SEC Filing | Howmet Aerospace Inc.

View:

Download DOC

Download PDF

Download XLS

Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 13, 2015 (April 8, 2015)

ALCOA INC.

(Exact name of Registrant as specified in its charter)


Pennsylvania	1-3610	25-0317820
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification Number)


390 Park Avenue, New York, New York		10022-4608
(Address of Principal Executive Offices)		(Zip Code)

Office of Investor Relations 212-836-2674

Office of the Secretary 212-836-2732

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

On April 8, 2015, Alcoa Inc. held its first quarter 2015 earnings conference call, broadcast live by webcast. A transcript of the call and a copy of the slides presented during the call are attached hereto as Exhibits 99.1 and 99.2, respectively, and are hereby incorporated by reference.

* * * * *

The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished in accordance with the provisions of General Instruction B.2 of Form 8-K.

Forward-Looking Statements

This communication contains statements that relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning global demand growth for aluminum, end market conditions, supply/demand balances, and growth opportunities for aluminum in automotive, aerospace, and other applications; targeted financial results or operating performance; statements about Alcoa’s strategies, outlook, and business and financial prospects; and statements regarding the acceleration of Alcoa’s portfolio transformation, including the expected benefits of acquisitions, including the completed acquisition of the Firth Rixson business and TITAL, and the pending acquisition of RTI International Metals, Inc. (RTI). These statements reflect beliefs and assumptions that are based on Alcoa’s perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. Forward-looking statements are subject to a number of risks, uncertainties, and other factors and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa, including aerospace, automotive, commercial transportation, building and construction, packaging, defense, and industrial gas turbine; (d) the impact of changes in foreign currency exchange rates on costs and results, particularly the Australian dollar, Brazilian real, Canadian dollar, euro, and Norwegian kroner; (e) increases in energy costs or the costs of other raw materials, or the unavailability or interruption of energy supplies; (f) increases in the costs of other raw materials; (g) Alcoa’s inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations (including moving its alumina refining and aluminum smelting businesses down on the industry cost curves and increasing revenues and improving margins in its Global Rolled Products and Engineered Products and Solutions segments) anticipated from its restructuring programs and productivity improvement, cash sustainability, technology, and other initiatives; (h) Alcoa’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions (including achieving the expected levels of synergies, revenue growth, or EBITDA margin improvement), sales of assets, closures or curtailments of facilities, newly constructed, expanded, or acquired facilities, or international joint ventures, including

the joint venture in Saudi Arabia; (i) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products, including unfavorable changes in laws and governmental policies, civil unrest, imposition of sanctions, expropriation of assets, or other events beyond Alcoa’s control; (j) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (k) the impact of cyber attacks and potential information technology or data security breaches; (l) failure to receive the required votes of RTI’s shareholders to approve the merger of RTI with Alcoa; (m) failure to receive, delays in the receipt of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals of the acquisition of RTI, or the failure to satisfy the other closing conditions to the acquisition; (n) the risk that acquisitions (including Firth Rixson, TITAL and RTI) will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (o) the possibility that certain assumptions with respect to RTI or the acquisition could prove to be inaccurate, including the expected timing of closing; (p) the loss of customers, suppliers and other business relationships as a result of acquisitions, competitive developments, or other factors; (q) the potential failure to retain key employees of Alcoa or acquired businesses; (r) the effect of an increased number of Alcoa shares outstanding as a result of the acquisition of RTI; (s) the impact of potential sales of Alcoa common stock issued in the RTI acquisition; (t) failure to successfully implement, to achieve commercialization of, or to realize expected benefits from, new or innovative technologies, equipment, processes, or products, including the Micromill, innovative aluminum wheels, and advanced alloys; and (u) the other risk factors summarized in Alcoa’s Form 10-K for the year ended December 31, 2014 and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market. Nothing on Alcoa’s website is included or incorporated by reference herein.

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits.

The following are furnished as exhibits to this report:

99.1

Transcript of Alcoa Inc. first quarter 2015 earnings call.

99.2

Slides presented during Alcoa Inc. first quarter 2015 earnings call.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		ALCOA INC.

By:		/s/ Audrey Strauss
Name:		Audrey Strauss
Title:		Executive Vice President, Chief Legal Officer and Secretary

Dated: April 13, 2015

EXHIBIT INDEX


Exhibit No.		Description

99.1		Transcript of Alcoa Inc. first quarter 2015 earnings call.

99.2		Slides presented during Alcoa Inc. first quarter 2015 earnings call.

EX-99.1

Exhibit 99.1



THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT AA - Q1 2015 Alcoa Inc Earnings Call

EVENT DATE/TIME: APRIL 08, 2015 / 09:00PM GMT

OVERVIEW: Co. reported 1Q15 net income excluding special items of $363m or $0.28 per diluted share.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

© 2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. ‘Thomson Reuters’ and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

CORPORATE PARTICIPANTS

Nahla Azmy Alcoa Inc. – VP of IR

Klaus Kleinfeld Alcoa Inc. - Chairman and CEO

William Oplinger Alcoa Inc. - EVP and CFO

CONFERENCE CALL PARTICIPANTS

David Gagliano BMO Capital Markets - Analyst

Jorge Beristain Deutsche Bank - Analyst

Timna Tanners BofA Merrill Lynch - Analyst

Paretosh Misra Morgan Stanley - Analyst

Sal Tharani Goldman Sachs - Analyst

Josh Sullivan Sterne, Agee & Leach, Inc. - Analyst

Brian Yu Citigroup - Analyst

PRESENTATION

Operator

Good day, ladies and gentlemen, and welcome to the first-quarter 2015 Alcoa earnings conference call. My name is Kyle and I will be your operator for today. As a reminder, today’s conference is being recorded for replay purposes. I would now like to turn the call over to your host for today, Nahla Azmy, Vice President of Investor Relations. Please proceed.

Nahla Azmy - Alcoa Inc. - VP of IR

Thank you, Kyle. Good afternoon and welcome to Alcoa’s first-quarter 2015 earnings conference call. I’m joined by Klaus Kleinfeld, Chairman and Chief Executive Officer, and William Oplinger, Executive Vice President and Chief Financial Officer. After comments by Klaus and Bill we will take your questions.

Before we begin, I would like to remind you that today’s discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the Company’s actual results to differ materially from those projections listed in today’s press release and presentation and in our most recent SEC filings.

In addition we’ve included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s press release, in the appendix to today’s presentation, and on our website, www.alcoa.com under the “Invest” section. Any reference in our discussion today to historical EBITDA means adjusted EBITDA, for which we have provided calculations and reconciliations in the appendix.

With that I will turn the call over to Mr. Klaus.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Thank you very much, Nahla. Welcome, everybody. Let me in the usual fashion quickly summarize the quarter. I assume that you have had a little chance of looking at it and I hope you all conclude it’s been a strong operational quarter and the transformation is fully on track.

Let’s look at the operational performance. Let’s start with revenue. Revenue has been growing year over year by 7%. And if you look under the hood, you actually see that this has been driven primarily by the organic growth coming from auto and aero.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Obviously over a year, when you look at all the transformational portfolio moves that we have made, that we have had, capacity reductions, as well as some portfolio actions, as well as currency, if you put all of this together, that’s pretty much a wash, and the only thing that stands out is the organic growth in the auto and aero. That’s been the reason for the 7%, and I assume that we’ll have more of a discussion around that. I’m happy to provide more color on that later in the Q&A.

When you then look at profits, you also see, on the downstream side, we have another first-quarter record there with $191 million ATOI. On the midstream, we have $34 million ATOI. There’s challenge on the can sheet on the one hand, and at the same time, we have record auto shipments. I’ll explain the dynamics and what we are going to do on that and in detail when it comes to my presentation.

On the upstream, good news, 14th consecutive quarter of improvement. Alumina segment stands at $221 million. Primary segment is at $187 million of ATOI. And then you again see in the quarter nice productivity, $238 million productivity.

And the good news is, again, like in the last quarter, it’s really coming from all segments and from all functions. And that all falls to the bottom line and also falls, which is equally important, into cash. So we have $1.2 billion cash on hand. So this is kind of the operational side.

On the transformation I would say it’s fully on track. Firth Rixson, we just remind you, doubles our aero content. Going well. The TITAL acquisition we completed in this quarter. This is going to give us titanium/aluminium structural castings in Europe.

We announced the RTI acquisition which is titanium and it complements our mid and downstream value chain. We expect to close within the next two to five months.

Sold Belaya Kalitva, one of our Russian rolling mills. And we announced today that we secured 75% of the long-term gas needs for western Australian refineries.

And we announced about six weeks ago that we are putting 2.8 million tons on the refining side and 500,000 tons on the smelting side under review. And followed up, as you know from us, immediately after this with the first set of actions.

And we closed down the last pot line that we had open in Sao Luis, and that was 74,000 tons. And we, almost at the same time, announced that we are curtailing part of our refining in Suriname, another 443,000 tons. And we are exploring at the same time the sale to the Surinamese government.

So, that’s pretty much what’s been happening, strong operational results, transformation fully on track. So, Bill, why don’t you give us a little more details on the numbers side.

William Oplinger - Alcoa Inc. - EVP and CFO

Thanks, Klaus. Let’s review the income statement. First, the year-ago revenue increased $365 million, or 7%. The 7%, as Klaus said, was principally organic growth, largely driven by auto and aerospace volumes, and positive market factors, which were offset by the impact of portfolio actions.

Cost of goods sold percentage decreased by 160 basis points sequentially, primarily driven by the strong US dollar, and productivity partially offset by lower LME pricing. Compared to a year ago quarter basis, the 6 percentage point improvement came from productivity gains, improved prices and a stronger US dollar, somewhat offset by cost increases in energy.

Overhead costs were down sequentially across the organization. The addition of Firth Rixson was more than offset by headcount reduction and favorable currency impacts.

Other income was $12 million in the quarter, including a favorable balance sheet remeasurement impact of $17 million pretax. EBITDA was over $1 billion for the third consecutive quarter, over $400 million higher than the 2014 first quarter.

First-quarter effective tax rate of 47% was higher than our expected operational tax rate, primarily due to a non cash valuation allowance against certain deferred tax assets in our alumina business, the impact of which was entirely offset in non-controlling interests and the fact that a significant portion of our special items had no tax benefits associated with them. Excluding the impact of these items, our operational rate was 31% for the quarter, which is consistent with our expected operational rate for the year.

Overall results for the quarter are net income of $0.14 per share. Excluding special items we have net income of $0.28 per share, $0.19 higher than first quarter last year.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Let’s take a closer look at the special items. Included in net income is an after-tax charge of $168 million or $0.14 per share, primarily for restructuring.

During the quarter we took several actions in support of the Company’s transformation. We sold Belaya Kalitva – the Belaya Kalitva rolling mill in Russia, which resulted in an after-tax charge of $129 million.

We also announced the curtailment of the remaining capacity at our Sao Luis smelter, resulting in an $11 million charge. The balance relates to a $9 million adjustment for the Mt. Holly sale, which was completed in December of 2014, in addition to other charges related to actions taken across the organization. In total, roughly 90% of the restructuring related charges are non cash.

Other special items for the quarter were $7 million of acquisition fees in the period related to TITAL and RTI. So, in aggregate, this results in net income excluding special items of $363 million, or $0.28 per diluted share.

Let’s look at the results versus a year ago. First-quarter earnings of $363 million are more than triple the prior-year quarter. Favorable market factors such as the LME pricing and a strong US dollar contributed $153 million to first-quarter earnings.

Also, we delivered $156 million of after-tax productivity gains across all of our segments. That’s $238 million on a pretax basis. And that more than offset cost headwinds due to higher maintenance cost, lower labor wage increases and raw material usage.

As Klaus alluded to, stronger demand and share gains in aerospace, as well as the North American automotive, building and construction and commercial transportation markets, led to favorable volume impact of $42 million. Higher regional premiums account for most of the favorable price mix impact. However, that was somewhat offset by continued pricing pressures in rolled products. The unfavorable energy impact was driven largely by higher energy costs in the Spain smelting operations.

If we move on to the segments, as Klaus noted, EPS generated ATOI of $191 million, up from the first quarter of 2014. EBITDA margin reached 20.1% for the quarter.

Third-party revenue was $1.7 billion, up 8% versus the fourth quarter at 17% versus a year ago, driven by Firth Rixson acquisition and share gains in aerospace, commercial transportation, and the North American building and construction markets. These favorable impacts were partially offset by currency headwinds to revenue of roughly $70 million due to the strong US dollar.

A couple of drivers in the quarter. Firth Rixson contributed $6 million of ATOI in the quarter on EBITDA of $27 million. This is firmly on track with the acquisition business case that we had laid out.

Currency was a negative headwind of $10 million to earnings due to the stronger US dollar. The segment was negatively impacted by weaker prices and mix due primarily to slightly weaker mix in our fastener and wheels businesses and short-term pricing pressures in the European building and construction market. The business continued to generate strong productivity gains of $53 million after tax, more than offsetting $45 million of cost increases.

If we then move on to the outlook for the second quarter, the aerospace market will remain strong. We expect recovery in the North American nonresidential building construction market to continue to be a bright spot with some softness seen in Europe. Heavy-duty truck will remain strong in North America, partially offset by declines in Europe.

We expect further share gains and productivity improvements across the portfolio. So, in aggregate for the second quarter of 2015, we expect ATOI to be up 3% to 8% year over year, including a negative foreign currency impact of $13 million.

If we turn to the rolled products segment, ATOI in the first quarter was $34 million compared to $59 million in the prior year. A couple of items to note in the segment. The segment had, as Klaus alluded to, record automotive shipments during the quarter resulting from the Davenport expansion, which you can see in the volume growth.

Business has been negatively impacted by the falling metal prices, however, due to the lag of cost in inventory. That’s a $27 million negative impact.

Pricing is being impacted by weakness in the can sheet market and a change in input costs in Russia. We’re now being charged the Rotterdam premium in Russia and are unable to fully pass that through to our customers currently. Very strong productivity results also in this segment largely offset some of the cost increases that we’re experiencing, including labor and maintenance cost increases, the start-up at the Saudi joint venture and expenses associated with the Micromill R&D project.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

As we look out into the second quarter, we expect GRP to be impacted by a number of factors. Continued strong demand for both auto sheet and brazing sheet, combined with seasonal volume improvements in the packaging business. However, packaging prices in North America and the inability to pass through metal premiums in Russia will continue to negatively impact ATOI, and we estimate that as about $19 million year over year after tax.

Cost for the ramp-up of the Saudi Arabia rolling mill and investment in the Micromill R&D will also continue. And that’s approximately $13 million year over year. And metal lag impacts, as of today, metal lag impacts would result in a negative $15 million at current market prices. So, in total, ATOI for the segment is expected to decrease 30% over last year’s result, assuming current metal prices and exchange rates.

Let’s move to the alumina segment. Combined primary metals and alumina upstream segments produced our 14th consecutive quarter of performance improvement, with combined ATOI totaling $408 million.

The alumina segment continued to deliver very strong earnings of $221 million, ATOI up 24% sequentially, and more than double last year. The first-quarter result serves as a reminder of the strength of our alumina portfolio and the strides we’ve made to de-link alumina pricing from LME prices.

Three positive factors drove the sequential earnings gain, significantly stronger US dollar, which lowered local currency-denominated production costs at our non-US mines and refineries; favorable energy costs, fuel oil in Suriname and natural gas prices across the system, as well as the positive impact from converting the San Ciprian refinery to natural gas; and improvements in productivity and costs overall. These gains were partially offset by lower LME-based contract pricing, as well as lower shipments due to the sale of our Jamaican refinery interest and two fewer days in the quarter.

As we look out into the second quarter, API-based and spot sales will be roughly 75% of external sales in 2015. API pricing will continue to follow the 30-day lag while LME-based contracts will follow the typical 60-day lag.

We expect production to be down slightly by 74,000 metric tons from 1Q due to curtailment of the Suriname refinery. This volume impact will be offset by one additional day of production in the quarter, however. Maintenance costs will be slightly higher. So, in total, for the second quarter we expect productivity improvements, volume increases, and the favorable energy environment to offset the aforeseen cost increases.

If we then turn to primary metals, as I highlighted in January, the primary metals segment typically ships more metal internally in the first quarter, and this year was no exception as third-party revenue declined in the quarter. Earnings in primary declined $80 million versus the fourth quarter of 2014 to $187 million, but we’re up sharply versus a year ago.

While lower LME prices were a sequential headwind of $84 million for the quarter, the impact of the recent decline in premiums was muted due to the lag on premiums through revenue. Energy and alumina costs were also unfavorable sequentially. Lower energy sales in Brazil were partially offset by lower power prices, particularly in Spain. This impact, combined with higher alumina prices, reduced earnings by $36 million.

Earnings improvement came from several sources, however. As in the alumina segment, the strengthening dollar lowered cost, improving primary’s earnings by $22 million. Earnings also improved due to lower costs at curtailed facilities and lower overhead costs.

Looking to the second quarter, our pricing will continue to lag by 15 days to the LME price. Production and shipments will be down 18,000 metric tons due to the Sao Luis curtailment. This volume impact will be partially offset by one additional day of production in the quarter.

We expect negative impact from the current decline in the regional premiums of approximately $65 million based on premium levels as of April 1. We expect energy impacts to be slightly positive in the second quarter.

Favorable energy costs and the additional sales in Brazil will be offset by lower energy sales in other regions. In sum, we expect productivity and favorable energy to offset the lower volume and other cost increases in the segment.

