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| 8-K - FORM 8-K - Howmet Aerospace Inc. | d910528d8k.htm |
| EX-99.1 - EX-99.1 - Howmet Aerospace Inc. | d910528dex991.htm |
 1
st
Quarter
Earnings
Conference
12
April 8, 2015
[Alcoa logo]
Exhibit 99.2 |
 Important Information
2
[Alcoa logo]
This
communication
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
those
containing
such
words
as
“anticipates,”
“believes,”
“could,”
“estimates,”
“expects,”
“forecasts,”
“intends,”
“may,”
“outlook,”
“plans,”
“projects,”
“seeks,”
“sees,”
“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;
targeted
financial
results
or
operating
performance;
statements
about
Alcoa’s
strategies,
outlook,
and
business
and
financial
prospects;
and
statements
regarding
the
acceleration
of
Alcoa’s
portfolio
transformation,
including
the
expected
benefits
of
acquisitions,
including
the
completed
acquisition
of
the
Firth
Rixson
business
and
TITAL,
and
the
pending
acquisition
of
RTI
International
Metals,
Inc.
(RTI).
These
statements
reflect
beliefs
and
assumptions
that
are
based
on
Alcoa’s
perception
of
historical
trends,
current
conditions
and
expected
future
developments,
as
well
as
other
factors
management
believes
are
appropriate
in
the
circumstances.
Forward-looking
statements
are
subject
to
a
number
of
risks,
uncertainties,
and
other
factors
and
are
not
guarantees
of
future
performance.
Important
factors
that
could
cause
actual
results
to
differ
materially
from
those
expressed
or
implied
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
aerospace,
automotive,
commercial
transportation,
building
and
construction,
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
or
the
unavailability
or
interruption
of
energy
supplies;
(f)
increases
in
the
costs
of
other
raw
materials;
(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
and
improving
margins
in
its
Global
Rolled
Products
and
Engineered
Products
and
Solutions
segments)
anticipated
from
its
restructuring
programs
and
productivity
improvement,
cash
sustainability,
technology,
and
other
initiatives;
(h)
Alcoa’s
inability
to
realize
expected
benefits,
in
each
case
as
planned
and
by
targeted
completion
dates,
from
acquisitions
(including
achieving
the
expected
levels
of
synergies,
revenue
growth,
or
EBITDA
margin
improvement),
sales
of
assets,
closures
or
curtailments
of
facilities,
newly
constructed,
expanded,
or
acquired
facilities,
or
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,
imposition
of
sanctions,
expropriation
of
assets,
or
other
events
beyond
Alcoa’s
control;
(j)
the
outcome
of
contingencies,
including
legal
proceedings,
government
or
regulatory
investigations,
and
environmental
remediation;
(k)
the
impact
of
cyber
attacks
and
potential
information
technology
or
data
security
breaches;
(l)
failure
to
receive
the
required
votes
of
RTI’s
shareholders
to
approve
the
merger
of
RTI
with
Alcoa;
(m)
failure
to
receive,
delays
in
the
receipt
of,
or
unacceptable
or
burdensome
conditions
imposed
in
connection
with,
all
required
regulatory
approvals
of
the
acquisition
of
RTI,
or
the
failure
to
satisfy
the
other
closing
conditions
to
the
acquisition;
(n)
the
risk
that
acquisitions
(including
Firth
Rixson,
TITAL
and
RTI)
will
not
be
integrated
successfully
or
such
integration
may
be
more
difficult,
time-consuming
or
costly
than
expected;
(o)
the
possibility
that
certain
assumptions
with
respect
to
RTI
or
the
acquisition
could
prove
to
be
inaccurate,
including
the
expected
timing
of
closing;
(p)
the
loss
of
customers,
suppliers
and
other
business
relationships
as
a
result
of
acquisitions,
competitive
developments,
or
other
factors;
(q)
the
potential
failure
to
retain
key
employees
of
Alcoa
or
acquired
businesses;
(r)
the
effect
of
an
increased
number
of
Alcoa
shares
outstanding
as
a
result
of
the
acquisition
of
RTI;
(s)
the
impact
of
potential
sales
of
Alcoa
common
stock
issued
in
the
RTI
acquisition;
(t)
failure
to
successfully
implement,
to
achieve
commercialization
of,
or
to
realize
expected
benefits
from,
new
or
innovative
technologies,
equipment,
processes,
or
products,
including
the
Micromill,
innovative
aluminum
wheels,
and
advanced
alloys;
and
(u)
the
other
risk
factors
summarized
in
Alco
a’s
Form
10-K
for
the
year
ended
December
31,
2014,
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.
Market
projections
are
subject
to
the
risks
discussed
above
and
other
risks
in
the
market.
Nothing
on
Alcoa’s
website
is
included
or
incorporated
by
reference
herein.
Forward-Looking Statements |
 Important Information (continued)
3
[Alcoa logo]
Non-GAAP Financial Measures
Additional Information and Where to Find It
Participants in the Solicitation
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
accounting
principles
generally
accepted
in
the
United
States
of
America
(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.
Any
reference
to
historical
EBITDA
means
adjusted
EBITDA,
for
which
we
have
provided
calculations
and
reconciliations
in
the
Appendix.
Alcoa
has
not
provided
a
reconciliation
of
any
forward-looking
non-GAAP
financial
measure
to
the
most
directly
comparable
GAAP
financial
measure,
due
primarily
to
variability
and
difficulty
in
making
accurate
forecasts
and
projections,
as
not
all
of
the
information
necessary
for
a
quantitative
reconciliation
is
available
to
Alcoa
without
unreasonable
effort.
This
communication
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
buy
any
securities
or
a
solicitation
of
any
vote
or
approval
nor
shall
there
be
any
sale
of
securities
in
any
jurisdiction
in
which
such
offer,
solicitation
or
sale
would
be
unlawful
prior
to
registration
or
qualification
under
the
securities
laws
of
any
such
jurisdiction.
The
proposed
business
combination
transaction
between
Alcoa
and
RTI
will
be
submitted
to
the
shareholders
of
RTI
for
their
consideration.
Alcoa
has
filed
with
the
Securities
and
Exchange
Commission
(SEC)
a
Registration
Statement
on
Form
S-4
(Registration
No.
333-203275)
containing
a
preliminary
proxy
statement
of
RTI
that
also
constitutes
a
prospectus
of
Alcoa.
These
materials
are
not
yet
final
and
will
be
amended.
RTI
will
provide
the
proxy
statement/prospectus
to
its
shareholders
after
the
registration
statement
has
become
effective.
Alcoa
and
RTI
also
plan
to
file
other
documents
with
the
SEC
regarding
the
proposed
transaction.
This
document
is
not
a
substitute
for
any
prospectus,
proxy
statement
or
any
other
document
which
Alcoa
or
RTI
may
file
with
the
SEC
in
connection
with
the
proposed
transaction.
INVESTORS
AND
SECURITY
HOLDERS
OF
RTI
ARE
URGED
TO
READ
THE
PROXY
STATEMENT/PROSPECTUS
AND
ANY
OTHER
RELEVANT
DOCUMENTS
THAT
WILL
BE
FILED
WITH
THE
SEC
CAREFULLY
AND
IN
THEIR
ENTIRETY
WHEN
THEY
BECOME
AVAILABLE
BECAUSE
THEY
WILL
CONTAIN
IMPORTANT
INFORMATION
ABOUT
THE
PROPOSED
TRANSACTION.
You
may
obtain
copies
of
all
documents
filed
with
the
SEC
regarding
this
transaction,
free
of
charge,
at
the
SEC’s
website
(www.sec.gov).
You
may
also
obtain
these
documents,
free
of
charge,
from
Alcoa’s
website
(www.alcoa.com).
You
may
also
obtain
these
documents,
free
of
charge,
from
RTI’s
website
(www.rtiintl.com).
Alcoa,
RTI,
and
certain
of
their
respective
directors,
executive
officers
and
other
members
of
management
and
employees
may
be
deemed
to
be
participants
in
the
solicitation
of
proxies
from
RTI
shareholders
in
connection
with
the
proposed
transaction.
Information
regarding
the
persons
who
may,
under
the
rules
of
the
SEC,
be
deemed
participants
in
the
solicitation
of
RTI
shareholders
in
connection
with
the
proposed
transaction
is
set
forth
in
the
proxy
statement/prospectus.
You
can
find
information
about
Alcoa’s
executive
officers
and
directors
in
its
definitive
proxy
statement
filed
with
the
SEC
on
March
19,
2015,
its
Annual
Report
on
Form
10-K
filed
with
the
SEC
on
February
19,
2015
and
in
the
above-referenced
Registration
Statement
on
Form
S-4.
