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 14, 2016 (April 11, 2016)

ALCOA INC.

(Exact name of Registrant as specified in its charter)

Pennsylvania	1-3610	25-0317820
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer 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 11, 2016, Alcoa Inc. held its first quarter 2016 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,” “goal,” “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 statements regarding the separation transaction, including the future performance of Value-Add Company and Upstream Company if the separation is completed, the expected benefits of the separation, and the expected timing of the Form 10 filing and the completion of the separation. 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, 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,

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and fluctuations in indexed-based and spot prices for alumina; (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 executing on the business improvement plans, moving the Upstream alumina and aluminum businesses down on the industry cost curves, and increasing revenues and improving margins in the Value-Add businesses) 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 Value-Add Company or Upstream Company; and (s) the other risk factors discussed in Alcoa’s Form 10-K for the year ended December 31, 2015, 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.

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 2016 earnings call.
99.2	Slides presented during Alcoa Inc. first quarter 2016 earnings call.

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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 14, 2016

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Transcript of Alcoa Inc. first quarter 2016 earnings call.
99.2	Slides presented during Alcoa Inc. first quarter 2016 earnings call.

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EX-99.1

Exhibit 99.1

Event ID:	137608125962
Event Name:	Q1 2016 Alcoa Inc Earnings Call
Event Date:	2016-04-11T21:00:00 UTC

P:   Operator;;

C:   Matthew Garth; Alcoa Inc.; VP of Financial Planning and Analysis & IR

C:   Klaus Kleinfeld; Alcoa Inc.; Chairman & CEO

C:   William Oplinger; Alcoa Inc.; EVP & CFO

P:   Evan Kurtz; Morgan Stanley; Analyst

P:   Curt Woodworth; Credit Suisse; Analyst

P:   David Gagliano; BMO Capital Markets; Analyst

P:   Justin Bergner; Gabelli & Company; Analyst

P:   Tony Rizzuto; Cowen and Company; Analyst

P:   Josh Sullivan; Sterne, Agee & Leach, Inc.; Analyst

P:   Charles Bradford; Bradford Research; Analyst

P:   Justine Fisher; Goldman Sachs; Analyst

+++ presentation

Operator^ Good day, ladies and gentlemen, and welcome to the first-quarter 2016 Alcoa earnings conference call. My name is Shannon, 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 conference over to your host for today, Matthew Garth, Vice President of Financial Planning and Analysis and Investor Relations. Please proceed.

Matthew Garth^ Thank you, Shannon. Good afternoon, and welcome to Alcoa’s first-quarter 2016 earnings conference call.

Let me begin by apologizing for the late distribution of the press release. Our news wire provider network went down, so we distributed the release as quickly as we could. I’m joined today 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’d like to remind you that today’s discussion will contain forward-looking statements relating to future events and expectations. You can find factors that cause the Company’s actual results to differ materially from these projections listed in today’s press release and presentation, and in our most recent SEC filings. In addition, we have 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 at www.alcoa.com under the “Invest” section. Any reference in our discussion today to historical EBITDA means adjusted EBITDA, from which we have provided reconciliations and calculations in the appendix. With that, I’d like to turn the call over to Klaus.

Klaus Kleinfeld^ Very good, Matt. Thank you very much. In the usual fashion, let me characterize the quarter. Solid performance, strong

productivity, separation on track. We have, for your better digestion actually, separated out your Arconic, as the new value-add company will be called, and new Alcoa, gives you a better taste for the future two firms.

Let’s start with the Arconic segment. Revenue is $3.3 billion, down 2.2% overall. This is really a combination of the growth of 6.7%, predominantly acquisition related, and a decline of 8.3% from metals and FX changes, and also minus 0.6% from divestitures or closing of operations. Profits are up 8%, record adjusted EBITDA margin of 16.4%.

If we then go down into the segments, global rolled products profit up 26%, the EBITDA margin per metric ton, probably the best measure of how they’re doing, $374. And if you include the Warrick metal, cold metal plant it would have been even at $390 per metric ton.

And then in Engineered Products and Solutions, record first-quarter revenues, record first-quarter profit up 4%, Transportation and Construction Solutions up 3% profitability, and record first-quarter adjusted EBITDA margin of 14.9%. Good news, also, we’ve been able to secure a supply agreement with Airbus for 3D printed titanium parts for Airbus on the planes. So this is obviously also indicating an important future business opportunity.

We’ve been able to secure multi-year $1 billion industrial gas turbine contract, the largest IGT contract to date. We have been able to sell Remmele Medical, proceeds of $102 million. $179 million of productivity, plan is $650 million in 2016. Global rolled products, transportation, construction solutions are on track to meet their three-year targets, and we have set a new goal for EPS that will better reflect the aerospace market and the Firth Rixson performance, and obviously we’ll go into it and I’ll talk to this in detail in my presentation.

So then, when you go to the new Alcoa segments, third-party revenues of $1.7 billion, down 32%. This also is a combination of growth of 4.5%, offset by 26% through lower prices and FX, and another 10.6% through the curtailment and closures of operations. Both segments are profitable. We’ve been able to sign a $350 million third-party bauxite contract.

Ma’aden, the refinery is now at 80%, nameplate capacity, we’ve been able to curtail, fully curtail. We are able to fully curtail Point Comfort by the second quarter. Warrick smelter is closed, $175 million of productivity, plan is $550 million in 2016.

We’ve sold the pipeline, natural gas pipeline, or our stake in it, in Western Australia, for $154 million, and we are on track to meet our three-year targets, which is a cost curve target to get down to 38th percentile for aluminum and the 21st percentile for alumina. And as a third point, separation is on track. With this, let me hand over, Bill, to you.

William Oplinger^ Thanks, Klaus. As we usually do, let’s review the income statement. First-quarter 2016 revenue totaled $4.9 billion, down approximately 15% year-over-year. Organic growth, and growth from the

recent acquisitions was offset by lower alumina and metal pricing, and the impact of divested and closed businesses. Cost of goods sold percentage decreased by 230 basis points sequentially, largely due to productivity gains.

Overhead spending increased year-over-year, primarily as a result of costs related to planned separation of the Company, and the acquisition of RTI. Other expenses of $34 million were related to the results of our Ma’aden joint venture and unfavorable currency translation. First-quarter effective tax rate of 73.2% was primarily due to non-deductible separation costs, and tax associated with an asset sale and discrete tax items in the quarter. Excluding these impacts, our operational rate was 32%.

Overall, net income for the quarter was $16 million or $0.00 per share. Preferred dividends were $18 million in the quarter, which reduced EPS by $0.01 per share. Excluding special items, net income was $108 million, or $0.07 a share.

Let’s take a closer look at the special items. In the quarter, we recorded after-tax charges of $92 million or $0.07 per share, primarily related to restructuring and separation costs. Restructuring across the business included accelerated depreciation of the Warrick smelter, costs from the Wenatchee and Point Comfort curtailments, and headcount reductions associated with lower market demand, largely in the aerospace businesses.

In the EPS segment we’ve reduced 600 positions in the first quarter, and have a plan to reduce an additional 400 positions this year, also, given the current market environment, we’re evaluating a further reduction of up to 1,000 positions. Portfolio transaction costs stem from work being done to separate the Company. Note that roughly 75% of the restructuring-related charges are non-cash.

Now, let’s look at our performance versus a year ago. First-quarter adjusted earnings of $108 million were down $255 million from the prior-year quarter, driven largely by the drop in alumina and metal prices. Lower prices, predominantly related to new contracts that have been signed over the last year, drove a negative impact also. However, strong productivity gains in all segments contributed $232 million in savings, which more than offset $80 million in cost increases. The largest driver of these cost increases were costs associated with our recent exits in the upstream business, as well as increases in labor and benefits.

Now let’s move to the segment results. GRP turned in another strong quarter, as growth in automotive sheet shipments and solid productivity gains were partially offset by spending on growth projects and utilizing cold metal at the Warrick facility, after the smelter shutdown. As Klaus alluded to, EBITDA per ton was $374 a metric ton, or $390 a metric ton, excluding the costs associated with the Warrick curtailment, well above the three-year target of $344 a metric ton.

As we look to the second quarter of 2016, we expect GRP’s performance to reflect the following factors: Strong automotive sheet shipments, lower

commercial transportation build rates, and $15 million of costs after-tax to secure metal as a result of the Warrick smelter curtailment. Overall, ATOI for the segment is expected to be up 5% to 7%, excluding the Warrick impact.

Let’s move to EPS. EPS posted record revenue for the first quarter, driven by the inclusion of RTI, now known as ATEP, Alcoa Titanium Engineered Products. ATOI was $162 million for the quarter, up 4% versus the prior year. ATEP contributed $17 million in ATOI, which is ahead of our business case estimates.

Firth Rixson delivered ATOI of $11 million, and an EBITDA of $34 million. On an operational basis, after-tax productivity gains in the segment of $66 million more than offset cost increases of $39 million, and growth project spend of $15 million. As I mentioned in the overall Alcoa bridge, the unfavorable price mix is mainly in our base aerospace segments. Klaus will spend some more time talking about the performance drivers in EPS here shortly.

As we look to the second quarter, we expect the aerospace market to remain solid. However, it will be tampered by declines in legacy program deliveries, careful new program ramp-ups, and inventory management at OEMs. We expect to gain share through innovation, and continue to drive productivity across all businesses, amid pricing pressures. Overall, for the second quarter, we anticipate ATOI to be up 5% to 10% year-over-year.

Now, let’s move to TCS. TCS first-quarter revenue declined 9% year-over-year driven by the North American heavy duty truck market, and the relatively weak Brazilian market. ATOI for the first quarter was $39 million, up slightly versus the prior-year quarter, as productivity gains more than offset currency, market headwinds, and cost increases.

As we look to the second quarter, we expect improvement in the North American non-residential construction market, with sustained levels in Europe. Continued softness in the North American heavy duty truck market, offset by European improvement, continued weakness in our Brazil operations, stemming from the current economic environment. However, the second-quarter ATOI is expected to be flat year-over-year, as strong productivity gains counter these factors.

Let’s now move on to Alumina. Sequentially, the alumina segment was heavily impacted by declines in API pricing, which fell another 19% on average this quarter. Strong productivity at our operating locations, and improved mix of smelter grade shipments priced on API helped to partially offset these pricing headwinds. We’ve ramped down our Point Comfort refinery, which is currently operating on one digester, and we will be fully curtailed in the second quarter.

Creep production, however, with our system will offset the Point Comfort decline, yielding flat production sequentially. As we look forward to the second quarter, API pricing, as it usually does, will follow a 30-day lag, and LME pricing to follow a 60-day lag. Continued expansion of third party sales of bauxite, as Klaus alluded to, we recently signed a large bauxite contract. Benefit from acceleration of our productivity program. ATOI is expected to be up $15 million, excluding impacts of pricing and currency.

Let me turn to Primary Metals. Primary Metals first-quarter ATOI improved by $54 million sequentially, due to very strong productivity improvements, and further declines in alumina costs. The closure of the Warrick smelter was completed in the quarter. Looking forward to the second quarter, we expect production will decrease 50,000 metric tons, because of the Warrick closure.

Pricing, as it usually does, will follow a 15-day lag to the LME, and energy sales will continue to decline, but our accelerated productivity program and favorable raw material costs will more than offset these headwinds. In this segment, ATOI is expected to be up $10 million, excluding the impacts of pricing and currency.

Before I move on to working capital, let me summarize the second-quarter guidance. GRP up 5% to 7%, excluding the Warrick cold metal plant. EPS up 5% to 10%. TCS flat in tough market conditions, and the upstream up $25 million, excluding pricing and currency impacts.

Let’s take a look at working capital. DWC increased 14 days year-over-year. Acquisitions, mainly ATEP, drove 10 days, while the organic business increased by 4 days. In the organic portion of the business, the increase of 4 days is almost entirely related to the ramp-up of our automotive sheet business and new growth programs and EPS.

We move on to the cash flow statement. Cash from operations was negative $430 million for the quarter, leading to free cash flow of negative $681 million. This reflects our usual seasonal increase in working capital, as well as annual incentive compensation payments, semi-annual interest payments, and the third of five annual DOJ and SEC settlement payments, related to the Alba case.

This quarter, we contributed $70 million of cash to the pension plan. One question we often get asked is whether the pension expense sits in the segments or in corporate, so I’ll take a second to clear that up. Pension expense associated with the active employees and retirees from existing businesses is included in the respective segment. Pension expense associated with sold, closed businesses, or corporate employees, sits in corporate. Capital expenditures for the quarter were $251 million, with $123 million related to return-seeking projects.

We ended the quarter with $1.4 billion of cash. We’ve also announced the sale of a few assets to increase our cash position, so let me take a look at those in more detail. As you can see from this slide, we’ve initiated the sale of non-essential assets as part of our actions to strengthen liquidity during the separation process.

These include both upstream and future Arconic assets. We’ve announced the sales of our stake, as Klaus alluded to, in the Western Australia pipeline, and ATEP’s medical device business, and have already closed on the pipeline deal. In addition, we are redeeming the corporate owned life insurance program which was set up a number of decades ago. Those sales

generated $234 million in the first quarter, with approximately $270 million more expected in the second quarter. So if we move to the balance sheet, we ended the quarter with $1.4 billion in cash on hand and debt at $9.1 billion, resulting in net debt of $7.7 billion, slightly higher than our position last year at this time.

Now let’s take a look at the aluminum market fundamentals. We’re revising our 2016 global demand for aluminum from 6% to 5%, with consumption on pace to reach 59.7 million metric tons. The slight decline in demand is from two key markets, China and North America.

Chinese growth is being reduced to 6.5% versus our prior forecast of 8%, due to slower growth in the construction and electrical segments. North American demand growth is being reduced to 4%. However, at the same time, we’ve seen a reduction in supply, leaving our 2016 deficit projection largely intact. Aluminum supply growth is projected at only 2% year-over-year. At approximately 3% supply growth, China’s net supply growth rate is the lowest that it’s been since the global financial crisis.

Even outside of China, we see the majority of growth coming from Asia, while North America has curtailed significant production, putting the rest of the world on track for 1.5% supply growth in 2016. So the net impact is a global deficit of aluminum of approximately 1.1 million metric tons, with the rest of the world in deficit by nearly 2 million metric tons and China in surplus. Global inventories on a days of consumption basis have fallen, both year-over-year and versus last quarter, and we expect them to continue to fall, due to the global deficit this year. Premiums seem to have stabilized with all three of the major global premiums currently above their low points from the fourth quarter.

We move to the alumina market. The 2016 alumina market is also in deficit of approximately 1.4 million metric tons. However, this is a fairly large revision from our prior estimate of 2.2 million metric tons. The lower deficit is predominantly the result of lower demand due to smelting, as I alluded to on the smelting side, and Chinese refinery restarts.

