Alcoa Corporation · NYSE:AA
Alcoa — Q1 2007 Earnings Presentation
38 slides from Alcoa's earnings presentation, Apr 13, 2007
Slide 1: First Quarter 2007 Analyst Conference
April 10, 2007 st Quarter 2007 Analyst Conference Exhibit 99.2
Slide 2: Forward Looking Statements
2 Forward Looking Statements Today’s discussion may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Alcoa’s actual results
Slide 3: Chuck McLane, Vice President and Chief Financial Officer
Vice President and Chief Financial Officer Chuck McLane
Slide 4: 1st Quarter 2007 Financial Overview
4 st Quarter 2007 Financial Overview – Income from continuing operations of $691m or $0.79 per share - $673m or $0.77 per share including the impact of restructurings – Revenues of $7.9b – Cash from operations of $527m – Debt-to-cap at 30.9% – Trailing four quarters ROC of 12.7%
Slide 5: 1st Quarter 2007 Financial Overview
5 st Quarter 2007 Financial Overview In Millions 4Q'06 1Q'07 Change Sales $7,840 $7,908 $68 Cost of Goods Sold $6,132 $6,007 ($125) % of Sales 78.2% 76.0% (2.2) pts. SG&A $367 $357 ($10) % of Sales 4.7% 4.5% (0.2) pts. Restructuring and Other Charges $554 $26 ($528) Interest Expense $93 $83 ($10) Ot
Slide 6: 4th Quarter vs. 1st Quarter Comparison
6 th Quarter vs. 1 st Quarter Comparison
Slide 7: Alumina
7 1Q’07 4Q’06 1Q’06 1,877 2,084 2,023 Party Shipments (kmt) 3,655 3,790 3,702 Production (kmt) Party Revenue ($MM) ATOI ($MM) Decreased production Higher prices Lower shipments Guinea strike impact Stronger Australian dollar Alumina st Quarter Highlights nd Quarter Outlook Prices to follow 2 month l
Slide 8: Primary Metals
8 st Quarter Highlights ATOI ($MM) 2,902 2,766 2,534 Party Price ($/MT) 1,633 1,698 1,408 Party Revenue ($MM) 1Q’07 4Q’06 1Q’06 Party Shipments (kmt) Production (kmt) Primary Metals nd Quarter Outlook st Quarter Business Conditions Higher realized pricing Intalco and Iceland start-up costs Increased
Slide 9: Flat-Rolled Products
9 Favorable aerospace volumes and mix Productivity offset cost inflation Prior quarter tax benefit not repeated 1Q’07 4Q’06 1Q’06 ATOI ($MM) 2,275 2,127 1,940 Party Revenue ($MM) Flat-Rolled Products st Quarter Highlights nd Quarter Outlook st Quarter Business Conditions Global aerospace markets rem
Slide 10: Engineered Solutions
10 (6) (4) (5) Other 4Q’06 Total Investment Castings, Forgings, Fasteners AFL, Auto Castings and Structures (5) 1Q’06 (8) 1Q’07 North America Class 8 truck builds off 25% year over year – partially offset by share gains and new product sales Weakness continued in the North American automotive custom
Slide 11: Extruded and End Products
11 (7) Alcoa Custom Extruded Solutions, US Industrial and Other 1Q’07 4Q’06 1Q’06 - Total Global Hard Alloy Extrusions, Building & Construction Systems and Russia Solid markets in building & construction and aerospace Lower volume in North American automotive and Class 8 truck markets Extruded and E
Slide 12: Packaging & Consumer
12 (1) (1) (1) Other (9) 4Q’06 Total Reynolds Food Packaging and Flexible Packaging Closure Systems and Consumer Products (11) 1Q’06 (3) 1Q’07 Packaging & Consumer ATOI ($MM) st Quarter Business Conditions nd Quarter Outlook Seasonal increase in Closures and Consumer businesses Continued productivit
Slide 13: 1st Quarter 2007 Cash Flow Review
13 st Quarter 2007 Cash Flow Review $ In Millions 1Q'06 1Q'07 Net Income $608 $662 DD&A Change in Working Capital (915) (457) Other Adjustments (136) Pension Contributions (77) (50) Cash From Operating Activities (213) Dividends to Shareholders (131) (148) Change in Debt Dividends to Minority Intere
Slide 14: Strong Performance Trends
14 Strong Performance Trends
Slide 15: Financial targets and 2007 outlook
ROC Exceed cost of capital Cash from Operations Exceed capital expenditures Volume/Mix/Productivity Exceed cost inflation Exceed 2006 in every EBITDA Margins downstream segment Debt to Capital Not to exceed 30% — 35% Capital Expenditures $3.0 — $3.2 Billion AEE eee
Slide 16: Alain J.P. Belda, Chairman and Chief Executive Officer
Chairman and Chief Executive Officer Alain J.P. Belda
Slide 17: Taking Action on Climate Change
17 Taking Action on Climate Change 1990 2006 2010 Target Level 25% Direct CO Reduction 26% Reduction in GHG Emissions Leader in Public Policy Founding Member USCAP Alcoa is Favorably Positioned to Help Customers with GHG Emissions
Slide 18: Safety Rates by Years
Rates by Years w SPP HSA HP HP SAPP HSS FSF HLS ‘WN Lost Work Days (ME Tolal Recordables
Slide 19: Global Environment: Aluminum Consumption Growth Rates
19 Global Environment Aluminum Consumption Growth Rates Source: Alcoa analysis
