3 rd Quarter Earnings 1 Alcoa Corporation October 16, 2024 Cautionary Statement regarding Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "aims," "ambition," "anticipates," "believes," "could," "develop," "endeavors," "estimates," "expects," "forecasts," "g ...

Financial Performance - Net income increased sequentially to $90 million, or $0.38 per common share, reflecting higher alumina prices and lower raw material costs[2][4] - Adjusted EBITDA excluding special items increased sequentially to $455 million, primarily due to higher alumina prices and lower raw material costs[2][5] - Net income attributable to Alcoa Corporation for the quarter ended September 30, 2024, was $90 million, compared to a net loss of $168 million in the same period last year[22] - Basic earnings per share (EPS) for the quarter ended September 30, 2024, was $0.39, compared to a loss of $0.94 in the same period last year[19] - Diluted EPS for the quarter ended September 30, 2024, was $0.38, compared to a loss of $0.94 in the same period last year[20] - For the nine months ended September 30, 2024, Alcoa reported a net loss of $142 million, an improvement from a net loss of $501 million in the same period last year[24] - Net loss attributable to Alcoa Corporation for the nine months ended September 30, 2024, was $651 million, compared to a net income of $90 million in the same period of 2023[30] - Adjusted EBITDA for Q3 2024 was $429 million, compared to $291 million in Q2 2024 and $68 million in Q3 2023[37] - Free cash flow for Q3 2024 was -$3 million, compared to $123 million in Q2 2024 and -$76 million in Q3 2023[40] Production and Shipments - Alumina production decreased 4% sequentially to 2.44 million metric tons due to the full curtailment of the Kwinana refinery[3] - Aluminum production increased 3% sequentially to 559,000 metric tons due to progress on the Alumar smelter restart[3] - The company expects 2024 Alumina segment shipments to range between 12.9 and 13.1 million metric tons, an increase of 0.2 million metric tons from prior projections[11] - Bauxite production in 3Q23 reached 10.7 million dry metric tons (mdmt), with third-party shipments at 1.9 mdmt[32] - Alumina production in 3Q23 was 2,805 thousand metric tons (kmt), with third-party shipments at 2,374 kmt[32] - Aluminum production in 3Q23 was 532 kmt, with total shipments at 630 kmt[32] Sales and Revenue - Sales for the quarter ended September 30, 2024, were $2,904 million, a slight decrease from $2,906 million in the previous quarter but an increase from $2,602 million in the same quarter last year[22] - Total sales for the nine months ended September 30, 2024, were $8,409 million, up from $7,956 million in the same period last year[24] - Third-party alumina sales in 3Q23 were $846 million, with an average realized price of $354 per metric ton[32] - Third-party aluminum sales in 3Q23 were $1,644 million, with an average realized price of $2,647 per metric ton[32] - Sales for Q3 2024 were $2.904 billion, compared to $2.906 billion in Q2 2024 and $2.602 billion in Q3 2023[46] Costs and Expenses - Cost of goods sold for the nine months ended September 30, 2024, was $7,330 million, slightly lower than $7,388 million in the same period last year[24] - Research and development expenses for the nine months ended September 30, 2024, increased to $40 million from $25 million in the same period last year[24] - Provision for depreciation, depletion, and amortization for the nine months ended September 30, 2024, was $483 million, up from $469 million in the same period last year[24] - Restructuring and other charges for the nine months ended September 30, 2024, were $250 million, compared to $195 million in the same period last year[24] - Restructuring and other charges for the quarter ended September 30, 2024, amounted to $30 million[35] - Other special items for the quarter ended September 30, 2024, included a net unfavorable change in mark-to-market energy derivative instruments of $31 million[35] Acquisitions and Divestitures - The company completed the acquisition of Alumina Limited on August 1, 2024, strengthening its market leadership[2][6] - Alcoa announced the sale of its 25.1% interest in the Ma'aden joint ventures for approximately $1.1 billion, expected to close in the first half of 2025[6] Agreements and Contracts - Alcoa secured a new 9-year power agreement with AGL Energy Limited for 287 megawatts to support operations at the Portland Aluminium Smelter starting July 1, 2026[8] - The company announced a long-term agreement to supply up to 16.5 million tonnes of smelter grade alumina to Aluminium Bahrain B.S.C. over 10 years[9] Tax and Operational Expenses - Alcoa expects fourth quarter 2024 operational tax expense to approximate $120 million to $130 million, subject to market conditions and jurisdictional profitability[12] Cash Flow and Liquidity - Cash and cash equivalents increased to $1,313 million as of September 30, 2024, up from $944 million at the end of 2023, reflecting a 39.1% increase[26] - Net cash provided from operations improved to $207 million for the nine months ended September 30, 2024, compared to a net cash used of $107 million in the same period of 2023[29] - Cash and cash equivalents and restricted cash at the end of the period stood at $1,410 million, a 36.9% increase from $1,030 million at the end of the same period in 2023[29] - Net debt as of September 30, 2024, was $1.632 billion, compared to $923 million as of December 31, 2023[42] - Adjusted net debt as of September 30, 2024, was $2.213 billion, compared to $1.580 billion as of December 31, 2023[45] Assets and Liabilities - Total current assets rose to $4,866 million, a 10.5% increase compared to $4,405 million at the end of 2023[26] - Long-term debt increased significantly to $2,469 million, up 42.5% from $1,732 million at the end of 2023[26] - Total liabilities increased to $9,292 million as of September 30, 2024, up 11.8% from $8,310 million at the end of 2023[26] - Receivables from customers increased to $862 million as of September 30, 2024, up 31.4% from $656 million at the end of 2023[26] - Total debt as of September 30, 2024, was $2.945 billion, compared to $1.867 billion as of December 31, 2023[45] - Cash and cash equivalents as of September 30, 2024, were $1.313 billion, compared to $944 million as of December 31, 2023[45] Segment Performance - Segment Adjusted EBITDA for Alumina in 3Q23 was $53 million, while Aluminum segment Adjusted EBITDA was $79 million[32] - Total Segment Adjusted EBITDA for the nine months ended September 30, 2024, was $734 million, compared to $547 million in the same period of 2023, a 34.2% increase[30] Capital Expenditures - Capital expenditures for the nine months ended September 30, 2024, were $411 million, up 19.8% from $343 million in the same period of 2023[29] - Capital expenditures for Q3 2024 were $146 million, compared to $164 million in Q2 2024 and $145 million in Q3 2023[40] Working Capital - Days working capital for Q3 2024 was 45 days, compared to 41 days in Q2 2024 and 50 days in Q3 2023[46] - DWC working capital for Q3 2024 was $1.414 billion, compared to $1.295 billion in Q2 2024 and $1.409 billion in Q3 2023[46] Adjusted Metrics - Net income attributable to Alcoa Corporation for the quarter ended September 30, 2024, was $90 million, with adjusted net income at $135 million[35] - Diluted EPS for the quarter ended September 30, 2024, was $0.38, with adjusted diluted EPS at $0.57[35]

1 | --- | --- | --- | --- | --- | |-------|-----------------------|-------|-------|-------------------------| | | | | | | | | Investor Presentation | | | | | | September 2024 | | | | | | | | | OUR VALUES | | | | | | Act with Integrity | | | | | | Operate with Excellence | | | | | | Care for People | | | | | | Lead with Courage | Cautionary Statement regarding Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking ...