Similar to aluminum, alumina demand growth is projected to outpace supply growth globally in 2016, moving the market from the 2015 surplus to a projected deficit. The price has responded to the improving fundamentals, recovering almost $50 per ton since the lows we experienced at the beginning of the year. Now, let me turn it back over to Klaus.

Klaus Kleinfeld^ Thank you very much, Bill. So why don’t we start with a look into the end markets that are most relevant for Arconic and also for the new future Alcoa.

Start with aerospace. Aerospace we project 6% to 8% growth this year. This is a little lower than our 8% to 9% that we saw for this year earlier in the year.

We see that the market is going through a transition, given an unprecedented level of new model introductions, and we are seeing lower orders due to that for legacy models, and a careful ramp-up of the new models. Large commercial aircraft deliveries stand at 9%, plus 9%. The order book, the jet order book is bigger than nine years of production.

We actually see solid airline fundamentals from passenger mile demand to the cargo demand, airline profitability is expected to hit a record this year. The global trend is also fully intact with the middle class as well as urbanization and the cancellations are below the five-year average and below 2% of the gross order book.

Let’s go to automotive, and let’s start with North America. We believe a 1% to 5% growth. This confirms our earlier view. Production was up 7.4%, strong sales, 3.1%, sustained demand also, we see the average age of the vehicles of 12 years and older is increasing, so pent-up demand showing in there.

Stable inventories with 65 days. The average transaction price is up 2%. So all of that are pretty good news in that market in North America.

In EU, automotive in EU rising production of 1.9% and the west, 4.3% offset by minus 14% in Eastern Europe. Strong registrations, over 10%, and exports increased, expected to increase by 6.9%. China, production’s recovering, plus 3.9%. We expect for the full year, 2% to 5%, and then sales, plus 4.1% year-to-date and minus 1.3% year-over-year.

So let’s go to the next segment. The heavy duty trucks and trailer. North America, we already had a pretty bleak outlook for this year.

And originally said minus 19 to minus 23. Looks even worse than what we saw before. Granted, it comes off now a high base of last year. We see minus 23 to minus 27.

Production is down 19%, weak rate growth demand, weak orders down 42%, inventories climbing 15.6%, it now stands at 66,800. The 10-year average is 47,400, so gives you a feel for it. The order book is falling, it stands currently at 131,000. This is still bigger than the historic average of 101,000, which is reflective of the strength that we’ve seen in the previous year there.

So Europe, we actually think that it’s also a little slower, 1% to 5%. We originally thought it would be 3% to 7%. We see strength in Western Europe, production’s up 20%, registrations are up almost 22%. At the same time, we see a decline in Eastern Europe, down 8.6%, mainly driven by the two big markets, Russia and Turkey.

In China, sales are up 26.8%. Production’s turning, slowly turning. Remember, they had this artifact with end of 2014 with the change in emission standards there.

So packaging, no news on all fronts. We believe North America minus 1% to zero, Europe 1% to 2% growth, China, 5% to 8% growth.

Then on building and construction, North America 4% to 6% growth. We see the non-residential contracts awarded at plus 4.7%. Architectural building index relatively steady. Housing starts at 10.6 plus.

Europe we believe is going to be between zero and minus 2%, flat to slight decline, obviously very substantially, depending on what country in Europe you look at. China, plus 3% to 5%, we see there.

Last segment here, industrial gas turbines, we see a growth of 2% to 4%, actually stabilizing, strongly driven by the new high efficient turbines, with advanced technology. Heavy duty gas turbine orders are up 12%, that’s pretty nice. And the 60 hertz gas-fired generation market is up 18.5%, also strong demand for spares and component upgrades. So that actually concludes the part of the end markets.

So let’s now go over to look at the business side, and let’s start with what we call future Arconic, or value-add businesses. Let’s talk about the first-quarter performance and the outlook for the second quarter, and then for full year. This is a very unique year, because usually, as you know, we don’t give a full-year guidance at this time of the year, but this is the final year of this time’s three-year target, so we put this in here to give you an overview on that.

So on GRP, to start with the first one, order shipments up 38%, strong productivity. You can see the mix is changing in the portfolio. We also believe in the second quarter that the profitability is going to be up 5% to 7% year over year, and we are confirming our target which is $6 billion to $6.2 billion of revenues, and $344 per metric ton of profitability.

On TCS, we have seen a record first quarter with an EBITDA margin of 14.9%, in spite of the headwinds, obviously that our wheels business has been facing through the heavy duty trucks and trailer business, that I just mentioned. Very, very good performance. Our outlook for the second quarter is pretty much, because of that, flat year-over-year, and we are confirming the target of $2 billion to $2.2 billion revenues, and a 15% return on that.

EPS, we have seen a record first quarter. We’ve seen an EBITDA margin of 21%, and we will see more about ATEP or former RTI that’s ahead of what we planned, and Firth Rixson is progressing but behind, and I’ll talk more about this in depth. We are, as the second quarter outlook, saying this is going to be up 5% to 10%.

As you remember, our three-year target was at $7.2 billion revenues, with a 23%. We are lowering this target and putting out a new goal, and our goal in depth into this, to explain what the situation is there, and the new goal is $6 billion to $6.2 billion in revenues and profitability between 21% to 22%. So let’s give you more details, so that you can reconcile the old to the new target.

And I would actually encourage everybody who has a chance to look at the slides, to look at the slides, so that you can actually follow these buckets in the best possible way, right? Because I think you want to understand what’s really going on there. So let’s start here on the revenue side. On the revenue side, we’re coming down from $7.2 billion to $6 billion to $6.2 billion.

We already said at Investor Day, compared to when we put the target up, the exchange rate has changed. That alone has an impact on the revenue of roughly $200 million. Then comes the aero industry headwinds that we’ve seen here, and that is an impact of roughly $500 million.

The non-aero headwinds, which is mainly the off-highway segment and the mining segment here, as well as oil and gas, adds another $200 million revenue headwinds. Then the lower performance of Firth Rixson, another $300 million, and there’s a positive one of $200 million of share gains. That pretty much explains why we have set this target, and what has been happening in there.

Let’s now to go to the right hand side, and do exactly the same thing on the profitability side, so on the EBITDA side. So you’ve seen what we’re doing on the right-hand side, what this shows here, is what are we planning to do to get to the new target which is 1.260 to 1.360 which is basically the amount in between 21% and 22%. So we’re focusing on those things that we can control very strongly.

So productivity, we expect to have at $400 million. Then we have counter position to that, which is cost increases of $280 million. But if you look at the character of these cost increases, this is not all bad because quite — the majority of that really is costs that are either ramped up costs for organic growth, like our aluminum lithium facility in Lafayette, or the move to low-cost countries where we basically invest in bringing this over there, and will substantially reduce our costs going forward here.

Then competitive pricing, that also shouldn’t be a surprise. You know how the customers are beating down on everybody in the aerospace industry. At the same time, you’ve seen that we have been able to win $10 billion of new contracts. We had to give about $100 million of pricing. At the same time, beneath that, you actually see there’s also already in this year a positive part with the share gains, that we are getting there roughly $60 million, and then obviously a big positive, It’s obviously more important to be on the platform than not to be on the platform. And then, at the last point, is we see a full year of RTI in here which we call ATEP now. We’re substantially ahead of plan, and that adds another $110 million.

So let’s go to the next slide and let me address Firth Rixson, because that’s where a lot of questions obviously are coming from you all. This is clearly behind our original expectation, and this has been impacted by market headwinds, the press outage, and the isothermal ramp-up, and I referred to those things already in previous conversations, but let me put some numbers around it. But before I do that, let me update you where these things stand.

The press is back online. And in isothermal, we are also seeing additional demand. We’re pursuing this. The qualification of the existing contract continues. We believe that production shipments will start in 2017.

All included, that said, our 2016 revenue guidance comes down from our plan from $1.6 billion to $1.1 billion to $1 billion, with a margin of 14% to 16%, and an absolute EBITDA of $150 million to $170 million. So if you now go to the yellow box here in the upper left corner, you actually see that, and that’s a bit of good news, that we are making progress here. Because if you compare the first quarter of 2015 with the first quarter now, you’re actually seeing profitability is up from 11.6 to 14.3.

Let’s also spend a minute on how do we get to this performance, and so that we better understand what goes into achieving this 2016, this new 2016 goal. Again, the focus is on those actions that we have full control over ourselves. So it’s no surprise for you, that you see a big chunk of that being productivity, and another chunk of this being actions by management, like exiting unprofitable product, entering new engine platforms, optimizing available capacity, right? At the same time, there are some headwinds and these headwinds will remain, and we’ve talked about that.

So we have improved the performance, as you’ve seen, but we are clearly behind. And if I were to quantify that, I’d probably say probably by about two years behind here. So keep in mind, at the same time, the Firth Rixson acquisition is not about a quarter or a year.

The Firth Rixson acquisition, you have to see in light of what it is doing for Arconic. It is an important cornerstone for our aerospace presence. It is allowing us already today to have a full product suite for the jet engines. This has positioned us on a very different level via our jet engine, as well as our industrial gas turbine customers.

So let’s also now go and talk about another substantial acquisition that we did last year, which is RTI, or as we call it today, ATEP. So the integration is going very well. The performance is up, and it’s ahead of plan. If you look here on this slide, on the left hand side, this shows the pre-acquisition EBITDA and EBITDA margin, and the margin has been around 14%.

If you now look to the right hand side, and look at the first-quarter performance of former RTI, now ATEP, the profitability has been increased to 18.7%. What have we done? We’ve been able to accelerate our synergies. We are probably a year ahead, and we’ve been able to gain share. All of this together has allowed us to overcome the market headwinds that we’ve also seen here.

So therefore, we feel comfortable with our targets for this year, that you see on the right hand side here, to basically be able to get to 17% to 19% margin and generate $135 million to $160 million of EBITDA in 2016. Just to make this complete, our third but much smaller acquisition, TITAL, is fully on track.

You have seen this, in this quarter, the excellent performance of GRP. We have consistently and continued to shift to higher margin, higher value product in GRP. One of the questions that I’ve been receiving from some of you is, why don’t we see more of this and faster? And I want to provide some color, so that you see what is really going on in this.

So therefore, here on the left hand side, you see the measure for profitability in this business is basically the conversion margin, EBITDA per metric ton, right? And we’ve broken out here GRP into really two segments, packaging and aero transportation, industrial, which is basically the rest. You see what’s been happening. A massive decline in profitability in packaging, minus 55% in this timeframe that we’ve chosen here.

At the same time, as we are doing portfolio actions and selling and closing rolling mills, as well as order ramps up, we’ve been able to increase the aero transportation industrial segments, the profitability by 62%. And the good news is, and that’s what you see on the right hand side, auto will continue to grow in the coming years. So we very much push for constant productivity, and that is what we can control, and as you know, that’s much needed in light of the headwinds.

So the good news is, if you look at the left hand side here, at Arconic, we currently have 11,644 actions under way for this year, right? And the actions so far have generated $179 million of productivity by the end of the first quarter. The target is to get up to $650 million of productivity by 2016, and I think we’re well on track to do that.

The same good news is true for the future new Alcoa. Future new Alcoa has achieved $175 million of productivity target at $550 million, and there are 5,518 actions underway to get to that target. Also, well deployed, as we would call it.

So let’s also look at new Alcoa, our upstream business. We’re driving down the cost curve, and we’re meeting the three-year targets. Alumina curtailed Point Comfort, will be curtailed Point Comfort this quarter.

Saudi Arabia, 80% at nameplate capacity, Suralco curtailed, good productivity, outlook up $15 million, with constant pricing and currency for the second quarter, and we are confirming the target to come down to the 21st percentile by the end of the year on the cost curve. Aluminum, Warrick smelter closed. Wenatchee curtailed. Record low cost per ton in Saudi Arabia, good productivity. In the second quarter, we believe the profits will be up by $10 million, again, assuming pricing and currency constant. And we are confirming our cost curve target to come down to the 38th percentile by the end of the year.

Lastly, let me update you on the separation. We are on course for the second half of 2016. There’s a lot of detailed work going into separating a 120-year-old firm. Very exciting, but I would say the most interesting thing for you out there has probably been the launch of our new value-add name, and the refresh of the Alcoa brand, which we should see on page 14. There it is, for those that haven’t seen that yet.

Let me summarize this. We’re pulling all upstream levers. Arconic is geared for profitable growth, substantially in aero and auto. We see traction there, our robust business improvement programs underway, and we are on track for the separation in the second half. So with this, I turn it over to the Q&A.

+++ q-and-a

Operator^ (Operator Instructions)

Your first question comes from the line of Evan Kurtz from Morgan Stanley. Your line is open. Please go ahead.

Evan Kurtz^ Thanks everyone. Thanks for taking my questions. Just a quick one on aerospace. Seems like the market might be weakening a little bit. I was wondering how you protect yourself from that? Do you have any minimum requirements, contracts where you get some take or pay penalties if they dip below a certain amount in a given year?

Klaus Kleinfeld^ The contracts vary substantially, but typically, the way this works is you get certain components on a jet engine or on a plane platform, and then it all depends on whether — how much this sells, and typically if it doesn’t sell, you don’t get it. If it sells more, you get more. That’s really how this works.

Evan Kurtz^ Okay. So if they were to cut production schedules more, that would be a one-for-one relative to your revenue in aerospace, is that how to think about it?

Klaus Kleinfeld^ That’s exactly how you have to think about it. What you’re seeing here is a little bit of a different phenomenon. They are very carefully ramping up the new platforms, and that’s, I think, a very responsible behavior on their side, because there’s a lot of new technology in the jet engines, as well as in the structures, so they are carefully ramping it up, so that they are not spreading the goods all over the planet, and then if there are maintenance issues, they have an issue.

I see it rather than stretching out, because the demand, as you can see by what I just talked about on the end market, demand continues to be strong, right? You have a nine year order book. And there’s almost no cancellations and the fundamentals are strong, so that’s what’s happening in the market.

Evan Kurtz^ Thanks for that. My follow-up is just on the bauxite opportunity. Nice to see the $300 million third-party sale. What is the — I was hoping could you size the opportunity there. How much spare bauxite capacity do you have? I assume with some of the refineries down, that you can go above and beyond that, but any quantifying, that would be helpful.

William Oplinger^ We have curtailed Point Comfort. We’ve curtailed Suriname. And so any additional bauxite that we’re getting out of the system, we’re selling into the third-party market. And so the size of that deal that we just recently announced is $350 million over a couple of years, and as we’re looking to grow our third-party bauxite business.

Klaus Kleinfeld^ The nice thing is with the mining, it’s much easier to increase your capacity, as well as to slow down your capacity. This is not like in a refinery or in a smelter, where you have certain increments. A smelter you basically can typically only do a half a line, in a refinery it’s a digester that’s the unit that you can bring up or down.

In a bauxite mine, it’s much, much easier, and you can ramp it up and ramp it down much faster. You leave it in the air, in — you leave it in the ground, we’re still on aerospace, you leave it in the ground, you leave it in the ground, if there’s no demand, and you bring it out. Frankly, I think we are really not limited by our own capabilities. We have one of the largest bauxite reserves.

