, by value in the U.S., will be green by 2016 (1) Aerospace Commercial Building and Construction Automotive 1) McGraw Hill Construction, Green Outlook 2013. Other 0.8 Industrial Products 2.0 Commercial Transportation 1.3 Packaging 3.2 Automotive 0.7 Commercial Building and Construction 1.4 Aerospace 3.8 Revenues: $13.2B |
![]() o[Alcoa logo] New A330 strengthens Alcoa’s metallic aero opportunity 22 Airbus A330 Updates and Alcoa Solutions Airbus tailors new A330 for Asian markets Opportunities to apply Alcoa solutions September 2013: New variant of all-metallic A330-300 announced by Airbus Target short, high-density routes in growth markets Airbus goals: Reduce weight Increase passenger capacity Optimize engine thrust and lifespan Advanced alloys Aerospace hard alloys Aluminum Lithium - Weight / - Corrosion Value-add products Extruded wing stringers Floor beams and seat tracks Forged wheel & brake systems + Passenger Capacity Engine technology Advanced airfoils Structural engine components Specialized coatings New thrust requirements Images: Airbus. 2013 |
![]() o[Alcoa logo] Alcoa technology powers next generation jet engine performance 23 Increases coating life 3.0-3.5X Enhances airfoil hot corrosion protection 3D Multi-wall Airfoils Provides customized targeted cooling of critical areas of the engine blades Nickel-based superalloys Increases blade melting point by 12% Improves oxidation resistance Advanced Single Crystal Technology Reduced Emissions Engine Fuel Burn Reduction Lower Maintenance & Operating Cost Customer needs and Alcoa solutions in the aerospace airfoils market Specialized Airfoil Coatings Alcoa technology enables operation at highest temperatures >3,000°F Customer needs Alcoa provides high temperature airfoil solutions |
![]() o[Alcoa logo] Aluminum Intensive Vehicles have the competitive edge Comparison between baseline steel and aluminum intensive vehicles 1) Aluminum Association. 2) Oak Ridge National Laboratory. 2013 24 “Aluminum offers the most promise for cutting total automotive-related carbon emissions and energy use” (1) Steel Toyota Venza: 3% Al content Fuel Efficiency: +18% (2) Weight: -8% (2) CO2 Breakeven Point: 1,900 miles Compared to baseline steel: Over Lifecycle (2 ) : - 32% lower energy - 29% less CO2 Safe and Durable Al Intensive Toyota Venza: 37% Al content Reduces CO 2 emissions Improves fuel efficiency Safer – can reduce stopping distances from 45 mph to zero by up to 7 feet – could mean the difference between a serious collision and a near-miss More Durable – unlike steel, aluminum auto body panels are naturally corrosion resistant Proven – aluminum’s strength and durability proven in harsh environments e.g. military, space missions |
![]() o[Alcoa logo] Aluminum intensity is accelerating auto sheet demand Projected aluminum content per vehicle (lbs) and auto sheet demand (kMT) Sources: Ducker Worldwide , IHS , Alcoa analysis 25 136 55 14 2025 2015 2012 North America Aluminum Body Sheet Content Per Vehicle (in lbs) North America Market Demand – Auto Aluminum (kMT) 2025 4,550 3,425 1,125 2015 3,150 2,720 430 2012 2,400 2,300 100 Increasing Aluminum Intensity Drives Auto Sheet Demand 4x increase in auto sheet already locked into designs of 2015 models Auto Sheet Other Auto Aluminum Castings Actual Projected ~10x ~4x |