If we move to the day’s working capital slide, we continue to focus on maintaining working capital at the lows that we saw last year. We were able to maintain DWC on the underlying business at 30 days, with an additional 3 days associated with the Firth Rixson acquisition. This is an area of opportunity for the integration team as we strive to bring Firth Rixson in line with the other EPS businesses.

Moving on to the cash flow statement and liquidity, as is typical for our business in the first quarter, we had free cash outflow of $422 million. However, this is significantly better than a year-ago quarter.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

The outflow is based on a number of factors. In the quarter, working capital needs increased due to higher receivables due to stronger sales in the downstream, and seasonal increases preparing for the typically stronger second quarter. In the first quarter we also make annual incentive compensation payments and semi-annual interest payments. Also, we made the second of five annual payments to the US government for the Department of Justice and SEC settlement in the amount of $74 million.

If we move to pension, the global pension contribution requirement for 2015 is estimated to be $485 million. In the first quarter we contributed $85 million in cash. We now show pension expense net of contribution in the cash flow statement. So based on a cash contribution of $85 million, pension expense was $122 million in the quarter.

Capital expenditures for the quarter were $247 million, with $150 million on return seeking capital projects. $124 million of that, or 83% of that spend, was in the mid and the downstream, including our spend on La Porte and the Davenport for aerospace expansions, and Tennessee for automotive expansion, among others. Also during the quarter we closed on the TITAL acquisition, which we paid a net of $204 million in cash, ending the quarter with $1.2 billion of cash on hand.

If we turn to the balance sheet, we continue to maintain a strong balance sheet. From a liquidity perspective, we’re ending the quarter with $1.2 billion and debt at $8.8 billion, resulting in net debt of $7.6 billion.

You will recall that last quarter we communicated a leverage target for 2015 that represents our commitment to regain full investment grade status. For the quarter, debt to EBITDA was 2.2 times on a trailing four-quarter basis, which is at the bottom of our target range. As you probably noticed, S&P has recognized the improvements in the balance sheet by taking their rating to a neutral outlook.

Lastly, we have agreed to a $260 million loan with the Department of Energy supporting the expansion at Tennessee, which we expect to close within three to four months.

I will conclude the review of the quarter with a discussion of the 2015 targets. Our annual financial targets have been set to continue to reposition the Company, driving growth and operational improvements. Year-to-date productivity is on schedule, with $238 million of productivity actions achieved in the first quarter against a target of $900 million.

Return-seeking capital spend was $150 million and is anticipated to ramp up during the year to meet the $750 million target. Sustaining capital was maintained at $101 million, significantly lower than the run rate of $725 million would suggest, but we would anticipate this will also ramp up during the year. Debt to EBITDA, as I mentioned, is at the bottom of our target range.

Lastly, while we did have a cash outflow in the quarter, we still anticipate generating a minimum of $500 million of free cash flow for the year. This target now includes the prepayment of $300 million in 2015 related to the execution of a 12-year natural gas contract for our refineries in western Australia. To be clear, we’ll deliver the $500 million of free cash flow after making the prepayment for gas in Australia.

Let me turn to a review of the upstream markets. We’ve updated both our 2014 final growth numbers and projected 2015 growth estimates. I will start by updating the final demand growth for 2014.

We upwardly revised global growth to 9% in 2014, an increase on our forecast of 7%, driven by higher than expected growth in China. This results in global consumption of 54 million metric tons, or 1.2 million metric tons higher than we knew in January. This is very positive, and we’re talking about the continued strong growth this year on an even higher base.

We continue to project approximately 3.5 million metric tons of new demand in 2015, resulting in a 6.5% growth rate, and leading to record global demand of 57.5 million metric tons. Just to put this in perspective, that compares to demand in the pre-crisis level in 2008 of approximately 40 million metric tons.

In the alumina market, we tightened our forecast by roughly 230,000 metric tons, driven by slower than expected ramp-up in supply. And regarding aluminum, where the market is relatively balanced with a slight surplus of 326,000 metric tons, China continues to add capacity with expansions occurring largely in the northwest. We’ve lowered our estimate of curtailments by 300,000 metric tons, as smelters have been reluctant to curtail as the SHFE prices have recovered to over $2,159 per metric ton.

In the rest of the world, expansions are concentrated in India where execution will depend on securing sufficient coal to support power needs. And restarts are expected to remain modest due to the decline of the all-in price.

Versus a year ago, inventories continue to fall and are at 66 days of consumption. Global inventories are approaching the 30-year average of 61 days. The reality is demand for aluminum is strong, the industry needs metal to operate, so as metal comes out of inventory it is being absorbed in the market through higher demand.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Lastly, premiums started 2015 down from historical highs but remain strong at average levels roughly 20% to 25% higher compared to last year. We’ve seen increases in semis exports coming out of China. This is a combination of real semi-fabricated products and what we would call fake semis that are manufactured to capture the difference in tax treatment between semis and primary.

The premiums have responded to this Chinese supply. Now that premiums have adjusted, the economics of Chinese exports have deteriorated. Ultimately the positive fundamentals, we believe, will drive the industry and be reflected in the regional premiums.

So, let me turn it back over to Klaus.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Thank you, Bill. That was very good. So let’s look at the Alcoa end markets, and let’s start with aerospace.

We continue to project for this year growth between 9% to 10%. And the reason for that is because we see large commercial aircraft segment growing at 9.6%. The order book for that large segment stands now at nine years of production.

The airline fundamentals are very solid, 7% increase in passenger demand projected; 4.3% cargo demand; airline profits are up. Those are all the expectations basically from IATA up to $25 billion in 2015.

On top of it, the other segments, the regional jet segment, is also growing nicely, almost at 11%. That’s 50% above the 2012 situation. So, that’s really good.

Automotive North America, we continue to believe we will see a growth for this year between 1% and 4%. Sales are strong, 5.6%, up year to date. I actually looked at the SAAR rate, the seasonally adjusted annual rate, and in January we project $16.4 million for the year, and the projection now is at $17.1 million.

Very strongly driven by light trucks. We talked about that last time. This is a bit of the impact of lower gasoline prices. We continue to see pent-up demand there. The average fleet age is at 11 years in the US and the historic number roughly is at 10.

Production is flat, and this is mainly a factor of the new models ramping up. So, we see that basically following the sales situation. Inventories are down, which those two things you see go together at 58 days. In March the industry average was rather between 60 and 65 days. Incentives are flat, and on trucks are obviously down because there’s a very strong demand there.

If you look at Europe automotive, we also believe that we see a range that could go up to 3% growth, but it could also go down to minus 1%. Where do we see it today? Production is pretty much flat up to now.

We see western Europe improve, offset by Russia. Registrations are up 7%. Exports are up 3.6%.

On China we continue to believe to see a growth between 5% and 8%. Production is up 6.2%, sales are up 4.3%. The growth is driven by the increased middle class and also by this thing that they call the Clean Air Act. We still, even after looking at the numbers of vehicles that have already been taken off the roads, there are still roughly 9 million vehicles that are not complying with the Clean Air Act and that need to get off the road by 2017.

Let’s move on to the next segment, heavy-duty truck and trailer. North America, we project 6% to 8%. Actually, we are tightening our range to the up side here. We used to say in the early part of this year, when I talked about it last, that we see the range between 4% and 8%.

And the reason for this is what we saw in orders in the fourth quarter Record orders in the fourth quarter – 131,000 units. Orders are up. Rising order book, 66% year over year, highest since July 2006. Solid fundamentals, 3.4%, freight ton miles up, 4.3% freight prices up, and the production is up by 16% with an almost 50,000 trucks in February, the number.

On Europe, actually we are tightening our range a little bit. We believe it is going to shrink between minus 5% and minus 7%. Earlier in the year, we actually thought it could even go to minus 10%, but we don’t believe that any more given some of the signs that we see in western Europe.

Production forecast is pretty much unchanged. Western Europe minus 5%, Eastern Europe minus 10%. But we do see improving signs in Western Europe. Orders are up 4.3%, registrations are up 8.2%.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

In China, we actually do see it further down. We believe minus 9% to minus 11%. And we see the production as down by 31%.

But keep in mind, you have a little bit of an off situation here when you compare this with the last year because in the last year we had in the production particularly we had this pull-ahead effect due to the regulatory changes that led to a growth rate in orders of 30% in 2013. And that obviously rippled through on the production side in the first half of the year in 2014. So, that’s what’s happening there.

Packaging North America, unchanged. We see it continue to shrink a little bit, minus 1% to minus 2%. That’s mainly the demand decline of the carbonated soft drink side, and partially offset by moderate growth in the beer segment.

Europe, we believe, is going to grow 1% to 2%, very strongly driven by steel to aluminum conversion in Western Europe, and partially offset by declining Eastern European markets. China, 8% to 12% growth here. It’s mainly the penetration of aluminum into the beer segment.

Then when you go to building and construction, North America, we believe it is going to grow 4% to 5%. If you look at some of the early indicators, nonresidential contract award, plus 13% in March. Architectural building index positive 50.4. Case-Shiller home price index 4.5%. So that’s that for North America.

Europe, we believe minus 2% to minus 3%. Weakness continues. Obviously strong variation across market. China we also continue to believe 7% to 9%. Fundamentals continue to stabilize.

Last but not least, industrial gas turbines, we believe we’re going to see a plus 1% to plus 3% this year. And let me explain that, because we do see that the new capacities are down 16%. Electricity demand is down 0.9%, and the spare shift, with the energy – the spares are negative, and with the energy mix and usage different there.

But what we do see is actually a new trend, strongly driven by our customers as they bring out new high technology turbines and also offer upgrades of existing turbines. That’s obviously the major factor, very, very important for us and that’s why we’ve come to this 1 to 3%. I think I’ve mentioned that already in the last call and we stick to it.

So, let’s with this move from the general tone of the end markets into what’s happening at Alcoa. And let me remind you of our overarching strategic direction.

We are creating two value engines. This is an old picture, but sometimes I think it’s important to get the frame right. We are building really two value engines.

One is lightweight multi-material innovation powerhouse. And the other one is we are creating the globally competitive commodity business. So you will always see actions around those two things in the quarter if we do our job well.

We’re increasing the share in exciting growth markets. I will come to that. We have a full pipeline of innovative products. We are really using all growth levers. We are shifting to higher value add and we are expanding in multi-materials and we are increasing our expertise in multiple technology areas.

And on the globally competitive commodity side, we are really increasing our competitiveness. And we do this to mitigate the downside, which I’ve said multiple times, we cannot influence the commodity prices, but what we can influence is where we are on the competitiveness side. And that’s also – and I hope we’ll come to that at least in the Q&A – that’s also why we have been doing a lot of actions around the capacity and why you have to take that into account when you look at the revenue growth. So we’ve taken quite a bit off revenues out there.

We’re optimizing also on the value-add side. Casthouse value-add on the smelting side. And we’ve shifted to API basically on the alumina side to reflect the market fundamentals. And we’re continuing to drive productivity improvements.

Let’s start looking at what we have been doing. And let’s first start with our value-add businesses. We used organic as well as inorganic growth.

This is a full slide, but actually it’s only a selection of the things that we have done, particularly on the left-hand side. And I think that we sometimes lose sight when people get so excited about from acquisitions. But when you look at the growth, and it’s nicely reflected in this quarter, the 7% growth that you see year over year primarily comes from organic growth in the auto and aero side.

When you look at this, and just think about automotive organic growth, the aluminum-intense vehicles, the A951, the really industry-enabling bonding technology, the Micromill, all of this is big. I’ll cover that later. Auto sheet alone we believe will have $1.3 billion revenues in 2018 for Alcoa.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Look at a segment that we almost never have time to talk about, commercial transportation and wheels. We have the lightest wheel in the industry with Ultra One, and the cleanest with Dura-Bright. We are winning share and we’re growing the business. It is going to be $1 billion by 2016. And it is nicely profitable.

Aerospace, a lot of the attention has gone into the acquisitions that we’ve recently done, and taken a lot of the limelight. But I really want to mention the hard work of a lot of Alcoans to bring the organic growth in here.

Just look at aluminum lithium. We recently had in this quarter the announcement that Pratt & Whitney qualified us on the pure power fan blade for the A320. This is a big breakthrough.

If you add all of these things on aluminum lithium alone, we currently have a projection of $100 million revenues that are contracted by 2017. This is all happening relatively soon.

Now, on the right-hand side, I think it would be foolish if we would not also look at opportunities on the inorganic growth side, if we have a good idea on how to create value. And I will talk about that because I believe we have a very good idea how to create value.

Firth Rixson RTI, TITAL, I’m going to do a deep dive. TITAL is very small. If there’s a question on it, I’ll be happy to answer that, but I’m not going to do a deep dive.

I’m going to start with a deep dive on Firth Rixson here. First of all, let me remind you, what Firth Rixson is as an acquisition is really a jet engine acquisition. It doubles the content that we will have, or that we do have from now on, in every jet engine platform.

If you look at how was that enhancing our portfolio, on the financials, we plan to get $40 million synergies in year two, $100 million in year five. We plan to build this by next year into $1.6 billion revenues and $350 million EBITDA.

And currently, as Bill mentioned, the integration is going really as planned. We’re actually a little bit ahead of our own plan. Keep in mind, we only announced the closure on November 19. So, happy to talk more about that.

We’re building capabilities through this. We became the leader in seamless rolled rings as well as added aero engines. We now have a full range of aero engine discs.

Multi-materials, the multi-material mix 60% nickel, 25% titanium, 15% steel and aluminum. And we got access to really leading edge technology, like isothermal forging. I cannot emphasize that enough because isothermal forging gives us capabilities that are of unbelievably high value for our customers, for the engine makers. It’s all about efficiency.

What isothermal forging does, it allows 70 degrees Fahrenheit, higher temperature in the combustion chamber. This alone increases the combustion efficiency by 40%. It’s big and customers are paying for it. This is why – we are not in love with technology, but we are in love when we can use technology to create customer value and get the benefit and reap the rewards from this. Last but not least, it gives us access to largest, most advanced, closed-die forge presses.

Here on the right-hand side you see this. I kind of love this simple diagram. It’s kind of a virtual blowup of an engine. Everything is blue in it.

Why is everything blue in it? Because all of these components Alcoa can make now with Firth Rixson. So, over 90% of those structural and rotated components we can make. Unfortunately, not for every engine. We do make them, but that’s what I call potential.

We are in the hot section with nickel and ti-aluminide. We are in the cold section with titanium, aluminum, and steel. So this is fantastic.

Now, how we capture the value. We had a lot of discussions, how do you capture the value? I want to give you a little bit more color on this so that you understand how we are doing it.

We basically took Firth Rixson and broke it up into two parts. We had this idea already from the start on in the preparation towards. We never approve an acquisition if we don’t understand how we want to manage it, including the people that we want to have managing this.

So, we broke Firth Rixson up and integrated it into two engineered products and solutions business units. On the ring side they became part of Alcoa Fasteners. The reason for that is because of the major locations for rings are in California. And we wanted to make sure that the proximity of the locations is there and that an experienced management team of AFS can basically get their hands around it and bring the value to them.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

The disc part we integrated into our forging and extrusion business. And here the logic was very simple. The logic is around technological synergies from forging, and also because the AFE team is a very experienced team.

Now, what are we doing there? We are basically using the exact same discipline that we call our Alcoa operating system to manage the integration. Way before we go through with the acquisition we do the planning so that on day one when we close we are ready to basically go full blast ahead and know exactly where we are having to go after.

I would say, if you were to go to any Firth Rixson facility today, you would already see that that’s an Alcoa facility. And that I think if you were to ask people they would say well, those and those and those examples here, we are managing differently and we’re managing to the Alcoa operating system book.

What is that book? The book is a book that to those that follow us is very simple to understand. We have those three strategic priorities, profitable growth, Alcoa advantage, disciplined execution.

Those are the things that have brought us over the last years through the crisis, $9.7 billion productivity, reduced the days working capital. Bill showed it again. Generated $3 billion of free cash flow. And has shown a nice profitable growth also on the organic side.

And we are applying that same thought onto Firth Rixson. And how are we doing it? We’re breaking it down. Let’s take a look at the synergies.

We’re breaking the $40 million synergies in 2016 down into those three buckets, – operational productivity where we want to get $22 million out. You see some examples here. Happy if anybody wants to know more color on that to answer that later. Procurement savings of $14 million, overhead reductions of $8 million.

Now you see this yellow bubbles there and you wonder what does that mean? 200% deployed, 250%, 150%, and in total 190%. We are using the exact same systematic on the disciplined execution, which we call degrees of implementation. We are using that from the start of the planning on to the execution of the full integration.

What this means, let me pick out the $22 million on operational productivity. We currently have actions identified that have a value that’s 150% of the $22 million. That is in our action plan. Now, I don’t want you to – and the total is 190% of the $40 million.

I don’t want you to put that into your model because in reality, this is one of the reasons why we are so good in productivity, because we always find ways to overdeploy, because reality hits sooner than later, and then you find that something cannot get done in exactly that fashion. So, you need to be overdeployed to do it right and basically deliver, deliver our promises, which we’ve done every time from 2008 onwards.

I also want to mention the isothermal press. The isothermal press, this is a very important piece of technology that I described beforehand. And the question is – it’s hard to quantify that. The question is, where do we stand currently on the isothermal press?

We’ve received the isothermal forge and heat treat testing method approval by our customer. This is the foundation to be cleared for qualification. That allowed us to forge six batches of qualification materials here that are currently in machining.

And they will basically then go to the customer for testing. We will see the first revenue in the second half of 2015. So, all very well on track and pretty much operating as one.