William Oplinger^ We have one of the largest bauxite reserves, and we’re the largest bauxite miner. We mine around 45 million metric tons a year, and looking to get bigger in the third party market.

Klaus Kleinfeld^ Exactly.

Evan Kurtz^ Thanks, everyone.

Operator^ Your next question comes from the line of Curt Woodworth from Credit Suisse. Your line is open. Please go ahead.

Curt Woodworth^ First question just on the guidance at Firth Rixson. When you look at it relative to your initial guidance, say 18 months ago, you’re off almost $190 million of EBITDA, and you commented that you think that’s — you’re two years behind your initial plans. The question is, how much of the miss is on the isothermal piece, and then when you say you’re two years out, does that mean you still think you can hit that initial target you outlined for the $1.6 billion of revenue, and the $350 million of EBITDA?

Klaus Kleinfeld^ Well, the good news on the isothermal, we have structured the contract in such a way that we have a performance clause in there. This is not directly for the isothermal alone. It’s for Savannah, and that was more for practical purposes, how to calculate that. That’s $130 million, if I recall that correctly. So that’s a performance, that’s a performance part in the purchasing agreement, with the seller. So in case that doesn’t happen, we would not have to —

Curt Woodworth^ That’s $150 million earn-out that we —.

Klaus Kleinfeld^ Exactly. So that’s the good news there. The other thing is on isothermal, as I mentioned before, it is coming up, the qualification is underway, and we have had additional requests from customers, which we are currently working on securing, which obviously allow us to improve the utilization of the isothermal press. We knew from the start on that isothermal, it’s a very, very complicated technology, and that’s why we did the earn-out, because we knew there was a risk in it from the start. Again, to be clear, the earn-out is on Savannah in total, not just on isothermal.

The question you mentioned, the second part of your question, will we get it in two years? Frankly, after our recent experiences, I would really leave it as I described it. We’re two years behind, and I would say we will work on it.

And the other plan, which is something that I shared with some of you already, but let me share it here. We are planning the moment — we are separating the two companies. We will be coming out with new three-year or multi-year, let me put it this way, multi-year targets.

By that time, so in the second half of the year you will also get much more clarity on the longer term for both companies, and we will also come out with the measurements that are more in tune with the two types of businesses that you will be seeing, a commodity business, as well as the high performance technology business. We have been talking to quite a number of investors, and we’re currently in the process of getting the investor matrix lined up.

Curt Woodworth^ As a follow-up, just on the packaging business, you said that profitability’s down about 55%. It’s not clear what the timetable is on that chart but it looks like it’s —

Klaus Kleinfeld^ Timetable’s very simple. It starts basically with the year —

William Oplinger^ 2011.

Klaus Kleinfeld^ 2011. We put the 2011 at 100%, and then you see how it’s going from there.

Curt Woodworth^ Falling 55% roughly, in say two years. Do you think that’s a structural change? How much of that — do you see a bottoming, and is it a combination of say, scrap spreads narrowing and pricing pressure, or mix, and do you think you can turn that around at all, because it’s still significant.

Klaus Kleinfeld^ Looks on the chart as two years but really it’s four, because we only showed 2011 to basically early 2016.

Curt Woodworth^ It is pretty flat the first year.

Klaus Kleinfeld^ Well, yes, in the first two years. The answer is very simple, yes, there is a structural change in the business and that’s also why we have been doing things like, for instance, changing Tennessee, that used to be a packaging mill only, into an automotive and packaging mill. That’s why we have been restructuring some other parts, closing some down, on our Australian mills, for instance, two Australian mills.

We sold the three mills in Europe, two in Spain, one in France, this all goes into it. We clearly believe that there is a structural change in the market, and we’re very happy that we have been building up the higher value businesses in there, and that’s really what you can see here also. But the unfortunate thing is the market, the packaging market has really substantially deteriorated.

William Oplinger^ And I would also point out, Curt, you look at the strength of the productivity that GRP has done year over year, and that’s really an attempt to offset some of these declines in the market in packaging.

Curt Woodworth^ Okay. Got it. Thank you.

Operator^ Your next question comes from the line of David Gagliano from BMO Capital Markets.

(Operator Instructions)

David Gagliano^ Thank you for taking my questions. Also, thank you for the increased visibility on the targets in the downstream. Actually, I have a question that’s related to the other two segments. I don’t know if I’m reading this correctly, but it looks to me like you say the GRP and the TCS segments are on track to meet the three-year targets for 2016.

And you gave revenue numbers for each of those segments in the press release. But if I look back at the November 2015 investor day, the revenue numbers in the press release for those two segments are about $1 billion below what they were, as of November 2015. So I’m wondering if you could give us a similar bridge that you gave for the EPS segment, to explain the difference.

Klaus Kleinfeld^ To be honest, I’m looking at it right now and I’m happy to put this out in the deck. I’m not sure whether, we probably have to run this through our legal process here. But I tell you, it’s very simple, and it ties back to what I just explained. Remember how much we have divested and closed also in the GRP side.

What we’ve basically done, if you take the original target, was nominal $7.1 billion, right? And we’ve divested and closed about $1.1 billion. So the target for 2013 where we put this out was roughly — the starting point was roughly $6 billion. And then if you look at what we have been able to add, through all the other things here, so automotive and stuff, and look at the LME and the FX, it brings it basically down to $6.1 billion.

William Oplinger^ And on the TCS side, Dave, there’s around $200 million negative impact from currency, also. So the numbers that you see on page 6, from it’s probably not page 6 on your deck, but from Klaus’ presentation, have been adjusted for ForEx impacts.

David Gagliano^ Okay. And so just — but just to clarify, on the GRP business, the $7 billion number that was provided November 2015 was pre —

Klaus Kleinfeld^ $7.1 billion.

David Gagliano^ $7.1 billion, was pre any divestitures?

Klaus Kleinfeld^ It was pre any divestitures and closures, and they have eliminated on that chart the LME and FX. You also have to see the LME pass-through part here and GRP.

David Gagliano^ Okay. Great. Thanks very much.

Operator^ Your next question comes from the line of Justin Bergner from Gabelli & Company. Your line is open. Please go ahead.

Justin Bergner^ Question on the separation. Is there any update you can give us on when we can expect the first Form 10 filing, or any update you can give us on sort of how matters are progressing vis-a-vis pension and the PBGC?

Klaus Kleinfeld^ Two things really. On the Form 10, we’ve always said first half of 2016 is when we put out the — is when we will put out the Form 10. And we will —

William Oplinger^ Regarding the PBGC, we’ve had initial conversations, initial discussions with the PBGC. It’s gone well, and we’ll update you, as we can. But the initial discussions have gone well.

Justin Bergner^ Great. That’s good to hear. As you divest some of these non-core assets, is it possible to provide us a net proceeds number, relative to that $750 million, and should we expect Alcoa to continue to work through divesting non-core assets opportunistically in the quarters ahead?

Klaus Kleinfeld^ We’re always looking at opportunities, how to monetize and generate value. So I think this has always been the case, if you look also in the previous year.

William Oplinger^ On the net proceeds side, you almost have to go one by one. But on the pipeline, you realize that we will have a tax impact, and also, we are a — it’s an AWAC asset, so we get our 60% share there. On Remmele, there will be a small tax impact, and then on the corporate owned life insurance, that will largely show up as cash this year, and we’re likely to consume a tax attribute in future years. So largely, that one will be without tax impact this year in 2016. So the total proceeds, slightly less than the $750 million we have for the gross.

Justin Bergner^ Great. Thanks for taking my questions.

Operator^ Your next question comes from the line of Tony Rizzuto from Cowen and Co. Your line is open. Please go ahead.

Tony Rizzuto^ Thanks for taking my questions. My first question is, what percentage of your aero business is spares or aftermarket versus OEM business?

Klaus Kleinfeld^ That’s a good one. Do you know it offhand?

William Oplinger^ I don’t know it offhand, Klaus. I hate to put a number out there without the actual numbers.

Klaus Kleinfeld^ Neither would I. Neither would I.

Tony Rizzuto^ I’ll follow up with you guys then offline.

Klaus Kleinfeld^ Exactly, Tony.

Tony Rizzuto^ Okay. And then the second question if I may, maybe if I could possibly ask a third question if that’s all right —

Klaus Kleinfeld^ Let’s start with the second before the third.

Tony Rizzuto^ All right. With regard to GRP, it sounded like you are seeing increased pressures on margins in the packaging market. Is that fair? Is that a fair statement?

Klaus Kleinfeld^ Just look at the slide that we just discussed here. There’s no way to deny that. At the same time, I’m not sure — I would say, we have seen the level to come down to this level, as we have it. So I think that — you’re talking about GRP, right, on packaging?

Tony Rizzuto^ Yes. And I’m talking about the level of acceleration in those pressures, because I am hearing — (multiple speakers)

Klaus Kleinfeld^ I would say this, at this point in time, we’re not seeing that increasing, but we’re also not seeing it trend upward.

William Oplinger^ I would reference you back, Tony, at least to our short-term guidance. And so we’re trying to be very clear in all of our short-term guidance that all of our segments are trending upward, with the exception of TCS. And so on the GRP side, we said, I think 5% to 7% year-over-year. So even if we see additional pricing pressures, we’re able to mitigate it through good cost control.

Klaus Kleinfeld^ With regards to the spares, our good team is just providing it, and I don’t want to go into each one of the segments, but I would say — I would say, it varies substantially depending on which one of the aerospace segments you are looking at, and it can go from — I think it also varies, if you look at by year, and I only have here in front of me one year. So it varies, if you look at, this is 2015, if you look at 2015, it varies from 50% in that year, some businesses, to 16%, or actually 10%, 10% in some other businesses, right? But I would be very careful with this number, right? Because the segment that has the 50% I think that’s a very unique situation that we had in 2015.

Tony Rizzuto^ Okay. That’s helpful. May I ask a quick third question if I may?

Klaus Kleinfeld^ Sure, go ahead.

Tony Rizzuto^ Of the upstream adjusted EBITDA that you reported, $185 million in Q1, approximately what percentage would be from power sales?

William Oplinger^ Let us come back to you on that one, Tony. I don’t have the numbers in front of me, but I think that the — just to give you some color, power sales have been down on a sequential quarter basis, and on a year-over-year basis, as we’ve seen the Brazilian power prices come off fairly substantially. So I can get you that number in a minute.

Tony Rizzuto^ All right. Got it. Thank you so much, gentlemen.

Operator^ Your next question comes from the line of Josh Sullivan from Sterne Capital. Your line is open. Please go ahead.

Josh Sullivan^ Just regarding the revised EPS guidance, you talked about pricing pressures from the OEMs. Do you think we’ve seen the bottom of that pressure, or just how do you see that playing out over the next 24 months? And if you could dissect that between maybe the legacy aircraft, and next generation aircraft?

Klaus Kleinfeld^ Look, I think that there’s enormous pressure from the OEMs. They are under pressure, through their customers. This pressure will continue. We are assuming this pressure will continue, and we will have to continue to build productivity in, and we will also have to continue to win through innovation, and basically put out new cars, come out with new ideas so it’s not just giving a certain reduction on price, but coming up with a technical solution that’s superior, so that we can jointly win. And that’s I think where our technical skills come in, and we are pretty good at that.

But the pricing pressure will continue. That’s what we are assuming, and we are in the business also to help our customers to win. So that will be going on. You also see, we’re pretty proud of having won this Airbus contract for 3D metals printing, and in this case, it’s titanium. I don’t know whether you noticed that.

As you may be aware of, also, we brought our new powder metals plant online beginning of the year, and that allows us to do powder very, very high quality metals powder for three different types of metal alloys, and in the main titanium alloys, nickel alloy as well as aluminum alloys. So this is a big, big enabler for the future growth.

Josh Sullivan^ Okay. Thank you.

Operator^ Your next question comes from the line of Charles Bradford from Bradford research. Your line is open. Please go ahead.

Charles Bradford^ Just a simple question on the insurance sales. Was there a profit, and do you expect to book a profit in the second quarter, when you finish up those sales? It may have been in your deck. I might have missed it.

William Oplinger^ There was no book — no accounting gain on those sales, Chuck. There is a lower tax basis, so we will have some tax expense associated with it, but no book gain.

Charles Bradford^ Thank you.

William Oplinger^ And Tony, to answer Tony Rizzuto, I was able to grab the numbers fairly quickly. Around 25% of that $185 million of upstream EBITDA is associated with energy sales. Now, that’s our energy business unit. So that would be inclusive of energy that we’re selling externally, and internally. So it would be inclusive of energy we sell at the Warrick facility, up in Canada, at our ownership there, and then also in Brazil.

Klaus Kleinfeld^ Next question, please.

Operator^ (Operator Instructions)

Your next question comes from the line of Justine Fisher from Goldman Sachs. Your line is open. Please go ahead.

Justine Fisher^ The first question I have is related to the pension liabilities. You had mentioned earlier in the presentation that there are liabilities associated with operating businesses, and then anything that’s curtailed goes with — can be left at the corporate level, I guess, as opposed to the segment level. Does that mean that those liabilities would potentially be offloaded to the PBGC, so if we are looking at potential standalone for the upstream business, we can exclude — I won’t quantify, but exclude some of the legacy liabilities that are on current Alcoa’s balance sheet?

William Oplinger^ No, we would not be looking at offloading any of the legacy liabilities to the PBGC. The legacy liabilities will be split between the two companies. That’s part of the activity that we’re going through now. And clearly, when we sit down with the PBGC, they have an interest in how those get split, and the creditworthiness of the two companies. So that’s part of the exercise, but none get offloaded per se.

Justine Fisher^ Okay. Could you reduce or reschedule any of the cash payments related to those liabilities, that might saddle the upstream Company?

William Oplinger^ We are making the minimum ERISA payments today on those liabilities. And so, we’re currently on a GAAP basis, around 74% funded. On an ERISA basis, I believe it’s in the lower 90s. But there would not be any further reduction of payments that we could make, that we’re making, less than we’re making currently.

Justine Fisher^ Just one last question. In this timetable on steps to completion in the presentation, it mentions complete financing in the second half of 2016. What financing is that? I mean, if the debt can move downstream and you guys haven’t announced anything, but if hypothetically it did, it seems to me there wouldn’t necessarily need to be any new financing. Can you talk about what that refers to?

William Oplinger^ Sure. We would be looking, the debt ultimately will be attributed to the upstream and the downstream. In order to do that, we will go out and without getting into too much detail around the orientation of the separation, we will go out into the market, raise debt on one of the two entities, and then pay off debt at the other entity. And so that’s what the financing would be.

Justine Fisher^ Okay. Thanks very much.

Operator^ At this time, this is all the time we have, and I’d like to turn the call back to Mr. Klaus Kleinfeld.