You
can
find
information
about
RTI’s
executive
officers
and
directors
in
the
proxy
statement/prospectus
and
in
RTI’s
Annual
Report
on
Form
10-K
filed
with
the
SEC on
February
26,
2015.
You
can
obtain
free
copies
of
these
documents
from
Alcoa
and
RTI
as
described
in
the
preceding
paragraph. |
 Klaus Kleinfeld
Chairman and Chief Executive Officer
4
April 8, 2015
[Alcoa logo] |
 Strong Operational Results
+
Transformation Fully on Track
Note: Close of RTI transaction expected in 2-5 months subject to regulatory
approvals and RTI shareholder approval. Delivering Strong
Operational
Performance
1Q 2015 Overview
Portfolio
Transformation
Fully On Track
Revenue
up
7%
Y-O-Y
($5.8B):
Driven
primarily
by
organic
growth
in
auto
&
aero;
positive
market
factors
partially
offset
by
capacity
reductions
and
portfolio
actions
Profits
substantially
up
Downstream:
ATOI
of
$191
million,
first
quarter
record
result
Midstream:
ATOI
of
$34
million,
challenge
in
can
sheet
+
record
auto
shipments
Upstream:
Improved
Performance
–
14
Consecutive
Quarters
Alumina
segment:
ATOI
of
$221
million,
more
than
double
Y-O-Y
Primary
Metals
segment:
ATOI
of
$187
million,
+
$200
million
Y-O-Y
Productivity:
$238
million
across
all
segments
Cash
on
Hand:
$1.2
billion
Integration
of
Firth
Rixson
on
track
–
Doubles
Aero-Engine
Content
Completed
TITAL
acquisition
–
Titanium/aluminum
structural
castings
in
Europe
Announced
RTI
acquisition
–
Titanium
+
Complements
mid
and
downstream
Value
Chain
Expected
to
close
in
2
to
5
months
Sold
Belaya
Kalitva
(Russia
rolling
mill)
Secured
75%
of
long
term
gas
needs
for
Western
Australia
refineries
Announced
12-month
capacity
review:
2.8
MMT
Refining,
500
kmt
Smelting
São
Luís
(Alumar)
smelting
curtailment
of
remaining
74
kmt
Suriname
refining
curtailment
of
443
kmt;
exploring
sale
to
Suriname
government
[Alcoa logo] |
 William Oplinger
Executive Vice President and Chief Financial Officer
6
April 8, 2015
[Alcoa logo] |
 Income Statement Summary
7
See appendix for Adjusted Income reconciliation.
$ Millions, except aluminum prices and per-share amounts
1Q14
4Q14
1Q15
Prior Year
Change
Sequential
Change
Realized Aluminum Price ($/MT)
$2,205
$2,578
$2,420
$215
($158)
Revenue
$5,454
$6,377
$5,819
$365
($558)
Cost of Goods Sold
$4,495
$4,973
$4,443
($52)
($530)
COGS % Revenue
82.4%
78.0%
76.4%
(6.0 % pts.)
(1.6 % pts.)
Selling,
General Administrative, Other
$236
$271
$232
($4)
($39)
SGA % Revenue
4.3%
4.2%
4.0%
(0.3 % pts.)
(0.2 % pts.)
Other
(Income) Expenses, Net
$25
($6)
($12)
($37)
($6)
Restructuring and Other Charges
$461
$388
$177
($284)
($211)
Effective Tax Rate
28.1%
51.3%
47.0%
18.9% pts.
(4.3% pts.)
EBITDA
$672
$1,073
$1,089
$417
$16
Net (Loss) Income
($178)
$159
$195
$373
$36
Net (Loss) Income Per Diluted Share
($0.16)
$0.11
$0.14
$0.30
$0.03
Income
per Diluted
Share excl
Special Items
$0.09
$0.33
$0.28
$0.19
($0.05)
[Alcoa logo] |
 Special Items
1) Total restructuring-related charges in 1Q15 of $158 million (88
percent non-cash, 12 percent
cash)
See appendix for Adjusted Income
reconciliation 8
[Alcoa logo]
$ Millions, except per-share amounts
1Q14
4Q14
1Q15
Income Statement
Classification
Segment
Net (Loss) Income
($178)
$159
$195
Net (Loss) Income Per Diluted Share
($0.16)
$0.11
$0.14
Restructuring
-Related
1
($296)
($200)
($158)
Restructuring
and Other
Charges/COGS
Corporate / All
Tax Items
$22
($53)
($4)
Income Taxes
Corporate
Acquisition Costs
-
($22)
($7)
SG&A/Interest Expense
Corporate
Mark-to-Market Energy Contracts
-
$2
$1
Other (Income) Expenses, Net
Corporate
Surgold
Gain
$11
-
-
Other Expenses, Net
Alumina
Saudi JV Potline
Impact/Massena Fire
($13)
-
-
COGS
/ Other Income, Net
Primary Metals
Special Items
($276)
($273)
($168)
Net Income excl Special Items
$98
$432
$363
Net
Income
per Diluted
Share excl Special Items
$0.09
$0.33
$0.28 |
 Operating results more than triple Y-O-Y on Performance and Market
factors See appendix for Adjusted Income reconciliation
9
Net Income excluding Special Items ($ Millions)
Market
+$153
Performance
+$243
Cost Headwinds
-$131
10
156
45
42
97
1
55
363
98
-110
Raw
Materials
Energy
-31
Productivity
Price
/ Mix
Volume
Currency
API
LME
1Q 14
1Q 15
Cost
Increases
/ Other
[Alcoa logo] |
 EPS: Higher volumes, productivity offset currency and cost headwinds
10
[Alcoa logo]
$ Millions
1Q 14
4Q 14*
1Q 15*
3
Party Revenue ($ Millions)
1,443
1,566
1,689
ATOI ($ Millions)
189
165
191
EBITDA Margin
22.2%
18.9%
20.1%
1
st
Quarter Results
1
st
Quarter Business Highlights
2
nd
Quarter Outlook
1
st
Quarter Performance Bridge
1Q15 Actual and 2Q15 Outlook –
Engineered Products and Solutions
$53
$22
$191
$189
1Q 15
Cost
Increases
-$45
Productivity
Price / Mix
-$18
Volume
Currency
-$10
1Q 14
* Includes Firth Rixson. EPS Base Business EBITDA Margin: 20.6% for 4Q14, 21.5% for
1Q15 Revenue
up
17%
year-over-year,
EBITDA
margin
of
20.1%
Revenue
growth
driven
by
Firth
Rixson
and
share
gains
in
Aerospace,
Heavy
Duty
Truck
and
N.A.
Non-Residential
Construction
Unfavorable
currency
impact
due
to
stronger
U.S.
Dollar
Year-over-year
improvement
driven
by
productivity,
strong
Aerospace,
Commercial
Transportation
revenues
Aerospace
market
remains
strong
Continued
recovery
in
N.A.
Non-Residential
Construction;
European
weakness
continues,
outlook
varies
across
regions
Strong
N.A.
