Alcoa : Press-release - Q3

ALCOA CORPORATION REPORTS THIRD QUARTER 2020 RESULTS:

Strong operating and safety performance with continued stability

Executing well on strategic actions and initiatives, enhancing liquidity

PITTSBURGH - October 14, 2020 - Alcoa Corporation (NYSE: AA) today reported third quarter 2020 results that reflect improved pricing for alumina and aluminum, continued operational excellence during the pandemic, and a strong cash position.

Third Quarter Highlights

• Generated $158 million in cash from operations; $84 million free cash flow
• Set new production records for Alcoa operated mines and refineries
• Grew cash balance to $1.74 billion, including the proceeds from a $750 million debt issuance
• Realized an 11 percent sequential increase in sales volume of value-add products due to improving customer demand in the aluminum segment
• On pace to deliver approximately $900 million in combined cash actions in 2020
• Completed restart of ABI smelter in Bécancour, Québec and curtailment of Intalco smelter in Washington State
• Continued progress in improving safety; managing health risks posed by COVID-19 pandemic; all production sites remain fully operational

Financial Results

M, except per share amounts	3Q20	2Q20	3Q19
Revenue	$2,365	$2,148	$2,567
Net loss attributable to Alcoa Corporation	$(49)	$(197)	$(221)
Loss per share attributable to Alcoa Corporation	$(0.26)	$(1.06)	$(1.19)
Adjusted net loss	$(218)	$(4)	$(82)
Adjusted loss per share	$(1.17)	$(0.02)	$(0.44)
Adjusted EBITDA excluding special items	$284	$185	$388

Investor Contact:	James Dwyer	[phone]	[e-mail]
Media Contact:	Jim Beck	[phone]	[e-mail]

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"Across all of our segments, we are delivering solid results and continuing to improve overall performance," said Alcoa President and CEO Roy Harvey. "In the third quarter, we captured the gains from better pricing in alumina and aluminum, increased sales of value-add aluminum products, and realized a 54 percent sequential improvement in adjusted EBITDA," he continued. "We also boosted our Company's liquidity, so we have even greater flexibility to execute on our strategy."

"We are doing far more than simply maintaining stability - we are setting production records, driving productivity, reducing costs, and improving our balance sheet. All of this is aligned with our strategic priorities and is only possible because of the dedication of our people and the work to protect safety and health during these unprecedented times," Harvey said.

• Production records:
  In the third quarter of 2020, Alcoa set a year-to-date production record for Alcoa-operated bauxite mines and the Alumina segment surpassed its record rate (metric tons per day) for quarterly production, last set in the second quarter of 2020.
• Shipments: In Alumina, third-party shipments increased approximately 6 percent sequentially, primarily due to the timing of shipments and higher overall production. In Aluminum, third-party shipment volume declined approximately 3 percent, primarily related to the curtailment of the Intalco smelter in the third quarter of 2020.
• Revenue: Higher aluminum and alumina prices coupled with higher alumina shipments in the third quarter helped drive a 10 percent sequential increase in revenue to $2.4 billion. The Company realized an 11 percent sequential increase in sales volume of value-add products, primarily due to improved demand from the automotive sector.
• Net loss attributable to Alcoa Corporation: Alcoa reported net loss of $49 million, or $0.26 per share, compared with net loss of $197 million, or $1.06 per share, in the second quarter of 2020. The sequential improvement is primarily attributed to higher aluminum and alumina prices in addition to lower restructuring-related charges in the quarter.
• Adjusted net loss: Excluding the impact of special items of $169 million, adjusted net loss was $218 million, or $1.17 per share, a decline from the second quarter 2020 adjusted net loss of $4 million, or $0.02 per share.
• Adjusted EBITDA excluding special items: Adjusted EBITDA excluding special items was $284 million, a 54 percent sequential increase primarily attributed to higher aluminum prices.
• Cash: Alcoa ended the quarter with cash on hand of $1.74 billion, which included $736 million in net proceeds from a July 2020 debt issuance. Debt as of September 30, 2020 was $2.5 billion and net debt was $804 million. Cash provided from operations was $158 million. Cash provided from financing activities was $692 million, primarily related to the debt issuance, and cash used for investing activities was $78 million. Free cash flow was $84 million.
• Working capital: The Company reported 22 days working capital, a 2-day improvement sequentially, and an 8-day improvement year over year, primarily due to decreases in days of inventory on hand.

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Strategic Actions and Initiatives

Alcoa continues to execute strategic actions to drive lower costs and sustainable profitability, including the review of its existing production capacities and non-core assets, and other cash preservation programs.

