Alcoa Corporation Announces Decisions on Smelting Assets

PITTSBURGH–(BUSINESS WIRE)–Alcoa Corporation, a global leader in bauxite, alumina and aluminum
products, today announced decisions regarding smelting assets in the
United States and Italy. The actions support the Company’s strategic
priorities to reduce complexity and to strengthen the balance sheet.

• In the United States, Alcoa intends to permanently close its Rockdale
  Operations site in Texas, which has been fully curtailed since the end
  of 2008. The site includes a primary aluminum smelter and casthouse,
  an aluminum powder plant and associated buildings and equipment.
  Alcoa’s strategic review of these assets, announced
  earlier this year, concluded that these operations have limited
  economic prospects. Separately, the Company continues to market for
  sale more than 30,000 acres of land at the Rockdale site.
• In Italy, Alcoa has reached an agreement to divest the Portovesme
  primary aluminum smelter, fully curtailed since 2012 and closed since
  2014, to Invitalia, the Italian government agency that manages
  economic development. As part of the agreement, Alcoa and the Italian
  government have settled matters related to past energy tariffs,
  including the Italian Energy Authority Regulation 148/2004 matter, and
  a groundwater remediation project.

“We continuously evaluate our portfolio of global assets against many
factors to optimize value,” said President and Chief Executive Officer
Roy Harvey. “Achieving a resolution on these two assets further
streamlines our Company as we continue to execute against our strategic
priorities.”

The Company will record an estimated charge of $55 million (pre- and
after-tax) in the fourth quarter of 2017 associated with the permanent
closure of Rockdale. In addition, the Company will record an estimated
$22 million (pre- and after-tax) reserve reduction in the fourth quarter
of 2017 associated with a reserve established at the end of 2015 for the
Italy matter.

The net earnings impact of the two actions is estimated to be a negative
$0.18 per share in the fourth quarter of 2017. The Company anticipates
annual adjusted EBITDA benefits of approximately $3 million upon
completion of the Rockdale decommissioning in 2022, and of approximately
$4 million upon completion of the Portovesme divestiture in 2018.

Cash outlays for the Rockdale closure are expected to be approximately
$53 million over the next five years, including holding and demolition
costs, with approximately $16 million in 2018. Cash outlays for the
Italy settlement, including the pre-existing 148/2004 matter and
remediation reserves, are expected to be between $40 million and $50
million over the next five years, with approximately $10 million in 2018.

About Alcoa

Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina and
aluminum products, with a strong portfolio of value-added cast and
rolled products and substantial energy assets. Alcoa is built on a
foundation of strong values and operating excellence dating back nearly
130 years to the world-changing discovery that made aluminum an
affordable and vital part of modern life. Since inventing 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. Visit us online on www.alcoa.com, follow @Alcoa on Twitter and
on Facebook at www.facebook.com/Alcoa.

The above website addresses are included only as inactive textual
references and are not intended to be active links to such websites.
Information contained on such websites or that can be accessed through
such websites do not constitute part of this press release.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company
developments and financial performance through its website at www.alcoa.com.

Forward-Looking Statements

This press release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,”
“intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,”
“should,” “targets,” “will,” “would,” or other words of similar meaning.
All statements that reflect the Company’s expectations, assumptions or
projections about the future, other than statements of historical fact,
are forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and unknown
risks, uncertainties, and changes in circumstances that are difficult to
predict. Although the Company 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. Additional information concerning factors that could
cause actual results to differ materially from those projected in the
forward-looking statements is contained in our filings with the
Securities and Exchange Commission. The Company 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.

Adjusted EBITDA Definition

Alcoa Corporation’s definition of Adjusted EBITDA 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
Corporation’s operating performance and the Company’s ability to meet
its financial obligations. The Adjusted EBITDA presented may not be
comparable to similarly titled measures of other companies. Alcoa
Corporation has not provided a reconciliation of the forward-looking
Adjusted EBITDA amounts included in this release to the most directly
comparable GAAP financial measures due primarily to the variability and
complexity in making accurate forecasts and projections, as not all of
the information for a quantitative reconciliation is available to the
company without unreasonable effort.

Contacts

Alcoa Corporation
Investor Contact
James Dwyer, 412-992-5450
[email protected]
or
Media
Contact
Jim Beck, 412-315-2909
[email protected]