Heavy
Duty
Truck
build
rates,
partially
offset
by
Europe
Share
gains
through
innovation
and
productivity
continue
across
all
sectors
ATOI
is
expected
to
increase
3%
to
8%
year-over-year,
including
$13m
of
currency
pressure
rd |
 See
appendix for EBITDA reconciliation GRP = Global Rolled Products
11
GRP: Productivity and record Auto offset by cost increases and pricing
[Alcoa logo]
$ Millions
1Q 14
4Q 14
1Q 15
3
Party Revenue ($ Millions)
1,677
1,888
1,621
ATOI ($ Millions)
59
71
34
EBITDA/MT ($)
315
317
280
1
Quarter Business Highlights
2
Quarter Outlook
1
Quarter Performance Bridge
1Q15 Actual and 2Q15 Outlook –
Global Rolled Products
1
Quarter Results
Price / Productivity
Mix
Volume
Currency
LME
1Q14
1Q15
Portfolio
Actions
Cost
Increases
/ Other
Energy
Strong
productivity
and
record
Auto
shipments
Unfavorable
metal
price
lag
impact
Russia
impacted
by
higher
metal
premiums
Continued
pricing
pressures
in
Packaging
Cost
increases
due
to
Micromill
TM
R&D
and
Saudi
JV
ramp-up
1Q14
costs
associated
with
portfolio
actions
did
not
repeat
Auto
demand
expected
to
remain
strong,
combined
with
seasonal
volume
increases
in
Packaging
Russia
impacts
and
negative
packaging
price
pressures
continue ($19M)
Costs
associated
with
ramp-up
of
Saudi
Arabia
rolling
mill
and
Micromill
TM
R&D
($13m)
At
current
prices,
metal
lag
will
be
a
negative
impact
of
$15m
ATOI
is
expected
to
decrease
30%
year-over-year,
assuming
current
metal
price
and
currency
rates
rd
st
st
nd
st |
 Alumina: Stronger US dollar and lower energy costs
12
[Alcoa logo]
1Q15 Actual and 2Q15 Outlook –
Alumina
1
Quarter Results
1
Quarter Business Highlights
Quarter Performance Bridge
1Q15
Jamalco
sale
Cost
Decreases
/ Other
Energy
Prod
-
uctivity
Price
/ Mix
Volume
Currency
API
LME
4Q14
1Q 14
4Q 14
1Q 15
Production (kmt)
4,172
4,161
3,933
3
Party Shipments (kmt)
2,649
2,928
2,538
3
Party Revenue ($ Millions)
845
1,017
887
3
Party Price ($/MT)
314
343
344
92
178
221
2
Quarter Outlook
Production
down
due
to
Jamaica
refinery
sale
and
fewer
days
Favorable
currency
movements
in
production
regions
Energy
benefit
from
lower
oil
and
gas
prices,
and
San
Ciprian
refinery conversion to natural gas
Lower
LME-based
contract
prices
~75%
of
3
party
shipments
on
API
or
spot
pricing
for
2015
API
pricing
follows
30-day
lag;
LME
pricing
follows
60-day
lag
Production
down
74
kmt
due
to
Suriname
curtailment,
offset
by one
additional production day
Saudi
Arabia
refinery
start-up
costs
will
continue
Maintenance
costs
will
increase
$9M
for
scheduled
outages
Productivity,
volume,
and
lower
energy
prices
will
offset
cost
increases
st
st
st
nd
rd
rd
rd
$ Millions
1
ATOI ($ Millions)
rd |
 Primary Metals: Lower LME prices and energy headwinds
13
* Based on published prices as of April 1, 2015
[Alcoa logo]
$ Millions
1Q15 Actual and 2Q15 Outlook –
Primary Metals
1
Quarter Results
1
Quarter Business Highlights
1
Quarter Performance Bridge
$9
$7
$2
$4
$22
1Q15
$187
Mt Holly
sale
-$4
Cost
Decreases
/ Other
Energy
-$19
Prod-
uctivity
Price
/ Mix
Volume
Currency
API
-$17
LME
-$84
4Q14
$267
1Q 14
4Q 14
1Q 15
Production (kmt)
839
731
711
3
Party Shipments (kmt)
617
637
589
3
Party Revenue ($ Millions)
1,424
1,852
1,572
3
Party Price ($/MT)
2,205
2,578
2,420
ATOI ($ Millions)
(15)
267
187
2
Quarter Outlook
Unfavorable
LME
pricing
driver
to
sequential
decline
Favorable
currency
movements
in
production
regions
Lower
energy
sales
prices
in
Brazil;
lower
energy
cost
in
Spain
Production
down
due
to
Mt.
Holly
sale
Cost
decreases
due
to
closed
locations
and
lower
overhead
Pricing
follows
a
15-day
lag
to
LME
Production
down
18kmt
due
to
Sao
Luis
curtailment,
partially
offset
by
one
additional
production
day
Regional
premium
decline
impact
of
$65m*
Net
Energy
impact
slightly
positive;
lower
costs
and
additional
Brazil
sales
offset
lower
energy
sales
in
other
regions
Productivity
and
favorable
energy
will
offset
impacts
of
lower
volume
and
other
cost
increases
rd
rd
rd
st
st
nd
st |
 Organic DWC maintained year-over-year, acquisition adds 3 days
See appendix for days working capital reconciliation
14
[Alcoa logo]
6 days
lower
Average Days Working Capital since First Quarter 2010
2 days
lower
33
32
33
30
28
31
29
32
36
35
34
36
40
40
40
44
43
42
28
30
37
2 days
lower
3 days
higher
9 day
reduction
since 1Q10
2 days
lower
Acquisition (3 days)
Alcoa ex Acquisition (30 days)
30 |
 1
st
Quarter Cash Flow Overview
15
See appendix for Free Cash Flow reconciliation
($ Millions)
1Q14
4Q14
1Q15
Net (Loss) Income before Noncontrolling
Interests
($197)
$114
$255
DD&A
$340
$336
$321
Change in Working Capital
($687)
$656
($595)
Pension Expense in Excess of Contributions
$18
$47
$37
Other Adjustments
($25)
$305
($193)
Cash from Operations
($551)
$1,458
($175)
Dividends to Shareholders
($33)
($56)
($54)
Change in Debt
($14)
($110)
$24
Net (Distributions)/Contributions from Noncontrolling
Interests
($15)
($36)
($29)
Other Financing Activities
$72
$21
$33
Cash from Financing Activities
$10
($181)
($26)
Capital Expenditures
($209)
($469)
($247)
Acquisitions/Divestitures/Asset Sales
-
($2,138)
($212)
Other Investing Activities
($31)
($46)
($6)
Cash from Investing Activities
($240)
($2,653)
($465)
Free Cash Flow
($760)
$989
($422)
Cash on Hand
$665
$1,877
$1,191
1Q14, 4Q14 & 1Q15 Cash Flow
[Alcoa logo] |
 16
LTM = last twelve months; See appendix for Net Debt reconciliation
Maintained Strong Balance Sheet
1,543
1,939
1,861
1,437
1,877
1,191
1Q15
8,817
7,626
2014
8,852
7,432
2010
9,165
7,622
6,975
2013
6,882
8,319
2012
8,829
6,968
2011
9,371
(Millions)
Net Debt
Cash
Debt-to-LTM EBITDA
3.27
3.39
2.87
Debt, Net Debt, and Debt-to-LTM EBITDA
2.49
4.20
2.22
[Alcoa logo] |
 2015 Annual Financial Targets
Aggressive targets drive growth and operational performance in 2015
Deliver
Operational
Performance
Drive Productivity Gains of $900M
Process productivity
Procurement savings
Overhead cost reductions
Invest in the
Future; Actively
Manage the
Base
Manage Return-Seeking Capital of $750M
Control Sustaining Capital of $725M
Strengthen the
Balance Sheet
Generate $500M+ of Free Cash Flow
Attain 2.25 to 2.75 Debt-to-EBITDA
17
[Alcoa logo] |
 Market fundamentals remain strong
See appendix for full scale charts
18
[Alcoa logo] |
 Klaus Kleinfeld
Chairman and Chief Executive Officer
19
April 8, 2015
[Alcoa logo] |
 Another Strong year for Aerospace; Steady growth in Automotive
Source: Alcoa analysis
1) International Air Transport Association 2015 Expectations
20
[Alcoa logo] |
 Heavy Duty Truck –
Strong U.S., Weak China; Packaging Stable
Source: Alcoa analysis
21
[Alcoa logo] |
 Solid Commercial B&C Growth; Global Airfoil Market Improves
Source: Alcoa analysis
B&C = Building and construction
22
[Alcoa logo] |
 Building a Lightweight Multi-Material
Innovation Powerhouse
Transforming Alcoa –
Creating Compelling Sustainable Value
Creating a Globally Competitive
Commodity Business
Increasing
share
in
exciting
growth markets
(e.g., aerospace, automotive, heavy duty truck and
trailer, building and construction)
Full
pipeline
of
innovative
products
and solutions
Using all growth levers
Shifting
mix
to
higher
value-add
Expanding multi-material,
technology
and
process
expertise
Increasing competitiveness,
mitigating
downside
risk
Optimizing
the
casthouse
value-add
portfolio
Shifting
pricing
to
reflect
market
fundamentals
Continuing to drive productivity
improvements
23
[Alcoa logo] |
 24
Organic and Inorganic Growth Expands Higher Value-Add Portfolio
[Alcoa logo]
Summary of Key Innovations, Growth Projects, and Inorganic Investments
|
 25
Firth Rixson Enhances Leadership Position in Jet Engine Components
1) On track to reach 2019 gross synergy target of $105M offset by $5M integration
costs (66% productivity, 26% procurement, 8% overhead). 2) Growth from $1B in
2013 to $2B in 2019; 70% secured by long term agreement. AA = Alcoa; FR = Firth Rixson
[Alcoa logo]
Firth Rixson Strategic and Financial Benefits and Alcoa’s Expanded Jet Engine
Suite Portfolio Enhancing: Expands Jet Engine Suite
Multi-Material
Edge
Leading-Edge
Technology
Building
Capabilities
Financial
Benefits
Doubles Engine Content
(e.g. turbine blades & vanes, structural castings, rings,
disks, shafts and front fan blades)
Multi-Material
Ni and Ti-Al in hot section
Ti, Al and Steel in cold section
AA
Products
FR
Products
Enables
+
70°F
+
40%
combustion
efficiency
Critical
rotating
Disks
from
Superalloys
and
Titanium
alloys
One
of
the
largest,
most
advanced
closed-die
forge
presses
$40M
net
synergies
in
year
2;
$100M¹
net
in
year
5
Visibility
of
$1B
2
revenue
growth:
70%
secured
Global
leader
in
seamless
rolled
Rings
Largest
seamless
Rings
200”
in
diameter
Full
range
of
aero
Engine
Disks
(12”
to
53”
diameter)
Multi-Material
mix:
60%
Ni,
25%
Ti,
15%
Steel/Al
Integrated
Nickel
Supply
of
cast
stick,
bar
and
billet
Specialized
Isothermal
forgings
from
Powder
Metal
alloys
Can Produce >90% of
Structural and Rotating Components
2016E
$1.6B
revenue
$350M
EBITDA |
 Alcoa Advantage Track Record Drives Post-Merger Integration
1) 2009-2014 Productivity figures, pretax and pre-minority interest. 2009/2010
represent net productivity. 2011-2014 represent gross productivity.