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Alcoa reported a net income of $20 million in Q2 2024, a significant turnaround from a prior-year loss, with improved cash flow from operations [Note C: Acquisitions and Divestitures](index=12&type=section&id=C.%20Acquisitions%20and%20Divestitures) Alcoa completed the $2.8 billion acquisition of Alumina Limited, simplifying its structure and assuming $385 million in debt, while managing prior divestiture commitments - Alcoa completed the acquisition of Alumina Limited on August 1, 2024, to gain full ownership of the AWAC joint venture, simplifying its corporate structure and enhancing operational flexibility[24](index=24&type=chunk) - The acquisition involved exchanging Alcoa stock/CDIs for Alumina Shares, with an aggregate purchase consideration of approximately **$2.8 billion**. Alcoa also assumed **~$385 million** of Alumina Limited's debt[26](index=26&type=chunk)[27](index=27&type=chunk) - The company recorded charges of **$4 million** in Q2 2024 and **$15 million** in H1 2024 related to site separation commitments from the 2021 Warrick Rolling Mill divestiture, with a remaining balance of **$14 million** expected to be spent in 2024[30](index=30&type=chunk)[31](index=31&type=chunk) [Note D: Restructuring and Other Charges, Net](index=12&type=section&id=D.%20Restructuring%20and%20Other%20Charges%2C%20Net) Alcoa recorded $220 million in H1 2024 restructuring charges, primarily from the Kwinana refinery curtailment, with additional costs from closed smelter contracts Restructuring and Other Charges, Net (in millions) | Period | Alumina Segment | Aluminum Segment | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | | Q2 2024 | $8 | $0 | $10 | $18 | | H1 2024 | $205 | $0 | $15 | $220 | | Q2 2023 | $1 | $19 | $4 | $24 | | H1 2023 | $2 | $165 | $6 | $173 | - The full curtailment of the Kwinana refinery was completed in June 2024. Charges for the first half of 2024 totaled **$205 million**, covering water management, severance for **~580 employees**, asset retirement, and other costs. Cash outlays of **~$225 million** are expected through 2025[33](index=33&type=chunk) [Note K: Debt](index=24&type=section&id=K.%20Debt) Alcoa issued a $750 million green bond in March 2024, maintained undrawn credit facilities, and assumed $385 million of Alumina Limited's debt post-acquisition - In March 2024, a subsidiary issued **$750 million** of 7.125% Senior Notes due 2031, designated as a green bond, with net proceeds of **$737 million** to finance qualifying environmental projects and support cash needs[61](index=61&type=chunk) - The company's main **$1.25 billion** Revolving Credit Facility and its **$250 million** Japanese Yen Revolving Credit Facility had no outstanding borrowings as of June 30, 2024[66](index=66&type=chunk)[68](index=68&type=chunk) - Upon acquiring Alumina Limited on August 1, 2024, Alcoa assumed approximately **$385 million** of its outstanding debt under a **$500 million** revolving credit facility. Lenders have indicated they will delay any repayment demand until at least December 1, 2024[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) [Note N: Income Taxes](index=35&type=section&id=N.%20Income%20Taxes) Alcoa's 2024 effective tax rate is 105.1% due to valuation allowances on losses, offset by $20 million in tax credits and an expected $100 million deferred tax asset from the Alumina Limited acquisition - The estimated annualized effective tax rate for 2024 is **105.1%**, deviating from the **21%** U.S. statutory rate primarily due to losses in jurisdictions with full valuation allowances, resulting in no tax benefit[91](index=91&type=chunk)[92](index=92&type=chunk) - The company recorded benefits of **$10 million** in Q2 and **$20 million** in H1 2024 under the Inflation Reduction Act's Advanced Manufacturing Tax Credit for its Massena West and Warrick smelters[93](index=93&type=chunk) - Post-acquisition of Alumina Limited, Alcoa will recognize a deferred tax asset of approximately **$100 million** related to Alumina Limited's Australian net operating loss carryforwards[92](index=92&type=chunk) [Note O: Contingencies](index=36&type=section&id=O.%20Contingencies) Alcoa faces $252 million in environmental remediation reserves, a significant tax dispute with the ATO for $143 million in tax and $474 million in interest, and ongoing 'Red Dust' legal proceedings - The environmental remediation reserve was **$252 million** at June 30, 2024, with significant sites including Suriname, Massena (NY), and Point Comfort (TX)[95](index=95&type=chunk)[98](index=98&type=chunk) - AofA is in a dispute with the Australian Taxation Office (ATO) over assessments claiming **~$143 million** in tax and **~$474 million** in interest. AofA has paid **50%** of the tax amount and believes its position will be sustained. The case hearing was completed in June 2024, awaiting a decision[109](index=109&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - In the St. Croix 'Red Dust' legal proceedings, trials for the first group of cases are scheduled to begin in November 2024. The company recorded a reserve for its estimate of probable loss in Q2 2024[120](index=120&type=chunk) [Note R: Subsequent Events](index=42&type=section&id=R.%20Subsequent%20Events) Post-quarter, Alcoa completed the Alumina Limited acquisition, declared a $0.10 per share dividend, and settled a $5 million Clean Air Act violation fine for its Intalco smelter - On August 1, 2024, the Company completed the acquisition of Alumina Limited[127](index=127&type=chunk) - On July 31, 2024, the Board declared a quarterly cash dividend of **$0.10 per share** on common and preferred stock, payable on August 29, 2024[128](index=128&type=chunk) - The company agreed to a stipulated settlement with the U.S. Department of Justice to pay a **$5 million** civil fine for alleged Clean Air Act violations at the Intalco smelter[129](index=129&type=chunk) Consolidated Statement of Operations Highlights (unaudited, in millions) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,906 | $2,684 | $5,505 | $5,354 | | Income (Loss) Before Taxes | $92 | $(99) | $(233) | $(279) | | Net Income (Loss) Attributable to Alcoa | $20 | $(102) | $(232) | $(333) | | Diluted EPS | $0.11 | $(0.57) | $(1.29) | $(1.87) | Consolidated Balance Sheet Highlights (unaudited, in millions) | Metric | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,396 | $944 | | Total Current Assets | $4,903 | $4,405 | | Total Assets | $14,307 | $14,155 | | Long-term debt, less current portion | $2,469 | $1,732 | | Total Liabilities | $8,891 | $8,310 | | Total Equity | $5,416 | $5,845 | Consolidated Cash Flow Highlights (unaudited, in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Cash Provided From (Used For) Operations | $64 | $(176) | | Cash Provided From Financing Activities | $679 | $16 | | Cash Used For Investing Activities | $(281) | $(222) | | Net Change in Cash | $446 | $(377) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported improved Q2 2024 net income driven by higher prices and lower restructuring, with the Alumina Limited acquisition completed and liquidity enhanced by a green bond issuance [Business Update](index=43&type=section&id=Business%20Update) Alcoa completed the Alumina Limited acquisition, fully curtailed the Kwinana refinery, progressed the Alumar smelter restart, and faces funding exhaustion at the San Ciprián complex - The acquisition of Alumina Limited was completed on August 1, 2024, simplifying governance and enhancing Alcoa's vertical integration[131](index=131&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk) - The full curtailment of the Kwinana refinery was completed in June 2024, based on factors including its age, costs, and bauxite grades[138](index=138&type=chunk) - The San Ciprián complex remains unviable due to high energy costs and is projected to run out of funding by the end of 2024, at which point Alcoa will not provide additional funding[143](index=143&type=chunk)[144](index=144&type=chunk) - In March 2024, Alcoa issued its first green bond, raising **$750 million** to fund decarbonization, water management, and other sustainability-focused projects[146](index=146&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2024 net income of $20 million reflects a $272 million sequential improvement driven by higher prices and lower restructuring, narrowing the year-to-date net loss Selected Financial Metrics | Metric | Q2 2024 | Q1 2024 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,906M | $2,599M | $5,505M | $5,354M | | Net Income (Loss) Attributable to Alcoa | $20M | $(252)M | $(232)M | $(333)M | | Diluted EPS | $0.11 | $(1.41) | $(1.29) | $(1.87) | | Avg. Realized Alumina Price ($/mt) | $399 | $372 | $385 | $367 | | Avg. Realized Aluminum Price ($/mt) | $2,858 | $2,620 | $2,743 | $3,000 | - The sequential improvement from Q1 to Q2 2024 was primarily due to higher aluminum and alumina prices, lower restructuring charges (Q2 charge of **$18 million** vs Q1 charge of **$202 million**), and favorable derivative results[151](index=151&type=chunk)[160](index=160&type=chunk) - The year-over-year improvement for the first six months was mainly due to favorable raw material and energy costs and lower equity losses, which partially offset the negative impact of a lower average realized price for aluminum[152](index=152&type=chunk) [Segment Information](index=51&type=section&id=Segment%20Information) Alumina and Aluminum segments showed significant Q2 2024 Adjusted EBITDA improvements driven by higher prices, with shipment guidance maintained for 2024 Alumina Segment Performance (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Segment Adjusted EBITDA | $186M | $139M | | Avg. Realized Price/mt | $399 | $372 | | Alumina Production (kmt) | 2,539 | 2,670 | | Total Shipments (kmt) | 3,292 | 3,340 | Aluminum Segment Performance (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Segment Adjusted EBITDA | $233M | $50M | | Avg. Realized Price/mt | $2,858 | $2,620 | | Production (kmt) | 543 | 542 | | Total Shipments (kmt) | 677 | 634 | - The Alumina segment's sequential EBITDA increase was driven by higher prices, partially offset by higher production costs from the Kwinana curtailment. Production decreased **5%** due to the curtailment[176](index=176&type=chunk)[178](index=178&type=chunk) - The Aluminum segment's sequential EBITDA increase was primarily due to higher average realized prices. This was partially offset by unfavorable raw material costs from higher alumina input prices[191](index=191&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) Alcoa's liquidity is adequate with improved H1 2024 cash from operations and a $737 million bond issuance, despite recent credit rating downgrades and assumed acquisition debt - Cash provided from operations was **$64 million** in H1 2024, a **$240 million** positive swing from the **$176 million** used in H1 2023, driven by better underlying earnings and lower tax payments[202](index=202&type=chunk) - Financing activities provided **$679 million** in cash in H1 2024, primarily from the **$737 million** net proceeds of the March 2024 senior notes issuance[205](index=205&type=chunk)[208](index=208&type=chunk) - In March 2024, Moody's, Fitch, and S&P all downgraded Alcoa's long-term debt ratings, citing market conditions and operational challenges[219](index=219&type=chunk)[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Alcoa's market risk exposure remains materially unchanged since fiscal year-end 2023, with further details available in the 2023 Form 10-K and Note M - Alcoa's exposure to market risk has not changed materially since