• Restart complete at Aluminerie de Bécancour Inc. (ABI) smelter
  In the third quarter of 2020, Alcoa completed the full restart of the ABI smelter, owned by Alcoa (74.95%) and Rio Tinto Alcan Inc. (25.05%), with a total annual capacity of 413,000 metric tons per year. The restart began on July 26, 2019 after completing a new labor agreement for the facility.
• Intalco Works curtailment
  In August of 2020, the Company completed the full curtailment of its 279,000-metric-ton Intalco smelter in Washington State. In 2020, the Company recorded cash-based restructuring charges of approximately $23 million (pre- and after-tax) associated with the curtailment, including employee severance and costs associated with termination of contracts.
• San Ciprián curtailment
  On October 9, 2020, Alcoa announced that it will fully curtailthe 228,000 metric tons of annual capacity at its San Ciprián aluminum smelter in Spain, with the curtailment expected to be complete in the first quarter of 2021. The action follows an extensive consultation period with the workers representatives, which was completed in accordance with Spanish regulations. Associated with the curtailment, Alcoa expects restructuring charges of approximately $35 million to $40 million (pre- and after-tax), or $0.19 to $0.22 per share, in the fourth quarter of 2020 for employee-related costs, which are all cash-based charges expected to be paid primarily in the first half of 2021.
• 2020 Programs
  Earlier this year, Alcoa announced 2020 programs to drive leaner working capital and improved productivity. Year to date, the Company is on pace to meet its combined $175 million - $200 million full-year working capital reduction and productivity savings target.
• COVID-19Update
  As a result of our comprehensive measures to protect employees, contractors and communities from risks associated with the COVID-19 pandemic, all of our global operations have maintained production without interruption, and the Company's segments have not experienced any significant disruption in its supply sources. All locations have maintained comprehensive plans to mitigate the risks caused by the pandemic and continue to refine and update those plans based on specific conditions.
  The Company continues to manage cash during the economic downturn caused by the pandemic and is continuing to execute on programs to save or defer up to $380 million, including deferring to 2021 approximately $200 million of cash contributions to the Company's U.S. pension plans as permitted under the U.S. Coronavirus Aid, Relief and Economic Security Act.

Through the combination of the strategic actions, 2020 programs and COVID-19 response initiatives, Alcoa is on track to generate, save and defer a total of approximately $900 million in cash actions in 2020.

2020 Outlook

The Company's 2020 shipment outlook for Bauxite and Aluminum remains unchanged from the prior full- year estimates. Total annual bauxite shipments are expected to range between 48.0 and 49.0 million dry metric tons. Aluminum shipments are expected to be between 2.9 and 3.0 million metric tons. The Company expects its 2020 shipment outlook for Alumina to improve by 0.2 million metric tons to between

13.8 to 13.9 million metric tons due to improved production levels.

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In the fourth quarter of 2020, Alcoa expects flat sequential quarterly results in the Bauxite segment. In the Alumina segment, the Company expects lower sequential quarterly results primarily from higher energy costs and a change in the mix of customer shipments. In the Aluminum segment, the Company expects a sequential decline with anticipated higher power costs in Europe, a full quarter of Section 232 tariffs, and higher maintenance and seasonal labor costs, partially offset by the positive impact of the Intalco curtailment for a full quarter.

The fourth quarter 2020 operational tax expense is expected to be significantly lower than 3Q and approximate $25 million based on recent pricing.

The COVID-19 pandemic is ongoing, and its magnitude and duration continue to be unknown. The uncertainty around its future impact on the Company's business, financial condition, operating results, and cash flows could cause actual results to differ from this outlook.

Conference Call

Alcoa will hold its quarterly conference call at 5:00 p.m. Eastern Daylight Time (EDT) on Wednesday, October 14, 2020, to present third quarter financial results and discuss the business and market conditions.

The call will be webcast via the Company's homepage on www.alcoa.com. Presentation materials for the call will be available for viewing on the same website at approximately 4:15 p.m. EDT on October 14, 2020. Call information and related details are available under the "Investors" section of www.alcoa.com.

Dissemination of Company Information

Alcoa intends to make future announcements regarding company developments and financial performance through its website, www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls and webcasts. The Company does not incorporate the information contained on, or accessible through, its corporate website into this press release.

About Alcoa Corporation

Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina, and aluminum products, and is built on a foundation of strong values and operating excellence dating back more than 130 years to the world- changing discovery that made aluminum an affordable and vital part of modern life. Since developing the aluminum industry, and throughout our history, our talented Alcoans have followed on with breakthrough innovations and best practices that have led to efficiency, safety, sustainability, and stronger communities wherever we operate.

Forward-Looking Statements

This news release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goal," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements by Alcoa Corporation that reflect 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 bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results or operating performance; statements about strategies, outlook, and business and financial prospects; and statements about return of capital. These statements reflect beliefs and assumptions that are based on Alcoa Corporation's perception of historical trends, current conditions, and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances

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