2) Reflects 2009 –
2014. 3) Gross synergies of $44M offset by $4M integration costs.
DWC = Days Working Capital FCF = Free Cash Flow CT = Commercial Transportation.
26
[Alcoa logo]
190%
deployed
versus 2016E
synergy target
3
Alcoa Strategic Priorities
ALCOA ADVANTAGE
Creating value for all businesses
DISCIPLINED EXECUTION
Across all activities
Degrees of Implementation
methodology for rigorous
management from idea to cash
Talent
Purchasing
Customer
Intimacy
Operating
System
Technology
On Track to Deliver $40M Synergies in 2016
3
IT
Human Resources
Finance
Credit
Successful Execution Track Record
Operational Excellence
drive $7.9B of
Productivity
1
Sustainable DWC reduction:
28 days 4Q14; -9 days since 4Q09
Generated $3B
FCF 2;
5
consecutive
years
of
achieving
positive FCF
Capital Allocation for Growth
Auto: Aluminum intensive vehicles
Aero: World’s first Al-Li fan blade
CT: World’s lightest wheel
Commercializing Innovation
3D Core Platform technology
Alcoa 951 bonding technology
MagnaForceTM
alloy
150%
deployed
Examples of Operational, Financial, and Productivity Execution and Expertise to
Capture Firth Rixson Synergies 250%
deployed
200%
deployed
Operational Productivity $22M
titanium, nickel, and aluminum value chains
Productivity initiatives deployed
through Alcoa
daily management system Procurement Savings $14M
e.g., Leverage existing contracts
Consolidate global supply base
Overhead Reductions $8M
e.g., Integrate shared services Center of
Excellence
Update on Isothermal Press
Received isothermal forge, heat treat and testing
methods approval from customer and cleared for
qualification
Successfully forged 6 qualification batches for first
customer –
first revenue 2H 2015
PROFITABLE GROWTH
in every business
Business Programs that define:
3-year aspirations
Priority levers
Accountability
Standardized operating systems
e.g., Optimization of revert utilization across |
 27
Alcoa + RTI Combination Expands Titanium Customer Solutions
1) Growth from 14.5% in 2014 to 25.0% projected in 2019; 2) Projected revenue in
2019 3) Representative of mid and downstream capabilities; not intended
to reflect a market position. [Alcoa logo]
~65%
of
$1.2B
2
revenue
supported
by
contracts
Strategic and Financial Benefits of RTI and Mid and Downstream Titanium Value
Chain Enhances
Offerings:
Expands
Ti,
Value-Add
Solutions
Plasma
and
Electron
Beam
melting
Titanium billetizing and mill products
Machining
and
subassembly
Production of near net shape components from
Titanium and Metal Matrix Composites powders through
cold and hot isostatic pressing
Multi-Material
Edge
Leading-Edge
Technology
Building
Capabilities
Intellectual
property
in
multi-Material
3-D
printing
(Ti, Ni, Steel and Al)
Closed
loop
scrap
processing
Financial
Benefits
Complements
Mid
and
Downstream
Value
Chain
Capabilities
3
None
Limited
Moderate
Significant
Full
Melting
(Ingot, Cast Slab)
Billetizing,
Rolling
(Mill Products)
Conversion
(Closed
-Die
Forging, Extruding,
Investment Casting)
Machining,
Subassembly
INGOT
PLATE
FORGING
MACHINING
+
$30M
net
synergies
in
year
2;
$100M
net
in
year
4
+10% point
1
growth
in EBITDA margins
Ti-Al
ingot
for
technically
advanced
Ti-Al
low
pressure
turbine
blades
2019E
$1.2B
revenue
25%
EBITDA
margin |
 Alcoa Advantages to Drive Synergies and Further Growth Opportunities
1) Figure reflects net synergies after $9M merger integration costs.
28
[Alcoa logo]
Examples of RTI Synergy Levers, Growth Technologies, and Expanding End
Markets Overhead
Cost
Reductions
$20M
Procurement
Savings
$20M
Growth
$25M
Process
Productivity
$44M
Expand selection of machined
parts
(e.g., plate, forgings, extrusions)
Migrate from Ti ingot directed buy programs
Offer Ti
-Al for high-growth engine components
Integrate Shared Services Center of Excellence
Leverage Alcoa’s $18B global
spend
(
e.g.,
commodities, production, maintenance supplies )
Standardize payment terms
Maximize internal metal supply
Decrease outsourced machining
Increase utilization of
capacity
(e.g., melting, billetizing, rolling, machining)
Optimize revert metal loop
Finance
Credit
Meaningful RTI Synergies Identified
Direct
access
to
RTI Ti-Al ingot for
AA’s
investment
casting
and
forging
technology
Ti-Aluminide (Ti-Al)
Growth from Foundational Technologies
Upside from Additional End Market Potential
Information Technology
Human Resources
Operational and
commercial
expertise in additive
manufactured
part
production
Additive Mfg.
Manufacturer
in
minimally
invasive
surgical
tools
precision
machining
Medical
`
Attractive
titanium
and
steel
products for
production wells
Complementary
to
Alcoa’s
aluminum drilling
products
Oil & Gas
bed,
multi-spindle machining
subassemblies/kits
Machining
High-speed
long-
State-of-the-art
robotic
Flight
critical
Net
Synergies
$100M
1
30%
in
year
2
100%
in
year
4 |
 Transitioning GRP Portfolio From Lower Margin Markets…
29
GRP = Global Rolled Products
[Alcoa logo]
Invest
in
$190M
Very
Thick
Plate
stretcher
Upgrading Portfolio to Drive Higher Profitability
15%
27%
42%
14%
27%
21%
38%
16%
Can Sheet Supply/Demand Dynamics and Actions to Shift Portfolio
Oversupply, Weaker Demand Weighs on Can Sheet
Result:
Compressed Margins and Lower Volumes
% of GRP Revenues
14A
16E On track
for
$344/MT EBITDA or
Higher by 2016
Shift to Higher Margin, Differentiated Products
to Drive GRP Y-o-Y Profit Lift in 2016 vs. 2015
Market Sector
Invest combined ~$600M in
auto sheet plant expansions
Sold 3 rolling mills in Spain
and France
Sold rolling mill in Russia
2 mills closed in Australia
Expand aseptic foil mill in
Brazil
Portfolio Actions
Aero/Defense
Transportation
Industrial
Packaging
31%
41%
69%
59%
Demand
Supply
Overcapacity
+
Convert
capacity
to
auto from
packaging
(US)
Declining
carbon-
ated
soft drink
(US)
+
Beer
growth (US &
China)
+
Conversion to Al
from steel (Europe) |
 …To Higher Growth and Higher Margin End Markets
Source: Automotive from Ducker Worldwide 2014
1)
Annual
Savings
=
((15,000
Hwy
Miles/Yr
÷
17
Hwy
MPG)
–
(15,000
Hwy
Miles/Yr
÷
26
Hwy
MPG))
x
$3/gal;
$2/gal
cost
=
$611
savings.