December 31, 2023[224](index=224&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Alcoa's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during Q2 2024 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2024[225](index=225&type=chunk) - No changes in internal control over financial reporting occurred during Q2 2024 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[226](index=226&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Alcoa faces ongoing 'Red Dust' legal proceedings with trials starting November 2024 and settled a $5 million Clean Air Act violation fine for its Intalco smelter - In the St. Croix 'Red Dust' proceedings, trials for the first group of lead cases are scheduled to begin in November 2024 and continue through July 2025, with court-ordered mediation to occur by August 31, 2024[230](index=230&type=chunk) - The company settled a Notice of Violation from the EPA regarding the Intalco smelter, agreeing to pay a civil fine of **$5 million** for alleged Clean Air Act violations[232](index=232&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) New risks from the Alumina Limited acquisition include shareholder dilution, potential stock price pressure, dual listing complexities, increased currency exposure, and assumed liabilities - The issuance of new shares for the Alumina Limited acquisition has diluted existing Alcoa stockholders, who now own a smaller proportion of the company, and may depress the market price of Alcoa's stock[235](index=235&type=chunk)[236](index=236&type=chunk) - The secondary listing of Alcoa's stock as CDIs on the Australian Stock Exchange (ASX) could lead to price variations between the NYSE and ASX due to currency differences and other factors[237](index=237&type=chunk)[238](index=238&type=chunk) - The integration of Alumina Limited subjects Alcoa to all of Alumina's existing and potential liabilities, including those related to its revolving credit facility and potential tax issues[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Alcoa did not repurchase common stock in Q2 2024, with the full $500 million share repurchase authorization remaining available Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Weighted Avg. Price Paid | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2024 | 0 | N/A | $500,000,000 | | May 2024 | 0 | N/A | $500,000,000 | | June 2024 | 0 | N/A | $500,000,000 | [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2024 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024[244](index=244&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including documents related to the Alumina Limited acquisition, new stock, bylaws, and officer certifications - Exhibits filed include documents related to the Alumina Limited acquisition, new preferred stock designation, amended bylaws, and required officer certifications (31.1, 31.2, 32.1, 32.2)[248](index=248&type=chunk)

Financial Data and Key Metrics Changes - Revenue increased sequentially to $2.9 billion, driven by higher alumina and aluminum prices [9] - Net income attributable to Alcoa was $20 million, a significant improvement from a loss of $252 million in the prior quarter, with earnings per share rising to $0.11 [9] - Adjusted EBITDA increased by $193 million to $325 million, primarily due to higher average realized prices for alumina and aluminum [10] - Free cash flow was positive at $101 million, improving sequentially by $370 million [13] Business Line Data and Key Metrics Changes - In the Alumina segment, third-party revenue increased by 5% due to higher average realized prices, despite lower shipments [9] - In the Aluminum segment, third-party revenue rose by 16% on higher average realized prices and increased shipments [9] - Adjusted EBITDA for the Alumina segment increased by $47 million, while the Aluminum segment saw an increase of $183 million [10] Market Data and Key Metrics Changes - Alumina prices surged in the second quarter due to supply-side disruptions and strong demand from smelters, with a global alumina deficit of approximately 3 million metric tons anticipated for the full year [17][41] - Aluminum prices also increased, supported by limited new smelting projects and strong global demand, particularly in the packaging and electrical sectors [20][22] - Regional premiums for aluminum rose sequentially across North America, Europe, and Asia, driven by sanctions against Russian metal and supply chain disruptions [21] Company Strategy and Development Direction - The company is nearing completion of the Alumina Limited acquisition, expected to close on August 1, which is anticipated to enhance operational and financial flexibility [7][29] - Focus on safety, operational stability, and continuous improvement is emphasized, with production records set at various smelting locations [24] - The company is pursuing profitability improvement programs aimed at capturing approximately $645 million in adjusted EBITDA improvements by the end of 2025 [25] Management Comments on Operating Environment and Future Outlook - Management noted that favorable alumina and aluminum markets have contributed to improved profitability and cash flows [8] - The long-term outlook for both alumina and aluminum markets remains positive, driven by a transition towards low-carbon products [22] - Challenges in the supply chain and energy costs are acknowledged, particularly regarding the San Ciprian facility, with ongoing efforts to find competitive energy solutions [28] Other Important Information - The company is investing in two vessels for bauxite transportation in Brazil, expected to save $14 to $16 per tonne of alumina [12] - The company plans to reduce debt levels and maintain a strong balance sheet while exploring various deleveraging options [14][60] Q&A Session Summary Question: Synergies from the Alumina Limited acquisition - Management expects to realize overhead savings of $12 million immediately post-acquisition, with capital allocation improvements taking longer [32] Question: Impact of bauxite grade in Australia - Unfavorable costs of approximately $10 million are anticipated due to maintenance needs related to lower bauxite quality [36][37] Question: Sustainability of the alumina market dynamics - The alumina market is currently in a deficit, and sustainability will depend on resolving supply issues and potential smelter curtailments [41] Question: Interest in the San Ciprian facility - Six companies have expressed interest in the sale process, which is ongoing [56][68] Question: Deleveraging options - The company is exploring various options for deleveraging, including managing debt placement and evaluating cash flows [60][64]

Alcoa's Acquisition of Alumina Limited - Alcoa's acquisition of Alumina Limited is on track for an August 1 closing, enhancing Alcoa's position as a leading upstream global aluminum company[11, 12] - The acquisition simplifies the corporate structure and governance, leading to greater operational and financial flexibility[11] Financial Performance - Revenue increased sequentially to $2906 million in 2Q24, a $307 million increase from 1Q24[17] - Adjusted EBITDA excluding special items more than doubled to $325 million in 2Q24, a $193 million increase from $132 million in 1Q24[17] - Realized primary aluminum price increased to $2858 per metric tonne in 2Q24, a $238 increase from $2620 in 1Q24[16] - Realized alumina price increased to $399 per metric tonne in 2Q24, a $27 increase from $372 in 1Q24[16] Cash Flow and Capital Allocation - 2024 YTD capital returns to stockholders totaled $37 million[24] - Investment in Brazil bauxite transportation project involves a capital expenditure of approximately $90 million[22] - The company expects freight and tax savings of approximately $14-$16 per alumina tonne from the Brazil bauxite transportation investment[22] Market Outlook and Production - The company anticipates steady demand growth driven by growing aluminum supply[34] - China is expected to import 80% of its bauxite needs by 2030, up from 65% currently[34]

[Q2 2024 Financial Highlights](index=1&type=section&id=Alcoa%20Corporation%20Reports%20Second%20Quarter%202024%20Results) Alcoa reported significantly improved second-quarter 2024 results, driven by higher prices and profitability programs, with the Alumina Limited acquisition nearing completion [Financial Results and Highlights](index=1&type=section&id=Financial%20Results%20and%20Highlights) Alcoa reported significantly improved second-quarter 2024 results, with sequential increases in revenue, net income, and Adjusted EBITDA, driven by higher alumina and aluminum prices, alongside progress in profitability programs, and is nearing the completion of its acquisition of Alumina Limited Q2 2024 Key Financial Metrics (in millions, except per share amounts) | M, except per share amounts | 2Q24 | 1Q24 | 2Q23 | | :--- | :--- | :--- | :--- | | Revenue | $2,906 | $2,599 | $2,684 | | Net income (loss) attributable to Alcoa Corporation | $20 | $(252) | $(102) | | Income (loss) per share attributable to Alcoa Corporation | $0.11 | $(1.41) | $(0.57) | | Adjusted net income (loss) | $30 | $(145) | $(62) | | Adjusted income (loss) per share | $0.16 | $(0.81) | $(0.35) | | Adjusted EBITDA excluding special items | $325 | $132 | $137 | - Revenue increased **12% sequentially to $2.9 billion**, primarily due to higher alumina and aluminum prices[3](index=3&type=chunk) - Adjusted EBITDA excluding special items more than doubled sequentially, increasing to **$325 million** from **$132 million** in Q1 2024[4](index=4&type=chunk) - The acquisition of Alumina Limited is expected to close on or about August 1, 2024[4](index=4&type=chunk) - The company finished the second quarter with a cash balance of **$1.4 billion** and paid a quarterly dividend of **$0.10 per share**[4](index=4&type=chunk) [Detailed Financial and Operational Review](index=2&type=section&id=Detailed%20Financial%20and%20Operational%20Review) This section provides an in-depth analysis of Alcoa's second-quarter financial and operational performance, strategic initiatives, and the full-year 2024 outlook [Second Quarter 2024 Results Analysis](index=2&type=section&id=Second%20Quarter%202024%20Results) The company's Q2 performance reflects strong pricing in both Alumina and Aluminum segments, driving a 12% sequential revenue increase, with net income turning positive to $20 million, benefiting from the non-recurrence of a significant Q1 charge related to the Kwinana refinery curtailment, while strategic initiatives are progressing on schedule [Financial Performance](index=2&type=section&id=Financial%20Performance) Revenue grew to $2.9 billion, with a 5% increase in Alumina and a 16% increase in Aluminum third-party revenue, driven by 7% and 9% price increases, respectively, while net income of $20 million marked a significant turnaround from a $252 million loss in Q1, largely due to the absence of the prior quarter's $197 million Kwinana curtailment charge, and Adjusted EBITDA surged by $193 million sequentially to $325 million, with the company generating $123 million in free cash flow and ending the quarter with a $1.4 billion cash balance - Total third-party revenue increased **12% sequentially to $2.9 billion**, with Alumina segment revenue rising **5%** on a **7% price increase**, and Aluminum segment revenue rising **16%** on a **9% price increase** and higher shipments[7](index=7&type=chunk) - Net income improved to **$20 million**, reflecting higher prices and the non-recurrence of a **$197 million charge** in Q1 2024 for the Kwinana refinery curtailment[7](index=7&type=chunk) - Adjusted EBITDA increased by **$193 million sequentially