Slide 20: Global Environment: Supply / Demand Projections
20 Source: Alcoa analysis Global Environment Supply / Demand Projections
Slide 21: Global Environment: Days of Consumption
21 Global Environment Days of Consumption Source: IAI, Reuters and LME
Slide 22: Aerospace and Automotive
Aerospace Market Dynamics. Robust demand for large transports - 5 year backlogs at Boeing and Airbus Continued increases in builds and resumption of A380 dernand {fn 4007) will fuel strong demand Record demand for regional and business jets Alcoa impact Ator near capacity at most facilities Expandin
Slide 23: Non-Residential: Commercial Transportation, Building & Construction
ee =_— es Non-Residential Commercial Transportation Building & Construction Market Dynamics Alcoa impact Market Dynamics Alcoa Impact ' ‘ | a ‘ North American introducing new Now a fom a 8 i in roving priceiane construction expected products to capture prior year and 4006; i : _ tegrow 64 flessthan
Slide 24: Industrial Gas Turbine
industrial Gas Turbine Market Dynamics Turbine manufacturers increased 2007 cormponent schedules in 1007 to support new engine order bookings and spare parts requirements OEMs strengthening 2008 engine build forecast Small IGT market remains strong Balaricing capacity across system with focus an uti
Slide 25: Momentum Builders
25 Momentum Builders – Record 2006 Financial Performance – Disciplined Capital Management • Debt restructuring • Increased dividend • 10% share buyback program • 2007 peak capital spending year
Slide 26: Momentum Builders
26 Momentum Builders – Continued Portfolio Management • Sale of Alcoa Home Exteriors • Creation of a soft alloy extrusions joint venture • November 2006 downstream restructuring • Continued review of the packaging assets
Slide 27: Momentum Builders
27 Momentum Builders – Realization of the Growth Projects • Pinjarra refinery expansion • 50% aerospace capacity increase • Russia and China rolling assets • Sao Luis refinery expansion • Juruti bauxite mine development • Iceland smelter
Slide 28: Momentum Builders
28 Momentum Builders
Slide 29: Momentum Builders
29 Momentum Builders – Continued Improvement in Downstream Performance • Consistent quarter over quarter improvement • Proprietary technology and unique equipment • Continued new product development • Significant investments in productive assets • Unique and proprietary products for growing end mark
Slide 30: Bloomberg ROC Trailing Months
| Bloomberg ROC Trailing 12 Months Bloomberg ROC Trailing 13 Months including Growth Capex Excluding Growth Capex 142% wed tos om od g “s so? 1S RE SORE SORS ON OS MEE GO HOE 2085 SNES oO Gs ANE IGN HRD? Cash from Operations ao $Miions 1080 28 99 px
Slide 31: Tony Thene, Director, Investor Relations
31 Tony Thene Director, Investor Relations Alcoa 390 Park Avenue New York, N.Y. 10022-4608 Telephone: (212) 836-2674 Facsimile: (212) 836-2813 www.alcoa.com For Additional Information, Contact:
Slide 32: A
32 A
Slide 33: Appendix
33 A APPENDIX
Slide 34: Reconciliation of ATOI to consolidated net income
34 $ 662 $2,248 $ 359 $ 537 $ 744 $ 608 Consolidated net income (10) (7) Other (11) (3) (5) (6) Discontinued operations (18) (379) (386) (1) Restructuring and other charges (86) (317) (82) (64) (82) (89) Corporate expense (115) (436) (98) (109) (124) (105) Minority interests (54) (250) (61) (66) (63
Slide 35: Reconciliation of Return on Capital
35 Return on Capital (ROC) is presented based on Bloomberg Methodology which calculates ROC based on trailing four quarters. Reconciliation of Return on Capital 1Q'07 4Q'06 3Q'06 2Q'06 1Q'06 4Q'05 3Q'05 2Q'05 1Q'05 Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloom
Slide 36: Reconciliation of Adjusted Return on Capital
36 Return on capital, excluding growth investments is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides greater insight with respect to the underlying operating performance of the company’s productive assets. The company has significan
Slide 37: Reconciliation of Income and EPS, excluding Restructuring Charges & Discrete Tax Items
37 Reconciliation of Income and EPS, excluding Restructuring Charges & Discrete Tax Items Income from continuing operations – excluding restructuring and other charges and discrete tax items is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because man
Slide 38: Days of Working Capital
38 51.5 49.9 51.1 Days of Working Capital $ 7,908 $ 7,840 $ 7,111 Sales $ 4,524 $ 4,252 $ 4,038 Working Capital 2,570 2,680 2,449 Less: Accounts payable, trade 3,780 3,805 3,524 Add: Inventories $ 3,314 $ 3,127 $ 2,963 Receivables from customers, less allowances March 31, 2007 December 31, 2006 Marc