30
[Alcoa logo]
OEMs Need Fuel Economy…
U.S. Light Truck CAFE Targets (MPG)
…And Consumers Benefit
813
659
451
1,155
2018E
2020E
2016E
2015E
Aluminum Auto Demand Drivers, Alcoa Auto Sheet Investments and Revenue Growth
North America Aluminum
Auto Sheet Demand (kMT)
~3x
$660
$1,050
$340
Projected
Alcoa
Auto Sheet Revenues ($M)
Davenport Fully Operational
~3x
Lighter, less fuel consumption
Additional
payload/ towing capacity
(e.g., 700 lbs)
Faster
acceleration;
improved
braking
distance
9
MPG
$916/yr
savings
1
43.8
29.8
26.3
2025E
2016E
2014
+67%
Al auto
sheet
demand
expected to reach
>1MMT by 2020
2014A
2015E
2016E
Result:
Automotive
Revenues:
10%
of
GRP
in
2014
to
20%
in
2016E
Auto
Sheet
Shipments:
+65%
CAGR
(2013-16E)
Higher
Margins
and
Volumes
~2x
Auto Sheet Investments a Key Driver of Growth
Lightweighting Trend Accelerates Al Sheet Demand
•
•
• |
 31
Looking Forward: Alcoa Invents for Next-Generation Automotive
1) In late stage of development; 2) In early stage of development.
HSS = High Strength Steel
[Alcoa logo]
Breakthrough Al Alloy + Casting Technology
Stronger, Better, Faster: Win for the Customer and Alcoa
Micromill’s Innovation in Automotive Alloys, Value Proposition and Development
Progress Current alloys
(1)
High strength
(2)
Advanced impact
(2)
High formability
(1)
Advanced impact
: equivalent to
steel crash resistance at
30-40%
lighter
vs. HSS
Higher formability
: allows multiple
parts to
single piece
consolidation;
reduces
costs 4-
8%
vs.
ingot based Al
Higher strength
: can replace HSS
parts;
eliminates
dissimilar metal
joining issues;
reduces
weight
25-
35%
vs. HSS
2x
more
formable
, while
30% lighter
than HSS
Reduces
OEM
system cost
from
streamlined alloy portfolio
Attack share of
$3.5B
of
steel
auto
applications
20 day
rolling process
to 20 minutes
50% lower energy
use
1/4
the
footprint
of
conventional
mill
Completed
successful
customer trials
Qualification in
progress at first
customer
Executed
agreements to
qualify with
5
additional OEMs
First
commercial coil
Completed
In
Process
Exploring
Full Scale Capacity
Expansion Options
Micromill™
assembly |
 Sources: CRU and Alcoa analysis
API = Alumina Price Index
Commodity Strategy is Working: Lowering Costs and Enhancing Revenue
32
[Alcoa logo]
Lower Cost…
…
Enhance Revenue
Global Aluminum Cost Curve
Global Alumina Cost Curve
Key Commodity Business Metrics: 2010 and 2014 Actual and 2016 Targets
Alumina
Primary Metals
2010
2016
2014
57%
65%
70%
Value-add %
2010
2016
2014
5%
68%
84%
API/spot %
% of total shipments
2014
$55
EBITDA/MT
2014
$422
EBITDA/MT
%
of
3
rd
party
shipments |
 Executing Robust Process to Maximize Global Competitiveness
1)
Includes
74
kmt
of
Sao
Luis
smelting
capacity
to
be
executed
by
April
15
th
W.A. = Western Australia
33
[Alcoa logo]
Strategic Review Process and Capacity Actions Executed Against 2015 Strategic
Review Guiding Principles
Maximize cash position for
ramp-down and ramp-up
considering:
Operational flexibility
Power flexibility
Repowering impact
Community impact
33% reduction in smelting
operating
capacity
since
2007
1
March 6, 2015
2.8 mmt refining
500 kmt smelting
under strategic review
To Take Quick, Decisive Action
12
Months |
 Global Businesses Focused on Upstream Value Creation
34
[Alcoa logo]
Explore
opportunities in
external markets
Improve
competitiveness;
transform pricing
Leverage assets;
Secure long
-term
solutions
Lower cost;
enhance
operational
excellence
Grow value-add
product mix
Global Primary Products Global Business Units
Increases performance transparency
Focuses Centers of Excellence, enhances best practice sharing
Improves commercial and operational alignment
Optimizes capital allocation
MINING
REFINING
CASTING
SMELTING
ENERGY
Alumina
Primary Metals |
 Profitable
Growth
from
Organic
&
Inorganic
–
Fully
on
Track
Disciplined Execution Improves Upstream Competitiveness
Continue to Deliver Strong Operational Results
35
Creating Sustainable Value for Shareholders
[Alcoa logo] |
 Nahla Azmy
Vice President, Investor Relations
Alcoa
390 Park Avenue
New York, NY 10022-4608
Telephone: (212) 836-2674
Email: nahla.azmy@alcoa.com
www.alcoa.com
Additional Information
36
[Alcoa logo] |
 Annual Sensitivity Summary
Currency Annual Net Income Sensitivity
+/-
$100/MT = +/-
$190 million
LME Aluminum Annual Net Income Sensitivity
Australian $
+/-
$11 million
per 0.01 change in USD / AUD
Brazilian $
+/-
$ 1 million
per 0.01 change in BRL / USD
Euro €
+/-
$ 2 million
per 0.01 change in USD / EUR
Canadian $
+/-
$ 4 million
per 0.01 change in CAD / USD
Norwegian Kroner
+/-
$ 4 million
per 0.10 change in NOK / USD
37
+/-
$10/MT = +/-
$20 million
API/Spot Alumina Annual Net Income Sensitivity
[Alcoa logo] |
 Composition of Regional Premium Pricing Convention
38
[Alcoa logo] |
 39
Alcoa Segment Bridges
EPS = Engineered Products and Solutions
GRP = Global Rolled Products
$ Millions
$ Millions
$ Millions
$ Millions
EPS Sequential Quarter Bridge
GRP Sequential Quarter Bridge
API
$34
LME
$13
1Q14
$92
Energy
-$16
$8
Prod-
uctivity
$33
Price /
Mix
$14
Volume
-$8
FX
$69
Cost
Increases
/ Other
Surgold
sale
$221
1Q15
-$18
1Q15
Cost
Increases
/ Other
$43
Saudi
JV /
Portfolio
actions
$187
$26
-$41
Energy
$8
$45
FX
$7
Volume
$71
Price /
Mix
API
LME
-$15
1Q14
$62
-$19
Prod-
uctivity
1Q15
$191
Cost
Increases/
Other
-$14
Productivity
$27
Price / Mix
-$2
Volume
$20
Currency
-$5
4Q14
$165
Portfolio
Actions
-10
Cost
Increases
/ Other
-2
Energy
2
0
34
Price /
Mix
1Q15
Productivity
4
Volume
9
Currency
-3
LME
-36
4Q14
71
Alumina Year-over-Year Bridge
Primary Metals Year-over-Year Bridge
[Alcoa logo] |
 Special Items
See appendix for Adjusted Income reconciliation.
NCI: Non-controlling interest
40
Pre-tax, Before NCI
After-tax, After NCI
$ Millions, except per-share amounts
4Q14
1Q15
4Q14
1Q15
Income Statement
Classification
Segment
Income from Continuing Operations
$234
$481
$159
$195
Income Per Diluted Share
-
-
$0.11
$0.14
Restructuring-Related
($388)
($177)
($200)
($158)
Restructuring and
Other Charges/COGS
Corporate / All
Tax Items
-
-
($53)
($4)
Income Taxes
Corporate
Acquisition Costs
($25)
($9)
($22)
($7)
SG&A/Interest
Expense
Corporate
Mark-to-Market Energy Contracts
$2
$2
$2
$1
Other Expenses, Net
Corporate
Special Items
($411)
($184)
($273)
($168)
Income from Continuing Ops excl Special Items
$645
$665
$432
$363
Income
per Diluted
Share excl
Special Items
-
-
$0.33
$0.28
[Alcoa logo] |
 Revenue Change by Market
41
14%
7%
(23%)
3%
(25%)
(13%)
(15%)
(9%)
(13%)
(15%)
24%
46%
(18%)
13%
(28%)
(5%)
(5%)
43%
5%
10%
21%
5%
5%
7%
6%
1%
11%
2%
15%
27%
Aerospace
Automotive
B&C
Comm. Transport
Industrial Products
IGT
Packaging
Distribution/Other
Alumina
Primary Metals
1Q15 Third-Party Revenue
Sequential
Change
Year-Over-Year
Change
[Alcoa logo] |
 Revenue Change by Market
42
3%
17%
3%
15%
(3%)
(11%)
1%
24%
6%
3%
17%
4%
6%
6%
8%
2%
13%
1%
15%
28%
Aerospace
Automotive
B&C
Comm. Transport
Industrial Products
IGT
Packaging
Distribution/Other
Alumina
Primary Metals
FY 2014 Third-Party Revenue
Year-Over-Year
Change
[Alcoa logo] |
 Composition of Upstream Production Costs
1
Natural gas information corresponds to Point Comfort, as Australia is priced on a
rolling 16 quarter average 43
[Alcoa logo]
Fuel Oil
7%
Natural gas
13%
Caustic
9%
Bauxite
27%
Conversion
44%
Input Cost
Inventory flow
Pricing
convention
Annual ATOI
Sensitivity
Fuel oil
1 –
2 months
Prior month
$2m per $1/bbl
Natural gas
N/A
Spot
$13m per $1/GJ
1
Caustic soda
3 -
6 months
Spot & semi-
annual
$8m per
$10/DMT
Refining Cost Structure
Alumina
34%
Carbon
12%
Power
25%
Materials
7%
Conversion
22%
Smelting Cost Structure
Input Cost
Inventory flow
Pricing convention
Annual ATOI
Sensitivity
Coke
1 -
2 months
Spot, quarterly &
semi-annual
$7m per
$10/MT
Pitch
1 -
2 months
Spot, quarterly &
semi-annual
$2m per
$10/MT
1 |
 Alcoa Upstream capacity closed, sold and idled
44
1) Includes 74 kmt curtailment announced on March 30, 2015; Execute by April 15,
2015. 2) Includes 443 kmt curtailment announced on March 17, 2015;
Execute by April 30, 2015. Does not include a potential sale transaction with the Government of Suriname.