![]() o[Alcoa logo] $275M investment Enables flexible production Much of volume secured Broke ground in Aug. 2013 Complete by mid-2015 Alcoa’s auto triple play: 3 smart investments to capitalize on AIV growth $300M investment Supported by secured contracts On time and on budget First coil by Dec. 2013 26 Davenport Phase 1 Auto Expansion Auto Treatment Line – Davenport, IA Saudi Arabia JV Automotive growth projects $380M total investment * Addition to can sheet mill Cold mill, heat treat, finishing Broke ground in Dec. 2012 First auto coil by Dec. 2014 Positioning for growth in MENA Tennessee Phase 2 Auto Expansion Alcoa TN facility– Alcoa, TN Saudi Arabia JV – KSA AIV = Aluminum Intensive Vehicle; MENA = Middle East and North Africa * Total investment relates to rolling mill capability expansion to include auto sheet, building and construction sheet and foil stock. Alcoa’s investment portion is ~$95M |
![]() o[Alcoa logo] Alcoa delivers in a world demanding greener buildings 27 Alcoa solutions for U.S. commercial building and construction requirements U.S. vs. EU Building Facts (1,2) Increasing energy requirements Target of ‘Net Zero’ Buildings in EU by 2020 (4) / U.S.A. by 2030 (5) Green buildings provide (1) : Hurricane Resistance Thermal Performance Withstands object impact of over 50 mph 20% improvement in dynamic wind resistance 15% thermal performance improvement 1630SS IR Curtain Wall + 40% Thermal Perform. Air and water resistant (superior resistance to rot, warp, buckle due to moisture or weather exposure) OptiQ™ Ultra Thermal Window Blast Resistance Improves structural performance and glass retention by 60% 54% improvement in thermal performance IR 501UT Framing Triple Insulating Glass 1) LEED Gold Building vs. avg. U.S. commercial building, LEED Green Building Fact Sheet 2013, McGraw Hill. 2) Buildings Performance Institute Europe (BPIE), 2011. 3) U.S. EIA, 2013. Alcoa Analysis. 4) ACEEE, 2012. 5) European Commission Energy Efficiency Directive, 2013 15% pts reduction in U.S. consumption equals ~$58B in annual savings (3) 73% 58% 15% US EU Annual Electricity Consumption by Buildings (%) - 25% Energy consumption - 35% Emissions + 27% Occupant satisfaction |
![]() o[Alcoa logo] Enhancing competitiveness in the upstream business Largest low-cost global bauxite producer, and world leader in refining $171M in refinery gross productivity gains YTD, Performance contributed $159M YoY to ATOI Alumina Price Index deployment has reached 53% 11 day reduction in working capital YoY = $160M cash $17M reduction in total capital spend YTD 651 kMT or 16% of capacity curtailed; including 274 kMT (60%) of the 460 kMT under review in 2013 $228M in smelting gross productivity gains YTD, Performance contributed $167M YoY to ATOI Casthouse value-added has generated $200M in 2013 2 day reduction in working capital YoY = $50M cash $114M reduction in total capital spend YTD 28 Actions taken by upstream Alumina Aluminum Mining Refining Smelting Energy 8 consecutive quarters of performance (1) improvement in upstream business 1) Performance includes the following factors in ATOI: price/mix, volume, productivity, and cost impacts |
![]() o[Alcoa logo] 29 Smelter Rolling Mill Mine Refinery Phase 1 Phase 2 Construction progressing as planned; world’s lowest cost facility 99% complete 67% complete 38% complete 250kMT production in 2013 At full capacity in 2014 Lowest cost smelter 2% point reduction on the smelting cost curve First hot coil in 4Q 2013 First auto coil in 4Q 2014 First alumina 4Q 2014 Lowest cost refinery 2% point reduction on the refining cost curve On track to provide bauxite in 2014 88% complete Saudi Arabia JV construction update |