Klaus Kleinfeld^ Very good. So you have seen this quarter, our profits were up in every Arconic segment. Alumina, aluminum segment, both profitable in a very low pricing environment. We are laser beam focused on the things that we can control, productivity, high productivity, we showed you this, winning major contracts, monetizing non-essential assets. You should expect our focus continues there.

Looking ahead, we are on track to meet our three-year targets in all businesses except EPS, and I hope I gave you also the clear adjusted expectations to better reflect what is going on in aerospace, as well as the lower Firth Rixson performance, and the better RTI performance that shows you our new expectations for EPS, and those ones, and the other thing here is separation is on track. So stay tuned.

We will obviously have many more opportunities coming up here to talk. Thank you very much for joining us for this call. Thank you.

Operator^ This concludes today’s conference call. You may now disconnect.

EX-99.2

[Alcoa logo]

[Alcoa logo]

1

April 11, 2016

1

st

Quarter Earnings Conference

[Alcoa logo]

Exhibit

99.2

[Alcoa logo]

Important Information

2

Forward–Looking Statements

This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities

Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “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 statements regarding the separation transaction, including the future performance of Value-Add

Company and Upstream Company if the separation is completed, the expected benefits of the separation, and the expected timing

of

the Form 10 filing and the completion of the

separation. 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, 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;; (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 executing on the business improvement plans, moving the Upstream alumina and

aluminum businesses down on the industry cost curves, and increasing revenues and improving margins in the Value-Add businesses)

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 Value-Add Company or Upstream Company; and (s)

the other risk factors discussed in Alcoa’s Form 10-K for the year ended December 31, 2015, 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.

[Alcoa logo]

[Alcoa logo]

Important Information (continued)

3

Non-GAAP Financial Measures

Some of the information included in this presentation is derived from Alcoa’s consolidated financial information but is not presented in Alcoa’s financial statements

prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).  Certain of these data are considered “non-GAAP financial

measures” under SEC rules.  These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. 

Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in

the

Appendix

to

this

presentation.

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 Alcoa without unreasonable effort. Any reference to historical EBITDA means adjusted EBITDA, for which we have provided calculations and

reconciliations in the Appendix.

[Alcoa logo]

[Alcoa logo]

Klaus Kleinfeld

Chairman and Chief Executive Officer

4

April 11, 2016

[Alcoa logo]

[Alcoa logo]

Separation

on Track

1Q 2016 Overview

5

Delivering

Solid

Performance,

Strong

Productivity

–

Separation

on

Track

Arconic

Segments (Value-Add) Revenue $3.3B down 2.2% YoY: 6.7% revenue increase predominantly related to acquisitions,

offset by 8.3% decline from metal and foreign exchange and 0.6% revenue decline from divested or closed operations

ATOI

of

$269M,

up

8%

YoY,

adj.

EBITDA

$537M,

up

7%

YoY,

Record

adjusted

EBITDA

margin

16.4%

Global

Rolled

Products:

$68m

ATOI,

up

26%

YoY

and

adjusted

EBITDA

per

metric

ton

$374,

up

8%

YoY

due

to

strong

cost

control;

automotive

sheet

shipment

growth

up

38%

YoY

Engineered

Products

and

Solutions:

Record

Q1

Revenue

of

$1.4B;

Record

1Q

ATOI

of

$162M,

up

4%

YoY

Transportation

and

Construction

Solutions:

$39M

ATOI,

up

3%

YoY,

Record

1Q

adjusted

EBITDA

margin

of

14.9%

Supply

Agreement

for

3D-printed

titanium

fuselage

and

engine

pylon

parts

to

Airbus

Multi-year

~$1B

contract

for

advanced

Industrial

Gas

Turbine

(IGT)

components,

Alcoa’s

largest

IGT

contract

to

date

Agreement to sell RTI Remmele Medical business for $102m

Achieved

$179

million

in

Productivity

savings,

on

target

to

deliver

$650

million

in

2016

Global Rolled Products, Transportation and Construction Solutions on track to meet three-year 2016 targets;

New

goals set for EPS to better reflect aerospace market conditions and Firth Rixson performance

New

Alcoa

Segments

(Upstream)

3

rd

Party

Revenue

of

$1.7B

down

32.2%

YoY:

4.5%

revenue

increase

from

organic

growth

more

than

offset by 26.1% revenue decline due to lower pricing and foreign exchange impacts and 10.6% revenue decline predominantly related to

curtailed or closed operations

Total Revenue of $2.1B, ATOI of $22 million, and adj. EBITDA of $185M

Profitable

Alumina

and

Primary

Metals

segments

despite 19% price decline in API, and flat aluminum pricing, sequentially; YoY declines of 40% and 26%, respectively

Signed new Third-Party Bauxite Contracts valued at over $350 million over the next two years

Ma’aden-Alcoa joint venture refinery continued to ramp-up, now at 80% of nameplate capacity

Pt. Comfort, Texas refinery on track to be fully curtailed by end of second quarter; closed Warrick smelter in Indiana 

Achieved $175 million in productivity savings, on target to deliver $550 million in 2016

Sold stake in Dampier to Bunbury Natural Gas Pipeline in Western Australia (WA) for $154m.

Gas supply secured for three WA alumina refineries

On

track

to

meet

2016

Cost

Curve

Goals:

21

st

percentile

in

Alumina

and

38

th

percentile

in

Primary

Metals

Launched New Value-Add

Brand “Arconic”

& Refreshed New Alcoa Brand

Form 10

to be filed in first half 2016

See appendix for EBITDA reconciliations

and

adjusted

EBITDA

margin

of

21.0%;

Aerospace

sales

up

14%YoY

[Alcoa logo]

William Oplinger

Executive Vice President and Chief Financial Officer

6

April 11, 2016

[Alcoa logo]

Income Statement Summary

$ Millions, except aluminum prices and per-share amounts

1Q15

4Q15

1Q16

Prior Year

Change

Sequential

Change

Realized Aluminum Price ($/MT)

$2,420

$1,799

$1,793

($627)

($6)

Revenue

$5,819

$5,245

$4,947

($872)

($298)

Cost of Goods Sold

$4,443

$4,404

$4,041

($402)

($363)

COGS % Revenue

76.4%

84.0%

81.7%

5.3 % pts.

(2.3 % pts.)

Selling,

General Administrative, Other

$232

$262

$260

$28

($2)

SGA % Revenue

4.0%

5.0%

5.3%

1.3 % pts.

0.3 % pts.

Other

(Income) Expenses, Net

($12)

$29

$34

$46

$5

Restructuring and Other Charges

$177

$735

$93

($84)

($642)

Effective Tax Rate

47.0%

(6.1%)

73.2%

26.2 % pts.

79.3 % pts.

EBITDA

$1,089

$519

$603

($486)

$84

Net Income (Loss)

$195

($701)

$16

($179)

$717

Net Income (Loss) per Diluted Share

$0.14

($0.55)

$0.00

($0.14)

$0.55

Income excl. Special Items

$363

$65

$108

($255)

$43

Income

per Diluted

Share excl.

Special Items

$0.28

$0.04

$0.07

($0.21)

$0.03

See appendix for EBITDA and Adjusted Income reconciliations 

7

[Alcoa logo]

Special Items

See appendix for Adjusted Income reconciliation       

$ Millions, except per-share amounts

1Q15

4Q15

1Q16

Income Statement

Classification

Segment

Net Income (Loss)

$195

($701)

$16

Net Income (Loss) per Diluted Share

$0.14

($0.55)

$0.00

Restructuring-Related

($158)

($287)

($63)

Restructuring

and Other

Charges/COGS

Corporate/All

Tax Items

($4)

($189)

($12)

Income Taxes

Corporate

Portfolio Transaction Costs

($7)

($12)

($17)

SG&A

Corporate

Mark-to-Market Energy Contracts

$1

($5)

-

Other Expenses, Net

Corporate

Italian Energy Matter

-

($201)

-

Restructuring

and Other

Charges

Corporate

Q4’15 Overhead Reduction Program

-

($47)

-

Restructuring

and Other

Charges/COGS

Corporate

Goodwill Impairment

-

($25)

-

Impairment of Goodwill

Corporate

Special Items

($168)

($766)

($92)

Net Income excl. Special Items

$363

$65

$108

Net

Income

per Diluted

Share excl. Special Items

$0.28

$0.04

$0.07

8

[Alcoa logo]

Net Income excluding Special Items ($ Millions)

Adjusted Earnings Down on Lower LME, API and Regional Premiums

Market

-$366

Performance

+$208

Cost Headwinds

-$97

Note: Metal Price = LME + Regional Premium; Regional Premium previously reported in Price/Mix category

See appendix for Adjusted Income reconciliation

$108

$363

-$32

Volume

$8

Currency

$4

API

-$87

Metal

Price

-$283

1Q 15

-$9

Productivity

Price /

Mix

$232

-$8

1Q 16

Raw

Materials

Cost

Increases

/ Other

-$80

Energy

9

[Alcoa logo]

1Q 15

1

4Q 15

1Q 16

3

rd

Party Revenue ($ Millions)

1,621

1,422

1,397

3

rd

Party Conversion Revenue ($ Millions)

757

732

737

ATOI ($ Millions)

54

52

68

EBITDA/MT ($)

347

312

374

1Q16 Actual and 2Q16 Outlook –

Global Rolled Products

GRP: Productivity and Auto Uplift Offset Headwinds

EBITDA/MT up 12% YoY excluding impact to secure alternative metal supply at

Warrick

Auto sheet shipments up 38% year-over-year

Volume and

pricing pressure from packaging, Lower demand from Aero

due to

inventory overhang and significantly reduced N.A. heavy duty truck build rates

Continued investments of $5M in Growth projects including Micromill

TM

R&D,

Saudi

JV

and throughput/capacity increases at key plants

Strong productivity more than offset cost increases

Auto sheet shipments expected to be

up ~35% as Tennessee Auto ramp-up

accelerates

Continued

pricing pressure from packaging

Lower demand from Aero

due to new model transition and reduced N.A. heavy duty

truck build rates expected to continue

ATOI is expected to be

up 5-7% excluding $15M impact to secure alternative

metal supply at Warrick, and current currency rates

2

nd

Quarter

Year-over-Year

Outlook

1

st

Quarter

Business

Highlights

1

st

Quarter ATOI Results

$ Millions

1

st

Quarter

ATOI

Performance

Bridge

-$6

-$2

-$2

-$4

-$5

-$2

1Q16

Warrick

Cold Metal

Plan (CMP)

Cost Incr./

Other

Prod-

uctivity

Price

/ Mix

Volume

Currency

1Q15

Growth

Projects

1. 1Q15 amounts have been revised to remove impact of metal price lag   2. EBITDA/MT include impact from Warrick metal

supply. Without that impact, EBITDA/MT is $390. See appendix for additional information and EBITDA reconciliation.

10

$68

$35

$54

2

[Alcoa logo]

1Q 15

4Q 15

1Q 16

3

Party

Revenue

($

Millions)

1,257

1,409

1,449

ATOI ($ Millions)

156

123

162

EBITDA Margin

22.4%

17.3%

21.0%

1

Quarter ATOI Performance Bridge

1Q16 Actual and 2Q16 Outlook –

Engineered Products and Solutions

Aerospace market remains strong despite

slower ramp up of next

generation platforms due to simultaneous launches of new

technologies and

inventory overhangs

at OEMs

Oil & Gas, European Industrial Gas Turbine, North America

Commercial Transportation markets increasingly softer

Pricing pressure across all markets, except IGT

Share gains through innovation and productivity continue

ATOI

is expected to be up 5% to 10% year-over -year

1

Quarter

ATOI

Results

1

Quarter

Business

Highlights

Price

/ Mix

-$30

1Q16

Growth

Projects

Volume

Currency

-$15

ATEP

Cost

Increases

-$39

Productivity

1Q15

EPS: Strong Productivity and Benefits From Acquisitions

Revenue growth of 15% year-over-year driven by acquisitions,

partially offset by pricing pressure, inventory overhang in Aero

OEMs, and softening markets

Alcoa Titanium and Engineered Products (ATEP)

ATOI of +$17M;

EBITDA margin at 18.7%, above 1Q’15 of 14.1%

Year-over-year improvement

driven by productivity and ATEP

1

1Q15 amounts have been revised to remove impact of metal price lag; see appendix for additional information & EBITDA

reconciliation.

2

ATEP:

created

from

RTI

acquisition.

3

EBITDA

margin

excludes

impact

of

$4.7

million

of

transaction

costs

11

2

3

1

rd

st

st

st

nd

3

2

Quarter Year-over-Year Outlook

$66

$6

$1

$162

$156

$17

$ Millions

[Alcoa logo]

$ Millions

1Q

15

4Q 15

1Q 16

3

Party Revenue ($ Millions)

471

444

429

ATOI ($ Millions)

38

40

39

EBITDA Margin

13.4%

14.6%

14.9%

2

Quarter Year-over-Year Outlook

1

Quarter ATOI Performance Bridge

1Q16 Actual and 2Q16 Outlook –

Transportation and Construction Solutions

TCS: Strong Productivity Offsets Market Headwinds

Improving

N.A. Non-Residential Construction with sustained levels in

Europe

N.A. Heavy Duty Truck build rates continue to decline, slightly offset by

improvement in Europe

Brazil’s

current economic environment continues to negatively impact

business results

Robust productivity gains throughout the business

ATOI

is expected to be flat year-over-year at current currencies

Revenue down 9%

year-over-year; attributable to N.A. Heavy Duty Truck

and relatively weak Brazilian markets

Record Q1 EBITDA margin of 14.9%

N.A.

Non-Residential

Construction

remains

solid;

softness

continues

in

Europe

N.A.

Heavy

Duty

Truck

build

rates

continue

to

decline;

Europe

continues

to improve; bright spots in Asia Pacific

Strong Productivity actions offset cost increases and revenue decline

1

Quarter

ATOI

Results

1

Quarter Business Highlights

1. 1Q15 amounts have been revised to remove impact of metal price lag

See appendix for additional information and EBITDA reconciliation. 