So let’s also talk a bit about RTI. Obviously, RTI is in a very different stage. RTI, we announced the plan to acquire RTI. So we are currently waiting regulatory as well as RTI shareholder approval.

We believe this is going to take from now on about two to five months. We filed with the respective agency about two weeks ago, so all well on track.

Alcoa and RTI is a combination that expands basically the titanium customer solutions. So what are the benefits there? We believe we’re going to get, by 2019, $1.2 billion revenue, and we’re going to increase the EBITDA margin by 10 percentage points to 25%.

If you look at what this means, $30 million net synergies in year two, $100 million net in year four. We believe, as I said, 10 percentage points increase of EBITDA margin by 2019. 65% of the $1.2 billion revenues are supported by contracts. That’s the nice thing. We saw the same thing also in Firth Rixson. That’s the nice thing about being strong on the aerospace side.

We are building capabilities. Currently we only have VAR furnaces And we have only a few of those. And now we get our hands around, assuming that this thing will get closed, plasma and electron beam melting, have a lot of advantages. All titanium, by the way. Titanium, billetizing, mill products, machining and sub assembly.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

On the multi-material side, we get titanium, we get intellectual property on multi-material 3-D printing. And we can establish a closed loop goes through scrap processing.

Leading edge technology, it doesn’t stop right there. Ti-alumina ingots. And we already have ideas what we can do with this because we can bring the ti-aluminide into the low pressure turbine blades, which is a great application. Without RTI we would have had a much harder time to do. And we can also do the near net shape components as through cold and hot isothermal pressing.

If you look here on the right-hand side, you pretty much get what’s happening there. You see how Alcoa’s portfolio here looks on the titanium side and how RTIs look, on the right-hand side you see how those look together. Nice complementing the mid and the downstream value-add.

The integration preparation is really in full swing from both sides. I personally visited four sites in the last weeks and saw and met pretty much with all major leaders of RTI, and many of the RTI employees. I am happy to give you some more color on this if anybody has an interest on that.

So, let me also talk about what is our idea on the integration, again, assuming that this will go through. First on structure, once we’ve received all approvals, we plan to have RTI as a new business unit reporting in to EPS. So, as always, we will use the Alcoa operating system to ensure a fast capture of value. And that value basically means a net synergy of $100 million, and I mentioned 30% year two, 100% in year four.

That breaks down into those four categories here, process productivity $44 million, procurement $20 million, overhead $20 million, growth $20 million. I’m not going to go through all of this examples again. Happy to go more into it if anybody has an interest.

And on the right-hand side, you see there are some, what I call growth technologies, foundational technologies like machining, like ti-aluminide, like additive manufacturing. I mentioned an example on ti-aluminide, that we can bring that into the cold section on the investment casting side, which is a totally separate division. Additive manufacturing, waiting that, we see there at RTI, fits very well.

Then there’s upside, also, through the oil and gas business. We have a small oil and gas business, they have a bigger oil and gas business. They are focused more on titanium steel, we are all aluminum. Nice fit. They have some medical business which has very, very nice position and we will see how we can develop that further.

So all of that is fascinating and I think according to plan. As I said, we expect to have the approvals in two to five months.

Another fascinating transformation is happening in our global rolled products. Let me also provide you some insights on that. And let’s start with a downer here on the left-hand side.

The downer is what we see on the can sheet side happening. The can sheet situation is dragging GRP down. Because we clearly see overcapacity. And we, as others, are trying to take capacity out by converting into auto. But the fact is, it’s overcapacitized.

At the same time, we see declining carbonated soft drink demand, particularly in the US. And then beer growth, US and China. But all of that is not sufficient to balance off the supply overhang. That strongly impacts margins and volumes, and that is a big drag on GRP.

Now I think Kay has shown you that diagram here on the right-hand side when we had investor day, but I don’t think he showed it for 2016. We haven’t updated that because we are going through a fundamental transition here in the portfolio.

You can see here, this is basically structural along the value side. The higher it is, the more value – it’s a simplification – the more value it has. But what we are doing, we’re building out the higher value and we’re reducing the lower value. That’s very simple.

You can see some examples there. Again, I would be happy to illuminate some of those at a later point in time. So, we’re shifting to higher margin, we’re shifting to differentiated product, we’re driving GRP’s year-on-year profit to lift in 2016 versus 2015.

What is the really, really good news here? The good news is that we have invested in the innovation, in the growth on the aero side. That is happening. It’s happening, I would say better actually than what we expected.

It’s driven by two factors. One is the regulatory side with CAFE regulations. The others are the consumer benefits from fuel consumption, braking, distance safety, and those types of things. What does it do? It actually increases the North America aluminum sheet demand by 3 times until 2020.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

But let’s not look so far out. Let’s look much closer to what’s happening in Alcoa, and that you see here on the right-hand side. Davenport, our automotive expansion is fully operational. It’s at capacity, and it’s running really, really well. Tennessee will come online middle of this year, and it’s basically booked out.

So what will happen to our revenues? You will see already this year our revenues in auto sheet alone will double to $660 million revenues. And in 2016, we actually see that it’s coming up to $1 billion revenues.

What will be the results if you go – don’t go back to the chart now, but I think most of you will remember. The mix will change. The mix on automotive will change from 2014 where we presented 10% of GRP’s volume to 20% of GRP’s volume. And obviously, this will mean we will see higher volumes as well as higher margins there.

And that’s not even where the excitement stops, because if you look at what we announced end of last year with the Micromill, we announced that the first Micromill-enabled materials we announced the next-generation automotive alloys. What does the Micromill do? It allows us to offer products that are 2 times more formable, while 30% lighter than high-strength steel. That allows us to attack the steel market.

We can roll something, from hot to cold, from hot metal to rolling, we can do in 20 minutes what today takes 20 days. 50% lower energy, one-fourth of the footprint. It allows us also to attack other markets inside of the automotive with products that today are mainly steel, crash resistance with lighter components, 30% to 40% lighter. Higher formability, reduces assembly costs also, higher strength, reduces weight.

So, where do we stand in qualifying the Micromill? A lot of folks have asked us this. We completed successfully customer trials. We did it actually before we announced it because we wanted to have the validation.

Now we have a qualification process at the first customer, and we have an additional agreements with five customers for qualification. And we are on the road to have the first commercial coil being done. And then we are at the same time in parallel exploring whether and where to do a full-scale capacity expansion optionality.

If we do that, we will do that in exactly the same fashion that we’ve done Davenport and Tennessee. And both of those pretty much were sold out before we even committed to the project. So it’s not a build and wait and see attitude, but the customer will be there before we come to a conclusion, because we clearly know how to deploy capital and have shown that.

So, let’s close with talking a little bit on the commodity upstream side. You saw the first-quarter results. They really don’t need much of an explanation. They have been really, really good.

Now, why is that so? Because we have been coming down on the cost curve on alumina, we have been enhancing our revenues. We now have, for this year, we will have 75% of the revenues on API and spot. Remember, we only introduced that around 2010. That’s a market changing dynamics.

Primary come down on the cost curve. We’ve come down quite far. We have a lot of additional action. We are increasing the value-add, and we’re now at around 70% already with this.

We continue to have a robust process of maximizing our global competitiveness. We have reduced 33% of our smelting operating capacity since 2007. We announced on March 6 that we put another 2.8 million tons on refining and 500,000 tons on smelting under a strategic review.

And the principles are always the same. We look pretty much at cash, we look side by side. The logic that we use is a logic of fix, sell, curtail, or close. You can see some examples here on the right-hand side on fix.

The announcement that came out today on western Australia natural gas clearly falls in that category. Long term, we got our hands around competitive gas, closed the deal, done, moving in that direction. Suriname, moving in the direction of a sale, as another example.

Curtailment and closing, this is not a digital thing. It goes through a number of steps because you can do it in multiple steps. This is what’s shown there.

And on Suriname, we announced that we are taking up another 443,000 tons. And in Sao Luis, that we are also – that we have closed the last potline in Sao Luis with another 74,000 tons off-line.

Some of you also might have noticed that we changed the organizational structure of our GPP business. We are now fully verticalized in five business units with global P&Ls, mining, refining, energy, smelting, and casting.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Why are we doing that? We are doing that to increase performance transparency, to focus on a faster global rollout of best practice sharing. So, more productivity. We are doing it to improve the commercial as well as the operational side. And we are doing it to optimize capital allocation.

What do I mean with that? I mean that we have pretty much been breaking down the last remaining resource of potential regional fiefdoms. This is global, this is a global responsibility. Now, for you outside, we will continue to report on alumina and aluminum, so we’re really on the outside reporting really nothing will change.

So let me conclude. Lots going on. We are creating a sustainable value for our shareholder. We continue to deliver strong operational results, profitable growth, driven organic as well as inorganic, fully on track, disciplined execution, improved our upstream competitiveness.

With this, let’s open the Q&A.

QUESTION AND ANSWER

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

(Operator Instructions)

Your first question comes from the line of David Gagliano from BMO Capital Markets. Your line is open.

David Gagliano - BMO Capital Markets - Analyst

Great. Thank you. I thought we could focus in on the topic of the day for a minute, which from my seat is the premium – the Midwest premium, regional premiums, Europe, and America, North America. My first question, we’re hearing many transactions are happening below the Platts or the Metal Bulletin prices. My first question, where are premiums for you in terms of your physical transactions currently?

William Oplinger - Alcoa Inc. - EVP and CFO

Dave, we basically stick to the quoted premiums. The way the premiums work is, as transactions get done, they get reported to Platts and Midwest, and it moves the premium. So, we’re sitting currently at around $0.185 for the Midwest spot premium, and that’s down from the highs of $0.24.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

But, Dave, I would recommend, as you know, it’s very hard to predict where prices or commodities will go. And therefore I think it is good to remind ourselves of what drives what.

The LME price is driven, as we’ve been saying for now years, by sentiment. It moved up and down depending on what Mario Draghi or Janet Yellen wear on a day. Whereas the regional premium is really driven by the market fundamentals.

And then let’s go back and take a look at the chart that Bill showed at the end of his presentation and look at where this stands. We pretty much see that the market on aluminum is pretty much balanced. And I’ll come to that.

And on the alumina side, you see a bit of an overhang, but in reality we already are taking the overhang down from the first quarter because again we’re seeing that some of this capacity announcement are not coming through. And when you put it in perspective, we are projecting roughly 2 million or so, and we are talking about 100 million market, 100 million tons market roughly.

But let me come to what we’ve been hearing a lot also on the premium side. The reason why we’ve seen a little bit of additional pressure on the premiums is because we have seen that the high premiums have attracted some, what we call, Chinese fake semis. And the fake semis really are completely – they are remelts. They got completely directed towards competing with primary.

And now that the premium has adjusted, we are looking at the economics of this, and the economics actually has turned negative. So we believe that to come to an end.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

However, there’s a component in it where they are misusing – where those people that are exporting semis, fake semis, are basically misusing or abusing the Chinese tax policies and acting against the declared Chinese policy. The declared Chinese policy clearly doesn’t want primary to be exported. They have a 15% export duty on primaries.

So, they are declaring this as semis, and therefore they get the 13% value at rebate. And in reality it is remelt. That policy has not changed. All what we are seeing and all that we are hearing from the Chinese is that they have no intention to allow this to further happen. So we believe the market is pretty much going to come back to the classical market fundamentals.

David Gagliano - BMO Capital Markets - Analyst

That’s very helpful. Thank you. As a follow-up, based on that commentary, is it Alcoa’s view then that premiums will stabilize at $0.18 a pound?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Our view is that – that’s why I had such a long answer. In the end it all depends on the physical supply and demand. That is different, depending on regions. Because also, don’t forget, and what Bill showed, we always talk about the inventory overhang. I think most people have slept through the last years. We have been growing demand.

In 2008, the total market was roughly 40 million. Now it’s almost 60 million. 9% growth, demand growth, for last year. This is the compound interest.

And you see it very nicely in the inventory. In the height of the crisis we were around 108 days inventory. Now we’re back to roughly around 66 or something like this. The historic average, I think Bill said it, is around 61. So we’re pretty much back to normal.

So, you are seeing the little spot things, as I said, abusing Chinese tax policies. China doesn’t want that – declared policy. I think it’s a very limited phenomenon. And I think we are going to see this thing falling back exactly where it belongs and showing what is the regional supply and what is the regional demand.

Then also keep in mind, there are some regions where the supply chain has become very long. We saw that when part of Logan went down and how all of a sudden the packaging folks were scrambling for material because they were very worried, having to stop their facilities.

David Gagliano - BMO Capital Markets - Analyst

Okay, great. That’s very helpful. Thank you.

Operator

Your next question comes from the line of Jorge Beristain from Deutsche Bank. Your line is open.

Jorge Beristain - Deutsche Bank - Analyst

Good afternoon, everybody. Two questions, more for Bill. But just if you could talk a little bit more about, on page 11 on the slide deck, on GRP. You intoned of about a 30% year-on-year decline for ATOI as we head into 2Q for that business. I’m just trying to understand how much of that can ultimately be worked through. Because some of it seems to be the inability to do the pass through in Russia of premium, but that ultimately should be recoupable in the medium term.

And then just some other timing issues. I’m just trying to understand, do you see GRP getting back to normalized margins by second half, or is this really just a reset of the basis for that business because of the Russian issue?

William Oplinger - Alcoa Inc. - EVP and CFO

No, you have a couple of things going on. First of all, let me address the Russian issue right off the bat. The Russian issue is something that’s hitting us this year. We would expect that that will persist probably through 2015, and potentially into 2016 as we work to pass through that to our customers.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

The other things that are going on, and remember that 30% is a year-over-year number, that’s not a sequential number, it’s 30% from the baseline from last year. A couple of things that we have going on. We’ve got the investment in the Saudi Arabia rolling mill. That’s in the start-up phase, and that continues to cost us money. And we are spending money on the Micromill. Klaus alluded to the fact that we’ve got five partners signed up.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Six in total.

William Oplinger - Alcoa Inc. - EVP and CFO

Six in total. And that is costing us a little bit of money also. So, ultimately that will pay a reward. So those are really the things.

And then the other piece of it that I should allude to, we talked a little bit about the metal price lag. And when metal prices are going down, inventory costs stay high in the GRP segment. The opposite occurs when metal prices go up. And at this point we would say $15 million of that decline is purely the impact from the metal price lag.

Jorge Beristain - Deutsche Bank - Analyst

Okay. And my second question was just related to working capital. I know that you mentioned there’s some one-off issues due to acquisition integration. But do you think that working capital will actually be, on a year-over-year basis, a net source of funds, or is that tapped out?

William Oplinger - Alcoa Inc. - EVP and CFO

And let me just make sure that I’m very clear around the increase in working capital year over year. The EPS business, as you probably know, the EPS business, because it’s not a very capital intensive business, and due to the structure of the marketplace, has traditionally has had higher working capital than the rest of Alcoa. And Firth Rixson is even higher than that.

So the simple fact of blending in the Firth Rixson acquisition raises the working capital level on a day’s basis for Alcoa in total. And so we see that as – right now we have 3 additional days of working capital over the lows of 30 last year. We see it as an opportunity to bring it down.

The working capital levels are pretty high in Firth Rixson so our teams will be going after that. I do not see necessarily working capital be a cash generator for the Company in the year simply because working capital levels are pretty low to start the year.

Jorge Beristain - Deutsche Bank - Analyst

Thank you.

Operator

Your next question comes from the line of Timna Tanners from Bank of America Merrill Lynch. Your line is open.

Timna Tanners - BofA Merrill Lynch - Analyst

Good afternoon. I wanted to also focus on China but on the finished aluminum side, because the day that you came out with your announcement that you were exiting smelting capacity in Brazil, my Chinese colleague counterpart told me that, he was saying that Humin Chou – I think I pronounced it wrong, I don’t know – is adding 750,000 tons for the year. So, they’re clearly adding. And I get that they’re demanding more.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

But my question is, we’re hearing that the Chinese are starting to talk about actually removing the tariffs on exports. It sounds like there’s a lot of chatter on that. Are you concerned about it? What’s your view? Is there any way that Alcoa can respond to that level of support, government support for the industry?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

That’s a very good question, Timna. The declared policy and the policy that’s in place, and that economically makes sense, I have great admiration for what the Chinese government has done over the last four years. And the smartness of the economic team is unbelievably good. I had a chance to be exposed to them many times.

What they are doing here in regard to the policy is a very intelligent policy. On the one hand they are saying we don’t want primary to be exported. And that’s why they established this 15% export duty.

The logic is very simple. Because what primary, in their view, is a lot of resources that are scarce. And the scarce resources are bauxite. You know that they have to import 50% to 60% of that bauxite.

And it’s energy which is non-clean energy, and they are running out of air, literally. And then they are running out of water. And you, unfortunately, need a lot of water when you have a coal-fired power plant.

So, in reality you see all of this in the primary aluminum bar. And that’s why they basically say we don’t want this to be exported. So that’s why they have the 15% export duty. I don’t think that that’s going to change. I rather think that they are going to enhance this because they are literally running out of air.

The second logic is another logic. The logic is they want to upgrade the jobs. They want their people to earn more per hour. To do that they have to increase the value add of their businesses.

So, they are basically saying if you now take a base metal and refine it into something better, we want to encourage you to be able to export it. That’s why they have established this 13% value-add tax rebate. It makes a hell of a lot of sense.

And we’ve heard the chatter. And obviously we are very well established in China. I think it’s chatter. Obviously there are some people that are interested in doing it. I don’t think that we’re going to see any of this going through.