![]() o[Alcoa logo] Creating value by executing our strategy 30 Focusing on controllable items to increase upstream profitability Investing to capture growth and improve cost position Leveraging the Alcoa Advantage to deliver Value-Add products |
![]() o[Alcoa logo] o[Alcoa logo] |
![]() o[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 |
![]() o[Alcoa logo] Annual Sensitivity Summary 33 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 |
![]() o[Alcoa logo] Revenue Change by Market 34 (3%) (6%) 3% 2% (9%) (9%) (3%) 22% 3% (1%) 5% 7% 9% 7% (9%) (5%) (3%) (1%) 11% (11%) 17% 3% 7% 6% 7% 2% 14% 1% 15% 28% Aerospace Automotive B&C Comm. Transport Industrial Products IGT Packaging Distribution/Other Alumina Primary Metals 3Q’13 Third-Party Revenue Sequential Change Year-Over-Year Change |
![]() o[Alcoa logo] Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to Alcoa 35 |
![]() o[Alcoa logo] Reconciliation of Adjusted Income 36 |
![]() o[Alcoa logo] Reconciliation of Alcoa Adjusted EBITDA 37 |
![]() o[Alcoa logo] Reconciliation of Alumina Adjusted EBITDA 38 |
![]() o[Alcoa logo] Reconciliation of Primary Metals Adjusted EBITDA 39 ($ in millions , except per metric ton amounts ) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3Q12 2Q13 3Q13 After-tax operating income (ATOI) $ 657 $ 808 $ 822 $ 1,760 $ 1,445 $ 931 $ (612) $ 488 $ 481 $ 309 $ (14) $ (32) $ 8 Add: Depreciation, depletion, and amortization 310 326 368 395 410 503 560 571 556 532 130 132 131 Equity (income) loss (55) (58) 12 (82) (57) (2) 26 (1) 7 27 5 7 13 Income taxes 256 314 307 726 542 172 (365) 96 92 106 (19) (25) (16) Other 12 20 (96) (13) (27) (32) (176) (7) 2 (422) 2 (3) 2 Adjusted EBITDA $ 1,180 $ 1,410 $ 1,413 $ 2,786 $ 2,313 $ 1,572 $ (567) $ 1,147 $ 1,138 $ 552 $ 104 $ 79 $ 138 Production (thousand metric tons) (kmt) 3,508 3,376 3,554 3,552 3,693 4,007 3,564 3,586 3,775 3,742 938 896 897 Adjusted EBITDA / Production ($ per metric ton) $ 336 $ 418 $ 398 $ 784 $ 626 $ 392 $ (159) $ 320 $ 301 $ 148 $ 111 $ 88 $ 154 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. |
![]() o[Alcoa logo] Reconciliation of Global Rolled Products Adjusted EBITDA ($ in millions, except per metric ton amounts) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3Q12 2Q13 3Q13 After-tax operating income (ATOI)* $ 232 $ 290 $ 300 $ 317 $ 151 $ (41) $ (106) $ 241 $ 260 $ 346 $ 89 $ 79 $ 71 Add: Depreciation, depletion, and amortization 190 200 220 223 227 216 227 238 237 229 57 55 56 Equity loss 1 1 – 2 – – – – 3 6 1 2 3 Income taxes* 77 97 135 113 77 14 12 103 98 159 39 32 32 Other (5) 1 1 20 1 6 (2) 1 1 (2) (3) – – Adjusted EBITDA* $ 495 $ 589 $ 656 $ 675 $ 456 $ 195 $ 131 $ 583 $ 599 $ 738 $ 183 $ 168 $ 162 Total shipments (thousand metric tons) (kmt) 1,893 2,136 2,250 2,376 2,482 2,361 1,888 1,755 1,866 1,943 501 521 519 Adjusted EBITDA / Total shipments ($ per metric ton)* $ 261 $ 276 $ 292 $ 284 $ 184 $ 83 $ 69 $ 332 $ 321 $ 380 $ 365 $ 322 $ 312 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. 40 |