$19

$0

$39

$38

1Q16

Productivity

-$11

Price

/ Mix

Cost

Increases

Volume

-$6

Currency

-$1

1Q15

12

st

st

st

nd

rd

1

[Alcoa logo]

Alumina: Pricing Headwinds Continue to Impact Earnings

1Q16 Actual and 2Q16 Outlook –

Alumina

API pricing down 19% sequentially, 40% year over year

Announced curtailments drive production down ~530 KMT

Continued

productivity gains through strong cost control

Saudi Arabia refinery continues to ramp-up, now at 80% of name

plate capacity

Production expected to be flat sequentially

~85% of 3

party shipments on API or spot pricing for 2016

API pricing follows 30-day lag; LME pricing follows 60-day lag

Continue

expanding 3

party bauxite sales and

benefit from

accelerated productivity program

ATOI to be up $15M excluding pricing and currency impacts

1Q 15

4Q 15

1Q 16

Production (kmt)

3,933

3,856

3,330

3

Party Shipments (kmt)

2,538

2,713

2,168

3

Party Revenue ($ Millions)

887

732

545

3

Party Price ($/MT)

344

267

249

ATOI ($ Millions)

221

98

8

1

Quarter ATOI Results

1

Quarter Business Highlights

2

Quarter Sequential Outlook

$ Millions

1

Quarter ATOI Performance Bridge

Cost

Increases

/ Other

$14

Energy

Price /

Mix

-$8

Currency

$1

$8

Volume

-$6

API

-$93

Prod-

uctivity

$0

LME

1Q16

$8

-$6

4Q15

$98

13

st

st

st

rd

rd

rd

rd

rd

nd

[Alcoa logo]

Primary Metals: Profitable Despite Difficult Pricing Environment

$ Millions

1Q16 Actual and 2Q16 Outlook –

Primary Metals

-$9

-$1

-$2

$14

-$40

$1

$2

1Q16

Cost

Incr. /

Other

Energy

Currency

API

$25

Metal

prices

$11

4Q15

Price

/Mix

$27

Prod-

uctivity

Volume

Realized price flat sequentially

Announcement and execution of Warrick closure

Lower alumina, raw materials, and productivity drive positive

ATOI for the quarter

Energy sales continue to decline, offset by seasonal low prices

in Spain

Announced curtailments drive production down ~50 KMT

Pricing to follow a 15-day lag to LME

Lower

prices

for energy sales in Brazil and U.S. hit ATOI by

$18M

Accelerated productivity program and raw material pricing

more than offset energy headwinds

ATOI to be up $10M excluding impact of pricing and currency

1Q 15

4Q 15

1Q 16

Production (kmt)

711

699

655

3

Party Shipments (kmt)

589

644

575

3

Party Revenue ($ Millions)

1,572

1,236

1,123

3

Party Price ($/MT)

2,420

1,799

1,793

ATOI ($ Millions)

187

(40)

14

1

Quarter ATOI Results

1

Quarter Business Highlights

1

Quarter ATOI Performance Bridge

2

Quarter Sequential Outlook

1

Metal Price = LME + Regional Premium; Regional Premium previously reported in Price/Mix category

14

rd

rd

rd

st

st

st

nd

1

[Alcoa logo]

2

days

lower

Base Business DWC +4 days Year-over-Year, Acquisitions Add 10 days

Average Days Working Capital since First Quarter 2011

6

days

lower

See appendix for days working capital reconciliation

2 days

lower

14 days

higher

Acquisitions (10 days)

Alcoa ex-Acquisitions (37 days)

37

4

days

higher YoY 

from organic

business

3

days

higher

33

15

47

43

40

34

33

28

32

33

30

28

31

29

32

30

36

35

34

36

40

40

40

[Alcoa logo]

($ Millions)

1Q15

4Q15

1Q16

Net Income (Loss) before Noncontrolling Interests

$255

($765)

$11

Depreciation, Depletion and Amortization

$321

$321

$309

Change in Working Capital

($595)

$571

($469)

Pension Expense in Excess of Contributions

$37

$13

$13

Other Adjustments

($193)

$725

($294)

Cash from Operations

($175)

$865

($430)

Dividends to Shareholders

($54)

($74)

($57)

Change in Debt

$24

($122)

-

Net (Distributions)/Contributions from Noncontrolling Interests

($29)

($32)

($50)

Other Financing Activities

$33

($2)

-

Cash from Financing Activities

($26)

($230)

($107)

Capital Expenditures

($247)

($398)

($251)

Acquisitions/Divestitures/Asset Sales

($212)

-

$222

Other Investing Activities

($6)

($59)

$28

Cash from Investing Activities

($465)

($457)

($1)

Free Cash Flow

($422)

$467

($681)

Cash on Hand

$1,191

$1,919

$1,384

Seasonal Working Capital Increase Drives FCF to ($681) Million

1Q15, 4Q15 and 1Q16 Cash Flow

See appendix for Free Cash Flow reconciliation

16

[Alcoa logo]

1Q16 Asset Sale Announcements

Over $700 Million to be Generated by Announced Asset Sales

DBNG

Pipeline

Remmele

Company

Owned Life

Insurance

Sell all of Alcoa of Australia’s

20% minority

interest in the Australia Dampier to Bunbury Natural

Gas Pipeline

Western Australia’s principal gas transmission pipeline

and is the only pipeline connecting the gas

reserves in the north to Perth customers

~$150M

Cash Proceeds

~$100M

~$500M

Q2 2016

A $70M

contract manufacturer of medical devices,

including minimally invasive surgical tools, spinal,

drug infusion and dental implants, vascular

components, and urology instruments

Acquired in 2015 as part of RTI

transaction

Q2 2016

Q1 & Q2

2016 

Redemption of company-owned life insurance

A portion

sold in 1Q ($234M), with

a second portion

in 2Q

Total Cash Proceeds

~$750M

Closing

1

Alcoa

of

Australia

is

owned

60%

by

Alcoa

Inc.

and

40%

by

Alumina

Limited.

1

Represents

full

year

2015

Pro

forma

revenue

17

1

2

[Alcoa logo]

1Q16

9,069

7,685

2015

9,052

7,133

2014

8,787

6,910

2013

8,246

6,809

2012

8,744

6,883

2011

9,273

7,334

($ Millions)

Net Debt

Cash

Debt-to-LTM EBITDA

2.47

2.84

4.16

LTM

=

last

twelve

months;

See

appendix

for

Net

Debt

and

LTM

EBITDA

reconciliations.

Note:

Debt

amounts

for

2011

–

2015 have been updated to reflect the

adoption of FASB guidance (effective January 1, 2016) requiring presentation of debt issuance costs as a reduction to debt rather than as a noncurrent asset.

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

Cash on hand at $1.4 Billion

2.79

3.24

3.28

18

1,939

1,861

1,437

1,877

1,919

1,384

[Alcoa logo]

China

1.0

0.9

China

0.4

0.9

0.8

6.5%

4.0%

1.5%

-0.3%

7.0%

7.0%

4.0%

3.0%

-0.4%

-0.5%

2016 Aluminum Demand growth at 5% while supply only grows at 2%

Primary aluminum demand and supply by region

2016 Primary Aluminum Demand & YoY Growth (Mt)

2016 Primary Aluminum Supply & YoY Growth (Mt)

-12.0%

1.5%

3.0%

2.0%

0.0%

25.0%

0.0%

8.0%

0.0%

0.0%

59.7 Mt

58.7 Mt

Russia

Brazil

Other

1

MENA

SE Asia

India

North Asia

Europe

North America

Russia

Brazil

Other

1

MENA

SE Asia

India

North Asia

Europe

North America

ROW +3%

China +6.5%

Global +5%

Global +2%

ROW +1.5%

China +3%

Source: Alcoa analysis, CRU, Wood Mackenzie, IAI, CNIA, NBS, Aladdiny; figures rounded;

1

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

19

30.8

7.0

6.8

4.2

2.4

2.3

2.2

2.2

31.7

4.0

4.0

2.7

5.6

4.9

3.7

[Alcoa logo]

Aluminum Deficit Continues; Projected at 1.1Mmt

Source:  Alcoa analysis, CRU, Wood Mackenzie, IAI, CNIA, NBS, Aladdiny, Bloomberg

Aluminum fundamentals overview

Premiums have started to stabilize ($/t)

220

200

180

160

140

120

100

80

03/31/16

150

01/01/16

10/01/15

USA

Japan

Europe (Duty Paid)

Changes since

Oct./Nov. Lows

+$30

+$25

Global Inventories at 59 days; -5 days YoY

Continue to see global deficit in 2016

2016E Aluminum Balance (kmt)

China

Rest of World

Surplus

930

Deficit

(1,980)

Prod. at Beginning Run Rate

Prod. to be Added/Restarted

Prod. to be Closed/Curtailed

Total Supply

Demand

Net Balance

+$19

Global Inventories

down 45% from

2009 Peak of

108 days

20

$1,200

$1,700

$2,200

$2,700

$3,200

0

7

14

21

28

35

42

49

56

63

70

77

84

91

98

105

Financed Stocks

China Incl SRB

Producer

Japan Port

LME Cash

176

115

China

30,700

3,400

(2,390)

31,710

(30,780)

930

Rest of

World

26,620

760

(410)

26,970

(28,950)

(1,980)

[Alcoa logo]

280

300

320

340

360

240

260

200

180

220

Mar

2016

Jan

2016

Jul

2015

Jan

2015

Alumina Deficit at 1.4Mmt; Refining Curtailments Support Price

Source: Alcoa analysis, CRU, Wood Mackenzie, IAI, CNIA, NBS, Aladdiny, Bloomberg

*Alumina price = FOB WA price

Alumina fundamentals overview

Demand growth at 4% while supply only grows at 1% in 2016

Price has started to recover ($/t)

Alumina Price*

+$52 vs.

Jan. Lows

China

Rest of

World

2016 Prod. at Beginning Run Rate

57,500

56,740

2016 Prod. to be Added/Restarted

4,370

1,410

2016 Prod. to be Closed/Curtailed

(3,790)

(3,020)

Imports/(Exports) –

Full Year

4,360

(4,360)

Total Supply

62,440

50,770

Demand

(62,300)

(52,330)

Net Balance

140

(1,560)

Continue to see large deficit for 2016

2016E Alumina Balance (kmt)

ROW

China

52.3

62.3

5.6%

2.7%

50.8

China

62.4

ROW

-3.2%

4.5%

Demand & YoY Growth (Mt)

Supply & YoY Growth (Mt)

114.6 Mt

113.2 Mt

21

Deficit

(1,420)

249

197

[Alcoa logo]

Klaus Kleinfeld

Chairman and Chief Executive Officer

22

April 11, 2016

[Alcoa logo]

Aerospace Growth at Lower Pace; Continued Growth in Automotive

End Market

2016 Growth

Global and Regional Commentary

Source: Alcoa analysis   1) International Air Transport Association 2016 Expectations 2) IHS (Jul 2015)

Alcoa End Markets: Current Assessment of 2016 vs. 2015

Aerospace

6% to 8%

Global sales

growth

Automotive

E.U.

1% to 4%

China

2% to 5%

N.A.

1% to 5%

•

Market Transition given unprecedented level of New Model Introductions

•

Lower Orders for Legacy models + Careful Ramp-Up of new models

due to simultaneous launch of new technologies (body + engine) and supply chain changes

•

Large Commercial Aircraft Deliveries +9%

•

Strong

Commercial

Jet

Order

Book

of

~14,600

planes

:

>9

Years

Production

at

2015

delivery

rates

;

~23,800 engines

on firm order

•

Solid

Airline

Fundamentals

1

:

-’16FC +6.9% Passenger (’15: +6.7%);

+2.8% Cargo (’15: 1.7%);

-

Record Airline Profitability expected ($36B);

-

Global

trend

in

tact:

+Middle

Class

AND

+Urbanization

•

Cancellations

(2015

LCA)

Below

5-Year

Average

and

<2%

of

Gross

Order

Book

•

Production

Up:

+7.4%YTDFeb’16

(2.88M

vehicles)

•

Strong

Sales:

U.S.

sales

+3.1%YTDMar

‘16;

Light

Truck

penetration

at

57.9%

of

market

•

Sustained

demand:

Vehicles

12+

years

old

continue

to

grow

and

will

increase

15%

by

2020

2

•

Stable Inventory:

65 days

(industry target is 60-65 days)

•

Average

transaction

price

up

2%

(Mar’16

vs.

Mar’15)

driven

by

continued

strength

in

Light Truck;

ratio

of incentives to transaction price relatively flat

•

Rising

Production:

+1.9%YTDFeb

‘16,

West

up

+4.3%YTD(89%

share)

,

offsets

East,

down

-14.0%YTD

(11%

share)

•

Strong Registrations: +10.1%YTDFeb’16;

Exports to increase 6.9% in

2016 (+1.9% in 2015)

•

Recovering

Production:

+3.9%YTD

Feb’16

and

-1.2%YoY(Feb’16

vs.

Feb’15)

•

Sales +4.1%YTDFeb’15

and -1.3%YoY

(Feb’16 vs. Feb’15)

driven by tax incentives and light truck demand

•

Growth

propelled

by

increasing

middle

class,

exports,

and

evolving

emissions

policies

23

1% to 4%

Global

production

growth

[Alcoa logo]

HDT –

N.A.: Further Decline, Strength in Europe; Packaging Stable

End Market

2016 Growth

Global and Regional Commentary

Alcoa End Markets: Current Assessment of 2016 vs. 2015

Source: Alcoa analysis. HDT = Heavy Duty Truck. Packaging: 2016 Projections

Packaging

1% to 3%

Global sales

growth

N.A.

-1% to 0%

E.U.

1% to 2%

China

5% to 8%

•

Demand decline: Weakness (-1% to -2%) in Carbonated Soft Drinks (CSD)

•

Moderate growth

in Beer Segment

(+1% to +2%) to partially offset CSD

•

Growth

led

by

modest

growth

(1%

to

2%)

in

Western

Europe,

partially

offset

by

downward pressure in Eastern Europe (primarily declines in Russia)

•

Growth

led by aluminum can penetration from glass in beer segment

Heavy Duty Truck

and Trailer

N.A.

-23% to -27%

E.U.

1% to 5%

China

1% to 4%

•

Declining

Production:

Down

19.0%

YTD

Feb’16

at

40.4k

vs.

49.9k

trucks

•

Weak

Freight

Growth:

Freight

tonmiles

up

0.2%

YTD

Feb

’16

•

Weak Orders: Down 42.0% YoY (Feb’16 vs. Feb‘15)

•

Climbing

Inventory:

Up

15.6%

YoY

(Feb’16

vs.

Feb‘15)

at

66.8k

[10-year

average

47.4k]

•

Falling Orderbook: At 131.0k,

down 30.9% YoY

(Feb’16 vs. Feb‘15),

and

down 1.9%

month-

over-month. This still remains above its 10-year historical avg. of 101k

•

Strength

in

WEU:

Production

up

20.0%

YoY

(Feb’16

vs.

Feb’15)

and

up

20.9%

YTD

Feb

’16;

•

Registrations

up 21.8% YTD Feb ’16, despite Orders down 2.7% YTD Feb ’16

•

Decline in EEU:

Production down 8.6% YTD (Feb ‘16) from Russia and Turkey weakness

•

Strong

Sales:

Up

26.8%

YoY

(Feb’16

vs.

Feb‘15)

,

and

up

6.3%

YTD

Feb

’16

•

Production

Turning:

Down

1.3%

YoY

(Feb’16

vs.

Feb‘15)

,

and

down

7.3%

YTD

Feb

’16

24

-4% to 0%

Global

production

decline

[Alcoa logo]

Commercial B&C and Global Airfoil Market Continue to Grow

25

End Market

2016 Growth

Global and Regional Commentary

Source: Alcoa analysis;  B&C  = Building and construction.   