In fact, I think what on top of it is the problem here and often gets mixed up is the real semi products. China has been an exporter of semis for a long time. There are markets where the Chinese semis actually are dominant, in foil, for instance.

Typically these are not highly differentiated markets. And our semis typically are not competing against those because we are in much higher value-add semis.

The new phenomenon is this thing called fakes. We call it fake semis. Because the fake semis are not competing against semis because they aren’t semis. They are competing against primary because people immediately remelt them as primary. They have basically the primariest primary that you can think of.

So, in reality people are abusing – Chinese people are abusing – the intention of the Chinese government. All that we are picking up is that there’s quite a bit of noise also on the Chinese political front about this.

And obviously, I think I’ve said that before, we are monitoring the situation very well, and are looking at whether these unfair cost advantages continue to exist. And I’m pretty optimistic that the Chinese government enforces their policies and stops this abuse.

Timna Tanners - BofA Merrill Lynch - Analyst

Okay, great, Thank you.

Operator

Your next question comes from the line of Paretosh Misra from Morgan Stanley.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Paretosh Misra - Morgan Stanley - Analyst

I have a question on slide 41, actually. Is that something changed in the way you do business? Because I’m seeing your distribution revenues grew 43%, and you have a very sharp decline in industrial products and housing. Just hoping you could comment on that.

William Oplinger - Alcoa Inc. - EVP and CFO

To comment on that, the distribution jump that you see is, in large part, a portion of the Firth Rixson revenues, Paretosh. Firth Rixson does about 75% of their revenue in aerospace. At this point we’re putting the rest into distribution, hence that big jump in year over year.

The industrial products, I believe, is mostly related to the fact that we’ve exited some of the exits that Klaus talked about, especially in our rolled products business where lower margin products, and hence we got out of some of those industrial product segments in the rolling business. Those are the big drivers there.

Paretosh Misra - Morgan Stanley - Analyst

Got it. And if I could ask one more. You have purchased, RTI and Firth Rixson. I was hoping if you could just remind us, where do you see your revenues for the engineered products segment next year, or 2018 or 2019? And how much of that would be aerospace on a pro forma basis?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

I think we’ve put the – you can pretty much add those things. For Firth Rixson we have the $1.6 billion revenues with $350 million out there. And then you can add into it the organic growth target.

William Oplinger - Alcoa Inc. - EVP and CFO

$1.2 billion the first year.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

$900 million of that organic growth. And that you can pretty much add into it. We’ve also said that we will continue to bring up our profitability on the existing EPS portfolio.

William Oplinger - Alcoa Inc. - EVP and CFO

So, those are the two big changes. $1.2 billion of organic growth, $1.6 billion the first year.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

$1.2 billion of all growth. $900 million of organic growth.

William Oplinger - Alcoa Inc. - EVP and CFO

Right. And $1.6 billion associated with Firth Rixson.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Exactly. And then you have the TITAL.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

William Oplinger - Alcoa Inc. - EVP and CFO

$100 million.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

$100 million there.

Paretosh Misra - Morgan Stanley - Analyst

Got it. Thank you.

Operator

Your next question comes from the line of Sal Tharani from Goldman Sachs. Your line is open.

Sal Tharani - Goldman Sachs - Analyst

Good afternoon. I wanted to ask you on the acquisition strategy, you have two major acquisitions, Firth Rixson and now going to RTI. I’m just wondering what your goal is on the end game. Is there something else you think? Or should we consider that you will materialize that before going to some big acquisition, particularly on the sourcing side, and you now have titanium source available. I’m just wondering. You’re also becoming very big in nickel. Is that something you would be looking into?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Yes, good question. Sal, let me address the specific question at the end first. There was actually a question when we announced the RTI transaction. We have looked into this.

We’ve looked for backward integration, and there’s two steps of potential backward integration. One is sponge, and the other one is rutile and aluminite. Hard to pronounce. We’ll get used to it.

And we’ve studied the market and we see that both markets, there’s no need in further upstream integration there. There’s plenty of supply there. We have good long-term contracts, and I think we can even get better long-term contracts there. We are a customer of those suppliers, and I think I said last time that the supply source for RTI is mainly Japanese.

We also looked one level further back on the ore side, aluminite, as well as rutile. And also on that end we see plenty of supply there. So, no need for that.

Then on the bigger question, that’s why I put this one chart together there, which is, I know, very full, but I wanted to make sure that people have put a lot of attention on the acquisition. But in my mind, the best thing to create value always will be organic growth. And we have been very, very strong on the organic growth side. And we’ve been carrying this through and you see it in bringing the profitability up.

EPS profitability – and some of you might not even remember that because you didn’t cover us – but in 2008 the EPS profitability was 8%. 8% profitability. And look where we are today. And, frankly, we continue to be optimistic to bring it further up. But that’s a question of hard work in every single one of their business.

Innovation has played an enormously important role. You cannot do this by simply cutting the costs out. The great thing is that we have great technical skills on it.

And at the same time, on the inorganic side, we have the opportunities with Firth Rixson. It took us a long time to get that transaction done. Would have wished to have had it done earlier but you always need two to tango.

TITAL is a small one, a nice addition in Europe. And RTI was and is a great opportunity.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

On Firth Rixson, when you look, I’ve visited Fontana a while ago. I typically visit those sites right after we announce. And I visited Fontana which is the rings facility.

On the rings side, for instance, they do the rolled forging of rings. After this it goes to machining. When they machine, they machine titanium off and basically you create titanium chips. They send it to local scrap dealers.

We saw the process already early on and said we can actually find a better way to capture the value by getting those chips and cutting out bigger pieces and shipping it to Whitehall, because at Whitehall we have VAR furnaces and we could then turn it into sponge and create value. This was what we had originally planned in the integration, and that falls into the productivity or, how do we call this, the synergy, the operational synergies.

But the interesting thing is now is we are on the track to do that. But assuming that RTI goes through, we even have more capabilities on that because RTI has plasma as well as electron beam furnaces, which are better suitable for remelts. Plus, we have cleaning capabilities then with RTI.

So in reality, we will get even a synergy on top of the synergy. And we see that all the time.

On the procurement side, one of the actions that we have in store is that we basically went after the non-destructive testing. And they have a supplier in house. We went and renegotiated with the supplier, and basically got them down to give us a nice reduction here, and saving of roughly $4.5 million. Then we realized that we could actually bring the same logic to our own facilities, which we had never planned in the synergies.

This is what typically happens. And I could give you hundreds of those examples and also hundreds of those things that we see already on RTI. When I went to Claro and to the Minnesota facilities, of RTI, they have unbelievably good machining capabilities. Today we pretty much have no machining capabilities.

But we do use machining because the customers don’t want the unmachined parts. So, we are using external machining shops. So, in future we don’t need to go to external, we can do it internally, which does two things. It brings the capacity utilization up there and saves an enormous amount of cost.

Those are the type of stuff that we’re doing there. That’s why I continue to be really optimistic on those things working out.

But it is not that we now feel that we need to go on another round of acquisitions. That’s not our mind set. It was a bit coincidental that these things came one after the other but it was not lighthearted. We would not have done any single one of those had we not known how to manage the post-merger integration.

One of the things, I heard a lot in your conversation, is aren’t the same people affected by it. In reality, the leadership, yes, Bill and I are affected by it, and then the four or five leaders on EPS on top. But then it’s different people, it’s different division and different people. So, in terms of how much capacity do we have, the human capacity element is the most critical one that we look at even before we consider going after an acquisition. Long answer to a short question.

Sal Tharani - Goldman Sachs - Analyst

I just want to ask one more thing, on the upstream side. Two announcements you’ve done, and one announcement including the 12-month capacity review. How much do you think you need to get to the targeted cost that you are talking about, 38% and 21% on the cost curve? And how much of this you think you can do by the end of this 12 months?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

We wouldn’t have announced – you know how we’re doing these things. There’s a reason why we now have 33% of all primary capacity curtailed, and why we see the results, like the ones that we see today and the primary as well as the alumina segment.

I think we are all basically reaping the benefits of our strategy there. We have been making the upstream business much less vulnerable to swings on the metal side, on the commodity side. We are looking at these in a relatively relaxed fashion.

Now, we would love to have a higher metal price and we’ll probably see it with the premiums. But it’s not earth shaking. I’ve always said that.

And you see also we announced it one week. The next week we were able to get to conclusion with our partner, in Sao Luis, BHP, or future South 32. We came to the conclusion, okay let’s close that remaining pot line down there. And it frees up the self owned energy which we can sell onto the open market, so we have a benefit.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

We’ve done the same thing on Suriname, curtailed further. Also, we will go to more of those reviews, and do what is right, always with an eye on cash.

Sal Tharani - Goldman Sachs - Analyst

Great. Thank you very much.

Operator

Our next question comes from the line of Josh Sullivan from Sterne Agee. Your line is open.

Josh Sullivan - Sterne, Agee & Leach, Inc. - Analyst

Good afternoon. Can you just talk a little bit about how you see the cadence of the Firth Rixson ramp? Clearly getting from, I think you said $27 million in this quarter to the 2016 target. It’s a big jump. Can you just give us an idea on the outlook of how we should be thinking about that ramp? Is it any particular contract, share shift, or maybe when the isothermal press finally comes on line?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

The isothermal, I said already, will start to generate revenues as of the second half of this year. I think you actually do see – I think we provided so many numbers. I think the most important short-term number is the $1.6 billion revenues for next year, with a $350 million EBITDA.

And then I think we had an addition, if I recall that correctly, the $1 billion growth until 2019 where we basically said that the major part of it, 7%, is locked in. That’s the beauty of aerospace contract, locked in with contracts. So I think there’s quite a bit of numbers. I don’t know –.

William Oplinger - Alcoa Inc. - EVP and CFO

But a big piece of the driver for 2016 will be the ramp-up of Savannah as that comes on line, produces revenue and produces profits.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

We will also have to be in a normal – I think I would not call the first quarter here, and I think you explained it very well, Bill, I would not call that a normal quarter.

William Oplinger - Alcoa Inc. - EVP and CFO

In the first quarter, we had a number of things that were going on still. We still had the inventory turns issue that we had in the fourth quarter, so that was a partial impact. We have all the integration costs.

And you probably noticed that we don’t pull out the integration costs. We have the integration costs embedded in the operating results that I gave you, the $27 million EBITDA and $6 million of ATOI. So, that’s some of the things that are impacting it in the first quarter.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Yes, I think people always – we are all moving so fast. But keep in mind, we were only allowed to get our hands around this on November 19. That was the first day for us.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Josh Sullivan - Sterne, Agee & Leach, Inc. - Analyst

Right. Okay, good. And then just a second one. In the global rolled products segment, can you just talk a little bit about the aerospace aluminum plate market and just what’s going on there with pricing?

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

What do you mean specifically?

Josh Sullivan - Sterne, Agee & Leach, Inc. - Analyst

In your global rolled products business, the aerospace business.

William Oplinger - Alcoa Inc. - EVP and CFO

You might be referring, Josh, on whether there’s any overhang. We’ve talked about overhang in the past about plate, and we have not really seen a significant impact from plate overhang over the last year or so.

Josh Sullivan - Sterne, Agee & Leach, Inc. - Analyst

Okay, great, thank you.

Operator

Your next question comes from the line of Brian Yu from Citigroup. Your line is open.

Brian Yu - Citigroup - Analyst

Great. The first question is just on the $500 million prepayment on the western Australia gas deal. Can you talk about how – I presume that this is a prepayment – how that recovery works? And what’s the anticipated cost savings associated with the new gas deal?

William Oplinger - Alcoa Inc. - EVP and CFO

I’m really glad you asked the question, Brian, because that deal has come together fairly quickly. We announced it today. Our partners announced it in Australia today. And the selling company that the partners are buying this asset from announced it after the market closed. So, let me give you just very briefly a couple of things about the structure of that deal.

It’s a $500 million prepayment. $300 million gets paid this year, $200 million gets paid next year. It’s to secure energy in WA for combined with a couple of other smaller deals. We’ll secure the natural gas for the refineries in WA for about 75% of our needs.

And it starts in 2020, and so it’ll run from 2020 to 2032. Just to be clear, if you look at the results of the alumina segment, you see that under normalized environment, those assets are great assets, so it secures those assets for the long term.

And one other point – two other points. The way we recapture that cash is that we get a tranche of free gas during that 2020 to 2032 time frame, and we get a discounted gas level from market rate. So, those are the two ways that we recover the money.

And then my last point on this subject, we had a $500 million free cash flow target at the beginning of the year. We are saying that we’re going to spend $300 million on this prepayment this year. We’re still going to deliver $500 million of free cash flow even after having paid that $300 million.

So, we’re essential absorbing an additional $300 million that we will deliver this year. So, $500 million of free cash flow after that $300 million payment. So it’s actually, I think, a pretty good story for us all around, both mid term and long term.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

Brian Yu - Citigroup - Analyst

Okay. And that $300 million, just so I’m clear, is that on a 100% basis, or is that Alcoa’s 60% ownership?

William Oplinger - Alcoa Inc. - EVP and CFO

That is 100% basis, Brian. So that $500 million is 100% basis. Clearly our partners will absorb 40% of that $500 million.

Brian Yu - Citigroup - Analyst

Got it. And then second one, just going back to your comments earlier on the inventory impact at Firth Rixson, can you quantify what did the purchase inventory mark-up, what was that head wind in the quarter?

William Oplinger - Alcoa Inc. - EVP and CFO

That’s a hold-over from last quarter. Just whenever you do purchase accounting you have to mark your inventory up to market levels. So, when you turn that inventory the first time, you make no profit on it because you’ve marked your inventory up to market. And so in this quarter, that was a couple of million dollar impact negative on the EPS segment.

Brian Yu - Citigroup - Analyst

Got it. Okay. Appreciate it. Thanks.

Klaus Kleinfeld - Alcoa Inc. - Chairman and CEO

Okay. Thank you very much. Before we close, let me ask myself a question, because a question that has not been asked but I’m sure is on the mind of some of you, but we’re running out of time here, given some other commitments. The question that I think I have seen before I came in after the release that’s floating around in the space, is around revenue growth.

I want to address that to make sure that everybody understands that, because we’ve grown year over year, 7% on the revenue side. And I know that there’s been some comparisons on what the expectations are out there. But in reality it’s 7%. So let’s lock that in. And I have also said the primary drivers of that 7% has been organic growth coming from auto and aero.

Now, let me give you some more color on this and remind you – and please help me explain that to the outside world, because people are going to look at you to explain this, and I think you understand what’s going on there – so that they understand why this is a really good growth quarter.

If you look at the exact number, the exact growth number year over year is 6.7%. Then when you break it down to how much of that has changed through portfolio moves, you have to really have two buckets. One bucket is reductions. And we have two large segments where we have reduced our portfolio over a year. And it’s a lot that we’ve done.

Those of you all that know us well, remember that. But we sometimes forget a year is 12 months, it’s a long time, and we’ve done a lot of things. Let me list some of those. And I’m almost certain I will not be complete with this.

On GPP, on primary, we closed Point Henry. We sold Mt. Holly, Massena East, Poços de Caldas. Sao Luis, entire curtailment. Suriname. So all of these revenues basically leave our revenues. So you have to subtract those.

In addition to that, on the GRP side, Australia rolling mills, Spain two rolling mills, and a rolling mill in France. Again, subtract that all. And then you can add in on the portfolio side Firth Rixson and TITAL. So, this together, the net effect of that, inside of the 6.7% is a negative 2.3%. Negative 2.3% of the 6.7%.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

The second thing is a benefit coming from the external things – metal price, as well as the ForEx side. That’s a positive 1.8%. So, I would say that’s a wash.

So, then, what remains sitting there is the organic growth. And the organic growth is a positive 6.8%. And it is coming very strongly from automotive and also strongly from aero. Those are the two big drivers. And a little bit from GPP additional volumes organically, basically through value add and creep there.

So, please help me explain this. That’s why I’m providing this. And I’m sure that that has been one of the questions that’s floating around out there.

So, forgive me for asking myself a question. Let me close with this. I think this is a very strong quarter performance, and we should all be pleased with this. The acquisition strategy is showing real dividends.

And keep in mind for some of this it’s really only been a few short months that we got our hands around it. And I must say, I’m very comfortable with where we are, and I think things are really nicely on track.

Also, please stay focused on all this discussion on our strategic direction. I think we’ve been crystal clear – don’t get distracted, this is what we’re doing, this is the direction we are following. And whether it’s revenues versus expectations, yes, we understand that, but please then put it in perspective. And that’s why I’ve been providing these additional color on this. And let’s continue to stay focused on the bottom line and our ability to drive additional synergies plus organic growth.

And I would also point out, put it in perspective. Let’s look at where we started. We’ve come a long way in the last years. At the same time, I would say the best is yet to come, and we are very well positioned to get that done.

And I think it’s one thing – when I look at Alcoa and the Alcoans, how pumped up they all are and the capabilities that they have. I would say old and new Alcoans. And at the same time I’m looking at the end markets that we’re in. And the good thing is the end markets are also positive, the ones that we are in.

So all of this gives me really good confidence. And with this, I close and stay tuned to this station. Thank you very much.

William Oplinger - Alcoa Inc. - EVP and CFO

Thank you.

Operator

That concludes today’s conference call. You may now disconnect.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

DISCLAIMER

Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.

