Alcoa Reports Progress Towards Business Targets and Path to Separation at 2015 Investor Day

NEW YORK--(BUSINESS WIRE)--

Lightweight metals leader Alcoa AA today reported progress on the Company's performance against three-year financial targets and its continuing transformation as it prepares to separate into two industry-leading, publicly-traded companies. Alcoa also outlined a clear roadmap to complete its separation in the second half of 2016. The Company delivered the update at its 2015 Investor Day event in Grand Rapids, Michigan.

"Alcoa's transformation continues to create exciting profitable growth in our Value-Add business and lower the cost position of our Upstream business to ensure success throughout the cycle," said Klaus Kleinfeld, Chairman and Chief Executive Officer. "Culminating our successful multi-year transformation, we have now set a clear path to separating the portfolios into two strong, industry-leading public companies. We are gratified at the positive feedback we have received from analysts, long-term investors and many new investors who recognize the enhanced value that the separation will create; we look forward to launching two strong companies in the second half of next year."

Progress Towards Three-Year Targets

As the Company prepares for the separation, both the Value-Add businesses and the Upstream businesses reported progress against 2016 targets set at the end of 2013.

The Value-Add businesses:

• Global Rolled Products forecast approximately $1 billion of revenue growth for the three-year period, with 2016 adjusted EBITDA per metric ton at or above average historical highs of $344;
• Engineered Products and Solutions (EPS) forecast approximately $3.1 billion of revenue growth between 2013 and 2016, with adjusted EBITDA margin of approximately 23 percent next year; and
• Transportation and Construction Solutions, the new segment formed in third quarter 2015 comprising two businesses formerly part of EPS—Alcoa Wheel and Transportation Products and Alcoa Building and Construction Solutions—and the Latin American Extrusions business, forecast approximately $500 million revenue growth over the three-year period, with adjusted EBITDA margin of at least 15 percent in 2016.

The Upstream businesses:

• Moved down two points on the global alumina cost curve to the 23^rd percentile in 2015 with goal to improve position to the 21^st percentile in 2016;
• On track to achieve its 38^th percentile target on the global aluminum cost curve in 2016, from the 43^rd percentile this year; and
• Increased margins by $1.5 billion from 2010 through 2015 through shaped products from casthouses by boosting production to 70 percent of sales estimated in 2015, on target to reach 74 percent in 2016; and grew exports of third-party bauxite sales, on target to double shipments in 2016.

In addition, Alcoa projected a 2016 global aluminum deficit of 360,000 metric tons, down from a 551,000 metric ton surplus in 2015 estimated in third quarter 2015, driven by strong aluminum demand, smaller production increases and smelter curtailments. The Company also projected a 1 million metric ton alumina deficit in 2016 from a 2.2 million metric ton surplus in 2015 estimated in third quarter 2015, due to record global alumina demand and refinery curtailments.

Separation Update

Alcoa also provided an update on its separation plans. The Company has established a well-defined governance structure led by a steering committee, a separation program office and functional teams to separate Alcoa into two standalone companies. The separation program office is ensuring that all deliverables and deadlines will be met to make the separation effective in the second half of 2016. Alcoa is targeting a Form 10 filing with the U.S. Securities and Exchange Commission by mid-2016.

A replay of the Alcoa 2015 Investor Day webcast and archived slides are available on www.alcoa.com/investorday.

About Alcoa

A global leader in lightweight metals technology, engineering and manufacturing, Alcoa innovates multi-material solutions that advance our world. Our technologies enhance transportation, from automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. We enable smart buildings, sustainable food and beverage packaging, high performance defense vehicles across air, land and sea, deeper oil and gas drilling and more efficient power generation. We pioneered the aluminum industry over 125 years ago, and today, our more than 60,000 people in 30 countries deliver value-add products made of titanium, nickel and aluminum, and produce best-in-class bauxite, alumina and primary aluminum products. For more information, visit www.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoa and follow us on Facebook at www.facebook.com/Alcoa.

Forward-Looking Statements

This release 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," "would," 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, supply/demand balances, and growth of the aerospace, automotive, and other end markets; statements regarding targeted financial results or operating performance; statements about Alcoa's strategies, outlook, business and financial prospects, and the acceleration of Alcoa's portfolio transformation; and statements regarding the separation transaction, including the future performance of the two independent companies if the separation is completed, the expected benefits of the separation, the expected timing of completion of the separation, and the expected qualification of the separation as a tax-free transaction. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) uncertainties as to the timing of the separation and whether it will be completed; (b) the possibility that various closing conditions for the separation may not be satisfied; (c) failure of the separation to qualify for the expected tax treatment; (d) the possibility that any third-party consents required in connection with the separation will not be received; (e) the impact of the separation on the businesses of Alcoa; (f) the risk that the businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on Alcoa's resources, systems, procedures and controls, disruption of its ongoing business and diversion of management's attention from other business concerns; (g) material adverse changes in aluminum industry conditions; (h) deterioration in global economic and financial market conditions generally; (i) unfavorable changes in the markets served by Alcoa; (j) the impact of changes in foreign currency exchange rates on costs and results; (k) increases in energy costs; (l) the 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, Engineered Products and Solutions, and Transportation and Construction Solutions segments) anticipated from restructuring programs and productivity improvement, cash sustainability, technology advancements (including, without limitation, advanced aluminum alloys, Alcoa Micromill, and other materials and processes), and other initiatives; (m) Alcoa's inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, or expansions, or international joint ventures; (n) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products; (o) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (p) the impact of cyber attacks and potential information technology or data security breaches; (q) the potential failure to retain key employees while the separation transaction is pending or after it is completed; (r) the risk that increased debt levels, deterioration in debt protection metrics, contraction in liquidity, or other factors could adversely affect the targeted credit ratings for the two proposed independent companies; and (s) the other risk factors discussed in Alcoa's Form 10-K for the year ended December 31, 2014, and other reports filed with the U.S. Securities and Exchange Commission (SEC). 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.

Non-GAAP Financial Measures

Alcoa has not provided a reconciliation of any forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures, due primarily to variability and difficulty in making accurate forecasts and projections, as not all of the information necessary for a quantitative reconciliation is available to the Company without unreasonable effort.

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