Alcoa End Markets: Current Assessment of 2016 vs. 2015

Industrial

Gas Turbines

2% to 4%

Global airfoil

market growth

•

Market moving towards higher value-add product as customers develop new, high

efficiency turbines with advanced technology

•

New heavy duty gas turbine units ordered +12%

in 2015 (globally)

•

U.S. (60 Hz) gas-fired generation +18.5% in 2015 driving strong demand for spares

and component upgrades on existing turbines

•

2015 OECD electricity demand up 0.7% y/y but still 0.6% below 2008 levels

Building and

Construction

N.A.

4% to 6%

E.U.

0% to -2%

China

3% to 5%

4% to 6%

Global sales

growth

•

Non-Residential Contracts Awarded:

+4.7% in Feb. (mean of 12-month rolling average)

•

Architectural Billings Index Relatively Steady: In 2015, it averaged 51.6, with only

Aug.’15 registering below 50 at 48.8. In Feb.’16 it was 50.3, up from 49.6 in Jan.’16

•

Housing Starts

up +10.6% in 2015 (vs. 2014); starts grew +5.2% in Feb’16 (vs. Jan 16)

•

Flat to slight decline as E.U. economies continue to stabilize, outlook varies by country

•

Continued moderation of growth in 2016 from 5% in 2015 and 8% in 2014

[Alcoa logo]

Future Arconic: GRP and TCS on 3-Year Target; EPS New 2016 Goal

26

1Q16 Arconic Performance and 2016 Goals

GRP

TCS

EPS

3

rd

Party

Revenue

2

($B)

EBITDA (%, $/MT)

1Q 2016 Highlights

•

Revenue $1,397M; auto shipments up 38%

•

Strong

productivity;

$374

1

EBITDA/MT

•

Portfolio:

Strength in auto Improving Mix

•

Revenue at $429M

•

Strong productivity;

Record

1

st

quarter

EBITDA

Margin

14.9%

•

Portfolio:  BCS improving;

LA extrusions weak

2Q 2016 Outlook

•

ATOI up 5-7% YoY

excluding $15M impact to secure

alternative metal supply at Warrick

•

ATOI flat

YoY

•

ATOI up 5-10% YoY

2016 Goal

•

Record

1

st

quarter

revenue

$1,449M

•

Strong productivity; EBITDA Margin 21.0%

•

Portfolio:  ATEP ahead; FR progressing

1) EBITDA/MT includes impact from Warrick cold metal program. Without that impact, EBITDA/MT is $390   2) 3-Yr Target Revenue adjusted for FX/LME: 

GRP $(0.9)M; TCS $(0.2)M  3) Does not include impact of announced sale of Remmele Medical Business   4) Excludes Warrick CMP impact. 

See appendix for EBITDA reconciliations 

6.0-6.2

7.2

2.1

2.0-2.2

6.0-6.2

6.1

~23%

~15%

$344/MT

4

$344/MT

~15%

3-Yr Target

2016 Goal

3-Yr Target

2016 Goal

3-Yr Target

2016 Goal

3

21-22%

$5.3B

$1.3B

3 Year

Target

$4.7B

$4.0B

2015

$2.5B

$7.2B

New Target

$4.1B

to

$4.2B

$1.9B

to

$2.0B

$6.0B to

$6.2B

EPS 2016 Goal: $6.0-6.2B Revenue, 21%-22% EBITDA Margin

2016 EPS Revenue ($B) and EBITDA (%) Overview

FX

Aero Industry

Headwinds    

Non-Aero

Headwinds        

Firth Rixson                    

Share Gains

(~ -$0.2B)

(~ -$0.5B)

(~ -$0.2B)

(~ -$0.3B)

(~ +$0.2B)

2016

2015

$161M

$1,110M

$949M

$1,000M

2016

$1,260M to

$1,360M

$260M

to

$360M

Productivity

Cost Increases

Competitive

Pricing 

Share Gain and

Market

Full Year of RTI

(ATEP)

(~ +$400M)

(~ -$280M)

(~ -$100M)

(~ +$60M)

New Revenue Target of $6.0B to $6.2B

New EBITDA Target of 21% to 22%

21.0% -

22.0%

EBITDA margin

20.8%

EBITDA

margin

Inorganic

Organic

~23%

EBITDA

margin

1. Does not include impact of announced sale of Remmele Medical Business

See appendix for EBITDA reconciliations

(~ +$110M)

27

[Alcoa logo]

1

1

Productivity

o

Operational Improvement

o

Accelerated Capture of Synergies

Markets & Share Gains

o

Aerospace Market

o

Oil & Gas, Off-Highway Lower

o

Exiting Unprofitable Products

o

Entering New Engine Platforms

o

Optimizing Available Capacity

Cost Increases

o

Production Ramp-up

o

Qualification Costs

o

Labor Costs

Competitive Pricing

o

Legacy Contracts

Firth Rixson: Improvement Underway; 2016 EBITDA Margin 14%-16%

2015-2016 EPS Firth Rixson Revenue ($B) and EBITDA ($M,%) Overview

Q1 ’16 Actuals: $237M Revenue; 14.3% EBITDA

Q1 ’15 Actuals: $232M Revenue; 11.6% EBITDA

2015

Actual

$136M

$0.9B

$1.0 to

$1.1B

New 2016

Goal

$150M to

$170M

14.5%

EBITDA

margin

14.0% -

16.0%

EBITDA

margin

(~ +$55M)

(~ -$8M)

(~ -$40M)

(~ +$20M)

Revenue

EBITDA

28

[Alcoa logo]

1) ATEP (RTI) pre-acquisition results exclude deal-related costs  2) Does not include impact of announced sale of Remmele Medical Business; Post the sale ATEP

EBITDA margin target unchanged; revenue target range reduction dependent on timing (annual sales of $70 million).  See appendix for EBITDA reconciliations

$794M

$810M –

$830M

$135M –

$160M

2014 Actual

14.5%

EBITDA

margin

1Q 2015 Actual

1Q 2016 Actual

2016 Target

14.1%

EBITDA

margin

1

18.7%

EBITDA

margin

~17.0%

-

19.0%

EBITDA

margin

Pre-Acquisition: EBITDA Margin of ~14%

2014-2016 EPS ATEP Revenue ($M) and EBITDA ($M,%) Overview

ATEP Ahead of Integration Plan, Delivering 17-19% EBITDA Margin in 2016

Accelerated Capture of Synergies is 1 year ahead

Share Gains

Ti Aluminide for engine programs

Ti Mill Products for JSF

B787 PiBox

3D Printing for Airbus

$38M vs. $7.8M

gross synergies target achieved to date

Revenue

EBITDA

Revenue

EBITDA

Post-Acquisition: EBITDA

Margin

of

17%-19%

29

[Alcoa logo]

$38M

$203M

$28M

$198M

$115M

2

[Alcoa logo]

GRP Shifting to Higher Margin Led by Automotive Growth

Source: Alcoa Automotive Marketing

See appendix for EBITDA reconciliations

GRP Profitability and Auto Growth

133%

162%

Aero, Transportation

& Industrial

Packaging

GRP

+62%

-55%

EBITDA/MT

Indexed % change

Shifting to a Higher Margin Product Mix

GRP Growing Auto Revenue

2013

2011

2018P

2016E

2015

52% CAGR

+17%

GRP Automotive Sheet Revenue

$M

+2%

+3%

0

30

60

100

140

180

2011

2013

2015

1Q'16

$1,300

$956

$634

$229

$117

[Alcoa logo]

Productivity Programs Achieved $364M1 of $1,200M Target through Q1’16

31

Alcoa Gross Productivity Program Q12016

Future Arconic Achieved $179M of $650M Target

Future New Alcoa Achieved $175M of $550M Target

Business

Programs

Procurement

Overhead

Business

Programs

Procurement

Overhead

$98M

$70M

$11M

$27M

$142M

$6M

2016 Productivity

$ Millions

2016 Productivity

$ Millions

1)  Productivity: Future Arconic = $179M; Future New Alcoa = $175M; Corporate = $10M

$179M

$175M

$650M

$550M

[Alcoa logo]

500

0

10

20

30

40

60

50

0

1,000

3,000

2,500

2,000

1,500

40

100

20

60

80

0

120

400

500

100

0

300

200

New Alcoa: Driving Down Cost Curve in 2016, Meeting 3-Year Targets

32

1Q16 New Alcoa Highlights and 2016 Targets

Alumina: 21    Percentile

1Q 2016 Highlights

2016 Targets

$/MT

Reshaping portfolio:

Warrick smelter closed March 24

First full quarter with Wenatchee curtailed

Saudi

Arabia

smelter

Q1

record

low

cost/ton

Lowering costs:

$107m gross productivity

Cash

cost per ton declined $145/ton,

10% sequentially

Reshaping Portfolio:

Curtailed 1.2 mmt at Pt. Comfort

Saudi

Arabia

refinery

at

80%

of

capacity

First full quarter with Suralco curtailed

Lowering costs:

$68m gross productivity

Cash cost per ton declined $15/ton, 7%

sequentially

Aluminum: 38    Percentile

$/MT

2Q 2016 Outlook

ATOI up $10M from Q1

excluding pricing and currency

impacts

ATOI up $15M

from Q1

excluding pricing and currency

impacts

Alumina

Aluminum

2010:

30

th

Percentile

2015:

23

rd

Percentile

2016:

21

st

Percentile

Production (MMT)

2010:

51

st

Percentile

Production (MMT)

2016:

38

th

Percentile

2015:

43

rd

Percentile

st

th

[Alcoa logo]

Executing

Separation

–

On

Course

for

Second

Half

of

2016

33

Separation Approximate Timeline and Path to Completion

4Q 2015

1

st

Half 2016

2

nd

Half 2016

Launched New Value-Add

Name and

Brand and Refreshed Alcoa Brand

Separate

Supplier/Partner Contracts

Form 10 Filing

-

e.g.,

–

3-Year Carve-Out and 1-Year Pro-Forma

Financials

–

Form of Separation and Legal Structure

–

Capital Structure

–

Allocation of Assets and Liabilities

–

Governance Structure

Form 10

Effectiveness and Final

Board Approval

Complete Separation of IT

Systems

and Infrastructure

Complete Financing

Begin Trading

as Two Companies

Launched the Separation Program

Office

Announced the Executive

Management Teams

Confirmed U.S. Domicile

for

Both Companies

Launched New Business

Improvement Programs

for 2016

–

Value-Add to Deliver $650M

–

Upstream to Deliver $600M

–

Above Includes Overhead Reductions

Across Alcoa                                        

($100M

1

in 2016, $225M over two years)

1)  $50M of $100M to be realized in 2016 comes from Value-Add, remaining $50M from Upstream.

[Alcoa logo]

Successfully Launched Two Strong Brands Ahead of Separation

34

Arconic and New Alcoa branding

[Alcoa logo]

Arconic Geared for Profitable Growth; Significant Aero, Auto Traction

Robust Business Improvement Programs to Strengthen Both Portfolios

Pulling All Upstream Levers to Improve Profitability

35

On Track to Separate into Two Strong Companies

On Track for Completing Separation 2

nd

Half of 2016

[Alcoa logo]

Matthew Garth

Vice President, Investor Relations and FP&A

Alcoa

390 Park Avenue

New York, NY 10022-4608

Telephone:  (212) 836-2674

Email: matthew.garth@alcoa.com

www.alcoa.com

Additional Information

36

[Alcoa logo]

[Alcoa logo]

EPS Sequential Quarter Bridge

Value

Add

Segment

Bridges

–

1Q

2016

GRP Sequential Quarter Bridge

EPS = Engineered Products and Solutions     GRP = Global Rolled Products

TCS = Transportation and Construction Solutions

4Q15

$123

Price /

Mix

-$19

Volume

$20

Currency

$1

1Q16

$162

Cost

Increases/

Other

-$9

Productivity

$46

TCS Sequential Quarter Bridge

$4

Price /

Mix

$1

Volume

-$3

Currency

1Q16

$39

Cost

Increases/

Other

-$3

Productivity

$0

4Q15

$40

1Q16

$68

Cost

Increases

/ Other

$4

Prod-

uctivity

$7

4Q15

$52

Price /

Mix

$3

Volume

$3

Currency

-$1

38

$ Millions

$ Millions

$ Millions

[Alcoa logo]

Upstream Segment Bridges –

1Q 2016

Volume

-$10

$8

Cost

Increases

/ Other

-$13

Energy

Currency

$34

API

-$261

LME

-$20

1Q15

$221

-$5

Prod-

uctivity

$47

Price /

Mix

$15

1Q16

Alumina Year-over-Year Bridge

Primary Metals Year-over-Year Bridge

$70

Metal

Prices

-$288

1Q15

$187

1Q16

$14

Cost

Increases

/ Other

-$24

Energy

-$8

Prod-

uctivity

$77

Price /

Mix

-$5

Volume

-$1

Currency

$6

API

39

$ Millions

$ Millions

[Alcoa logo]

Revenue Change by Market -

1Q 2016

2%

25%

7%

0%

(14%)

0%

27%

(10%)

7%

(26%)

(9%)

8%

10%

(4%)

(3%)

(21%)

(16%)

52%

(18%)

13%

(39%)

(29%)

1Q16 Third-Party Revenue

Sequential

Change

Year-Over-Year

Change

40

27%

4%

2%

6%

6%

5%

2%

11%

3%

11%

23%

Aerospace

Automotive

Brazing

B&C

Comm. Transport

Industrial Products

IGT

Packaging

Distribution/Other

Alumina

Primary Metals

[Alcoa logo]

Composition of Upstream Production Costs

Input Cost

Inventory flow

Pricing

convention

Annual ATOI

Sensitivity

Fuel oil

1 –

2 months

Prior month

$2m per $1/bbl

Natural gas

N/A

N/A

N/A

Caustic soda

3 -

6 months

Spot & semi-

annual

$6m per

$10/DMT

Refining Cost Structure

Smelting Cost Structure

Input Cost

Inventory flow

Pricing convention

Annual ATOI

Sensitivity

Coke

1 -

2 months

Spot, quarterly &

semi-annual

$5m per

$10/MT

Pitch

1 -

2 months

Spot, quarterly &

semi-annual

$1m per

$10/MT

1

Natural gas information related to Point Comfort will no longer apply as we are curtailing the plant. Australia

is priced on a rolling 16 quarter average

41

Alumina

31%

Carbon

13%

Power

24%

Materials

7%

Conversion

25%

Fuel Oil

7%

Natural gas

13%

Caustic

10%

Bauxite

26%

Conversion

44%

1

[Alcoa logo]

Alcoa Upstream Capacity Closed, Sold, and Idled

Facility

Year

kmt

Baie Comeau

2008

53

Eastalco

2010

195

Badin

2010

60

Tennessee

2011

215

Rockdale

2011

76

Baie Comeau

2013

105

Fusina

2013

44

Massena East

2013

41

Massena East

2014

84

Point Henry

2014

190

Portovesme

2014

150

Mt. Holly

(sale)