to $325 million**, primarily due to higher prices and lower production costs, partially offset by higher energy costs[7](index=7&type=chunk) - The company ended the quarter with **$1.4 billion in cash**, generating **$287 million in cash from operations** and **$123 million in free cash flow**[7](index=7&type=chunk) [Operational Performance](index=2&type=section&id=Operational%20Performance) Alumina production decreased by 5% sequentially to 2.53 million metric tons, a direct result of the completed Kwinana refinery curtailment, while aluminum production rose for the seventh consecutive quarter to 543,000 metric tons, and total aluminum shipments increased by 7% sequentially Q2 2024 Production & Shipments | Segment | Metric | Value (kmt) | Sequential Change | | :--- | :--- | :--- | :--- | | Alumina | Production | 2,530 | -5% | | Alumina | 3rd Party Shipments | - | -5% | | Aluminum | Production | 543 | Increased (7th consecutive quarter) | | Aluminum | Total Shipments | - | +7% | [Strategic Initiatives and Key Actions](index=2&type=section&id=Strategic%20Initiatives%20and%20Key%20Actions) Alcoa is advancing several key strategic goals, with the acquisition of Alumina Limited set to close around August 1, 2024, the full curtailment of the Kwinana refinery completed in June as planned, and the company's profitability improvement program on track, having achieved $350 million of its $645 million year-end 2025 target - The acquisition of Alumina Limited is expected to be completed on or about August 1, 2024, with all regulatory approvals received[7](index=7&type=chunk) - The full curtailment of the Kwinana refinery in Australia was completed in June 2024 as planned[7](index=7&type=chunk) - Profitability improvement programs are projected to achieve **$350 million** of the **$645 million target** by year-end 2025, indicating the company is on track[7](index=7&type=chunk) - Regarding the San Ciprián complex, Alcoa continues to seek competitive energy solutions and progress a potential sale, but anticipates available funding will be exhausted by the end of 2024[7](index=7&type=chunk) [2024 Outlook](index=3&type=section&id=2024%20Outlook) Alcoa reaffirmed its full-year 2024 production and shipment guidance for both the Alumina and Aluminum segments, and for the third quarter, the company anticipates specific financial impacts, including unfavorable bauxite grade effects in Alumina, favorable raw material prices in Aluminum, increased interest expense following the Alumina Limited acquisition, and an operational tax expense of $60 to $70 million Full Year 2024 Shipment & Production Outlook | Segment | Metric | Range (million metric tons) | | :--- | :--- | :--- | | Alumina | Production | 9.8 - 10.0 | | Alumina | Shipments | 12.7 - 12.9 | | Aluminum | Production | 2.2 - 2.3 | | Aluminum | Shipments | 2.5 - 2.6 | - For Q3 2024, Alumina Segment Adjusted EBITDA is expected to see an unfavorable impact of **$10 million** due to bauxite grade in Australia[10](index=10&type=chunk) - For Q3 2024, Aluminum Segment Adjusted EBITDA is expected to see a favorable impact of **$10 million** from raw material prices[10](index=10&type=chunk) - Q3 2024 interest expense is expected to increase by approximately **$5 million** due to the assumption of Alumina Limited debt[11](index=11&type=chunk) - Third quarter operational tax expense is expected to be between **$60 million and $70 million**[11](index=11&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents Alcoa's consolidated financial statements, including the statement of operations, balance sheet, and cash flows [Statement of Consolidated Operations](index=6&type=section&id=Statement%20of%20Consolidated%20Operations) For the second quarter of 2024, Alcoa reported sales of $2.906 billion and net income attributable to the company of $20 million, or $0.11 per diluted share, representing a significant improvement from a net loss of $252 million in Q1 2024 and a net loss of $102 million in Q2 2023, with the company posting a net loss of $232 million for the six months ended June 30, 2024 Quarterly Statement of Operations Highlights (in millions) | Line Item | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Sales | $2,906 | $2,599 | $2,684 | | Income (loss) before income taxes | $92 | $(325) | $(99) | | Net income (loss) attributable to Alcoa | $20 | $(252) | $(102) | | Diluted EPS | $0.11 | $(1.41) | $(0.57) | Six-Month Statement of Operations Highlights (in millions) | Line Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Sales | $5,505 | $5,354 | | Loss before income taxes | $(233) | $(279) | | Net loss attributable to Alcoa | $(232) | $(333) | | Diluted EPS | $(1.29) | $(1.87) | [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2024, Alcoa's balance sheet showed total assets of $14.307 billion and total liabilities of $8.891 billion, with cash and cash equivalents increasing significantly to $1.396 billion from $944 million at year-end 2023, while long-term debt also increased, contributing to a rise in total liabilities Key Balance Sheet Items (in millions) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,396 | $944 | | Total current assets | $4,903 | $4,405 | | Total assets | $14,307 | $14,155 | | Total current liabilities | $3,166 | $3,030 | | Long-term debt | $2,469 | $1,732 | | Total liabilities | $8,891 | $8,310 | | Total equity | $5,416 | $5,845 | [Statement of Consolidated Cash Flows](index=9&type=section&id=Statement%20of%20Consolidated%20Cash%20Flows) For the first six months of 2024, Alcoa generated $64 million in cash from operations, a notable improvement from the $176 million used in the same period of 2023, with cash used for investing activities at $281 million, primarily for capital expenditures, and financing activities providing $679 million, largely from new debt issuance, resulting in a net increase in cash of $446 million for the period Six-Month Cash Flow Summary (in millions) | Cash Flow Category | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Cash Provided From (Used For) Operations | $64 | $(176) | | Cash Used For Investing Activities | $(281) | $(222) | | Cash Provided From Financing Activities | $679 | $16 | | Net Change in Cash | $446 | $(377) | [Segment Information](index=10&type=section&id=Segment%20Information) This section details the financial and operational performance of Alcoa's Alumina and Aluminum segments [Segment Performance](index=10&type=section&id=Segment%20Performance) In Q2 2024, the Alumina segment's Adjusted EBITDA rose to $186 million from $139 million in Q1, benefiting from a higher average realized price of $399 per metric ton, while the Aluminum segment showed a more dramatic improvement, with Adjusted EBITDA jumping to $233 million from $50 million in Q1, driven by a significant increase in the average realized price to $2,858 per metric ton Alumina Segment Key Metrics | Metric | 2Q24 | 1Q24 | | :--- | :--- | :--- | | Alumina production (kmt) | 2,539 | 2,670 | | Third-party alumina shipments (kmt) | 2,267 | 2,397 | | Average realized third-party price per mt | $399 | $372 | | Segment Adjusted EBITDA (M) | $186 | $139 | Aluminum Segment Key Metrics | Metric | 2Q24 | 1Q24 | | :--- | :--- | :--- | | Aluminum production (kmt) | 543 | 542 | | Total aluminum shipments (kmt) | 677 | 634 | | Average realized third-party price per mt | $2,858 | $2,620 | | Segment Adjusted EBITDA (M) | $233 | $50 | [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations for Alcoa's non-GAAP financial measures, including Adjusted Income, Adjusted EPS, Adjusted EBITDA, Free Cash Flow, Net Debt, and Working Capital [Adjusted Income and Adjusted EPS](index=11&type=section&id=Adjusted%20Income%20and%20Adjusted%20EPS) Alcoa's Q2 2024 adjusted net income was $30 million, or $0.16 per diluted share, a non-GAAP measure derived by adjusting the GAAP net income of $20 million for $10 million in net special items, which included restructuring charges, mark-to-market gains on energy derivatives, and costs related to portfolio actions Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (in millions) | Description | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Alcoa (GAAP) | $20 | $(252) | $(102) | | Special items (subtotal) | $10 | $107 | $40 | | **Net income (loss) attributable to Alcoa – as adjusted** | **$30** | **$(145)** | **$(62)** | [Adjusted EBITDA](index=12&type=section&id=Adjusted%20EBITDA) The company reported Adjusted EBITDA excluding special items of $325 million for Q2 2024, calculated by taking the GAAP net income attributable to Alcoa ($20 million) and adding back items such as taxes, interest, D&A, and restructuring charges, then adjusting for $34 million in special items Reconciliation to Adjusted EBITDA, excluding special items (in millions) | Description | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Alcoa (GAAP) | $20 | $(252) | $(102) | | Add back various items (NCI, Taxes, Interest, etc.) | $253 | $395 | $183 | | Adjusted EBITDA | $291 | $124 | $111 | | Special items | $34 | $8 | $26 | | **Adjusted EBITDA, excluding special items** | **$325** | **$132** | **$137** | [Free Cash Flow and Net Debt](index=13&type=section&id=Free%20Cash%20Flow%20and%20Net%20Debt) Alcoa generated $123 million in free cash flow during Q2 2024, a significant positive swing from the $324 million used in Q1 2024, and as of June 30, 2024, the company's net debt stood at $1.183 billion, an increase from $923 million at the end of 2023, reflecting higher total debt levels Free Cash Flow Calculation (in millions) | Description | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Cash provided from (used for) operations | $287 | $(223) | | Capital expenditures | $(164) | $(101) | | **Free cash flow** | **$123** | **$(324)** | Net Debt Calculation (in millions) | Description | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total debt | $2,579 | $1,867 | | Less: Cash and cash equivalents | $1,396 | $944 | | **Net debt** | **$1,183** | **$923** | [Working Capital](index=14&type=section&id=Working%20Capital) The company's liquidity management efficiency improved in Q2 2024, as evidenced by a reduction in Days Working Capital (DWC) to 41 days from 47 days in the previous quarter, primarily due to better inventory management Days Working Capital (DWC) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | DWC working capital (M) | $1,295 | $1,331 | $1,611 | | **Days working capital** | **41** | **47** | **55** |