[Alcoa logo]
Facility
Year
kmt
Baie Comeau
2008
53
Eastalco
2010
195
Badin
2010
60
Warrick
2010
40
Tennessee
2011
215
Rockdale
2011
76
Baie Comeau
2013
105
Fusina
2013
44
Massena East
2013
41
Massena East
2014
84
Point Henry
2014
190
Portovesme
2014
150
Mt. Holly
(sale of 50.33% interest)
2014
115
Total
1,368
Closed/sold since December 2007
Facility
kmt
Rockdale
191
Sao Luis
1
268
Pocos
96
Intalco
49
Wenatchee
41
Aviles
32
Portland
30
La Coruna
24
Total
731
Smelting Capacity
Idled
Refining Capacity
Facility
Year
kmt
Jamalco
(sale of 55% interest)
2014
779
Total
779
Closed/sold since December 2007
Facility
kmt
Suriname
2
1,319
Point Comfort
295
Total
1,614
Idled |
 Source: Alcoa estimates, CRU, Harbor, Wood Mackenzie
6.5% 2015 demand growth on higher base
45
29.2
6.7
6.7
4.3
2.2
2.1
2.1
1.1
1.0
5%
9.5%
5%
7%
4%
1%
0.5%
1.5%
8%
-2%
57.5 mmt
1
Other includes Africa, E. Europe, Latin America ex Brazil, and Oceania
2015 Primary Aluminum Consumption (mmt), Annualized Growth (%)
China
Europe
North America
North Asia
India
SE Asia
MENA
Russia
Brazil
Other ¹
2.1
2015 demand +6.5%
on higher base
Higher
Final 2014 global demand growth
+9% vs. +7%
[Alcoa logo] |
 46
Source: Alcoa analysis, Alladiny, CNIA, CRU, China Customs, Harbor, Wood
Mackenzie Alumina surplus tightens, Aluminum in balance
[Alcoa logo]
2015E Aluminum Supply/Demand Balance
2015E Alumina Supply/Demand Balance
’000 mt
China
Rest of World
2015 Production
47,522
54,921
2015 Production to be added
5,030
3,006
2015 Capacity curtailed or restarted
1,331
(462)
Imports/(exports)
3,000
(3,000)
Total supply
56,883
54,465
Demand
(56,883)
(51,766)
Net Balance
0
2,699
Supply/Demand Analysis
4Q14
Surplus
2,932
4Q14
Deficit
(38)
’000 mt
China
Rest of World
2015 Production
27,998
25,955
2015 Production to be added
4,400
868
2015 Capacity curtailed or *restarted
(1,415)
0
Total Supply
30,983
26,823
Demand
(29,171)
(28,309)
Net Balance
1,812
(1,486)
Surplus
326
Surplus
2,699 |
 Source: Alcoa estimates, IAI, LME, Marubeni, Shanghai Metal Exchange
Global inventories have fallen to 66 days; down 10 days year-over year
47
[Alcoa logo] |
 Premiums down from record highs; remain above 2014 levels
48
Source:
Graph
shows
monthly
average
of
daily
prices
-
Platts
Metals
Week
1Q15
and
1Q14
bubble/table
data
shows
quarterly
average
of
daily
prices
[Alcoa logo] |
 Reconciliation
of
ATOI
to
Consolidated
Net
(Loss)
Income
Attributable
to
Alcoa
(in millions)
1Q14
2Q14
3Q14
4Q14
2014
1Q15
Total segment ATOI
$325
$418
$619
$681
$2,043
$633
Unallocated amounts (net of tax):
Impact of LIFO
(7)
(8)
(18)
(21)
(54)
7
Interest expense
(78)
(69)
(81)
(80)
(308)
(80)
Noncontrolling interests
19
9
18
45
91
(60)
Corporate expense
(67)
(70)
(74)
(83)
(294)
(64)
Restructuring and other charges
(321)
(77)
(189)
(307)
(894)
(161)
Other
(49)
(65)
(126)
(76)
(316)
(80)
Consolidated net (loss) income attributable to Alcoa
$(178)
$138
$149
$159
$268
$195
49
[Alcoa logo] |
 Reconciliation of Adjusted Income
50
(in millions, except
per-share amounts)
(Loss) Income
Diluted
EPS
(3)
Quarter ended
Quarter ended
March 31,
December 31,
March 31,
March 31,
December 31,
March 31,
2014
2014
2015
2014
2014
2015
Net (loss) income
attributable to Alcoa
$(178)
$159
$195
$(0.16)
$0.11
$0.14
Restructuring and
other charges
274
200
158
Discrete tax items
(1)
(6)
16
Other special items
(2)
8
57
10
Net income
attributable to Alcoa
–
as adjusted
$98
$432
$363
0.09
0.33
0.28
[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.
(1)
Discrete tax items include the following:
•
for the quarter ended December 31, 2014, a charge for the remeasurement of certain deferred
tax assets of a subsidiary in Spain due to a tax rate change ($16), a benefit for an adjustment to the remeasurement of certain deferred tax assets of a subsidiary in Brazil due to a tax rate change
($3), and a net charge for a number of small items ($3); and
•
for the quarter ended March 31, 2014, a net benefit for a number of small items.
(2)
Other special items include the following:
•
for the quarter ended March 31, 2015, an unfavorable tax impact related to the interim period
treatment of operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($35), a favorable tax impact resulting from the difference between Alcoa’s consolidated
estimated annual effective tax rate and the statutory rates applicable to special items ($31),
costs associated with current and future acquisitions of aerospace businesses ($7), and a net favorable change in certain mark-to-market energy derivative contracts ($1);
•
for the quarter ended December 31, 2014, an unfavorable tax impact resulting from the
difference between Alcoa’s consolidated estimated annual effective tax rate and the statutory rates applicable to special items ($81), a favorable tax impact related to the interim period treatment of
operational losses in certain foreign jurisdictions for which no tax benefit was recognized
($44), costs associated with current and future acquisitions of aerospace businesses ($22), and a net favorable change in certain mark-to-market energy derivative contracts ($2); and
•
for the quarter ended March 31, 2014, a favorable tax impact resulting from the difference
between Alcoa’s consolidated estimated annual effective tax rate and the statutory rates applicable to special items ($72), an unfavorable tax impact related to the interim period treatment of
operational losses in certain foreign jurisdictions for which no tax benefit was recognized
($56), a write-down of inventory related to the permanent closure of a smelter and two rolling mills in Australia and a smelter in the United States ($20), an unfavorable impact related to the restart of one
potline at the joint venture in Saudi Arabia that was previously shut down due to a period of
pot instability ($13), a gain on the sale of a mining interest in Suriname ($11), and a loss on the write-down of an asset to fair value ($2).