2014

115

Pocos

2015

96

Warrick

2016

269

Total

1,693

Closed/sold since December 2007

Facility

Year

kmt

Portland

2008

30

Rockdale

2008

191

Aviles

2012

32

La Coruna

2012

24

Sao Luis

2013

97

Sao Luis

2014

97

Sao Luis

2015

74

Wenatchee

2015

184

Total

729

Smelting Capacity

Idled

Refining Capacity

Facility

Year

kmt

Jamalco

(sale)

2014

779

Total

779

Closed/sold since December 2007

Facility

Year

kmt

Point Comfort

2008

340

Suriname

2009

870

Suriname

2015

1,337

Point Comfort

2016

1,508

Total

4,055

Idled

42

[Alcoa logo]

Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to Alcoa

(in millions)

1Q15

2Q15

3Q15

4Q15

2015

1Q16

Total segment ATOI

$656

$567

$410

$273

$1,906

$291

Unallocated amounts (net of tax):

Impact of LIFO

7

36

50

43

136

4

Metal

price lag

(23)

(39)

(48)

(23)

(133)

1

Interest expense

(80)

(80)

(80)

(84)

(324)

(83)

Noncontrolling interests

(60)

(67)

(62)

64

(125)

5

Corporate expense

(62)

(65)

(72)

(67)

(266)

(55)

Impairment

of

goodwill

–

–

–

(25)

(25)

–

Restructuring and other charges

(161)

(159)

(48)

(575)

(943)

(61)

Other

(82)

(53)

(106)

(307)

(548)

(86)

Consolidated net income

(loss)

attributable

to Alcoa

$195

$140

$44

$(701)

$(322)

$16

43

[Alcoa logo]

Reconciliation of ATOI to Consolidated Net Income (Loss) Attributable to

Alcoa

(1)

–

Supplemental View

(in millions)

1Q14

2Q14

3Q14

4Q14

2014

1Q15

2Q15

3Q15

4Q15

2015

1Q16

Total

segment

ATOI

(2)

$320

$408

$581

$659

$1,968

$656

$567

$410

$273

$1,906

$291

Unallocated amounts (net of tax):

Impact of LIFO

(7)

(8)

(18)

(21)

(54)

7

36

50

43

136

4

Metal

price lag

(2)

7

11

38

22

78

(23)

(39)

(48)

(23)

(133)

1

Interest expense

(78)

(69)

(72)

(80)

(299)

(80)

(80)

(80)

(84)

(324)

(83)

Noncontrolling interests

(20)

(13)

(29)

(72)

(134)

(95)

(87)

(92)

(25)

(299)

3

Corporate expense

(66)

(58)

(68)

(60)

(252)

(56)

(60)

(55)

(55)

(226)

(38)

Other

(58)

(55)

(62)

(16)

(191)

(46)

(87)

(76)

(64)

(273)

(70)

Income

excluding

special

items

98

216

370

432

1,116

363

250

109

65

787

108

Special

items

(3)

(276)

(78)

(221)

(273)

(848)

(168)

(110)

(65)

(766)

(1,109)

(92)

Consolidated net (loss)

income

attributable to Alcoa

$(178)

$138

$149

$159

$268

$195

$140

$44

$(701)

$(322)

$16

44

(1)

In the third quarter of 2015, management approved a realignment of Alcoa’s Engineered Products and Solutions segment due to the

expansion of this part of Alcoa’s business portfolio through both organic and inorganic growth.  A portion of this

realignment consisted of moving the Latin American extrusions business from Corporate into a new Transportation and Construction

Solutions segment (see the Reconciliation of Transportation and Construction Solutions Adjusted EBITDA for additional

information).  Segment information for all prior periods presented was revised to reflect the new segment structure.

(2)

Effective in the second quarter of 2015, management removed the impact of metal price lag from the results of the Global Rolled

Products and Engineered Products and Solutions (now Engineered Products and Solutions and Transportation and

Construction Solutions –

see footnote 1 above) segments in order to enhance the visibility of the underlying operating performance of these businesses. Metal price lag describes the timing difference created when the average price of metal sold differs

from the average cost of the metal when purchased by the respective segment.

The impact of metal price lag is now reported as a

separate line item in Alcoa’s reconciliation of total segment ATOI to consolidated net (loss) income attributable to Alcoa. 

As a result, this change does not impact the consolidated results of Alcoa.

Segment information for all prior periods presented

was updated to reflect this change.

(3)

Special items are defined as restructuring and other charges, discrete tax items, and other special items.  See the Reconciliation of Adjusted Income for additional information.

NOTES FOR CORPORATE AMOUNTS:

LIFO

and

Metal

price

lag

–

these

items

tend

to

offset

each

other

over

time

as

the

same

underlying

market

conditions

typically

drive

both

amounts.

Noncontrolling

interests

–

primarily

represents

Alumina

Limited’s

40%

share

of

the

operating

results

of

the

Alcoa

World

Alumina

and

Chemicals

joint

venture,

which

principally

comprises

Alcoa’s

Alumina

segment.

Corporate

expense

–

represents

general

and

administrative

expenses

attributable

to

Alcoa’s

corporate

and

business

support

locations,

as

well

as

costs

associated

with

Alcoa’s

corporate

research

and

development center.

Other

–

includes all other income and expenses not included in the segments, primarily: postretirement benefits and environmental remediation costs associated with certain closed or divested businesses;

various corporate eliminations of inter-segment transactions; certain corporate foreign currency gains and losses; and the impact of the difference between the income tax rates applicable to the segments

and the consolidated effective tax rate of the Company.

[Alcoa logo]

Reconciliation of Adjusted Income (Loss)

(in millions, except

per-share amounts)

Income (Loss)

Diluted EPS

(3)

Quarter ended

Quarter ended

March 31,

December 31,

March 31,

March 31,

December 31,

March 31,

2015

2015

2016

2015

2015

2016

Net income (loss)

attributable to Alcoa

$195

$(701)

$16

$0.14

$(0.55)

$0.00

Restructuring and

other charges

158

507

61

Discrete tax items

(1)

–

187

2

Other special items

(2)

10

72

29

Net income

attributable to Alcoa

–

as adjusted

$363

$65

$108

0.28

0.04

0.07

Net

income

(loss)

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 income (loss) 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 March 31, 2016, a net charge for a number of small items; and

•

for the quarter ended December 31, 2015, a charge for valuation allowances related to certain U.S. and Iceland deferred tax assets ($190) and a net benefit for a small number of items ($3).

(2)

Other special items include the following:

•

for the quarter ended March 31, 2016, costs associated with the planned separation of Alcoa ($17), 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 ($8), an unfavorable

tax impact related to the interim period treatment of operational losses in certain foreign jurisdictions for which no tax benefit was recognized ($2), and a write-down on inventory related to the permanent closure of the Warrick smelter ($2);

•

for

the

quarter

ended

December

31,

2015,

a

write-down

of

inventory

related

to

the

permanent

closure

or

temporary

curtailment

of

various

facilities

in

Suriname

and

the

United

States

($28),

an

impairment

of

goodwill

related

to

the

soft

alloy

extrusion

business

in

Brazil

($25),

costs

associated

with

the

planned

separation

of

Alcoa

($12),

a

net

unfavorable

change

in

certain

mark-to-market

energy

derivative

contracts

($5),

and

an

unfavorable

tax

impact

related

to

the

interim

period

treatment

of

operational

losses

in

certain

foreign

jurisdictions

for

which

no

tax

benefit

was

recognized

($2); and

•

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 acquisitions of aerospace businesses ($7), and a net favorable change in certain mark-to-market energy derivative contracts ($1).

(3)

The

average

number

of

shares

applicable

to

diluted

EPS

for

Net

income

(loss)

attributable

to

Alcoa

common

shareholders

excludes

certain

share

equivalents

as

their

effect

was

anti-dilutive.

However,

certain

of

these

share

equivalents

may

become

dilutive

in

the

EPS

calculation

applicable

to

Net

income

attributable

to

Alcoa

common

shareholders

–

as

adjusted

due

to

a

larger

and/or

positive

numerator.

Specifically:

•

for

the

quarter

ended

March

31,

2016,

share

equivalents

associated

with

outstanding

employee

stock

options

and

awards

were

dilutive

based

on

Net

income

attributable

to

Alcoa

common

shareholders

–

as

adjusted,

resulting

in

a

diluted

average

number

of

shares

of

•

1,324,558,308;

•

for

the

quarter

ended

December

31,

2015,

share

equivalents

associated

with

outstanding

employee

stock

options

and

awards

were

dilutive

based

on

Net

income

attributable

to

Alcoa

common

shareholders

–

as

adjusted,

resulting

in

a

diluted

average

number

of

shares

of

1,324,378,133;

and

•

for

the

quarter

ended

March

30,

2015,

share

equivalents

associated

with

mandatory

convertible

preferred

were

diluted

based

on

Net

Income

attributable

to

Alcoa

common

shareholders

–

as

adjusted,

resulting

in

a

diluted

average

number

of

shares

of

1,315,558,890.

Additionally,

the

subtraction

of

preferred

stock

dividends

declared

from

the

numerator

(see

footnote

1

to

the

Statement

of

Consolidated

Operations)

needs

to

be

reversed

since

the

related

mandatory

convertible

preferred

stock

was

dilutive

in

the

EPS

calculation

for

Net

income

attributable

to

Alcoa

–

as

adjusted.

45

[Alcoa logo]

Reconciliation of Alcoa Adjusted EBITDA

($ in millions)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

Net income (loss) attributable to Alcoa

$1,233

$2,248

$2,564

$(74)

$(1,151)

$254

$611

$191

$(2,285)

$268

$(322)

$195

$(701)

$16

Add:

Net income (loss) attributable to noncontrolling

interests

259

436

365

221

61

138

194

(29)

41

(91)

125

60

(64)

(5)

Cumulative effect of accounting changes

2

–

–

–

–

–

–

–

–

–

–

–

–

–

Loss (income) from discontinued operations

50

(22)

250

303

166

8

3

–

–

–

–

–

–

–

Provision (benefit) for income taxes

464

853

1,623

342

(574)

148

255

162

428

320

445

226

44

30

Other (income) expenses, net

(478)

(236)

(1,920)

(59)

(161)

5

(87)

(341)

(25)

47

2

(12)

29

34

Interest expense

339

384

401

407

470

494

524

490

453

473

498

122

129

127

Restructuring and other charges

266

507

268

939

237

207

281

172

782

1,168

1,195

177

735

93

Impairment of goodwill

–

–

–

–

–

–

–

–

1,731

–

25

–

25

–

Provision for depreciation, depletion, and

amortization

1,227

1,252

1,244

1,234

1,311

1,450

1,479

1,460

1,421

1,371

1,280

321

322

308

Adjusted EBITDA

$3,362

$5,422

$4,795

$3,313

$359

$2,704

$3,260

$2,105

$2,546

$3,556

$3,248

$1,089

$519

$603

Sales

$24,149

$28,950

$29,280

$26,901

$18,439

$21,013

$24,951

$23,700

$23,032

$23,906

$22,534

$5,819

$5,245

$4,947

Adjusted EBITDA Margin

13.9%

18.7%

16.4%

12.3%

1.9%

12.9%

13.1%

8.9%

11.1%

14.9%

14.4%

18.7%

9.9%

12.2%

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.

46

[Alcoa logo]

Reconciliation of Alumina Adjusted EBITDA

($ in millions, except per metric ton amounts)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$682

$1,050

$956

$727

$112

$301

$607

$90

$259

$370

$746

$221

$98

$8

Add:

Depreciation, depletion, and amortization

172

192

267

268

292

406

444

455

426

387

296

80

68

63

Equity loss (income)

–

2

(1)

(7)

(8)

(10)

(25)

(5)

4

29

41

7

14

14

Income taxes

246

428

340

277

(22)

60

179

(27)

66

153

300

92

36

5

Other

(8)

(6)

2

(26)

(92)

(5)

(44)

(8)

(6)

(28)

1

–

2

–

Adjusted EBITDA

$1,092

$1,666

$1,564

$1,239

$282

$752

$1,161

$505

$749

$911

$1,384

$400

$218

$90

Production (thousand metric tons) (kmt)

14,598

15,128

15,084

15,256

14,265

15,922

16,486

16,342

16,618

16,606

15,720

3,933

3,856

3,330

Adjusted EBITDA / Production

($ per metric ton)

$75

$110

$104

$81

$20

$47

$70

$31

$45

$55

$88

$102

$57

$27

Alcoa’s

definition

of

Adjusted

EBITDA

(Earnings

before

interest,

taxes,

depreciation,

and

amortization)

is

net

margin

plus

an

add-back

for

depreciation,

depletion,

and

amortization.

Net

margin

is

equivalent

to

Sales

minus

the

following

items:

Cost

of

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion,

and

amortization.

The

Other

line

in

the

table

above

includes gains/losses on asset sales and other non-operating items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted EBITDA

provides

additional

information

with

respect

to

Alcoa’s

operating

performance

and

the

Company’s

ability

to

meet

its

financial

obligations.

The

Adjusted

EBITDA

presented

may

not

be

comparable

to

similarly

titled

measures

of

other companies.

47

[Alcoa logo]

Reconciliation of Primary Metals Adjusted EBITDA

($ in millions, except per metric ton amounts)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$822

$1,760

$1,445

$931

$(612)

$488

$481

$309

$(20)

$594

$155

$187

$(40)

$14

Add:

Depreciation, depletion, and

amortization

368

395

410

503

560

571

556

532

526

494

429

109

105

102

Equity loss (income)

12

(82)

(57)

(2)

26

(1)

7

27

51

34

12

3

(3)

(4)

Income taxes

307

726

542

172

(365)

96

92

106

(74)

203

(28)

57

(42)

(16)

Other

(96)

(13)

(27)

(32)

(176)

(7)

2

(422)

(8)

(6)

(2)

(1)

1

(1)

Adjusted EBITDA

$1,413

$2,786

$2,313

$1,572

$(567)

$1,147

$1,138

$552

$475

$1,319

$566

$355

$21

$95

Production (thousand metric tons) (kmt)

3,554

3,552

3,693

4,007

3,564

3,586

3,775

3,742

3,550

3,125

2,811

711

699

655

Adjusted EBITDA / Production

($ per metric ton)

$398

$784

$626

$392

$(159)

$320

$301

$148

$134

$422

$201

$499

$30

$145

Alcoa’s

definition

of

Adjusted

EBITDA

(Earnings

before

interest,

taxes,

depreciation,

and

amortization)

is

net

margin

plus

an

add-back

for

depreciation,

depletion,

and

amortization.

Net

margin

is

equivalent

to

Sales

minus

the

following

items:

Cost

of

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion,

and

amortization.

The

Other

line

in

the

table

above includes gains/losses on asset sales and other non-operating items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted

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

measures of other companies.