Alcoa Corporation Conference Call Summary Company Overview - Alcoa Corporation is a global pure play upstream aluminum company with operations in 27 locations across six continents, focusing on two business segments: alumina and aluminum [2][3] Key Developments - Alcoa announced a proposed acquisition of Alumina Limited, aiming for 100% ownership of the AWAC joint venture, with an equity value of approximately $2.2 billion and a premium of 13.1% to Alumina Limited's share price [4][5] - The acquisition is expected to enhance Alcoa's vertical integration across the aluminum value chain, providing stability throughout commodity cycles [5][10] Financial Metrics - In 2023, Alcoa reported production of 41 million metric tons of bauxite, 10.9 million metric tons of alumina, and 2.1 million metric tons of aluminum [5] - The transaction will simplify governance and operational flexibility, increasing Alcoa's economic interest in core Tier 1 assets [10][11] Strategic Priorities - Alcoa's strategic priorities include reducing complexity, driving returns for stockholders, and advancing sustainability [3] - The company maintains a strong balance sheet with investment-grade metrics, allowing for self-funding of capital requirements and technology development projects [6] Market Outlook - The near-term outlook for alumina prices is positive, reaching a two-year high of $423 per ton, driven by steady demand and supply concerns [17] - Aluminum prices have recently hit their highest level in a year, with strong demand in automotive and electrical sectors, although building construction remains challenged [18] Risks and Challenges - The Alumar restart has faced delays due to equipment reliability and personnel experience issues, while the San Ciprián site is under review for long-term viability or potential sale [15][16] - Political risks and trade uncertainties are increasing, impacting supply chains, but Alcoa has managed to navigate these challenges due to its global diversity [22][23] Sustainability Initiatives - Alcoa is focused on developing low-carbon and recycled content products, with ongoing R&D projects aimed at reducing carbon emissions and improving efficiency [6][9] - The company recognizes the growing importance of secondary aluminum demand and is exploring ways to participate in this market [30] Conclusion - The acquisition of Alumina Limited is seen as a strategic move to enhance Alcoa's position in the aluminum market, providing immediate value for shareholders and aligning interests [12][11] - Alcoa remains committed to long-term growth and sustainability, with a positive outlook for both alumina and aluminum markets [20][21]

[PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Alcoa Corporation's unaudited consolidated financial statements for Q1 2024, including operations, comprehensive income, balance sheet, cash flows, and equity changes, along with detailed explanatory notes [Statement of Consolidated Operations (unaudited)](index=5&type=section&id=Statement%20of%20Consolidated%20Operations%20%28unaudited%29) This statement details Alcoa Corporation's unaudited consolidated operational results for Q1 2024, showing sales, costs, and net loss Consolidated Operations (First Quarter Ended March 31) | Metric (in millions, except per-share) | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Sales | $2,599 | $2,670 | | Cost of goods sold | 2,404 | 2,404 | | Selling, general administrative, and other expenses | 60 | 54 | | Research and development expenses | 11 | 10 | | Provision for depreciation, depletion, and amortization | 161 | 153 | | Restructuring and other charges, net | 202 | 149 | | Interest expense | 27 | 26 | | Other expenses, net | 59 | 54 | | Total costs and expenses | 2,924 | 2,850 | | Loss before income taxes | (325) | (180) | | (Benefit from) provision for income taxes | (18) | 52 | | Net loss | (307) | (232) | | Less: Net loss attributable to noncontrolling interest | (55) | (1) | | NET LOSS ATTRIBUTABLE TO ALCOA CORPORATION | $(252) | $(231) | | Basic EPS | $(1.41) | $(1.30) | | Diluted EPS | $(1.41) | $(1.30) | [Statement of Consolidated Comprehensive Income (unaudited)](index=6&type=section&id=Statement%20of%20Consolidated%20Comprehensive%20Income%20%28unaudited%29) This statement presents Alcoa Corporation's unaudited consolidated comprehensive income for Q1 2024, including net loss and other comprehensive income components Consolidated Comprehensive Income (First Quarter Ended March 31) | Metric (in millions) | Alcoa Corporation (2024) | Alcoa Corporation (2023) | Noncontrolling interest (2024) | Noncontrolling interest (2023) | Total (2024) | Total (2023) | | :------------------- | :----------------------- | :----------------------- | :----------------------------- | :----------------------------- | :----------- | :----------- | | Net loss | $(252) | $(231) | $(55) | $(1) | $(307) | $(232) | | Other comprehensive income (loss), net of tax: | | | | | | | | Pension and other postretirement benefits | 9 | 4 | 1 | — | 10 | 4 | | Foreign currency translation adjustments | (122) | 2 | (54) | 15 | (176) | 17 | | Net change in unrecognized gains/losses on cash flow hedges | 130 | (122) | — | — | 130 | (122) | | Total Other comprehensive income (loss), net of tax | 17 | (116) | (53) | 15 | (36) | (101) | | Comprehensive (loss) income | $(235) | $(347) | $(108) | $14 | $(343) | $(333) | [Consolidated Balance Sheet (unaudited)](index=7&type=section&id=Consolidated%20Balance%20Sheet%20%28unaudited%29) This balance sheet provides Alcoa Corporation's unaudited consolidated financial position as of March 31, 2024, detailing assets, liabilities, and equity Consolidated Balance Sheet (as of March 31, 2024 and December 31, 2023) | Metric (in millions) | March 31, 2024 | December 31, 2023 | | :------------------- | :------------- | :---------------- | | **ASSETS** | | | | Current assets: | | | | Cash and cash equivalents | $1,358 | $944 | | Receivables from customers | 869 | 656 | | Inventories | 2,048 | 2,158 | | Total current assets | 4,881 | 4,405 | | Properties, plants, and equipment, net | 6,577 | 6,785 | | Total assets | $14,328 | $14,155 | | **LIABILITIES** | | | | Current liabilities: | | | | Accounts payable, trade | $1,586 | $1,714 | | Total current liabilities | 3,041 | 3,030 | | Long-term debt, less amount due within one year | 2,469 | 1,732 | | Total liabilities | 8,794 | 8,310 | | **EQUITY** | | | | Total Alcoa Corporation shareholders' equity | 3,994 | 4,251 | | Noncontrolling interest | 1,540 | 1,594 | | Total equity | 5,534 | 5,845 | | Total liabilities and equity | $14,328 | $14,155 | [Statement of Consolidated Cash Flows (unaudited)](index=9&type=section&id=Statement%20of%20Consolidated%20Cash%20Flows%20%28unaudited%29) This statement outlines Alcoa Corporation's unaudited consolidated cash flows for Q1 2024, categorized by operating, financing, and investing activities Consolidated Cash Flows (Three Months Ended March 31) | Metric (in millions) | 2024 | 2023 | | :------------------- | :--- | :--- | | CASH FROM OPERATIONS | | | | Net loss | $(307) | $(232) | | Depreciation, depletion, and amortization | 161 | 153 | | Restructuring and other charges, net | 202 | 149 | | Changes in assets and liabilities: | | | | (Increase) decrease in receivables | (212) | 40 | | Decrease in inventories | 71 | 17 | | Decrease in accounts payable, trade | (98) | (273) | | CASH USED FOR OPERATIONS | $(223) | $(163) | | FINANCING ACTIVITIES | | | | Additions to debt | 965 | 25 | | Payments on debt | (221) | (1) | | Dividends paid on Alcoa common stock | (19) | (18) | | CASH PROVIDED FROM FINANCING ACTIVITIES | $754 | $40 | | INVESTING ACTIVITIES | | | | Capital expenditures | (101) | (83) | | CASH USED FOR INVESTING ACTIVITIES | $(117) | $(102) | | Net change in cash and cash equivalents and restricted cash | 408 | (223) | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $1,455 | $1,251 | [Statement of Changes in Consolidated Equity (unaudited)](index=11&type=section&id=Statement%20of%20Changes%20in%20Consolidated%20Equity%20%28unaudited%29) This statement presents Alcoa Corporation's unaudited consolidated equity changes for Q1 2024, detailing movements in common stock, capital, and accumulated loss Changes in Consolidated Equity (Three Months Ended March 31) | Metric (in millions) | Balance at Jan 1, 2024 | Net loss | Other comprehensive income (loss) | Stock-based compensation | Tax withholding/stock options | Dividends paid | Contributions | Distributions | Other | Balance at Mar 31, 2024 | | :------------------- | :--------------------- | :------- | :------------------------------ | :----------------------- | :---------------------------- | :------------- | :------------ | :------------ | :---- | :---------------------- | | Common stock | $2 | — | — | — | — | — | — | — | — | $2 | | Additional capital | 9,187 | — | — | 10 | (15) | — | — | — | 2 | 9,184 | | Accumulated deficit | (1,293) | (252) | — | — | — | (19) | — | — | — | (1,564) | | Accumulated other comprehensive loss | (3,645) | — | 17 | — | — | — | — | — | — | (3,628) | | Noncontrolling interest | 1,594 | (55) | (53) | — | — | — | 61 | (6) | (1) | 1,540 | | Total equity | $5,845 | $(307) | $(36) | $10 | $(15) | $(19) | $61 | $(6) | $1 | $5,534 | [Notes to the Consolidated Financial Statements (unaudited)](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section provides detailed notes to the unaudited consolidated financial statements, covering accounting policies, acquisitions, restructuring, segment data, and other financial details [A. Basis of Presentation](index=12&type=section&id=A.%20Basis%20of%20Presentation) This note explains the unaudited interim financial statements' basis, management's estimates, and consolidation policies, including the AWAC joint venture - Alcoa Corporation's interim Consolidated Financial Statements are unaudited and include normal recurring adjustments. Management's estimates are based on historical experience and available information, which may affect reported financial amounts[17](index=17&type=chunk)[18](index=18&type=chunk) - The Consolidated Financial Statements include accounts of Alcoa Corporation and companies with a controlling interest, such as the AWAC joint venture (**60% Alcoa, 40% Alumina Limited**), which is consolidated for financial reporting. Equity method accounting is used for investments with significant influence but not effective control[19](index=19&type=chunk)[20](index=20&type=chunk) [B. Recently Adopted and Recently Issued Accounting Guidance](index=12&type=section&id=B.%20Recently%20Adopted%20and%20Recently%20Issued%20Accounting%20Guidance) This note discusses new FASB ASUs (2023-09 on income tax and 2023-07 on segment expenses), effective in 2024/2025, with no expected material financial impact - ASU No. 2023-09 (December 2023) changes income tax disclosures, requiring greater disaggregation of information in rate reconciliation and disclosure of taxes paid by jurisdiction. Effective for annual periods beginning after December 15, 2024, with early adoption permitted. No material impact on financial statements expected[21](index=21&type=chunk) - ASU 2023-07 (November 2023) requires disclosure of significant segment expenses, other segment items, CODM title/position, and explanation of CODM's use of segment profit/loss measure. Effective for annual reports beginning after December 31, 2024. No material impact on financial statements expected[22](index=22&type=chunk) [C. Acquisitions and Divestitures](index=13&type=section&id=C.%20Acquisitions%20and%20Divestitures) Alcoa agreed to acquire Alumina Limited to strengthen its upstream aluminum position, involving share exchange and site separation costs from a prior divestiture - Alcoa entered a Scheme Implementation Deed on March 11, 2024, to acquire Alumina Limited, which holds a **40% interest in the AWAC joint venture**. The acquisition aims to enhance Alcoa's position as a pure-play upstream aluminum company and simplify its corporate structure[23](index=23&type=chunk) - Alumina Limited shareholders will receive **0.02854 Alcoa common shares** for each Alumina Limited share. Post-transaction, Alumina Limited shareholders will own **31.25%** and Alcoa shareholders **68.75%** of the combined company[24](index=24&type=chunk) - Alcoa recorded an additional charge of **$11 million** in Q1 2024 (vs. **$17 million** in Q1 2023) in Other expenses, net, related to site separation commitments from the Warrick Rolling Mill divestiture. Related cash outlays were **$7 million** in Q1 2024 (vs. **$14 million** in Q1 2023)[26](index=26&type=chunk) [D. Restructuring and Other Charges, Net](index=13&type=section&id=D.