In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies’ most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

Forward-Looking Statements

This communication contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning global demand growth for aluminum, end market conditions, supply/demand balances, and growth opportunities for aluminum in automotive, aerospace, and other applications; targeted financial results or operating performance; statements about Alcoa’s strategies, outlook, and business and financial prospects; and statements regarding the acceleration of Alcoa’s portfolio transformation, including the expected benefits of acquisitions, including the completed acquisition of the Firth Rixson business and TITAL, and the pending acquisition of RTI International Metals, Inc. (RTI). These statements reflect beliefs and assumptions that are based on Alcoa’s perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. Forward-looking statements are subject to a number of risks, uncertainties, and other factors and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa, including aerospace, automotive, commercial transportation, building and construction, packaging, defense, and industrial gas turbine; (d) the impact of changes in foreign currency exchange rates on costs and results, particularly the Australian dollar, Brazilian real, Canadian dollar, euro, and Norwegian kroner; (e) increases in energy costs or the unavailability or interruption of energy supplies; (f) increases in the costs of other raw materials; (g) Alcoa’s inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations (including moving its alumina refining and aluminum smelting businesses down on the industry cost curves and increasing revenues and improving margins in its Global Rolled Products and Engineered Products and Solutions segments) anticipated from its restructuring programs and productivity improvement, cash sustainability, technology, and other initiatives; (h) Alcoa’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

acquisitions (including achieving the expected levels of synergies, revenue growth, or EBITDA margin improvement), sales of assets, closures or curtailments of facilities, newly constructed, expanded, or acquired facilities, or international joint ventures, including the joint venture in Saudi Arabia; (i) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products, including unfavorable changes in laws and governmental policies, civil unrest, imposition of sanctions, expropriation of assets, or other events beyond Alcoa’s control; (j) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (k) the impact of cyber attacks and potential information technology or data security breaches; (l) failure to receive the required votes of RTI’s shareholders to approve the merger of RTI with Alcoa; (m) failure to receive, delays in the receipt of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals of the acquisition of RTI, or the failure to satisfy the other closing conditions to the acquisition; (n) the risk that acquisitions (including Firth Rixson, TITAL and RTI) will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (o) the possibility that certain assumptions with respect to RTI or the acquisition could prove to be inaccurate, including the expected timing of closing; (p) the loss of customers, suppliers and other business relationships as a result of acquisitions, competitive developments, or other factors; (q) the potential failure to retain key employees of Alcoa or acquired businesses; (r) the effect of an increased number of Alcoa shares outstanding as a result of the acquisition of RTI; (s) the impact of potential sales of Alcoa common stock issued in the RTI acquisition; (t) failure to successfully implement, to achieve commercialization of, or to realize expected benefits from, new or innovative technologies, equipment, processes, or products, including the Micromill^TM, innovative aluminum wheels, and advanced alloys; and (u) the other risk factors summarized in Alcoa’s Form 10-K for the year ended December 31, 2014, and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market. Nothing on Alcoa’s website is included or incorporated by reference herein.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The proposed business combination transaction between Alcoa and RTI will be submitted to the shareholders of RTI for their consideration. Alcoa has filed with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4 (Registration No. 333-203275) containing a preliminary proxy statement of RTI that also constitutes a prospectus of Alcoa. These materials are not yet final and will be amended. RTI will provide the proxy statement/prospectus to its shareholders after the registration statement has become effective. Alcoa and RTI also plan to file other documents with the SEC regarding the proposed transaction. This document is not a substitute for any prospectus,

proxy statement or any other document which Alcoa or RTI may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF RTI ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from Alcoa’s website (www.alcoa.com). You may also obtain these documents, free of charge, from RTI’s website (www.rtiintl.com).

Participants in the Solicitation

Alcoa, RTI, and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from RTI shareholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of RTI shareholders in connection with the proposed transaction is set forth in the proxy statement/prospectus. You can find information about Alcoa’s executive officers and directors in its definitive proxy statement filed with the SEC on March 19, 2015, its Annual Report on Form 10-K

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

APRIL 08, 2015 / 09:00PM GMT, AA - Q1 2015 Alcoa Inc Earnings Call

filed with the SEC on February 19, 2015 and in the above-referenced Registration Statement on Form S-4. You can find information about RTI’s executive officers and directors in the proxy statement/prospectus and in RTI’s Annual Report on Form 10-K filed with the SEC on February 26, 2015. You can obtain free copies of these documents from Alcoa and RTI as described in the preceding paragraph.

THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us

EX-99.2

Quarter

Earnings

Conference

April 8, 2015

[Alcoa logo]

Exhibit 99.2

Important Information

[Alcoa logo]

This

communication

contains

statements

that

relate

future

events

and

expectations

and

such

constitute

forward-looking

statements

within

the

meaning

the

Private

Securities

Litigation

Reform

Act

1995.

Forward-looking

statements

include

those

containing

such

words

“anticipates,”

“believes,”

“could,”

“estimates,”

“expects,”

“forecasts,”

“intends,”

“may,”

“outlook,”

“plans,”

“projects,”

“seeks,”

“sees,”

“should,”

“targets,”

“will,”

other

words

similar

meaning.

All

statements

that

reflect

Alcoa’s

expectations,

assumptions

projections

about

the

future

other

than

statements

historical

fact

are

forward-looking

statements,

including,

without

limitation,

forecasts

concerning

global

demand

growth

for

aluminum,

end

market

conditions,

supply/demand

balances,

and

growth

opportunities

for

aluminum

automotive,

aerospace,

and

other

applications;

targeted

financial

results

operating

performance;

statements

about

Alcoa’s

strategies,

outlook,

and

business

and

financial

prospects;

and

statements

regarding

the

acceleration

Alcoa’s

portfolio

transformation,

including

the

expected

benefits

acquisitions,

including

the

completed

acquisition

the

Firth

Rixson

business

and

TITAL,

and

the

pending

acquisition

RTI

International

Metals,

Inc.

(RTI).

These

statements

reflect

beliefs

and

assumptions

that

are

based

Alcoa’s

perception

historical

trends,

current

conditions

and

expected

future

developments,

well

other

factors

management

believes

are

appropriate

the

circumstances.

Forward-looking

statements

are

subject

number

risks,

uncertainties,

and

other

factors

and

are

not

guarantees

future

performance.

Important

factors

that

could

cause

actual

results

differ

materially

from

those

expressed

implied

the

forward-looking

statements

include:

(a)

material

adverse

changes

aluminum

industry

conditions,

including

global

supply

and

demand

conditions

and

fluctuations

London

Metal

Exchange-based

prices

and

premiums,

applicable,

for

primary

aluminum,

alumina,

and

other

products,

and

fluctuations

indexed-based

and

spot

prices

for

alumina;

(b)

deterioration

global

economic

and

financial

market

conditions

generally;

(c)

unfavorable

changes

the

markets

served

Alcoa,

including

aerospace,

automotive,

commercial

transportation,

building

and

construction,

packaging,

defense,

and

industrial

gas

turbine;

(d)

the

impact

changes

foreign

currency

exchange

rates

costs

and

results,

particularly

the

Australian

dollar,

Brazilian

real,

Canadian

dollar,

euro,

and

Norwegian

kroner;

(e)

increases

energy

costs

the

unavailability

interruption

energy

supplies;

(f)

increases

the

costs

other

raw

materials;

(g)

Alcoa’s

inability

achieve

the

level

revenue

growth,

cash

generation,

cost

savings,

improvement

profitability

and

margins,

fiscal

discipline,

strengthening

competitiveness

and

operations

(including

moving

its

alumina

refining

and

aluminum

smelting

businesses

down

the

industry

cost

curves

and

increasing

revenues

and

improving

margins

its

Global

Rolled

Products

and

Engineered

Products

and

Solutions

segments)

anticipated

from

its

restructuring

programs

and

productivity

improvement,

cash

sustainability,

technology,

and

other

initiatives;

(h)

Alcoa’s

inability

realize

expected

benefits,

each

case

planned

and

targeted

completion

dates,

from

acquisitions

(including

achieving

the

expected

levels

synergies,

revenue

growth,

EBITDA

margin

improvement),

sales

assets,

closures

curtailments

facilities,

newly

constructed,

expanded,

acquired

facilities,

international

joint

ventures,

including

the

joint

venture

Saudi

Arabia;

(i)

political,

economic,

and

regulatory

risks

the

countries

which

Alcoa

operates

sells

products,

including

unfavorable

changes

laws

and

governmental

policies,

civil

unrest,

imposition

sanctions,

expropriation

assets,

other

events

beyond

Alcoa’s

control;

(j)

the

outcome

contingencies,

including

legal

proceedings,

government

regulatory

investigations,

and

environmental

remediation;

(k)

the

impact

cyber

attacks

and

potential

information

technology

data

security

breaches;

(l)

failure

receive

the

required

votes

RTI’s

shareholders

approve

the

merger

RTI

with

Alcoa;

(m)

failure

receive,

delays

the

receipt

of,

unacceptable

burdensome

conditions

imposed

connection

with,

all

required

regulatory

approvals

the

acquisition

RTI,

the

failure

satisfy

the

other

closing

conditions

the

acquisition;

(n)

the

risk

that

acquisitions

(including

Firth

Rixson,

TITAL

and

RTI)

will

not

integrated

successfully

such

integration

may

difficult,

time-consuming

costly

than

expected;

(o)

the

possibility

that

certain

assumptions

with

respect

RTI

the

acquisition

could

prove

inaccurate,

including

the

expected

timing

closing;

(p)

the

loss

customers,

suppliers

and

other

business

relationships

result

acquisitions,

competitive

developments,

other

factors;

(q)

the

potential

failure

retain

key

employees

Alcoa

acquired

businesses;

(r)

the

effect

increased

number

Alcoa

outstanding

result

the

acquisition

RTI;

(s)

the

impact

potential

sales

Alcoa

common

stock

issued

the

RTI

acquisition;

(t)

failure

successfully

implement,

achieve

commercialization

of,

realize

expected

benefits

from,

new

innovative

technologies,

equipment,

processes,

products,

including

the

Micromill,

innovative

aluminum

wheels,

and

advanced

alloys;

and

(u)

the

other

risk

factors

summarized

Alco

a’s

Form

10-K

for

the

year

ended

December

31,

2014,

and

other

reports

filed

with

the

Securities

and

Exchange

Commission.

Alcoa

disclaims

any

obligation

update

publicly

any

forward-looking

statements,

whether

response

new

information,

future

events

otherwise,

except

required

applicable

law.

Market

projections

are

subject

the

risks

discussed

above

and

other

risks

the

market.

Nothing

Alcoa’s

website

included

incorporated

reference

herein.

Forward-Looking Statements

Important Information (continued)

[Alcoa logo]

Non-GAAP Financial Measures

Additional Information and Where to Find It

Participants in the Solicitation

Some

the

information

included

this

presentation

derived

from

Alcoa’s

consolidated

financial

information

but

not

presented

Alcoa’s

financial

statements

prepared

accordance

with

accounting

principles

generally

accepted

the

United

States

America

(GAAP).

Certain

these

data

are

considered

“non

-GAAP

financial

measures”

under

SEC

rules.

These

non-

GAAP

financial

measures

supplement

our

GAAP

disclosures

and

should

not

considered

alternative

the

GAAP

measure.

Reconciliations

the

most

directly

comparable

GAAP

financial

measures

and

management’s

rationale

for

the

use

the

non-GAAP

financial

measures

can

found

the

Appendix

this

presentation.

Any

reference

historical

EBITDA

means

adjusted

EBITDA,

for

which

have

provided

calculations

and

reconciliations

the

Appendix.

Alcoa

has

not

provided

reconciliation

any

forward-looking

non-GAAP

financial

measure

the

most

directly

comparable

GAAP

financial

measure,

due

primarily

variability

and

difficulty

making

accurate

forecasts

and

projections,

not

all

the

information

necessary

for

quantitative

reconciliation

available

Alcoa

without

unreasonable

effort.

This

communication

does

not

constitute

offer

sell

the

solicitation

offer

buy

any

securities

solicitation

any

vote

approval

nor

shall

there

any

sale

securities

any

jurisdiction

which

such

offer,

solicitation

sale

would

unlawful

prior

registration

qualification

under

the

securities

laws

any

such

jurisdiction.

The

proposed

business

combination

transaction

between

Alcoa

and

RTI

will

submitted

the

shareholders

RTI

for

their

consideration.

Alcoa

has

filed

with

the

Securities

and

Exchange

Commission

(SEC)

Registration

Statement

Form

S-4

(Registration

No.

333-203275)

containing

preliminary

proxy

statement

RTI

that

also

constitutes

prospectus

Alcoa.

These

materials

are

not

yet

final

and

will

amended.

RTI

will

provide

the

proxy

statement/prospectus

its

shareholders

after

the

registration

statement

has

become

effective.

Alcoa

and

RTI

also

plan

file

other

documents

with

the

SEC

regarding

the

proposed

transaction.

This

document

not

substitute

for

any

prospectus,

proxy

statement

any

other

document

which

Alcoa

RTI

may

file

with

the

SEC

connection

with

the

proposed

transaction.

INVESTORS

AND

SECURITY

HOLDERS

RTI

ARE

URGED

READ

THE

PROXY

STATEMENT/PROSPECTUS

AND

ANY

OTHER

RELEVANT

DOCUMENTS

THAT

WILL

FILED

WITH

THE

SEC

CAREFULLY

AND

THEIR

ENTIRETY

WHEN

THEY

BECOME

AVAILABLE

BECAUSE

THEY

WILL

CONTAIN

IMPORTANT

INFORMATION

ABOUT

THE

PROPOSED

TRANSACTION.

You

may

obtain

copies

all

documents

filed

with

the

SEC

regarding

this

transaction,

free

charge,

the

SEC’s

website

(www.sec.gov).

You

may

also

obtain

these

documents,

free

charge,

from

Alcoa’s

website

(www.alcoa.com).

You

may

also

obtain

these

documents,

free

charge,

from

RTI’s

website

(www.rtiintl.com).

Alcoa,

RTI,

and

certain

their

respective

directors,

executive

officers

and

other

members

management

and

employees

may

deemed

participants

the

solicitation

proxies

from

RTI

shareholders

connection

with

the

proposed

transaction.

Information

regarding

the

persons

who

may,

under

the

rules

the

SEC,

deemed

participants

the

solicitation

RTI

shareholders

connection

with

the

proposed

transaction

set

forth

the

proxy

statement/prospectus.

You

can

find

information

about

Alcoa’s

executive

officers

and

directors

its

definitive

proxy

statement

filed

with

the

SEC

March

19,

2015,

its

Annual

Report

Form

10-K

filed

with

the

SEC

February

19,

2015

and

the

above-referenced

Registration

Statement

Form

S-4.

You

can

find

information

about

RTI’s

executive

officers

and

directors

the

proxy

statement/prospectus

and

RTI’s

Annual

Report

Form

10-K

filed

with

the

SEC on

February

26,

2015.

You

can

obtain

free

copies

these

documents

from

Alcoa

and

RTI

described

the

preceding

paragraph.

Klaus Kleinfeld

Chairman and Chief Executive Officer

April 8, 2015

[Alcoa logo]

Strong Operational Results

Transformation Fully on Track

Note: Close of RTI transaction expected in 2-5 months subject to regulatory approvals and RTI shareholder approval.

Delivering Strong

Operational

Performance

1Q 2015 Overview

Portfolio

Transformation

Fully On Track

Revenue

Y-O-Y

($5.8B):

Driven

primarily

organic

growth

auto

aero;

positive

market

factors

partially

offset

capacity

reductions

and

portfolio

actions

Profits

substantially

Downstream:

ATOI

$191

million,

first

quarter

record

result

Midstream:

ATOI

$34

million,

challenge

can

sheet

record

auto

shipments

Upstream:

Improved

Performance

–

Consecutive

Quarters

Alumina

segment:

ATOI

$221

million,

than

double

Y-O-Y

Primary

Metals

segment:

ATOI

$187

million,

$200

million

Y-O-Y

Productivity:

$238

million

across

all

segments

Cash

Hand:

$1.2

billion

Integration

Firth

Rixson

track

–

Doubles

Aero-Engine

Content

Completed

TITAL

acquisition

–

Titanium/aluminum

structural

castings

Europe

Announced

RTI

acquisition

–

Titanium

Complements

mid

and

downstream

Value

Chain

Expected

months

Sold

Belaya

Kalitva

(Russia

rolling

mill)

Secured

75%

long

term

gas

needs

for

Western

Australia

refineries

Announced

12-month

capacity

review:

2.8

MMT

Refining,

500

kmt

Smelting

São

Luís

(Alumar)

smelting

curtailment

remaining

kmt

Suriname

refining

curtailment

443

kmt;

exploring

sale

Suriname

government

[Alcoa logo]

William Oplinger

Executive Vice President and Chief Financial Officer

April 8, 2015

[Alcoa logo]

Income Statement Summary

See appendix for Adjusted Income reconciliation.

$ Millions, except aluminum prices and per-share amounts

1Q14

4Q14

1Q15

Prior Year

Change

Sequential

Change

Realized Aluminum Price ($/MT)

$2,205

$2,578

$2,420

$215

($158)

Revenue

$5,454

$6,377

$5,819

$365

($558)

Cost of Goods Sold

$4,495

$4,973

$4,443

($52)

($530)

COGS % Revenue

82.4%

78.0%

76.4%

(6.0 % pts.)

(1.6 % pts.)

Selling,

General Administrative, Other

$236

$271

$232

($4)

($39)

SGA % Revenue

4.3%

4.2%

4.0%

(0.3 % pts.)

(0.2 % pts.)

Other

(Income) Expenses, Net

$25

($6)

($12)

($37)

($6)

Restructuring and Other Charges

$461

$388

$177

($284)

($211)

Effective Tax Rate

28.1%

51.3%

47.0%

18.9% pts.