(3)
The average number of shares applicable to diluted EPS for Net (loss) income attributable to
Alcoa excludes certain share equivalents as their effect was anti-dilutive (see footnote 3 to the Statement of Consolidated Operations). However, certain of these share equivalents become dilutive in
the EPS calculation applicable to Net income attributable to Alcoa – as adjusted due to a
larger, positive numerator. Specifically, these share equivalents were associated with outstanding employee stock options and awards for the quarter ended March 31, 2014 and mandatory convertible
preferred stock for the quarters ended December 31, 2014 and March 31, 2015. As a result,
the average number of shares applicable to diluted EPS for Net income attributable to Alcoa – as adjusted was 1,115,941,470; 1,294,701,805; and 1,315,558,890 for the quarters ended March 31, 2014,
December 31, 2014, and March 31, 2015, respectively. Additionally, the subtraction of
preferred stock dividends declared from the numerator (see footnote 1 to the Statement of Consolidated Operations) needs to be reversed for the quarters ended December 31, 2014 and March 31, 2015
since the related mandatory convertible preferred stock was dilutive in the EPS calculation for
Net income attributable to Alcoa – as adjusted. |
 Reconciliation of Alcoa Adjusted EBITDA
($ in millions)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1Q14
4Q14
1Q15
Net
income
(loss)
attributable
to
Alcoa
$1,310
$1,233
$2,248
$2,564
$(74)
$(1,151)
$254
$611
$191
$(2,285)
$268
$(178)
$159
$195
Add:
233
259
436
365
221
61
138
194
(29)
41
(91)
(19)
(45)
60
Cumulative
effect
of
accounting
changes
–
2
–
–
–
–
–
–
–
–
–
–
–
–
Loss
(income)
from
discontinued
operations
27
50
(22)
250
303
166
8
3
–
–
–
–
–
–
Provision
(benefit)
for
income
taxes
546
464
853
1,623
342
(574)
148
255
162
428
320
(77)
120
226
Other
(income)
expenses,
net
(266)
(478)
(236)
(1,920)
(59)
(161)
5
(87)
(341)
(25)
47
25
(6)
(12)
Interest
expense
271
339
384
401
407
470
494
524
490
453
473
120
122
122
Restructuring
and
other
charges
(29)
266
507
268
939
237
207
281
172
782
1,168
461
388
177
Impairment
of
goodwill
–
–
–
–
–
–
–
–
–
1,731
–
–
–
–
Provision
for
depreciation,
depletion,
and
amortization
1,142
1,227
1,252
1,244
1,234
1,311
1,450
1,479
1,460
1,421
1,371
340
335
321
Adjusted
EBITDA
$3,234
$3,362
$5,422
$4,795
$3,313
$359
$2,704
$3,260
$2,105
$2,546
$3,556
$672
$1,073
$1,089
Sales
$21,370
$24,149
$28,950
$29,280
$26,901
$18,439
$21,013
$24,951
$23,700
$23,032
$23,906
$5,454
$6,377
$5,819
Adjusted
EBITDA
Margin
15.1%
13.9%
18.7%
16.4%
12.3%
1.9%
12.9%
13.1%
8.9%
11.1%
14.9%
12.3%
16.8%
18.7%
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods sold; Selling,
general administrative, and other expenses; Research and development expenses; and Provision for depreciation,
depletion, and amortization. Adjusted EBITDA is a non-GAAP financial
measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides
additional information with respect to Alcoa’s operating performance and the
Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
51
[Alcoa logo]
Net
income
(loss)
attributable
to
noncontrolling
interests |
 Reconciliation of Alumina Adjusted EBITDA
($ in millions, except per metric ton amounts)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1Q14
4Q14
1Q15
After-tax operating income (ATOI)
$632
$682
$1,050
$956
$727
$112
$301
$607
$90
$259
$370
$92
$178
$221
Add:
Depreciation, depletion, and amortization
153
172
192
267
268
292
406
444
455
426
387
97
90
80
Equity (income) loss
(1)
–
2
(1)
(7)
(8)
(10)
(25)
(5)
4
29
5
10
7
Income taxes
240
246
428
340
277
(22)
60
179
(27)
66
153
40
75
92
Other
(46)
(8)
(6)
2
(26)
(92)
(5)
(44)
(8)
(6)
(28)
(28)
2
–
Adjusted EBITDA
$978
$1,092
$1,666
$1,564
$1,239
$282
$752
$1,161
$505
$749
$911
$206
$355
$400
Production (thousand metric tons) (kmt)
14,343
14,598
15,128
15,084
15,256
14,265
15,922
16,486
16,342
16,618
16,606
4,172
4,161
3,933
Adjusted EBITDA / Production
($ per metric ton)
$68
$75
$110
$104
$81
$20
$47
$70
$31
$45
$55
$49
$85
$102
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is
equivalent
to
Sales
minus
the
following
items:
Cost
of
goods
sold;
Selling,
general
administrative,
and
other
expenses;
Research
and
development
expenses;
and
Provision
for
depreciation,
depletion, and amortization. The Other line in the table above includes
gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.
Management
believes
that
this
measure
is
meaningful
to
investors
because
Adjusted
EBITDA
provides
additional
information
with
respect
to
Alcoa’s
operating
performance
and
the
Company’s
ability to meet its financial obligations. The Adjusted EBITDA presented may
not be comparable to similarly titled measures of other companies. 52
[Alcoa logo] |
 Reconciliation of Primary Metals Adjusted EBITDA
($ in millions, except per metric ton amounts)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1Q14
4Q14
1Q15
After-tax operating income (ATOI)
$808
$822
$1,760
$1,445
$931
$(612)
$488
$481
$309
$(20)
$594
$(15)
$267
$187
Add:
Depreciation, depletion, and amortization
326
368
395
410
503
560
571
556
532
526
494
124
117
109
Equity (income) loss
(58)
12
(82)
(57)
(2)
26
(1)
7
27
51
34
28
(11)
3
Income taxes
314
307
726
542
172
(365)
96
92
106
(74)
203
(11)
89
57
Other
20
(96)
(13)
(27)
(32)
(176)
(7)
2
(422)
(8)
(6)
–
(2)
(1)
Adjusted EBITDA
$1,410
$1,413
$2,786
$2,313
$1,572
$(567)
$1,147
$1,138
$552
$475
$1,319
$126
$460
$355
Production (thousand metric tons) (kmt)
3,376
3,554
3,552
3,693
4,007
3,564
3,586
3,775
3,742
3,550
3,125
839
731
711
Adjusted EBITDA / Production
($ per metric ton)
$418
$398
$784
$626
$392
$(159)
$320
$301
$148
$134
$422
$150
$629
$499
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is
equivalent
to
Sales
minus
the
following
items:
Cost
of
goods
sold;
Selling,
general
administrative,
and
other
expenses;
Research
and
development
expenses;
and
Provision
for
depreciation,
depletion, and amortization. The Other line in the table above includes
gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.
Management
believes
that
this
measure
is
meaningful
to
investors
because
Adjusted
EBITDA
provides
additional
information
with
respect
to
Alcoa’s
operating
performance
and
the
Company’s ability to meet its financial obligations. The Adjusted EBITDA
presented may not be comparable to similarly titled measures of other companies.
53
[Alcoa logo] |
 Reconciliation of Global Rolled Products Adjusted EBITDA
($ in millions, except per metric ton amounts)
2004
2005
2006
2007
2008
2009
2010*
2011*
2012*
2013
2014
1Q14
4Q14
1Q15
After-tax operating income (ATOI)
$290
$300
$317
$151
$(41)
$(106)
$241
$260
$346
$252
$312
$59
$71
$34
Add:
Depreciation, depletion, and amortization
200
220
223
227
216
227
238
237
229
226
235
58
57
56
Equity loss
1
–
2
–
–
–
–
3
6
13
27
5
8
9
Income taxes
97
135
113
77
14
12
103
98
159
108
124
34
25
26
Other
1
1
20
1
6
(2)
1
1
(2)
–
(1)
(2)
–
–
Adjusted EBITDA
$589
$656
$675
$456
$195
$131
$583
$599
$738
$599
$697
$154
$161
$125
Total shipments (thousand metric tons) (kmt)
2,136
2,250
2,376
2,482
2,361
1,888
1,755
1,866
1,943
1,989
2,056
489
508
447
Adjusted EBITDA / Total shipments
($ per metric ton)
$276
$292
$284
$184
$83
$69
$332
$321
$380
$301
$339
$315
$317
$280
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 non-operating 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.
54
*
The
average
Adjusted
EBITDA
per
metric
ton
of
these
three
years
equals
$344
and
represents
the
average
historical
high
for
the
Global
Rolled
Products
segment.
Alcoa
has
a
2016
target
to meet or exceed this average historical high.