48

[Alcoa logo]

Reconciliation of Upstream(1) Adjusted EBITDA

(in millions)

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$1,658

$(500)

$789

$1,088

$399

$239

$964

$901

$408

$58

$22

Add:

Depreciation, depletion, and amortization

771

852

977

1,000

987

952

881

725

189

173

165

Equity (income) loss

(9)

18

(11)

(18)

22

55

63

53

10

11

10

Income taxes

449

(387)

156

271

79

(8)

356

272

149

(6)

(11)

Other

(58)

(268)

(12)

(42)

(430)

(14)

(34)

(1)

(1)

3

(1)

Adjusted EBITDA

$2,811

$(285)

$1,899

$2,299

$1,057

$1,224

$2,230

$1,950

$755

$239

$185

Alcoa’s

definition

of

Adjusted

EBITDA

(Earnings

before

interest,

taxes,

depreciation,

and

amortization)

is

net

margin

plus

an

add-back

for

depreciation,

depletion,

and

amortization.

Net

margin

is

equivalent

to

Sales

minus

the

following

items:

Cost

of

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion,

and

amortization.

The

Other

line

in

the

table

above includes gains/losses on asset sales and other non-operating items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted

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

measures of other companies.

49

(1)

Upstream is composed of the Alumina and Primary Metals segments.

[Alcoa logo]

Reconciliation of Global Rolled Products Adjusted EBITDA

($ in millions, except per metric ton amounts)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$278

$233

$178

$(3)

$(49)

$220

$266

$358

$292

$245

$244

$54

$52

$68

Add:

Depreciation, depletion, and amortization

220

223

227

216

227

238

237

229

226

235

227

56

59

56

Equity loss

–

2

–

–

–

–

3

6

13

27

32

9

8

11

Income taxes

121

58

92

35

48

92

104

167

123

89

109

36

20

34

Other

1

20

1

6

(2)

1

1

(2)

–

(1)

(1)

–

–

(1)

Adjusted EBITDA

$620

$536

$498

$254

$224

$551

$611

$758

$654

$595

$611

$155

$139

$168

Total shipments (thousand metric tons) (kmt)

2,250

2,376

2,482

2,361

1,888

1,755

1,866

1,943

1,989

2,056

1,836

447

446

449

Adjusted EBITDA / Total shipments

($ per metric ton)

$276

$226

$201

$108

$119

$314

$327

$390

$329

$289

$333

$347

$312

$374

Alcoa’s

definition

of

Adjusted

EBITDA

(Earnings

before

interest,

taxes,

depreciation,

and

amortization)

is

net

margin

plus

an

add-back

for

depreciation,

depletion,

and

amortization.

Net

margin

is

equivalent

to

Sales

minus

the

following

items:

Cost

of

goods

sold;

Selling,

general

administrative,

and

other

expenses;

Research

and

development

expenses;

and

Provision

for

depreciation,

depletion,

and

amortization.

The

Other

line

in

the

table

above includes gains/losses on asset sales and other non-operating items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted

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

measures of other companies.

50

[Alcoa logo]

Reconciliation of Engineered Products and Solutions Adjusted

EBITDA

($ in millions)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$183

$237

$351

$465

$321

$355

$436

$484

$569

$579

$595

$156

$123

$162

Add:

Depreciation, depletion, and

amortization

114

111

114

118

118

114

120

122

124

137

233

51

67

65

Income taxes

86

128

186

225

159

182

224

248

286

298

282

76

54

78

Other

(12)

2

2

2

2

–

–

–

–

–

–

(1)

–

–

Adjusted EBITDA

$371

$478

$653

$810

$600

$651

$780

$854

$979

$1,014

$1,110

$282

$244

$305

Third-party sales

$2,966

$3,406

$3,821

$4,215

$3,355

$3,225

$3,716

$3,863

$4,054

$4,217

$5,342

$1,257

$1,409

$1,449

Adjusted EBITDA Margin

12.5%

14.0%

17.1%

19.2%

17.9%

20.2%

21.0%

22.1%

24.1%

24.0%

20.8%

22.4%

17.3%

21.0%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an

add-back for depreciation, depletion, and amortization.  Net margin is equivalent to Sales minus the following items: Cost of goods

sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation,

depletion, and amortization.  The Other line in the table above includes gains/losses on asset sales and other non-operating

items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s

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

51

[Alcoa logo]

Reconciliation of Transportation and Construction Solutions Adjusted

EBITDA

($ in millions)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$94

$129

$94

$82

$5

$73

$109

$126

$167

$180

$166

$38

$40

$39

Add:

Depreciation, depletion, and

amortization

50

45

55

53

65

48

45

42

42

42

43

10

11

11

Equity loss (income)

–

6

–

–

(2)

(2)

(1)

–

–

–

–

–

–

–

Income taxes

30

27

7

–

(21)

18

38

49

67

69

63

14

14

14

Other

1

(4)

(10)

–

–

–

(1)

(9)

(2)

–

(1)

1

–

–

Adjusted EBITDA

$175

$203

$146

$135

$47

$137

$190

$208

$274

$291

$271

$63

$65

$64

Third-party sales

$1,954

$2,204

$2,249

$2,270

$1,537

$1,656

$1,936

$1,914

$1,951

$2,021

$1,882

$471

$444

$429

Adjusted EBITDA Margin

9.0%

9.2%

6.5%

5.9%

3.1%

8.3%

9.8%

10.9%

14.0%

14.4%

14.4%

13.4%

14.6%

14.9%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an

add-back for depreciation, depletion, and amortization.  Net margin is equivalent to Sales minus the following items: Cost of goods

sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation,

depletion, and amortization.  The Other line in the table above includes gains/losses on asset sales and other non-operating

items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s

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

52

[Alcoa logo]

Reconciliation

of

Value

Add

(1)

Adjusted

EBITDA

($ in millions)

2008

2009

2010

2011

2012

2013

2014

2015

1Q15

4Q15

1Q16

After-tax operating income (ATOI)

$544

$277

$648

$811

$968

$1,028

$1,004

$1,005

$248

$215

$269

Add:

Depreciation, depletion, and amortization

387

410

400

402

393

392

414

503

117

137

132

Equity (income) loss

–

(2)

(2)

2

6

13

27

32

9

8

11

Income taxes

260

186

292

366

464

476

456

454

126

88

126

Other

8

–

1

–

(11)

(2)

(1)

(2)

–

–

(1)

Adjusted EBITDA

$1,199

$871

$1,339

$1,581

$1,820

$1,907

$1,900

$1,992

$500

$448

$537

Third-party sales

$15,451

$10,961

$11,158

$13,294

$13,155

$13,111

$13,589

$13,462

$3,349

$3,275

$3,275

Adjusted EBITDA Margin

7.8%

7.9%

12.0%

11.9%

13.8%

14.5%

14.0%

14.8%

14.9%

13.7%

16.4%

Alcoa’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an

add-back for depreciation, depletion, and amortization.  Net margin is equivalent to Sales minus the following items: Cost of goods

sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation,

depletion, and amortization.  The Other line in the table above includes gains/losses on asset sales and other non-operating

items.  Adjusted EBITDA is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa’s operating performance and the Company’s

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

53

(1)

Value Add is composed of the Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions segments. 

[Alcoa logo]

Reconciliation of Free Cash Flow

(in millions)

Year ended

Quarter ended

December 31,

2010

December 31,

2011

December 31,

2012

December 31,

2013

December 31,

2014

December 31,

2015

March 31,

2015

December 31,

2015

March 31,

2016

Cash from

operations

$2,261

$2,193

$1,497

$1,578

$1,674

$1,582

$(175)

$865

$(430)

Capital

expenditures

(1,015)

(1,287)

(1,261)

(1,193)

(1,219)

(1,180)

(247)

(398)

(251)

Free cash flow

$1,246

$906

$236

$385

$455

$402

$(422)

$467

$(681)

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

capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate future cash flows from operations.  It is important to note

that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the

measure.

54

[Alcoa logo]

Days Working Capital

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

(1)

The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial institutions on a recurring basis.  Alcoa is adding back this receivable for the purposes of the Days Working Capital calculation.

(2)

The Working Capital for each period

presented represents an average quarter Working Capital, which reflects the capital invested during a given quarter.  As such, the components of Working Capital for each period presented represent the average of the

ending balances in each of the three months during the respective quarter.

55

($ 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

Receivables from

customers, less allowances  

$1,709

$1,650

$1,600

$1,573

$1,704

$1,483

$1,427

$1,383

Add: Deferred purchase

price

receivable

(1)

85

144

104

53

50

223

347

339

Receivables from

customers, less

allowances, as

adjusted

1,794

1,794

1,704

1,626

1,754

1,706

1,774

1,722

Add: Inventories

3,079

3,097

3,051

2,894

2,961

2,949

2,932

2,783

Less: Accounts

payable,

trade

2,660

2,594

2,496

2,587

2,656

2,820

2,746

2,816

Working Capital

(2)

$2,213

$2,297

$2,259

$1,933

$2,059

$1,835

$1,960

$1,689

Sales

$6,006

$5,963

$5,833

$5,898

$5,833

$5,849

$5,765

$5,585

Days Working

Capital

34

35

36

30

32

29

31

28

[Alcoa logo]

Days Working Capital

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

(1)

The deferred purchase price receivable relates to an arrangement to sell certain customer receivables to several financial institutions on a recurring basis.  Alcoa is adding back this receivable for the purposes of the Days Working Capital calculation.

(2)

The Working Capital for each period

presented represents an average quarter Working Capital, which reflects the capital invested

during a given quarter.  As such, the components of Working Capital for each period presented represent the average of the

ending balances in each of the three months during the respective quarter.

(3)

In the quarters ended September 30, 2015, December 31, 2015,  and March 31, 2016 Working Capital and Sales include $405 and $147, respectively, $606 and $207, respectively, and $640 and $217, respectively, related to two acquisitions, TITAL (March

2015), and RTI International Metals (July 2015).  Excluding these amounts, Days Working Capital was 35, 33 and 37 for the quarters ended September 30, 2015, December 31, 2015, and March 31, 2016, respectively.

56

($ in millions)

Quarter ended

31-Mar-14

30-Jun-14

30-Sep-14

31-Dec-14

31-Mar-15

30-Jun-15

30-Sep-15

(3)

31-Dec-15

(3)

31-Mar-16

(3)

Receivables from

customers, less allowances  

$1,391

$1,401

$1,526

$1,513

$1,487

$1,548

$1,489

$1,428

$1,462

Add: Deferred purchase

price

receivable

(1)

238

371

438

395

389

421

382

324

238

Receivables from

customers, less

allowances, as

adjusted

1,629

1,772

1,964

1,908

1,876

1,969

1,871

1,752

1,700

Add: Inventories

2,974

3,201

3,194

3,064

3,189

3,230

3,443

3,523

3,516

Less: Accounts

payable,

trade

2,813

2,880

3,016

3,021

2,936

2,978

2,871

2,842

2,654

Working Capital

(2)

$1,790

$2,093

$2,142

$1,951

$2,129

$2,221

$2,443

$2,433

$2,562

Sales

$5,454

$5,836

$6,239

$6,377

$5,819

$5,897

$5,573

$5,245

$4,947

Days Working

Capital

30

33

32

28

33

34

40

43

47

[Alcoa logo]

Reconciliation of Net Debt

Net debt

is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because management assesses Alcoa’s leverage

position after factoring in available cash that could be used to repay outstanding debt.

(in millions)

December 31,

March 31,

2011

2012

2013

2014

2015

2016

Short-term borrowings

$62

$53

$57

$54

$38

$40

Commercial paper

224

–

–

–

–

–

Long-term debt due within one year

445

465

655

29

21

772

Long-term debt, less amount due within one year

8,542

8,226

7,534

8,704

8,993

8,257

Total debt

(1)

9,273

8,744

8,246

8,787

9,052

9,069

Less: Cash and cash equivalents

1,939

1,861

1,437

1,877

1,919

1,384

Net debt

$7,334

$6,883

$6,809

$6,910

$7,133

$7,685

57

(1)

Debt amounts for 2011-2015 have been updated to reflect the adoption of FASB guidance (effective January 1, 2016) requiring presentation of debt issuance costs as a reduction of debt rather than as a noncurrent

asset.

[Alcoa logo]

Reconciliation of Debt-to-Adjusted EBITDA Ratio

($ in millions)

2011

2012

2013

2014

2015

1Q16*

Net income (loss) attributable to Alcoa

$611

$191

$(2,285)

$268

$(322)

$(501)

Add:

Net income (loss) attributable to noncontrolling

interests

194

(29)

41

(91)

125

60

Loss from discontinued operations

3

–

–

–

–

–

Provision for income taxes

255

162

428

320

445

249

Other expenses (income), net

(87)

(341)

(25)

47

2

48

Interest expense

524

490

453

473

498

503

Restructuring and other charges

281

172

782

1,168

1,195

1,111

Impairment of goodwill

–

–

1,731

–

25

25

Provision for depreciation, depletion, and

amortization

1,479

1,460

1,421

1,371

1,280

1,267

Adjusted EBITDA

$3,260

$2,105

$2,546

$3,556

$3,248

$2,762

Total Debt

(1)

$9,273

$8,744

$8,246

$8,787

$9,052

$9,069

Debt-to-Adjusted EBITDA Ratio

2.84

4.16

3.24

2.47

2.79

3.28

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.

58

•The calculation of Adjusted EBITDA for the quarter ended March 31, 2016 is based on the trailing twelve months.

(1)

Debt amounts for 2011-2015 have been updated to reflect the adoption of FASB guidance (effective January 1, 2016) requiring presentation of debt issuance costs as a reduction of debt rather than as a noncurrent

asset.

[Alcoa logo]

Reconciliation of RTI International Metals Adjusted EBITDA*

($ in millions)

2014

1Q15

Net income

$31

$5

Add:

Net

loss

attributable

to

discontinued

operations

-

–

Provision (benefit) for income taxes

10

(1)

Interest

expense

31

8

Interest

income

-

-

Other (income) expense, net

(2)

-

Merger-related

expenses

–

5

Depreciation

and

amortization

45

11

Adjusted EBITDA

$115

$28

Net sales

$794

$198

Adjusted EBITDA Margin

14.5%

14.1%

59

* The calculation of Adjusted EBITDA for RTI International Metals (RTI) (now Alcoa Titanium and Engineered Products) is based on Alcoa’s definition of Adjusted EBITDA (see below)

and does not purport to be the manner in which RTI’s former management would have calculated RTI’s Adjusted EBITDA.  Additionally, this calculation of Adjusted EBITDA is not

intended to suggest that RTI’s former management used Adjusted EBITDA as a measure of RTI’s profitability.  The amounts used in these calculations were obtained from RTI’s

Annual Report on Form 10-K for the year ended December 31, 2014 and Quarterly Report on Form 10-Q for the three months ended March 31, 2015 filed with the U.S. Securities and

Exchange Commission on February 26, 2015 and April 30, 2015, respectively.

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.