(4.3% pts.)

EBITDA

$672

$1,073

$1,089

$417

$16

Net (Loss) Income

($178)

$159

$195

$373

$36

Net (Loss) Income Per Diluted Share

($0.16)

$0.11

$0.14

$0.30

$0.03

Income

per Diluted

Share excl

Special Items

$0.09

$0.33

$0.28

$0.19

($0.05)

[Alcoa logo]

Special Items

1) Total restructuring-related charges in 1Q15 of $158 million (88 percent non-cash, 12 percent cash)

See appendix for Adjusted Income reconciliation

[Alcoa logo]

$ Millions, except per-share amounts

1Q14

4Q14

1Q15

Income Statement

Classification

Segment

Net (Loss) Income

($178)

$159

$195

Net (Loss) Income Per Diluted Share

($0.16)

$0.11

$0.14

Restructuring

-Related

($296)

($200)

($158)

Restructuring

and Other

Charges/COGS

Corporate / All

Tax Items

$22

($53)

($4)

Income Taxes

Corporate

Acquisition Costs

($22)

($7)

SG&A/Interest Expense

Corporate

Mark-to-Market Energy Contracts

Other (Income) Expenses, Net

Corporate

Surgold

Gain

$11

Other Expenses, Net

Alumina

Saudi JV Potline

Impact/Massena Fire

($13)

COGS

/ Other Income, Net

Primary Metals

Special Items

($276)

($273)

($168)

Net Income excl Special Items

$98

$432

$363

Net

Income

per Diluted

Share excl Special Items

$0.09

$0.33

$0.28

Operating results more than triple Y-O-Y on Performance and Market factors

See appendix for Adjusted Income reconciliation

Net Income excluding Special Items ($ Millions)

Market

+$153

Performance

+$243

Cost Headwinds

-$131

156

363

-110

Raw

Materials

Energy

-31

Productivity

Price

/ Mix

Volume

Currency

API

LME

1Q 14

1Q 15

Cost

Increases

/ Other

[Alcoa logo]

EPS: Higher volumes, productivity offset currency and cost headwinds

[Alcoa logo]

$ Millions

1Q 14

4Q 14*

1Q 15*

Party Revenue ($ Millions)

1,443

1,566

1,689

ATOI ($ Millions)

189

165

191

EBITDA Margin

22.2%

18.9%

20.1%

Quarter Results

Quarter Business Highlights

Quarter Outlook

Quarter Performance Bridge

1Q15 Actual and 2Q15 Outlook –

Engineered Products and Solutions

$53

$22

$191

$189

1Q 15

Cost

Increases

-$45

Productivity

Price / Mix

-$18

Volume

Currency

-$10

1Q 14

* Includes Firth Rixson. EPS Base Business EBITDA Margin: 20.6% for 4Q14, 21.5% for 1Q15

Revenue

17%

year-over-year,

EBITDA

margin

20.1%

Revenue

growth

driven

Firth

Rixson

and

gains

Aerospace,

Heavy

Duty

Truck

and

N.A.

Non-Residential

Construction

Unfavorable

currency

impact

due

stronger

U.S.

Dollar

Year-over-year

improvement

driven

productivity,

strong

Aerospace,

Commercial

Transportation

revenues

Aerospace

market

remains

strong

Continued

recovery

N.A.

Non-Residential

Construction;

European

weakness

continues,

outlook

varies

across

regions

Strong

N.A.

Heavy

Duty

Truck

build

rates,

partially

offset

Europe

gains

through

innovation

and

productivity

continue

across

all

sectors

ATOI

expected

increase

year-over-year,

including

$13m

currency

pressure

See appendix for EBITDA reconciliation

GRP = Global Rolled Products

GRP: Productivity and record Auto offset by cost increases and pricing

[Alcoa logo]

$ Millions

1Q 14

4Q 14

1Q 15

Party Revenue ($ Millions)

1,677

1,888

1,621

ATOI ($ Millions)

EBITDA/MT ($)

315

317

280

Quarter Business Highlights

Quarter Outlook

Quarter Performance Bridge

1Q15 Actual and 2Q15 Outlook –

Global Rolled Products

Quarter Results

Price / Productivity

Mix

Volume

Currency

LME

1Q14

1Q15

Portfolio

Actions

Cost

Increases

/ Other

Energy

Strong

productivity

and

record

Auto

shipments

Unfavorable

metal

price

lag

impact

Russia

impacted

higher

metal

premiums

Continued

pricing

pressures

Packaging

Cost

increases

due

Micromill

R&D

and

Saudi

ramp-up

1Q14

costs

associated

with

portfolio

actions

did

not

repeat

Auto

demand

expected

remain

strong,

combined

with

seasonal

volume

increases

Packaging

Russia

impacts

and

negative

packaging

price

pressures

continue ($19M)

Costs

associated

with

ramp-up

Saudi

Arabia

rolling

mill

and

Micromill

R&D

($13m)

current

prices,

metal

lag

will

negative

impact

$15m

ATOI

expected

decrease

30%

year-over-year,

assuming

current

metal

price

and

currency

rates

Alumina: Stronger US dollar and lower energy costs

[Alcoa logo]

1Q15 Actual and 2Q15 Outlook –

Alumina

Quarter Results

Quarter Business Highlights

Quarter Performance Bridge

1Q15

Jamalco

sale

Cost

Decreases

/ Other

Energy

Prod

uctivity

Price

/ Mix

Volume

Currency

API

LME

4Q14

1Q 14

4Q 14

1Q 15

Production (kmt)

4,172

4,161

3,933

Party Shipments (kmt)

2,649

2,928

2,538

Party Revenue ($ Millions)

845

1,017

887

Party Price ($/MT)

314

343

344

178

221

Quarter Outlook

Production

down

due

Jamaica

refinery

sale

and

fewer

days

Favorable

currency

movements

production

regions

Energy

benefit

from

lower

oil

and

gas

prices,

and

San

Ciprian

refinery conversion to natural gas

Lower

LME-based

contract

prices

~75%

party

shipments

API

spot

pricing

for

2015

API

pricing

follows

30-day

lag;

LME

pricing

follows

60-day

lag

Production

down

kmt

due

Suriname

curtailment,

offset

by one

additional production day

Saudi

Arabia

refinery

start-up

costs

will

continue

Maintenance

costs

will

increase

$9M

for

scheduled

outages

Productivity,

volume,

and

lower

energy

prices

will

offset

cost

increases

$ Millions

ATOI ($ Millions)

Primary Metals: Lower LME prices and energy headwinds

* Based on published prices as of April 1, 2015

[Alcoa logo]

$ Millions

1Q15 Actual and 2Q15 Outlook –

Primary Metals

Quarter Results

Quarter Business Highlights

Quarter Performance Bridge

$22

1Q15

$187

Mt Holly

sale

-$4

Cost

Decreases

/ Other

Energy

-$19

Prod-

uctivity

Price

/ Mix

Volume

Currency

API

-$17

LME

-$84

4Q14

$267

1Q 14

4Q 14

1Q 15

Production (kmt)

839

731

711

Party Shipments (kmt)

617

637

589

Party Revenue ($ Millions)

1,424

1,852

1,572

Party Price ($/MT)

2,205

2,578

2,420

ATOI ($ Millions)

(15)

267

187

Quarter Outlook

Unfavorable

LME

pricing

driver

sequential

decline

Favorable

currency

movements

production

regions

Lower

energy

sales

prices

Brazil;

lower

energy

cost

Spain

Production

down

due

Mt.

Holly

sale

Cost

decreases

due

closed

locations

and

lower

overhead

Pricing

follows

15-day

lag

LME

Production

down

18kmt

due

Sao

Luis

curtailment,

partially

offset

one

additional

production

day

Regional

premium

decline

impact

$65m*

Net

Energy

impact

slightly

positive;

lower

costs

and

additional

Brazil

sales

offset

lower

energy

sales

other

regions

Productivity

and

favorable

energy

will

offset

impacts

lower

volume

and

other

cost

increases

Organic DWC maintained year-over-year, acquisition adds 3 days

See appendix for days working capital reconciliation

[Alcoa logo]

6 days

lower

Average Days Working Capital since First Quarter 2010

2 days

lower

2 days

lower

3 days

higher

9 day

reduction

since 1Q10

2 days

lower

Acquisition (3 days)

Alcoa ex Acquisition (30 days)

Quarter Cash Flow Overview

See appendix for Free Cash Flow reconciliation

($ Millions)

1Q14

4Q14

1Q15

Net (Loss) Income before Noncontrolling

Interests

($197)

$114

$255

DD&A

$340

$336

$321

Change in Working Capital

($687)

$656

($595)

Pension Expense in Excess of Contributions

$18

$47

$37

Other Adjustments

($25)

$305

($193)

Cash from Operations

($551)

$1,458

($175)

Dividends to Shareholders

($33)

($56)

($54)

Change in Debt

($14)

($110)

$24

Net (Distributions)/Contributions from Noncontrolling

Interests

($15)

($36)

($29)

Other Financing Activities

$72

$21

$33

Cash from Financing Activities

$10

($181)

($26)

Capital Expenditures

($209)

($469)

($247)

Acquisitions/Divestitures/Asset Sales

($2,138)

($212)

Other Investing Activities

($31)

($46)

($6)

Cash from Investing Activities

($240)

($2,653)

($465)

Free Cash Flow

($760)

$989

($422)

Cash on Hand

$665

$1,877

$1,191

1Q14, 4Q14 & 1Q15 Cash Flow

[Alcoa logo]

LTM = last twelve months; See appendix for Net Debt reconciliation

Maintained Strong Balance Sheet

1,543

1,939

1,861

1,437

1,877

1,191

1Q15

8,817

7,626

2014

8,852

7,432

2010

9,165

7,622

6,975

2013

6,882

8,319

2012

8,829

6,968

2011

9,371

(Millions)

Net Debt

Cash

Debt-to-LTM EBITDA

3.27

3.39

2.87

Debt, Net Debt, and Debt-to-LTM EBITDA

2.49

4.20

2.22

[Alcoa logo]

2015 Annual Financial Targets

Aggressive targets drive growth and operational performance in 2015

Deliver

Operational

Performance

Drive Productivity Gains of $900M

Process productivity

Procurement savings

Overhead cost reductions

Invest in the

Future; Actively

Manage the

Base

Manage Return-Seeking Capital of $750M

Control Sustaining Capital of $725M

Strengthen the

Balance Sheet

Generate $500M+ of Free Cash Flow

Attain 2.25 to 2.75 Debt-to-EBITDA

[Alcoa logo]

Market fundamentals remain strong

See appendix for full scale charts

[Alcoa logo]

Klaus Kleinfeld

Chairman and Chief Executive Officer

April 8, 2015

[Alcoa logo]

Another Strong year for Aerospace; Steady growth in Automotive

Source: Alcoa analysis

1) International Air Transport Association 2015 Expectations

[Alcoa logo]

Heavy Duty Truck –

Strong U.S., Weak China; Packaging Stable

Source: Alcoa analysis

[Alcoa logo]

Solid Commercial B&C Growth; Global Airfoil Market Improves

Source: Alcoa analysis

B&C = Building and construction

[Alcoa logo]

Building a Lightweight Multi-Material

Innovation Powerhouse

Transforming Alcoa –

Creating Compelling Sustainable Value

Creating a Globally Competitive

Commodity Business

Increasing

exciting

growth markets

(e.g., aerospace, automotive, heavy duty truck and

trailer, building and construction)

Full

pipeline

innovative

products

and solutions

Using all growth levers

Shifting

mix

higher

value-add

Expanding multi-material,

technology

and

process

expertise

Increasing competitiveness,

mitigating

downside

risk

Optimizing

the

casthouse

value-add

portfolio

Shifting

pricing

reflect

market

fundamentals

Continuing to drive productivity

improvements

[Alcoa logo]

Organic and Inorganic Growth Expands Higher Value-Add Portfolio

[Alcoa logo]

Summary of Key Innovations, Growth Projects, and Inorganic Investments

Firth Rixson Enhances Leadership Position in Jet Engine Components

1) On track to reach 2019 gross synergy target of $105M offset by $5M integration costs (66% productivity, 26% procurement, 8%

overhead). 2) Growth from $1B in 2013 to $2B in 2019; 70% secured by long term agreement. AA = Alcoa; FR = Firth Rixson

[Alcoa logo]

Firth Rixson Strategic and Financial Benefits and Alcoa’s Expanded Jet Engine Suite

Portfolio Enhancing: Expands Jet Engine Suite

Multi-Material

Edge

Leading-Edge

Technology

Building

Capabilities

Financial

Benefits

Doubles Engine Content

(e.g. turbine blades & vanes, structural castings, rings,

disks, shafts and front fan blades)

Multi-Material

Ni and Ti-Al in hot section

Ti, Al and Steel in cold section

Products

Enables

70°F

40%

combustion

efficiency

Critical

rotating

Disks

from

Superalloys

and

Titanium

alloys

One

the

largest,

most

advanced

closed-die

forge

presses

$40M

net

synergies

year

$100M¹

net

year

Visibility

$1B

revenue

growth:

70%

secured

Global

leader

seamless

rolled

Rings

Largest

seamless

Rings

200”

diameter

Full

range

aero

Engine

Disks

(12”

53”

diameter)

Multi-Material

mix:

60%

Ni,

25%

Ti,

15%

Steel/Al

Integrated

Nickel

Supply

cast

stick,

bar

and

billet

Specialized

Isothermal

forgings

from

Powder

Metal

alloys

Can Produce >90% of

Structural and Rotating Components

2016E

$1.6B

revenue

$350M

EBITDA

Alcoa Advantage Track Record Drives Post-Merger Integration

1) 2009-2014 Productivity figures, pretax and pre-minority interest. 2009/2010 represent net productivity. 2011-2014 represent gross productivity.

2) Reflects 2009 –

2014. 3) Gross synergies of $44M offset by $4M integration costs.

DWC = Days Working Capital FCF = Free Cash Flow CT = Commercial Transportation.

[Alcoa logo]

190%

deployed

versus 2016E

synergy target

Alcoa Strategic Priorities

ALCOA ADVANTAGE

Creating value for all businesses

DISCIPLINED EXECUTION

Across all activities

Degrees of Implementation

methodology for rigorous

management from idea to cash

Talent

Purchasing

Customer

Intimacy

Operating

System

Technology

On Track to Deliver $40M Synergies in 2016

Human Resources

Finance

Credit

Successful Execution Track Record

Operational Excellence

drive $7.9B of

Productivity

Sustainable DWC reduction:

28 days 4Q14; -9 days since 4Q09

Generated $3B

FCF 2;

consecutive

years

achieving

positive FCF

Capital Allocation for Growth

Auto: Aluminum intensive vehicles

Aero: World’s first Al-Li fan blade

CT: World’s lightest wheel

Commercializing Innovation

3D Core Platform technology

Alcoa 951 bonding technology

MagnaForceTM

alloy

150%

deployed

Examples of Operational, Financial, and Productivity Execution and Expertise to Capture Firth Rixson Synergies

250%

deployed

200%

deployed

Operational Productivity $22M

titanium, nickel, and aluminum value chains

Productivity initiatives deployed through

Alcoa daily management system

Procurement Savings $14M

e.g., Leverage existing contracts

Consolidate global supply base

Overhead Reductions $8M

e.g., Integrate shared services Center of

Excellence

Update on Isothermal Press

Received isothermal forge, heat treat and testing

methods approval from customer and cleared for

qualification

Successfully forged 6 qualification batches for first

customer –

first revenue 2H 2015

PROFITABLE GROWTH

in every business

Business Programs that define:

3-year aspirations

Priority levers

Accountability

Standardized operating systems

e.g., Optimization of revert utilization across

Alcoa + RTI Combination Expands Titanium Customer Solutions

1) Growth from 14.5% in 2014 to 25.0% projected in 2019; 2) Projected revenue in 2019 3) Representative of mid and downstream

capabilities; not intended to reflect a market position.

[Alcoa logo]

~65%

$1.2B

revenue

supported

contracts

Strategic and Financial Benefits of RTI and Mid and Downstream Titanium Value Chain

Enhances

Offerings:

Expands

Ti,

Value-Add

Solutions

Plasma

and

Electron

Beam

melting

Titanium billetizing and mill products

Machining

and

subassembly

Production of near net shape components from

Titanium and Metal Matrix Composites powders through

cold and hot isostatic pressing

Multi-Material

Edge

Leading-Edge

Technology

Building

Capabilities

Intellectual

property

multi-Material

3-D

printing

(Ti, Ni, Steel and Al)

Closed

loop

scrap

processing

Financial

Benefits

Complements

Mid

and

Downstream

Value

Chain

Capabilities

None

Limited

Moderate

Significant

Full

Melting

(Ingot, Cast Slab)

Billetizing,

Rolling

(Mill Products)

Conversion

(Closed

-Die

Forging, Extruding,

Investment Casting)

Machining,

Subassembly

INGOT

PLATE

FORGING

MACHINING

$30M

net

synergies

year

$100M

net

year

+10% point

growth

in EBITDA margins

Ti-Al

ingot

for

technically

advanced

Ti-Al

low

pressure

turbine

blades

2019E

$1.2B

revenue

25%

EBITDA

margin

Alcoa Advantages to Drive Synergies and Further Growth Opportunities

1) Figure reflects net synergies after $9M merger integration costs.