%20Restructuring%20and%20Other%20Charges%2C%20Net) Alcoa recorded **$202 million** in Q1 2024 restructuring charges, mainly for the Kwinana refinery curtailment, up from **$149 million** in Q1 2023 - In Q1 2024, Alcoa recorded **$202 million** in Restructuring and other charges, net, primarily a **$197 million** charge for the curtailment of the Kwinana (Australia) alumina refinery[27](index=27&type=chunk) - The Kwinana refinery curtailment charge includes **$123 million** for water management, **$41 million** for severance, **$15 million** for asset retirement obligations, **$13 million** for take-or-pay contracts, and **$5 million** for asset impairments. Total cash outlays of approximately **$215 million** are expected through 2025, with **$140 million** in 2024[28](index=28&type=chunk) - In Q1 2023, Alcoa recorded **$149 million** in Restructuring and other charges, net, primarily for the permanent closure of the Intalco aluminum smelter (**$101 million**) and increased reserves for employee obligations at the San Ciprián smelter (**$47 million**)[29](index=29&type=chunk) Restructuring and Other Charges, Net by Segment (First Quarter Ended March 31) | Segment | 2024 (in millions) | 2023 (in millions) | | :-------- | :----------------- | :----------------- | | Alumina | $197 | $1 | | Aluminum | — | 146 | | Corporate | 5 | 2 | | Total | $202 | $149 | [E. Segment Information](index=16&type=section&id=E.%20Segment%20Information) Alcoa's two segments, Alumina and Aluminum, are evaluated by Adjusted EBITDA; Q1 2024 saw Alumina EBITDA rise to **$139 million**, while Aluminum EBITDA fell to **$50 million** - Alcoa Corporation has two operating and reportable segments: Alumina and Aluminum. Segment performance is primarily evaluated based on Adjusted EBITDA[34](index=34&type=chunk) Segment Performance (First Quarter Ended March 31) | Metric (in millions) | Alumina (2024) | Aluminum (2024) | Total (2024) | Alumina (2023) | Aluminum (2023) | Total (2023) | | :------------------- | :------------- | :-------------- | :----------- | :------------- | :-------------- | :----------- | | Third-party sales | $961 | $1,638 | $2,599 | $857 | $1,810 | $2,667 | | Intersegment sales | 395 | 4 | 399 | 421 | 3 | 424 | | Total sales | $1,356 | $1,642 | $2,998 | $1,278 | $1,813 | $3,091 | | Segment Adjusted EBITDA | $139 | $50 | $189 | $103 | $184 | $287 | Sales by Product Division (First Quarter Ended March 31) | Product Division | 2024 (in millions) | 2023 (in millions) | | :--------------- | :----------------- | :----------------- | | Aluminum | $1,661 | $1,846 | | Alumina | 890 | 714 | | Energy | 33 | 28 | | Bauxite | 61 | 127 | | Other | (46) | (45) | | Total | $2,599 | $2,670 | [F. Earnings Per Share](index=18&type=section&id=F.%20Earnings%20Per%20Share) Basic and diluted EPS for Q1 2024 were **$(1.41)**, and **$(1.30)** for Q1 2023, with potential dilutive securities being anti-dilutive due to net losses Earnings Per Share (First Quarter Ended March 31) | Metric (in millions, except per-share) | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Net loss attributable to Alcoa Corporation | $(252) | $(231) | | Average shares outstanding – basic | 179 | 178 | | Average shares outstanding – diluted | 179 | 178 | | Basic EPS | $(1.41) | $(1.30) | | Diluted EPS | $(1.41) | $(1.30) | - Basic and diluted average shares outstanding were the same in Q1 2024 and Q1 2023 because the effect of potential common shares was anti-dilutive due to net losses[37](index=37&type=chunk) [G. Accumulated Other Comprehensive Loss](index=19&type=section&id=G.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss for Alcoa shareholders was **$(3,628) million** at March 31, 2024, driven by cash flow hedge gains and foreign currency translation losses Accumulated Other Comprehensive Loss (First Quarter Ended March 31) | Component (in millions) | Alcoa Corporation (2024) | Alcoa Corporation (2023) | Noncontrolling interest (2024) | Noncontrolling interest (2023) | | :---------------------- | :----------------------- | :----------------------- | :----------------------------- | :----------------------------- | | Pension and other postretirement benefits (Balance at end of period) | $9 | $66 | $(14) | $(5) | | Foreign currency translation (Balance at end of period) | $(2,715) | $(2,683) | $(1,037) | $(1,025) | | Cash flow hedges (Balance at end of period) | $(922) | $(1,038) | — | $1 | | Total Accumulated other comprehensive loss | $(3,628) | $(3,655) | $(1,051) | $(1,029) | - For Alcoa Corporation shareholders, total other comprehensive income was **$17 million** in Q1 2024, a significant improvement from a loss of **$(116) million** in Q1 2023. This was mainly due to a **$130 million** gain from cash flow hedges in 2024, compared to a **$(122) million** loss in 2023[11](index=11&type=chunk)[39](index=39&type=chunk) - Foreign currency translation adjustments resulted in a loss of **$(122) million** for Alcoa Corporation shareholders in Q1 2024, compared to a gain of **$2 million** in Q1 2023[11](index=11&type=chunk)[39](index=39&type=chunk) [H. Investments](index=21&type=section&id=H.%20Investments) Alcoa's equity investments include a Saudi Arabia joint venture, which reported an improved net loss of **$(8) million** in Q1 2024, and the ELYSIS partnership basis is now zero Equity Investments Financial Information (First Quarter Ended March 31) | Metric (in millions) | Saudi Arabia Joint Venture (2024) | Mining (2024) | Energy (2024) | Other (2024) | Saudi Arabia Joint Venture (2023) | Mining (2023) | Energy (2023) | Other (2023) | | :------------------- | :-------------------------------- | :------------ | :------------ | :----------- | :-------------------------------- | :------------ | :------------ | :----------- | | Sales | $711 | $115 | $63 | $115 | $600 | $187 | $58 | $121 | | Net (loss) income | $(8) | $(5) | $31 | $(16) | $(252) | $24 | $24 | $(16) | | Alcoa Corporation's equity in net (loss) income | $(10) | $(2) | $11 | $(13) | $(75) | $11 | $9 | $(15) | - The Saudi Arabia joint venture's Q1 2023 results included a **$41 million** adjustment for a utility dispute settlement, which was not present in Q1 2024, contributing to the improved net loss[42](index=42&type=chunk) - Alcoa's basis in the ELYSIS Limited Partnership has been reduced to zero due to incurred losses, with **$54 million** in unrecognized losses as of March 31, 2024[41](index=41&type=chunk) [I. Receivables](index=21&type=section&id=I.%20Receivables) Alcoa uses a receivables purchase facility to sell up to **$130 million** of customer receivables, generating **$16 million** net cash proceeds in Q1 2024 - Alcoa has an agreement to sell up to **$130 million** of customer receivables without recourse on a revolving basis through a special purpose entity (SPE). The SPE held **$181 million** in unsold customer receivables as collateral at March 31, 2024[43](index=43&type=chunk)[44](index=44&type=chunk) - In Q1 2024, Alcoa sold **$307 million** in gross customer receivables and reinvested **$291 million**, resulting in net cash proceeds of **$16 million**. This compares to Q1 2023, where **$76 million** was sold, **$23 million** reinvested, and **$53 million** in net cash proceeds[46](index=46&type=chunk) [J. Inventories](index=22&type=section&id=J.%20Inventories) Alcoa's total inventories decreased to **$2,048 million** at March 31, 2024, a reduction across all categories from December 31, 2023 Inventories (as of March 31, 2024 and December 31, 2023) | Inventory Type (in millions) | March 31, 2024 | December 31, 2023 | | :--------------------------- | :------------- | :---------------- | | Finished goods | $326 | $355 | | Work-in-process | 281 | 287 | | Bauxite and alumina | 563 | 586 | | Purchased raw materials | 648 | 700 | | Operating supplies | 230 | 230 | | Total | $2,048 | $2,158 | [K. Debt](index=22&type=section&id=K.%20Debt) Alcoa's long-term debt increased to **$2,469 million** due to a **$750 million** green bond issuance, while revolving credit facilities remain undrawn and compliant - In March 2024, Alcoa Nederland Holding B.V. (ANHBV) completed a **$750 million** debt issuance of **7.125% Senior Notes due 2031**, designated as green bonds. Net proceeds of **$737 million** will finance/refinance qualifying projects under its Green Finance Framework and support cash position[51](index=51&type=chunk) - Alcoa has a **$1,250 million** Revolving Credit Facility maturing in June 2027 and a **$250 million** Japanese Yen Revolving Credit Facility maturing in April 2025 (extended in April 2024). Both facilities had no outstanding borrowings at March 31, 2024, and the Company was in compliance with all financial covenants[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Short-term borrowings related to inventory repurchase agreements were **$52 million** at March 31, 2024. In Q1 2024, the Company recorded **$21 million** in borrowings and repurchased **$25 million** of inventory under these agreements[49](index=49&type=chunk)[50](index=50&type=chunk) [L. Pension and Other Postretirement Benefits](index=24&type=section&id=L.%20Pension%20and%20Other%20Postretirement%20Benefits) Net periodic benefit cost for pensions was **$3 million** in Q1 2024, with a **$1 million** curtailment loss from Kwinana refinery, and **$17 million** expected contributions in 2024 Net Periodic Benefit Cost (First Quarter Ended March 31) | Component (in millions) | Pension benefits (2024) | Pension benefits (2023) | Other postretirement benefits (2024) | Other postretirement benefits (2023) | | :---------------------- | :---------------------- | :---------------------- | :----------------------------------- | :----------------------------------- | | Service cost | $2 | $2 | $1 | $1 | | Interest cost | 27 | 31 | 6 | 6 | | Expected return on plan assets | (35) | (39) | — | — | | Recognized net actuarial loss | 8 | 7 | 1 | 1 | | Amortization of prior service benefit | — | — | (3) | (3) | | Curtailments | 1 | — | — | — | | Net periodic benefit cost | $3 | $1 | $5 | $5 | - The full curtailment of the Kwinana refinery in January 2024 triggered curtailment accounting in Alcoa's Australian pension plan, resulting in a **$1 million** curtailment loss recognized in Restructuring and other charges, net[59](index=59&type=chunk) - Alcoa's estimated minimum required contribution to defined benefit pension plans in 2024 is approximately **$17 million**, with **$6 million** contributed to non-U.S. plans during Q1 2024[62](index=62&type=chunk) [M. Derivatives and Other Financial Instruments](index=26&type=section&id=M.%20Derivatives%20and%20Other%20Financial%20Instruments) Alcoa uses derivatives to mitigate market risks, with **$23 million** in assets and **$1,130 million** in liabilities at March 31, 2024, and details fair values of other financial instruments - Alcoa uses derivative instruments (aluminum, energy, foreign exchange, and interest rate contracts) to mitigate risks from changing commodity prices, foreign currency exchange rates, and interest rates, primarily for hedging purposes[64](index=64&type=chunk) Derivative Instruments Fair Value (as of March 31, 2024 and December 31, 2023) | Metric (in millions) | March 31, 2024 Assets | March 31, 2024 Liabilities | December 31, 2023 Assets | December 31, 2023 Liabilities | | :------------------- | :-------------------- | :------------------------- | :----------------------- | :---------------------------- | | Level 1 derivatives | $11 | $10 | $16 | $9 | | Level 3 derivatives | 12 | 1,120 | 16 | 1,297 | | Total | $23 | $1,130 | $32 | $1,306 | | Less: Current | 22 | 205 | 29 | 214 | | Noncurrent | $1 | $925 | $3 | $1,092 | Other Financial Instruments Fair Value (as of March 31, 2024 and December 31, 2023) | Metric (in millions) | March 31, 2024 Carrying Value | March 31, 2024 Fair Value | December 31, 2023 Carrying Value | December 31, 2023 Fair Value | | :------------------- | :---------------------------- | :------------------------ | :------------------------------- | :--------------------------- | | Cash and cash equivalents | $1,358 | $1,358 | $944 | $944 | | Restricted cash | 97 | 97 | 103 | 103 | | Short-term borrowings | 52 | 52 | 56 | 56 | | Long-term debt due within one year | 79 | 79 | 79 | 79 | | Long-term debt, less amount due within one year | 2,469 | 2,473 | 1,732 | 1,702 | [N. Income Taxes](index=31&type=section&id=N.