[Alcoa logo] |
 Reconciliation of Engineered Products and Solutions Adjusted EBITDA
($ in millions)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1Q14
4Q14
1Q15
After-tax operating income (ATOI)
$161
$276
$382
$423
$522
$311
$419
$537
$612
$726
$767
$189
$165
$191
Add:
Depreciation, depletion, and amortization
168
160
152
163
165
177
154
158
158
159
173
40
52
60
Equity loss (income)
–
–
6
–
–
(2)
(2)
(1)
–
–
–
–
–
–
Income taxes
70
120
164
184
215
138
198
258
297
348
374
91
81
89
Other
106
(11)
(2)
(7)
2
1
–
(1)
(9)
(2)
–
–
(2)
–
Adjusted EBITDA
$505
$545
$702
$763
$904
$625
$769
$951
$1,058
$1,231
$1,314
$320
$296
$340
Third-party sales
$4,283
$4,773
$5,428
$5,834
$6,199
$4,689
$4,584
$5,345
$5,525
$5,733
$6,006
$1,443
$1,566
$1,689
Adjusted EBITDA Margin
11.8%
11.4%
12.9%
13.1%
14.6%
13.3%
16.8%
17.8%
19.1%
21.5%
21.9%
22.2%
18.9%
20.1%
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 non-operating 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. 55
(1)
The
Adjusted
EBITDA
Margin
for
the
year
ended
December
31,
2013
represents
the
historical
high
for
the
Engineered
Products
and
Solutions
segment.
Alcoa
has
a
2016
target
to
exceed
this historical high.
(2)
In the quarter and year ended December 31, 2014, the Third-party sales and
Adjusted EBITDA of Engineered Products and Solutions includes $81 and $(10), respectively, related to the
acquisition
of
an
aerospace
business,
Firth
Rixson.
Excluding
these
amounts,
Adjusted
EBITDA
Margin
was
20.6%
and
22.3%
for
the
quarter
and
year
ended
December
31,
2014,
respectively.
(3)
In the quarter ended March 31, 2015, the Third-party sales and Adjusted EBITDA
of Engineered Products and Solutions includes $233 and $27, respectively, related to Firth Rixson. Excluding
these amounts, Adjusted EBITDA Margin was 21.5% for the quarter ended March 31,
2015. [Alcoa logo]
(1)
(2)
(2)
(3) |
 Reconciliation of Free Cash Flow
(in millions)
Year ended
Quarter ended
December 31,
2009
December 31,
2010
December 31,
2011
December 31,
2012
December 31,
2013
December 31,
2014
March 31,
2014
December 31,
2014
March 31,
2015
Cash from
operations
$1,365
$2,261
$2,193
$1,497
$1,578
$1,674
$(551)
$1,458
$(175)
Capital
expenditures
(1,622)
(1,015)
(1,287)
(1,261)
(1,193)
(1,219)
(209)
(469)
(247)
Free cash flow
$(257)
$1,246
$906
$236
$385
$455
$(760)
$989
$(422)
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. 56
[Alcoa logo] |
 Days Working Capital
Days Working Capital = Working Capital divided by (Sales/number of days in the
quarter). (1)
The deferred purchase price receivable relates to an arrangement to sell certain
customer receivables to several financial institutions on a recurring basis. Alcoa is adding back this receivable
for the purposes of the Days Working Capital calculation.
(2)
The
Working
Capital
for
each
period
presented
represents
an
average
quarter
Working
Capital,
which
reflects
the
capital
tied
up
during
a
given
quarter.
As
such,
the
components
of
Working
Capital
for
each
period
presented
represent
the
average
of
the
ending
balances
in
each
of
the
three
months
during
the
respective
quarter.
(3)
In the quarter ended March 31, 2015, Working Capital and Sales include $279 and
$233, respectively, related to the acquisition of two aerospace businesses, Firth Rixson and TITAL. Excluding
these
amounts,
Days
Working
Capital
was
30
for
the
quarter
ended
March
31,
2015.
57
($ in millions)
Quarter ended
31-Mar-12
30-Jun-12
30-Sep-12
31-Dec-12
31-Mar-13
30-Jun-13
30-Sep-13
31-Dec-13
31-Mar-14
30-Jun-14
30-Sep-14
31-Dec-14
31-Mar-15
(3)
Receivables from customers, less
allowances
$1,709
$1,650
$1,600
$1,573
$1,704
$1,483
$1,427
$1,383
$1,391
$1,401
$1,526
$1,513
$1,487
Add: Deferred purchase price
receivable
(1)
85
144
104
53
50
223
347
339
238
371
438
395
389
Receivables from customers, less
allowances, as adjusted
1,794
1,794
1,704
1,626
1,754
1,706
1,774
1,722
1,629
1,772
1,964
1,908
1,876
Add: Inventories
3,079
3,097
3,051
2,894
2,961
2,949
2,932
2,783
2,974
3,201
3,194
3,064
3,189
Less: Accounts payable, trade
2,660
2,594
2,496
2,587
2,656
2,820
2,746
2,816
2,813
2,880
3,016
3,021
2,936
Working Capital
(2)
$2,213
$2,297
$2,259
$1,933
$2,059
$1,835
$1,960
$1,689
$1,790
$2,093
$2,142
$1,951
$2,129
Sales
$6,006
$5,963
$5,833
$5,898
$5,833
$5,849
$5,765
$5,585
$5,454
$5,836
$6,239
$6,377
$5,819
Days Working Capital
34
35
36
30
32
29
31
28
30
33
32
28
33
[Alcoa logo] |
 Reconciliation of Net Debt
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.
(in millions)
December 31,
March 31,
2010
2011
2012
2013
2014
2015
Short-term borrowings
$92
$62
$53
$57
$54
$80
Commercial paper
–
224
–
–
–
–
Long-term debt due within one year
231
445
465
655
29
26
Long-term debt, less amount due within one year
8,842
8,640
8,311
7,607
8,769
8,711
Total debt
9,165
9,371
8,829
8,319
8,852
8,817
Less: Cash and cash equivalents
1,543
1,939
1,861
1,437
1,877
1,191
Net debt
$7,622
$7,432
$6,968
$6,882
$6,975
$7,626
58
[Alcoa logo] |
 Reconciliation of Debt-to-Adjusted EBITDA Ratio
($ in millions)
2010
2011
2012
2013
2014
1Q15*
Net income (loss) attributable to Alcoa
$254
$611
$191
$(2,285)
$268
$641
Add:
138
194
(29)
41
(91)
(12)
Loss from discontinued operations
8
3
–
–
–
–
Provision for income taxes
148
255
162
428
320
623
Other expenses (income), net
5
(87)
(341)
(25)
47
10
Interest expense
494
524
490
453
473
475
Restructuring and other charges
207
281
172
782
1,168
884
Impairment of goodwill
–
–
–
1,731
–
–
Provision for depreciation, depletion, and
amortization
1,450
1,479
1,460
1,421
1,371
1,352
Adjusted EBITDA
$2,704
$3,260
$2,105
$2,546
$3,556
$3,973
Total Debt
$9,165
$9,371
$8,829
$8,319
$8,852
$8,817
Debt-to-Adjusted EBITDA Ratio
3.39
2.87
4.20
3.27
2.49
2.22
Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes,
depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin
is equivalent to Sales minus the following items: Cost of goods sold; Selling,
general administrative, and other expenses; Research and development expenses; and Provision for depreciation,
depletion, and amortization. Adjusted EBITDA is a non-GAAP financial
measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides
additional information with respect to Alcoa’s operating performance and the
Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to
similarly titled measures of other companies.
59
*
The
calculation
of
Adjusted
EBITDA
for
the
quarter
ended
March
31,
2015
is
based
on
the
trailing
twelve
months.
[Alcoa logo]
Net income (loss) attributable to noncontrolling
interests |
 Reconciliation of RTI Adjusted EBITDA
($ in thousands)
2014*
Net income
$31,093
Add:
608
Provision for income taxes
10,037
Interest expense
31,055
Interest income
(310)
Other income, net
(2,156)
Depreciation and amortization
44,877
Adjusted EBITDA
$115,204
Net sales
$793,579
Adjusted EBITDA Margin
14.5%
60
* The calculation of Adjusted EBITDA for RTI is based on Alcoa’s definition of Adjusted EBITDA
(see below) and does not purport to be the manner in which RTI’s management would
calculate RTI’s Adjusted EBITDA. Additionally, this calculation of Adjusted EBITDA is not intended to suggest that RTI’s management uses Adjusted EBITDA as a measure of
RTI’s profitability. The amounts used in this calculation were obtained from RTI’s
Annual Report on Form 10-K for the year ended December 31, 2014 filed with the U.S. Securities
and Exchange Commission on February 26, 2015.
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. Net loss attributable to discontinued
operations [Alcoa logo] |
 [Alcoa logo] |