[Alcoa logo]

Examples of RTI Synergy Levers, Growth Technologies, and Expanding End Markets

Overhead

Cost

Reductions

$20M

Procurement

Savings

$20M

Growth

$25M

Process

Productivity

$44M

Expand selection of machined parts

(e.g., plate, forgings, extrusions)

Migrate from Ti ingot directed buy programs

Offer Ti

-Al for high-growth engine components

Integrate Shared Services Center of Excellence

Leverage Alcoa’s $18B global spend

(

e.g.,

commodities, production, maintenance supplies )

Standardize payment terms

Maximize internal metal supply

Decrease outsourced machining

Increase utilization of capacity

(e.g., melting, billetizing, rolling, machining)

Optimize revert metal loop

Finance

Credit

Meaningful RTI Synergies Identified

Direct

access

RTI Ti-Al ingot for

AA’s

investment

casting

and

forging

technology

Ti-Aluminide (Ti-Al)

Growth from Foundational Technologies

Upside from Additional End Market Potential

Information Technology

Human Resources

Operational and

commercial

expertise in additive

manufactured

part

production

Additive Mfg.

Manufacturer

minimally

invasive

surgical

tools

precision

machining

Medical

Attractive

titanium

and

steel

products for

production wells

Complementary

Alcoa’s

aluminum drilling

products

Oil & Gas

bed, multi-spindle

machining

subassemblies/kits

Machining

High-speed

long-

State-of-the-art

robotic

Flight

critical

Net

Synergies

$100M

30%

year

100%

year

Transitioning GRP Portfolio From Lower Margin Markets…

GRP = Global Rolled Products

[Alcoa logo]

Invest

$190M

Very

Thick

Plate

stretcher

Upgrading Portfolio to Drive Higher Profitability

15%

27%

42%

14%

27%

21%

38%

16%

Can Sheet Supply/Demand Dynamics and Actions to Shift Portfolio

Oversupply, Weaker Demand Weighs on Can Sheet

Result:

Compressed Margins and Lower Volumes

% of GRP Revenues

14A 16E

On track for

$344/MT EBITDA or

Higher by 2016

Shift to Higher Margin, Differentiated Products

to Drive GRP Y-o-Y Profit Lift in 2016 vs. 2015

Market Sector

Invest combined ~$600M in

auto sheet plant expansions

Sold 3 rolling mills in Spain

and France

Sold rolling mill in Russia

2 mills closed in Australia

Expand aseptic foil mill in

Brazil

Portfolio Actions

Aero/Defense

Transportation

Industrial

Packaging

31%

41%

69%

59%

Demand

Supply

Overcapacity

Convert

capacity

auto from

packaging

(US)

Declining

carbon-

ated

soft drink

(US)

Beer

growth (US &

China)

Conversion to Al

from steel (Europe)

…To Higher Growth and Higher Margin End Markets

Source: Automotive from Ducker Worldwide 2014

Annual

Savings

((15,000

Hwy

Miles/Yr

Hwy

MPG)

–

(15,000

Hwy

Miles/Yr

Hwy

MPG))

$3/gal;

$2/gal

cost

$611

savings.

[Alcoa logo]

OEMs Need Fuel Economy…

U.S. Light Truck CAFE Targets (MPG)

…And Consumers Benefit

813

659

451

1,155

2018E

2020E

2016E

2015E

Aluminum Auto Demand Drivers, Alcoa Auto Sheet Investments and Revenue Growth

North America Aluminum

Auto Sheet Demand (kMT)

~3x

$660

$1,050

$340

Projected Alcoa

Auto Sheet Revenues ($M)

Davenport Fully Operational

~3x

Lighter, less fuel consumption

Additional

payload/ towing capacity

(e.g., 700 lbs)

Faster

acceleration;

improved

braking

distance

MPG

$916/yr

savings

43.8

29.8

26.3

2025E

2016E

2014

+67%

Al auto

sheet

demand

expected to reach

>1MMT by 2020

2014A

2015E

2016E

Result:

Automotive

Revenues:

10%

GRP

2014

20%

2016E

Auto

Sheet

Shipments:

+65%

CAGR

(2013-16E)

Higher

Margins

and

Volumes

~2x

Auto Sheet Investments a Key Driver of Growth

Lightweighting Trend Accelerates Al Sheet Demand

•

Looking Forward: Alcoa Invents for Next-Generation Automotive

1) In late stage of development; 2) In early stage of development.

HSS = High Strength Steel

[Alcoa logo]

Breakthrough Al Alloy + Casting Technology

Stronger, Better, Faster: Win for the Customer and Alcoa

Micromill’s Innovation in Automotive Alloys, Value Proposition and Development Progress

Current alloys

(1)

High strength

(2)

Advanced impact

(2)

High formability

(1)

Advanced impact

: equivalent to

steel crash resistance at

30-40%

lighter

vs. HSS

Higher formability

: allows multiple

parts to

single piece

consolidation;

reduces

costs 4-

vs.

ingot based Al

Higher strength

: can replace HSS

parts;

eliminates

dissimilar metal

joining issues;

reduces

weight

25-

35%

vs. HSS

formable

, while

30% lighter

than HSS

Reduces

OEM

system cost

from

streamlined alloy portfolio

Attack share of

$3.5B

steel

auto

applications

20 day

rolling process

to 20 minutes

50% lower energy

use

1/4

the

footprint

conventional

mill

Completed

successful

customer trials

Qualification in

progress at first

customer

Executed

agreements to

qualify with

additional OEMs

First

commercial coil

Completed

Process

Exploring

Full Scale Capacity

Expansion Options

Micromill™

assembly

Sources: CRU and Alcoa analysis

API = Alumina Price Index

Commodity Strategy is Working: Lowering Costs and Enhancing Revenue

[Alcoa logo]

Lower Cost…

…

Enhance Revenue

Global Aluminum Cost Curve

Global Alumina Cost Curve

Key Commodity Business Metrics: 2010 and 2014 Actual and 2016 Targets

Alumina

Primary Metals

2010

2016

2014

57%

65%

70%

Value-add %

2010

2016

2014

68%

84%

API/spot %

% of total shipments

2014

$55

EBITDA/MT

2014

$422

EBITDA/MT

party

shipments

Executing Robust Process to Maximize Global Competitiveness

Includes

kmt

Sao

Luis

smelting

capacity

executed

April

W.A. = Western Australia

[Alcoa logo]

Strategic Review Process and Capacity Actions Executed Against 2015 Strategic Review

Guiding Principles

Maximize cash position for

ramp-down and ramp-up

considering:

Operational flexibility

Power flexibility

Repowering impact

Community impact

33% reduction in smelting

operating

capacity

since

2007

March 6, 2015

2.8 mmt refining

500 kmt smelting

under strategic review

To Take Quick, Decisive Action

Months

Global Businesses Focused on Upstream Value Creation

[Alcoa logo]

Explore

opportunities in

external markets

Improve

competitiveness;

transform pricing

Leverage assets;

Secure long

-term

solutions

Lower cost;

enhance

operational

excellence

Grow value-add

product mix

Global Primary Products Global Business Units

Increases performance transparency

Focuses Centers of Excellence, enhances best practice sharing

Improves commercial and operational alignment

Optimizes capital allocation

MINING

REFINING

CASTING

SMELTING

ENERGY

Alumina

Primary Metals

Profitable

Growth

from

Organic

Inorganic

–

Fully

Track

Disciplined Execution Improves Upstream Competitiveness

Continue to Deliver Strong Operational Results

Creating Sustainable Value for Shareholders

[Alcoa logo]

Nahla Azmy

Vice President, Investor Relations

Alcoa

390 Park Avenue

New York, NY 10022-4608

Telephone: (212) 836-2674

Email: nahla.azmy@alcoa.com

www.alcoa.com

Additional Information

[Alcoa logo]

Annual Sensitivity Summary

Currency Annual Net Income Sensitivity

+/-

$100/MT = +/-

$190 million

LME Aluminum Annual Net Income Sensitivity

Australian $

+/-

$11 million

per 0.01 change in USD / AUD

Brazilian $

+/-

$ 1 million

per 0.01 change in BRL / USD

Euro €

+/-

$ 2 million

per 0.01 change in USD / EUR

Canadian $

+/-

$ 4 million

per 0.01 change in CAD / USD

Norwegian Kroner

+/-

$ 4 million

per 0.10 change in NOK / USD

+/-

$10/MT = +/-

$20 million

API/Spot Alumina Annual Net Income Sensitivity

[Alcoa logo]

Composition of Regional Premium Pricing Convention

[Alcoa logo]

Alcoa Segment Bridges

EPS = Engineered Products and Solutions

GRP = Global Rolled Products

$ Millions

EPS Sequential Quarter Bridge

GRP Sequential Quarter Bridge

API

$34

LME

$13

1Q14

$92

Energy

-$16

Prod-

uctivity

$33

Price /

Mix

$14

Volume

-$8

$69

Cost

Increases

/ Other

Surgold

sale

$221

1Q15

-$18

1Q15

Cost

Increases

/ Other

$43

Saudi

JV /

Portfolio

actions

$187

$26

-$41

Energy

$45

Volume

$71

Price /

Mix

API

LME

-$15

1Q14

$62

-$19

Prod-

uctivity

1Q15

$191

Cost

Increases/

Other

-$14

Productivity

$27

Price / Mix

-$2

Volume

$20

Currency

-$5

4Q14

$165

Portfolio

Actions

-10

Cost

Increases

/ Other

-2

Energy

Price /

Mix

1Q15

Productivity

Volume

Currency

-3

LME

-36

4Q14

Alumina Year-over-Year Bridge

Primary Metals Year-over-Year Bridge

[Alcoa logo]

Special Items

See appendix for Adjusted Income reconciliation.

NCI: Non-controlling interest

Pre-tax, Before NCI

After-tax, After NCI

$ Millions, except per-share amounts

4Q14

1Q15

4Q14

1Q15

Income Statement

Classification

Segment

Income from Continuing Operations

$234

$481

$159

$195

Income Per Diluted Share

$0.11

$0.14

Restructuring-Related

($388)

($177)

($200)

($158)

Restructuring and

Other Charges/COGS

Corporate / All

Tax Items

($53)

($4)

Income Taxes

Corporate

Acquisition Costs

($25)

($9)

($22)

($7)

SG&A/Interest

Expense

Corporate

Mark-to-Market Energy Contracts

Other Expenses, Net

Corporate

Special Items

($411)

($184)

($273)

($168)

Income from Continuing Ops excl Special Items

$645

$665

$432

$363

Income

per Diluted

Share excl

Special Items

$0.33

$0.28

[Alcoa logo]

Revenue Change by Market

14%

(23%)

(25%)

(13%)

(15%)

(9%)

(13%)

(15%)

24%

46%

(18%)

13%

(28%)

(5%)

43%

10%

21%

11%

15%

27%

Aerospace

Automotive

B&C

Comm. Transport

Industrial Products

IGT

Packaging

Distribution/Other

Alumina

Primary Metals

1Q15 Third-Party Revenue

Sequential

Change

Year-Over-Year

Change

[Alcoa logo]

Revenue Change by Market

17%

15%

(3%)

(11%)

24%

17%

13%

15%

28%

Aerospace

Automotive

B&C

Comm. Transport

Industrial Products

IGT

Packaging

Distribution/Other

Alumina

Primary Metals

FY 2014 Third-Party Revenue

Year-Over-Year

Change

[Alcoa logo]

Composition of Upstream Production Costs

Natural gas information corresponds to Point Comfort, as Australia is priced on a rolling 16 quarter average

[Alcoa logo]

Fuel Oil

Natural gas

13%

Caustic

Bauxite

27%

Conversion

44%

Input Cost

Inventory flow

Pricing

convention

Annual ATOI

Sensitivity

Fuel oil

1 –

2 months

Prior month

$2m per $1/bbl

Natural gas

N/A

Spot

$13m per $1/GJ

Caustic soda

3 -

6 months

Spot & semi-

annual

$8m per

$10/DMT

Refining Cost Structure

Alumina

34%

Carbon

12%

Power

25%

Materials

Conversion

22%

Smelting Cost Structure

Input Cost

Inventory flow

Pricing convention

Annual ATOI

Sensitivity

Coke

1 -

2 months

Spot, quarterly &

semi-annual

$7m per

$10/MT

Pitch

1 -

2 months

Spot, quarterly &

semi-annual

$2m per

$10/MT

Alcoa Upstream capacity closed, sold and idled

1) Includes 74 kmt curtailment announced on March 30, 2015; Execute by April 15, 2015. 2) Includes 443 kmt curtailment announced on March 17,

2015; Execute by April 30, 2015. Does not include a potential sale transaction with the Government of Suriname.

[Alcoa logo]

Facility

Year

kmt

Baie Comeau

2008

Eastalco

2010

195

Badin

2010

Warrick

2010

Tennessee

2011

215

Rockdale

2011

Baie Comeau

2013

105

Fusina

2013

Massena East

2013

Massena East

2014

Point Henry

2014

190

Portovesme

2014

150

Mt. Holly

(sale of 50.33% interest)

2014

115

Total

1,368

Closed/sold since December 2007

Facility

kmt

Rockdale

191

Sao Luis

268

Pocos

Intalco

Wenatchee

Aviles

Portland

La Coruna

Total

731

Smelting Capacity

Idled

Refining Capacity

Facility

Year

kmt

Jamalco

(sale of 55% interest)

2014

779

Total

779

Closed/sold since December 2007

Facility

kmt

Suriname

1,319

Point Comfort

295

Total

1,614

Idled

Source: Alcoa estimates, CRU, Harbor, Wood Mackenzie

6.5% 2015 demand growth on higher base

29.2

6.7

4.3

2.2

2.1

1.1

1.0

9.5%

0.5%

1.5%

-2%

57.5 mmt

Other includes Africa, E. Europe, Latin America ex Brazil, and Oceania

2015 Primary Aluminum Consumption (mmt), Annualized Growth (%)

China

Europe

North America

North Asia

India

SE Asia

MENA

Russia

Brazil

Other ¹

2.1

2015 demand +6.5%

on higher base

Higher

Final 2014 global demand growth

+9% vs. +7%

[Alcoa logo]

Source: Alcoa analysis, Alladiny, CNIA, CRU, China Customs, Harbor, Wood Mackenzie

Alumina surplus tightens, Aluminum in balance

[Alcoa logo]

2015E Aluminum Supply/Demand Balance

2015E Alumina Supply/Demand Balance

’000 mt

China

Rest of World

2015 Production

47,522

54,921

2015 Production to be added

5,030

3,006

2015 Capacity curtailed or restarted

1,331

(462)

Imports/(exports)

3,000

(3,000)

Total supply

56,883

54,465

Demand

(56,883)

(51,766)

Net Balance

2,699

Supply/Demand Analysis

4Q14

Surplus

2,932

4Q14

Deficit

(38)

’000 mt

China

Rest of World

2015 Production

27,998

25,955

2015 Production to be added

4,400

868

2015 Capacity curtailed or *restarted

(1,415)

Total Supply

30,983

26,823

Demand

(29,171)

(28,309)

Net Balance

1,812

(1,486)

Surplus

326

Surplus

2,699

Source: Alcoa estimates, IAI, LME, Marubeni, Shanghai Metal Exchange

Global inventories have fallen to 66 days; down 10 days year-over year

[Alcoa logo]

Premiums down from record highs; remain above 2014 levels

Source:

Graph

shows

monthly

average

daily

prices

Platts

Metals

Week

1Q15

and

1Q14

bubble/table

data

shows

quarterly

average

daily

prices

[Alcoa logo]

Reconciliation

ATOI

Consolidated

Net

(Loss)

Income

Attributable

Alcoa

(in millions)

1Q14

2Q14

3Q14

4Q14

2014

1Q15

Total segment ATOI

$325

$418

$619

$681

$2,043

$633

Unallocated amounts (net of tax):

Impact of LIFO

(7)

(8)

(18)

(21)

(54)

Interest expense

(78)

(69)

(81)

(80)

(308)

(80)

Noncontrolling interests

(60)

Corporate expense

(67)

(70)

(74)

(83)

(294)

(64)

Restructuring and other charges

(321)

(77)

(189)

(307)

(894)

(161)

Other

(49)

(65)

(126)

(76)

(316)

(80)

Consolidated net (loss) income attributable to Alcoa

$(178)

$138

$149

$159

$268

$195

[Alcoa logo]

Reconciliation of Adjusted Income

(in millions, except

per-share amounts)

(Loss) Income

Diluted

EPS

(3)

Quarter ended

March 31,

December 31,

March 31,

December 31,

March 31,

2014

2015

2014

2015

Net (loss) income

attributable to Alcoa

$(178)

$159

$195

$(0.16)

$0.11

$0.14

Restructuring and

other charges

274

200

158

Discrete tax items

(1)

(6)

Other special items

(2)

Net income

attributable to Alcoa

–

as adjusted

$98

$432

$363

0.09

0.33

0.28

[Alcoa logo]

Net income attributable to Alcoa – as adjusted is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding the impacts of restructuring and other charges, discrete tax items, and

other special items (collectively, “special items”). There can be no assurances that additional special items will not occur in future periods. To compensate for this limitation, management believes that it is appropriate to consider both Net (loss) income attributable to Alcoa determined under

GAAP as well as Net income attributable to Alcoa – as adjusted.

(1)

Discrete tax items include the following:

•

for the quarter ended December 31, 2014, a charge for the remeasurement of certain deferred tax assets of a subsidiary in Spain due to a tax rate change ($16), a benefit for an adjustment to the remeasurement of certain deferred tax assets of a subsidiary in Brazil due to a tax rate change

($3), and a net charge for a number of small items ($3); and

•

for the quarter ended March 31, 2014, a net benefit for a number of small items.