%20Income%20Taxes) Alcoa's Q1 2024 AETR was **(8.9)%** on a **$(325) million** loss before taxes, influenced by valuation allowances and **$9 million** in Section 45X tax credits Income Tax Information (First Quarter Ended March 31) | Metric (in millions) | 2024 | 2023 | | :------------------- | :--- | :--- | | Loss before income taxes | $(325) | $(180) | | Estimated annualized effective tax rate | (8.9)% | 141.4% | | Income tax expense (benefit) | $29 | $(255) | | (Favorable) unfavorable tax impact related to losses in jurisdictions with no tax benefit | (47) | 305 | | Discrete tax expense | — | 2 | | (Benefit from) provision for income taxes | $(18) | $52 | - The AETR for 2024 differs from the U.S. federal statutory rate of **21%** primarily due to losses in certain jurisdictions with full valuation allowances and losses in foreign jurisdictions with higher statutory tax rates[75](index=75&type=chunk) - In Q1 2024, Alcoa recorded **$9 million** in benefits in Cost of goods sold related to the Section 45X Advanced Manufacturing Tax Credit from the Inflation Reduction Act of 2022, for its Massena West and Warrick smelters[76](index=76&type=chunk) [O. Contingencies](index=31&type=section&id=O.%20Contingencies) Alcoa holds **$261 million** in environmental remediation reserves and is disputing a **$139 million** Australian tax assessment on historic alumina sales Environmental Remediation Reserve Activity (in millions) | Metric | Balance at Dec 31, 2022 | Liabilities incurred | Cash payments | Reversals and other | Balance at Dec 31, 2023 | Liabilities incurred | Cash payments | Foreign currency translation and other | Balance at Mar 31, 2024 | | :----- | :---------------------- | :------------------- | :------------ | :------------------ | :---------------------- | :------------------- | :------------ | :------------------------------------- | :---------------------- | | Reserve | $284 | $39 | $(55) | $(1) | $268 | $1 | $(6) | $(2) | $261 | - Alcoa's environmental remediation reserve balance was **$261 million** at March 31, 2024, with **$64 million** classified as current. Cash payments for remediation expenses were **$6 million** in Q1 2024[78](index=78&type=chunk)[79](index=79&type=chunk) - AofA is contesting an Australian Taxation Office (ATO) assessment of approximately **$139 million** in additional income tax and **$460 million** in compounded interest related to historic alumina sales. AofA paid **50%** of the assessed income tax (**$74 million**) and filed proceedings in the Australian Administrative Appeals Tribunal[91](index=91&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) [P. Other Financial Information](index=35&type=section&id=P.%20Other%20Financial%20Information) Q1 2024 'Other Expenses, Net' totaled **$59 million**, driven by equity and foreign currency losses, while 'Other Noncurrent Assets' were **$1,605 million** Other Expenses, Net (First Quarter Ended March 31) | Component (in millions) | 2024 | 2023 | | :---------------------- | :--- | :--- | | Equity loss | $27 | $95 | | Foreign currency losses (gains), net | 24 | (16) | | Net loss from asset sales | 11 | 14 | | Net loss (gain) on mark-to-market derivative instruments | 5 | (26) | | Non-service costs – pension and other postretirement benefits | 4 | 3 | | Other, net | (12) | (16) | | Total | $59 | $54 | Other Noncurrent Assets (as of March 31, 2024 and December 31, 2023) | Asset (in millions) | March 31, 2024 | December 31, 2023 | | :------------------ | :------------- | :---------------- | | Value added tax credits | $324 | $336 | | Prepaid gas transmission contract | 285 | 297 | | Gas supply prepayment | 262 | 283 | | Deferred mining costs, net | 179 | 187 | | Goodwill | 146 | 146 | | Prepaid pension benefit | 127 | 125 | | Noncurrent prepaid tax asset | 69 | 73 | | Noncurrent restricted cash | 66 | 71 | | Intangibles, net | 36 | 37 | | Other | 111 | 95 | | Total | $1,605 | $1,650 | Cash and Cash Equivalents and Restricted Cash (as of March 31, 2024 and December 31, 2023) | Metric (in millions) | March 31, 2024 | December 31, 2023 | | :------------------- | :------------- | :---------------- | | Cash and cash equivalents | $1,358 | $944 | | Current restricted cash | 31 | 32 | | Noncurrent restricted cash | 66 | 71 | | Total | $1,455 | $1,047 | [Q. Supplier Finance Programs](index=36&type=section&id=Q.%20Supplier%20Finance%20Programs) Alcoa participates in supplier finance programs, with **$100 million** in outstanding invoices at March 31, 2024, allowing early supplier payments without affecting Alcoa's obligations - Alcoa has supplier finance programs with third-party financial institutions, enabling suppliers to receive early payments for qualifying invoices. Alcoa's obligations and payment terms to suppliers are not impacted[107](index=107&type=chunk) - As of March 31, 2024, **$100 million** in qualifying supplier invoices were outstanding under these programs (vs. **$104 million** at December 31, 2023), with payment terms ranging from **45 to 110 days**. These obligations are included in Accounts payable, trade[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Alcoa's Q1 2024 financial condition and operations, covering business updates, net loss, sales, segment performance, and liquidity, including the Alumina Limited acquisition [Business Update](index=37&type=section&id=Business%20Update) Q1 2024 saw Alcoa agree to acquire Alumina Limited, restart smelter pots, curtail Kwinana refinery, launch a **$100 million** productivity program, and issue **$750 million** in green bonds - Alcoa entered a binding agreement on March 11, 2024, to acquire Alumina Limited, aiming to enhance its position as a leading pure-play, upstream aluminum company and simplify its corporate structure[108](index=108&type=chunk)[109](index=109&type=chunk) - In Q1 2024, Alcoa completed the restart of one potline (**54,000 mtpy**) at Warrick Operations and approximately **6%** of pots at the San Ciprián smelter, in compliance with viability agreements[114](index=114&type=chunk)[116](index=116&type=chunk) - Alcoa announced the full curtailment of the Kwinana refinery in January 2024, to be completed in Q2 2024, due to factors including age, scale, operating costs, bauxite grades, and market conditions[117](index=117&type=chunk) - The Company completed a **$750 million** green bond issuance in March 2024 under its new Green Finance Framework, with net proceeds supporting decarbonization, water management, R&D, renewable energy, and low-carbon product projects[118](index=118&type=chunk) - Alcoa initiated a global productivity and competitiveness program in Q1 2024, targeting approximately **$100 million** in operating cost savings (excluding raw materials, energy, and transportation) by Q1 2025[119](index=119&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Alcoa's Q1 2024 net loss was **$252 million**, with sales decreasing to **$2,599 million** due to lower aluminum prices, and restructuring charges rising to **$202 million** Selected Financial Data (Quarter Ended March 31, 2024 vs. Dec 31, 2023 & March 31, 2023) | Metric (in millions, except per-share) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Sales | $2,599 | $2,595 | $2,670 | | Cost of goods sold | 2,404 | 2,425 | 2,404 | | Restructuring and other charges, net | 202 | (11) | 149 | | Net loss attributable to Alcoa Corporation | $(252) | $(150) | $(231) | | Diluted loss per share | $(1.41) | $(0.84) | $(1.30) | | Third-party shipments of alumina (kmt) | 2,397 | 2,259 | 1,929 | | Third-party shipments of aluminum (kmt) | 634 | 638 | 600 | | Average realized price per metric ton of alumina | $372 | $344 | $371 | | Average realized price per metric ton of aluminum | $2,620 | $2,678 | $3,079 | - Net loss attributable to Alcoa Corporation was **$252 million** in Q1 2024, an unfavorable change of **$102 million** sequentially (from **$150 million** in Q4 2023) and **$21 million** year-over-year (from **$231 million** in Q1 2023)[125](index=125&type=chunk) - Sales decreased **$71 million** year-over-year, primarily due to lower average realized aluminum prices and lower volumes and price from bauxite offtake and supply agreements, partially offset by higher alumina shipments[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of goods sold as a percentage of sales increased **2%** year-over-year, mainly due to higher production costs in the Alumina segment and lower average realized aluminum prices, partially offset by favorable raw material and energy costs[128](index=128&type=chunk)[133](index=133&type=chunk) - Restructuring and other charges, net, increased to **$202 million** in Q1 2024 (from **$(11) million** in Q4 2023 and **$149 million** in Q1 2023), primarily due to the Kwinana alumina refinery curtailment[135](index=135&type=chunk)[136](index=136&type=chunk) [Segment Information](index=45&type=section&id=Segment%20Information) Alumina segment Adjusted EBITDA rose to **$139 million** in Q1 2024, while Aluminum segment Adjusted EBITDA fell to **$50 million**, impacted by prices and production costs - Alumina Segment Adjusted EBITDA increased to **$139 million** in Q1 2024, up from **$84 million** in Q4 2023 and **$103 million** in Q1 2023. This was driven by a higher average realized price (**$28/ton** sequentially) and lower energy and raw material costs[159](index=159&type=chunk)[163](index=163&type=chunk) - Alumina production decreased **4%** sequentially and **3%** year-over-year, primarily due to reduced production at Australian refineries from lower bauxite grade, partially offset by increased production at the San Ciprián refinery[153](index=153&type=chunk)[154](index=154&type=chunk) - Aluminum Segment Adjusted EBITDA decreased to **$50 million** in Q1 2024, down from **$88 million** in Q4 2023 and **$184 million** in Q1 2023. This decline was primarily due to lower average realized prices (**$58/ton** sequentially, **$459/ton** year-over-year) and higher production costs[173](index=173&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk) - Aluminum production increased **5%** year-over-year in Q1 2024, driven by restarts at the Warrick and Alumar smelters. However, the Alumar smelter experienced operational instability[166](index=166&type=chunk)[172](index=172&type=chunk) Alumina Segment Key Metrics (Quarter Ended March 31) | Metric (kmt or millions) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :----------------------- | :----------- | :----------- | :----------- | | Bauxite production (mdmt) | 10.1 | 10.4 | 9.9 | | Alumina production (kmt) | 2,670 | 2,789 | 2,755 | | Third-party alumina shipments (kmt) | 2,397 | 2,259 | 1,929 | | Total sales | $1,356 | $1,354 | $1,278 | | Segment Adjusted EBITDA | $139 | $84 | $103 | | Average realized third-party price per metric ton of alumina | $372 | $344 | $371 | Aluminum Segment Key Metrics (Quarter Ended March 31) | Metric (kmt or millions) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :----------------------- | :----------- | :----------- | :----------- | | Production (kmt) | 542 | 541 | 518 | | Total shipments (kmt) | 634 | 638 | 600 | | Total segment third-party sales | $1,638 | $1,683 | $1,810 | | Segment Adjusted EBITDA | $50 | $88 | $184 | | Average realized third-party price per metric ton | $2,620 | $2,678 | $3,079 | | Average cost per metric ton of aluminum shipped | $2,474 | $2,483 | $2,695 | [Environmental Matters](index=52&type=section&id=Environmental%20Matters) This section refers to Note O for detailed environmental matters, including Alcoa's participation in site assessments, cleanups, and remediation reserves - For detailed information on environmental matters, refer to the Environmental Matters section of Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q[183](index=183&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Alcoa's liquidity is deemed adequate; Q1 2024 cash used for operations increased to **$223 million**, while financing cash flow surged to **$754 million** from green bond issuance - Management believes Alcoa's cash on hand, projected cash flows, and liquidity options are adequate to fund short-term and long-term operating and investing needs, with no significant debt maturities until 2027[184](index=184&type=chunk) - Cash used for operations was **$223 million** in Q1 2024, compared to **$163 million** in Q1 2023. This unfavorable change was primarily due to a **$22 million** increase in net loss (excluding restructuring) and a **$23 million** increase in working capital accounts, mainly receivables[187](index=187&type=chunk)[189](index=189&type=chunk) - Cash provided from financing activities was **$754 million** in Q1 2024, a significant increase from **$40 million** in Q1 2023. This was primarily driven by **$737 million** net proceeds from the 2031 green bond issuance and **$55 million** in net contributions from noncontrolling interest[190](index=190&type=chunk)[193](index=193&type=chunk) - Cash used for investing activities was **$117 million** in Q1 2024 (vs. **$102 million** in Q1 2023), primarily for **$101 million** in capital expenditures and **$17 million** in cash contributions to the ELYSIS partnership[201](index=201&type=chunk) - Credit ratings for Alcoa Corporation and ANHBV's long-term debt were downgraded by Moody's, Fitch, and Standard and Poor's in March 2024, with outlooks revised to stable[199](index=199&type=chunk)[200](index=200&type=chunk) [Recently Adopted and Recently Issued Accounting Guidance](index=56&type=section&id=Recently%20Adopted%20and%20Recently%20Issued%20Accounting%20Guidance) This section refers to Note B for details on recently adopted and issued accounting guidance, including ASUs on income tax and segment expense disclosures - For information on recently adopted and issued accounting guidance, refer to Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q[202](index=202&type=chunk) [Dissemination of Company Information](index=56&type=section&id=Dissemination%20of%20Company%20Information) Alcoa Corporation will disseminate future company developments and financial performance via its website, press releases, SEC filings, and webcasts - Alcoa Corporation will disseminate future company developments and financial performance through its website (www.alcoa.com), press releases, SEC filings, conference calls, and webcasts[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Alcoa's market risk exposure remains materially unchanged since December 31, 2023, with further details available in the Annual Report and Note M - Alcoa Corporation's exposure to market risk has not materially changed since December 31, 2023[204](index=204&type=chunk) - For additional information on market risk, refer to Part II Item 7A of Alcoa Corporation's Annual Report on Form 10-K for the year ended December 31, 2023, and Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Alcoa's CEO and CFO affirmed the effectiveness of disclosure controls and procedures as of March 31, 2024, with no material changes in internal control - Alcoa Corporation's CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[205](index=205&type=chunk) - There have been no changes in internal control over financial reporting during Q1 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[206](index=206&type=chunk) [PART II – OTHER INFORMATION](index=58&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Alcoa is involved in various legal proceedings, including environmental and tax matters, but management expects no material adverse effect on financial position - Alcoa is involved in various lawsuits and claims, including environmental, safety and health, commercial, tax, product liability, intellectual property infringement, employment, and employee and retiree benefit matters[207](index=207&type=chunk) - Management believes that the disposition of these pending or asserted matters will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company[207](index=207&type=chunk) - For additional information regarding legal proceedings, refer to Part I Item 1 of this Form 10-Q in Note O to the Consolidated Financial Statements[209](index=209&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) This section outlines risks associated with the proposed Alumina Limited acquisition, including significant costs, potential delays from approvals, and adverse impacts if the transaction fails - Alcoa expects to incur significant costs associated with the proposed acquisition of Alumina Limited, including financial advisor, filing, legal, accounting, and regulatory fees, some of which are payable regardless of transaction completion[211](index=211&type=chunk) - Completion of the Alumina Limited acquisition is subject to various conditions, including shareholder and court approvals, regulatory clearances (antitrust, foreign investment in Australia and Brazil), and NYSE listing approval for Alcoa shares. Delays or failure to obtain these approvals could prevent completion[212](index=212&type=chunk)[213](index=213&type=chunk)[216](index=216&type=chunk) - If the transaction is not completed, Alcoa's business and operations could be adversely affected, potentially leading to negative financial market reactions, litigation, and termination fees (e.g., **$20 million** if Alumina Limited terminates due to Alcoa's failure to obtain stockholder approval, or **$50 million** in other circumstances)[214](index=214&type=chunk)[215](index=215&type=chunk)[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Alcoa did not repurchase common stock in Q1 2024, with **$500 million** remaining available under its ongoing share repurchase program Issuer Purchases of Equity Securities (First Quarter Ended March 31, 2024) | Period | Total Number of Shares Purchased | Weighted Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program | | :---------------------- | :------------------------------- | :------------------------------------ | :--------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | January 1 to January 31 | — | — | — | $500,000,000 | | February 1 to February 29 | — | — | — | $500,000,000 | | March 1 to March 31 | — | — | — | $500,000,000 | | Total | — | — | — | | - As of March 31, 2024, Alcoa Corporation did not repurchase any shares of its common stock[218](index=218&type=chunk) - Alcoa has a common stock repurchase program, approved in July 2022, authorizing up to **$500 million** in repurchases. The full **$500 million** remains available for repurchase as of the report date[218](index=218&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2024 - None of Alcoa's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2024[219](index=219&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including Alumina Limited acquisition agreements, Senior Notes indenture, and executive certifications - Exhibits include the Scheme Implementation Deed for the Alumina Limited acquisition, the Indenture for the **7.125% Senior Notes due 2031**, and certifications of principal executive and financial officers[221](index=221&type=chunk) - Certain schedules, exhibits, and appendices have been omitted in accordance with Item 601(a)(5) of Regulation S-K, with the Company undertaking to furnish copies upon request[221](index=221&type=chunk) [SIGNATURES](index=62&type=section&id=SIGNATURES) The report was signed on May 2, 2024, by Molly S. Beerman, EVP and CFO, and Renee R. Henry, SVP and Controller - The report was signed on May 2, 2024, by Molly S. Beerman, Executive Vice President and Chief Financial Officer, and Renee R. Henry, Senior Vice President and Controller[224](index=224&type=chunk)

Financial Data and Key Metrics Changes - Revenue remained flat sequentially at $2.6 billion [15] - Net loss attributable to Alcoa changed from $102 million to $252 million, with loss per share changing from $0.84 to $1.41 [15] - Adjusted EBITDA increased by $43 million to $132 million, primarily due to improved energy costs [16] Business Line Data and Key Metrics Changes - Alumina segment third-party revenue increased by 6% due to higher average realized prices and higher shipments [15] - Aluminum segment third-party revenue decreased by 3% due to lower average realized prices [15] - Alumina segment EBITDA increased by $55 million sequentially, while aluminum segment EBITDA declined by $30 million [17] Market Data and Key Metrics Changes - Alumina prices recently reached a two-year high, driven by supply concerns from Chinese refineries and disruptions in Australia [24] - Demand for aluminum is improving, particularly in automotive and electrical sectors, with signs of recovery in packaging [25] - LME aluminum prices hit their highest level in a year following sanctions on Russian aluminum [26] Company Strategy and Development Direction - The proposed acquisition of Alumina Limited aims to enhance Alcoa's vertical integration and operational flexibility [9][10] - The company is focused on maintaining a strong balance sheet while pursuing growth opportunities through capital allocation [11] - Alcoa is committed to advancing its position as a global pure play upstream aluminum company [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the near-term markets and long-term outlook for both alumina and aluminum [24] - Supply concerns and environmental issues are expected to constrain future growth potential in alumina [24] - The company anticipates challenges in achieving profitability at certain facilities, particularly San Ciprián [30] Other Important Information - The company issued a $750 million green bond to support its cash position and fund decarbonization projects [19] - Working capital changes and capital expenditures were significant uses of cash in the first quarter [18] - The company expects to close the Alumina Limited transaction in the third quarter of 2024 [13] Q&A Session Summary Question: Market strength in aluminum versus alumina and AWAC acquisition synergies - Management indicated that aluminum demand is growing, while alumina is expected to be in deficit in 2024 due to curtailments [36][37] Question: Government support for new technologies - Management is exploring governmental support for R&D but noted that significant capital expenditures for breakthrough technologies will occur post-2030 [39] Question: Closure costs for Kwinana and San Ciprián - Kwinana's curtailment costs are estimated at $80 million for 2024, while a refinery closure in San Ciprián could cost around $200 million [41][44] Question: Working capital guidance - The company targets a working capital level of $1 billion by the end of 2024 [49] Question: Alumar restart challenges - Management acknowledged difficulties in the Alumar restart but remains committed to resolving issues [55] Question: Impact of Russian sanctions on the market - Management supports the sanctions and believes they will help reestablish credibility in global pricing mechanisms [83][84]