![]() o[Alcoa logo] Reconciliation of Engineered Products and Solutions Adjusted EBITDA ($ in millions) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3Q12 2Q13 3Q13 After-tax operating income (ATOI)* $ 126 $ 161 $ 276 $ 382 $ 423 $ 522 $ 311 $ 419 $ 537 $ 612 $ 158 $ 193 $ 192 Add: Depreciation, depletion, and amortization 166 168 160 152 163 165 177 154 158 158 39 39 40 Equity loss (income) – – – 6 – – (2) (2) (1) – – – – Income taxes* 57 70 120 164 184 215 138 198 258 296 77 94 91 Other* 11 106 (11) (2) (7) 2 1 – (1) (8) – – – Adjusted EBITDA* $ 360 $ 505 $ 545 $ 702 $ 763 $ 904 $ 625 $ 769 $ 951 $ 1,058 $ 274 $ 326 $ 323 Third-party sales $ 3,905 $ 4,283 $ 4,773 $ 5,428 $ 5,834 $ 6,199 $ 4,689 $ 4,584 $ 5,345 $ 5,525 $ 1,367 $ 1,468 $ 1,437 Adjusted EBITDA Margin* 9% 12% 11% 13% 13% 15% 13% 17% 18% 19% 20% 22% 22% 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. 41 |
![]() o[Alcoa logo] Reconciliation of Free Cash Flow 42 |
![]() o[Alcoa logo] Reconciliation of Free Cash Flow, con’t 43 |
![]() o[Alcoa logo] Days Working Capital 44 |
![]() o[Alcoa logo] Reconciliation of Net Debt 45 |
![]() o[Alcoa logo] Reconciliation of Net Debt-to-Capital 46 |
![]() o[Alcoa logo] Composition of Upstream Production Costs 47 Fuel Oil 14% Natural gas 10% Caustic 11% Bauxite 24% Conversion 41% Input Cost Inventory flow Pricing convention Annual ATOI Sensitivity Fuel oil 1 – 2 months Prior month $4m per $1/bbl Natural gas N/A Spot 1 $16m per $1/GJ 1 Caustic soda 3 - 6 months Spot & semi- annual $9m per $10/DMT Refining Cost Structure Alumina 33% Carbon 13% Power 25% 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 1 Natural gas information corresponds to Point Comfort, as Australia is priced on a rolling 16 quarter average |
![]() o[Alcoa logo] 48 Source: Alcoa estimates, Brook Hunt, CRU, Harbor Global aluminum demand growth at 7% 7% 5% 12% -1% 4% 9% 6% 4% 8% 6% 2013E 6.5 6.2 4.0 1.0 1.0 1.9 1.9 2.0 23.1 49.5 mmt (1) Other includes Africa, E.Europe, Latin America ex Brazil and Oceania 2013 Primary Aluminum Consumption (mmt), Annualized Growth (%) China Europe North America North Asia India SE Asia MENA Russia Brazil Other ¹ 1.9 2013 Demand +7% Rest of World +4% |
![]() o[Alcoa logo] 49 Source: Alcoa analysis, Brook Hunt, CRU, CNIA, NBS, Chinese Customs Market essentially balanced 2013E Aluminum Supply/Demand Balance ‘000 mt China Rest of World 2013 Production (August annualized) 22,775 25,447 2013 Production to be added 360 704 2013 Capacity to be curtailed (145) (56) Total supply 22,990 26,095 Demand (23,125) (26,360) Net Balance (135) (265) 2013E Alumina Supply/Demand Balance ‘000 mt China Rest of World 2013 Production (August annualized) 42,100 54,149 2013 Production to be added - 700 2013 Capacity to be curtailed (500) - Imports/(exports) 3,400 (3,400) Total supply 45,000 51,449 Demand (44,750) (51,063) Net Balance 250 386 2Q2013 Surplus 130 2Q2013 Deficit (315) Supply Demand Deficit (400) Supply Demand Surplus 636 Supply/Demand Analysis |
![]() o[Alcoa logo] Inventory is Stable 50 $1,000 $1,500 $2,000 $2,500 $3,000 0 7 14 21 28 35 42 49 56 63 70 77 84 91 98 105 China Incl SRB Producer Japan Port LME On Warrant Cancelled Warrants Off Exchange 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 34 days from the ’09 peak Days of Consumption Days of Consumption 74.5 days LME Price $1,808/MT $ per metric ton Global Inventories vs. LME Price Over Time $ |
![]() o[Alcoa logo] Lower regional premiums 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 3Q 13 Europe $240/MT Japan $246/MT Midwest USA $216/MT Year on Year Change Europe -17% Japan -4% Midwest USA -11% |
![]() o[Alcoa logo] o[Alcoa logo] |