(2)

Other special items include the following:

•

for the quarter ended March 31, 2015, an unfavorable tax impact related to the interim period treatment of operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($35), a favorable tax impact resulting from the difference between Alcoa’s consolidated

estimated annual effective tax rate and the statutory rates applicable to special items ($31), costs associated with current and future acquisitions of aerospace businesses ($7), and a net favorable change in certain mark-to-market energy derivative contracts ($1);

•

for the quarter ended December 31, 2014, an unfavorable tax impact resulting from the difference between Alcoa’s consolidated estimated annual effective tax rate and the statutory rates applicable to special items ($81), a favorable tax impact related to the interim period treatment of

operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($44), costs associated with current and future acquisitions of aerospace businesses ($22), and a net favorable change in certain mark-to-market energy derivative contracts ($2); and

•

for the quarter ended March 31, 2014, a favorable tax impact resulting from the difference between Alcoa’s consolidated estimated annual effective tax rate and the statutory rates applicable to special items ($72), an unfavorable tax impact related to the interim period treatment of

operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($56), a write-down of inventory related to the permanent closure of a smelter and two rolling mills in Australia and a smelter in the United States ($20), an unfavorable impact related to the restart of one

potline at the joint venture in Saudi Arabia that was previously shut down due to a period of pot instability ($13), a gain on the sale of a mining interest in Suriname ($11), and a loss on the write-down of an asset to fair value ($2).

(3)

The average number of shares applicable to diluted EPS for Net (loss) income attributable to Alcoa excludes certain share equivalents as their effect was anti-dilutive (see footnote 3 to the Statement of Consolidated Operations). However, certain of these share equivalents become dilutive in

the EPS calculation applicable to Net income attributable to Alcoa – as adjusted due to a larger, positive numerator. Specifically, these share equivalents were associated with outstanding employee stock options and awards for the quarter ended March 31, 2014 and mandatory convertible

preferred stock for the quarters ended December 31, 2014 and March 31, 2015. As a result, the average number of shares applicable to diluted EPS for Net income attributable to Alcoa – as adjusted was 1,115,941,470; 1,294,701,805; and 1,315,558,890 for the quarters ended March 31, 2014,

December 31, 2014, and March 31, 2015, respectively. Additionally, the subtraction of preferred stock dividends declared from the numerator (see footnote 1 to the Statement of Consolidated Operations) needs to be reversed for the quarters ended December 31, 2014 and March 31, 2015

since the related mandatory convertible preferred stock was dilutive in the EPS calculation for Net income attributable to Alcoa – as adjusted.

Reconciliation of Alcoa Adjusted EBITDA

($ in millions)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

1Q14

4Q14

1Q15

Net

income

(loss)

attributable

Alcoa

$1,310

$1,233

$2,248

$2,564

$(74)

$(1,151)

$254

$611

$191

$(2,285)

$268

$(178)

$159

$195

Add:

233

259

436

365

221

138

194

(29)

(91)

(19)

(45)

Cumulative

effect

accounting

changes

–

Loss

(income)

from

discontinued

operations

(22)

250

303

166

–

Provision

(benefit)

for

income

taxes

546

464

853

1,623

342

(574)

148

255

162

428

320

(77)

120

226

Other

(income)

expenses,

net

(266)

(478)

(236)

(1,920)

(59)

(161)

(87)

(341)

(25)

(6)

(12)

Interest

expense

271

339

384

401

407

470

494

524

490

453

473

120

122

Restructuring

and

other

charges

(29)

266

507

268

939

237

207

281

172

782

1,168

461

388

177

Impairment

goodwill

–

1,731

–

Provision

for

depreciation,

depletion,

and

amortization

1,142

1,227

1,252

1,244

1,234

1,311

1,450

1,479

1,460

1,421

1,371

340

335

321

Adjusted

EBITDA

$3,234

$3,362

$5,422

$4,795

$3,313

$359

$2,704

$3,260

$2,105

$2,546

$3,556

$672

$1,073

$1,089

Sales

$21,370

$24,149

$28,950

$29,280

$26,901

$18,439

$21,013

$24,951

$23,700

$23,032

$23,906

$5,454

$6,377

$5,819

Adjusted

EBITDA

Margin

15.1%

13.9%

18.7%

16.4%

12.3%

1.9%

12.9%

13.1%

8.9%

11.1%

14.9%

12.3%

16.8%

18.7%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin

is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation,

depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides

additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to

similarly titled measures of other companies.

[Alcoa logo]

Net

income

(loss)

attributable

noncontrolling

interests

Reconciliation of Alumina Adjusted EBITDA

($ in millions, except per metric ton amounts)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

1Q14

4Q14

1Q15

After-tax operating income (ATOI)

$632

$682

$1,050

$956

$727

$112

$301

$607

$90

$259

$370

$92

$178

$221

Add:

Depreciation, depletion, and amortization

153

172

192

267

268

292

406

444

455

426

387

Equity (income) loss

(1)

–

(1)

(7)

(8)

(10)

(25)

(5)

Income taxes

240

246

428

340

277

(22)

179

(27)

153

Other

(46)

(8)

(6)

(26)

(92)

(5)

(44)

(8)

(6)

(28)

–

Adjusted EBITDA

$978

$1,092

$1,666

$1,564

$1,239

$282

$752

$1,161

$505

$749

$911

$206

$355

$400

Production (thousand metric tons) (kmt)

14,343

14,598

15,128

15,084

15,256

14,265

15,922

16,486

16,342

16,618

16,606

4,172

4,161

3,933

Adjusted EBITDA / Production

($ per metric ton)

$68

$75

$110

$104

$81

$20

$47

$70

$31

$45

$55

$49

$85

$102

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is

equivalent

Sales

minus

the

following

items:

Cost

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.

Management

believes

that

this

measure

meaningful

investors

because

Adjusted

EBITDA

provides

additional

information

with

respect

Alcoa’s

operating

performance

and

the

Company’s

ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

[Alcoa logo]

Reconciliation of Primary Metals Adjusted EBITDA

($ in millions, except per metric ton amounts)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

1Q14

4Q14

1Q15

After-tax operating income (ATOI)

$808

$822

$1,760

$1,445

$931

$(612)

$488

$481

$309

$(20)

$594

$(15)

$267

$187

Add:

Depreciation, depletion, and amortization

326

368

395

410

503

560

571

556

532

526

494

124

117

109

Equity (income) loss

(58)

(82)

(57)

(2)

(1)

(11)

Income taxes

314

307

726

542

172

(365)

106

(74)

203

(11)

Other

(96)

(13)

(27)

(32)

(176)

(7)

(422)

(8)

(6)

–

(2)

(1)

Adjusted EBITDA

$1,410

$1,413

$2,786

$2,313

$1,572

$(567)

$1,147

$1,138

$552

$475

$1,319

$126

$460

$355

Production (thousand metric tons) (kmt)

3,376

3,554

3,552

3,693

4,007

3,564

3,586

3,775

3,742

3,550

3,125

839

731

711

Adjusted EBITDA / Production

($ per metric ton)

$418

$398

$784

$626

$392

$(159)

$320

$301

$148

$134

$422

$150

$629

$499

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is

equivalent

Sales

minus

the

following

items:

Cost

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.

Management

believes

that

this

measure

meaningful

investors

because

Adjusted

EBITDA

provides

additional

information

with

respect

Alcoa’s

operating

performance

and

the

Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

[Alcoa logo]

Reconciliation of Global Rolled Products Adjusted EBITDA

($ in millions, except per metric ton amounts)

2004

2005

2006

2007

2008

2009

2010*

2011*

2012*

2013

2014

1Q14

4Q14

1Q15

After-tax operating income (ATOI)

$290

$300

$317

$151

$(41)

$(106)

$241

$260

$346

$252

$312

$59

$71

$34

Add:

Depreciation, depletion, and amortization

200

220

223

227

216

227

238

237

229

226

235

Equity loss

–

Income taxes

135

113

103

159

108

124

Other

(2)

–

(1)

(2)

–

Adjusted EBITDA

$589

$656

$675

$456

$195

$131

$583

$599

$738

$599

$697

$154

$161

$125

Total shipments (thousand metric tons) (kmt)

2,136

2,250

2,376

2,482

2,361

1,888

1,755

1,866

1,943

1,989

2,056

489

508

447

Adjusted EBITDA / Total shipments

($ per metric ton)

$276

$292

$284

$184

$83

$69

$332

$321

$380

$301

$339

$315

$317

$280

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is

equivalent

Sales

minus

the

following

items:

Cost

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.

Management

believes

that

this

measure

meaningful

investors

because

Adjusted

EBITDA

provides

additional

information

with

respect

Alcoa’s

operating

performance

and

the

Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

The

average

Adjusted

EBITDA

per

metric

ton

these

three

years

equals

$344

and

represents

the

average

historical

high

for

the

Global

Rolled

Products

segment.

Alcoa

has

2016

target

to meet or exceed this average historical high.

[Alcoa logo]

Reconciliation of Engineered Products and Solutions Adjusted EBITDA

($ in millions)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

1Q14

4Q14

1Q15

After-tax operating income (ATOI)

$161

$276

$382

$423

$522

$311

$419

$537

$612

$726

$767

$189

$165

$191

Add:

Depreciation, depletion, and amortization

168

160

152

163

165

177

154

158

159

173

Equity loss (income)

–

(2)

(1)

–

Income taxes

120

164

184

215

138

198

258

297

348

374

Other

106

(11)

(2)

(7)

–

(1)

(9)

(2)

–

(2)

–

Adjusted EBITDA

$505

$545

$702

$763

$904

$625

$769

$951

$1,058

$1,231

$1,314

$320

$296

$340

Third-party sales

$4,283

$4,773

$5,428

$5,834

$6,199

$4,689

$4,584

$5,345

$5,525

$5,733

$6,006

$1,443

$1,566

$1,689

Adjusted EBITDA Margin

11.8%

11.4%

12.9%

13.1%

14.6%

13.3%

16.8%

17.8%

19.1%

21.5%

21.9%

22.2%

18.9%

20.1%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is

equivalent

Sales

minus

the

following

items:

Cost

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion, and amortization. The Other line in the table above includes gains/losses on asset sales and other non-operating items. Adjusted EBITDA is a non-GAAP financial measure.

Management

believes

that

this

measure

meaningful

investors

because

Adjusted

EBITDA

provides

additional

information

with

respect

Alcoa’s

operating

performance

and

the

Company’s

ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

(1)

The

Adjusted

EBITDA

Margin

for

the

year

ended

December

31,

2013

represents

the

historical

high

for

the

Engineered

Products

and

Solutions

segment.

Alcoa

has

2016

target

exceed

this historical high.

(2)

In the quarter and year ended December 31, 2014, the Third-party sales and Adjusted EBITDA of Engineered Products and Solutions includes $81 and $(10), respectively, related to the

acquisition

aerospace

business,

Firth

Rixson.

Excluding

these

amounts,

Adjusted

EBITDA

Margin

was

20.6%

and

22.3%

for

the

quarter

and

year

ended

December

31,

2014,

respectively.

(3)

In the quarter ended March 31, 2015, the Third-party sales and Adjusted EBITDA of Engineered Products and Solutions includes $233 and $27, respectively, related to Firth Rixson. Excluding

these amounts, Adjusted EBITDA Margin was 21.5% for the quarter ended March 31, 2015.

[Alcoa logo]

(1)

(2)

(3)

Reconciliation of Free Cash Flow

(in millions)

Year ended

Quarter ended

December 31,

2009

December 31,

2010

December 31,

2011

December 31,

2012

December 31,

2013

December 31,

2014

March 31,

2014

December 31,

2014

March 31,

2015

Cash from

operations

$1,365

$2,261

$2,193

$1,497

$1,578

$1,674

$(551)

$1,458

$(175)

Capital

expenditures

(1,622)

(1,015)

(1,287)

(1,261)

(1,193)

(1,219)

(209)

(469)

(247)

Free cash flow

$(257)

$1,246

$906

$236

$385

$455

$(760)

$989

$(422)

Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after

taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate future

cash

flows

from

operations.

important

note

that

Free

Cash

Flow

does

not

represent

the

residual

cash

flow

available

for

discretionary

expenditures

since

other

non-discretionary

expenditures, such as mandatory debt service requirements, are not deducted from the measure.

[Alcoa logo]

Days Working Capital

Days Working Capital = Working Capital divided by (Sales/number of days in the quarter).

(1)

The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial institutions on a recurring basis. Alcoa is adding back this receivable

for the purposes of the Days Working Capital calculation.

(2)

The

Working

Capital

for

each

period

presented

represents

average

quarter

Working

Capital,

which

reflects

the

capital

tied

during

given

quarter.

such,

the

components

Working

Capital

for

each

period

presented

represent

the

average

the

ending

balances

each

the

three

months

during

the

respective

quarter.

(3)

In the quarter ended March 31, 2015, Working Capital and Sales include $279 and $233, respectively, related to the acquisition of two aerospace businesses, Firth Rixson and TITAL. Excluding

these

amounts,

Days

Working

Capital

was

for

the

quarter

ended

March

31,

2015.

($ in millions)

Quarter ended

31-Mar-12

30-Jun-12

30-Sep-12

31-Dec-12

31-Mar-13

30-Jun-13

30-Sep-13

31-Dec-13

31-Mar-14

30-Jun-14

30-Sep-14

31-Dec-14

31-Mar-15

(3)

Receivables from customers, less

allowances

$1,709

$1,650

$1,600

$1,573

$1,704

$1,483

$1,427

$1,383

$1,391

$1,401

$1,526

$1,513

$1,487

Add: Deferred purchase price

receivable

(1)

144

104

223

347

339

238

371

438

395

389

Receivables from customers, less

allowances, as adjusted

1,794

1,704

1,626

1,754

1,706

1,774

1,722

1,629

1,772

1,964

1,908

1,876

Add: Inventories

3,079

3,097

3,051

2,894

2,961

2,949

2,932

2,783

2,974

3,201

3,194

3,064

3,189

Less: Accounts payable, trade

2,660

2,594

2,496

2,587

2,656

2,820

2,746

2,816

2,813

2,880

3,016

3,021

2,936

Working Capital

(2)

$2,213

$2,297

$2,259

$1,933

$2,059

$1,835

$1,960

$1,689

$1,790

$2,093

$2,142

$1,951

$2,129

Sales

$6,006

$5,963

$5,833

$5,898

$5,833

$5,849

$5,765

$5,585

$5,454

$5,836

$6,239

$6,377

$5,819

Days Working Capital

[Alcoa logo]

Reconciliation of Net Debt

Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses

Alcoa’s

leverage

position

after

factoring

available

cash

that

could

used

repay

outstanding

debt.

(in millions)

December 31,

March 31,

2010

2011

2012

2013

2014

2015

Short-term borrowings

$92

$62

$53

$57

$54

$80

Commercial paper

–

224

–

Long-term debt due within one year

231

445

465

655

Long-term debt, less amount due within one year

8,842

8,640

8,311

7,607

8,769

8,711

Total debt

9,165

9,371

8,829

8,319

8,852

8,817

Less: Cash and cash equivalents

1,543

1,939

1,861

1,437

1,877

1,191

Net debt

$7,622

$7,432

$6,968

$6,882

$6,975

$7,626

[Alcoa logo]

Reconciliation of Debt-to-Adjusted EBITDA Ratio

($ in millions)

2010

2011

2012

2013

2014

1Q15*

Net income (loss) attributable to Alcoa

$254

$611

$191

$(2,285)

$268

$641

Add:

138

194

(29)

(91)

(12)

Loss from discontinued operations

–

Provision for income taxes

148

255

162

428

320

623

Other expenses (income), net

(87)

(341)

(25)

Interest expense

494

524

490

453

473

475

Restructuring and other charges

207

281

172

782

1,168

884

Impairment of goodwill

–

1,731

–

Provision for depreciation, depletion, and

amortization

1,450

1,479

1,460

1,421

1,371

1,352

Adjusted EBITDA

$2,704

$3,260

$2,105

$2,546

$3,556

$3,973

Total Debt

$9,165

$9,371

$8,829

$8,319

$8,852

$8,817

Debt-to-Adjusted EBITDA Ratio

3.39

2.87

4.20

3.27

2.49

2.22

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization. Net margin

is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation,

depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides

additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to

similarly titled measures of other companies.

The

calculation

Adjusted

EBITDA

for

the

quarter

ended

March

31,

2015

based

the

trailing

twelve

months.

[Alcoa logo]

Net income (loss) attributable to noncontrolling

interests

Reconciliation of RTI Adjusted EBITDA

($ in thousands)

2014*

Net income

$31,093

Add:

608

Provision for income taxes

10,037

Interest expense

31,055

Interest income

(310)

Other income, net

(2,156)

Depreciation and amortization

44,877

Adjusted EBITDA

$115,204

Net sales

$793,579

Adjusted EBITDA Margin

14.5%

* The calculation of Adjusted EBITDA for RTI is based on Alcoa’s definition of Adjusted EBITDA (see below) and does not purport to be the manner in which RTI’s management

would calculate RTI’s Adjusted EBITDA. Additionally, this calculation of Adjusted EBITDA is not intended to suggest that RTI’s management uses Adjusted EBITDA as a measure of

RTI’s profitability. The amounts used in this calculation were obtained from RTI’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the U.S. Securities

and Exchange Commission on February 26, 2015.

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation, depletion, and amortization.

Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and

Provision for depreciation, depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors

because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted

EBITDA presented may not be comparable to similarly titled measures of other companies.

Net loss attributable to discontinued operations

[Alcoa logo]

[Alcoa logo]