Company on track to complete separation into
two industry-leading, public companies in second half 2016
Lightweight metals leader Alcoa (NYSE:AA) today reported
progress on the Company’s performance against three-year financial
targets and its continuing transformation as it prepares to
separate into two industry-leading, publicly-traded companies.
Alcoa also outlined a clear roadmap to complete its separation in
the second half of 2016. The Company delivered the update at its
2015 Investor Day event in Grand Rapids, Michigan.
“Alcoa’s transformation continues to create exciting profitable
growth in our Value-Add business and lower the cost position of our
Upstream business to ensure success throughout the cycle,” said
Klaus Kleinfeld, Chairman and Chief Executive Officer. “Culminating
our successful multi-year transformation, we have now set a clear
path to separating the portfolios into two strong, industry-leading
public companies. We are gratified at the positive feedback we have
received from analysts, long-term investors and many new investors
who recognize the enhanced value that the separation will create;
we look forward to launching two strong companies in the second
half of next year.”
Progress Towards Three-Year
Targets
As the Company prepares for the separation, both the Value-Add
businesses and the Upstream businesses reported progress against
2016 targets set at the end of 2013.
The Value-Add businesses:
- Global Rolled Products forecast
approximately $1 billion of revenue growth for the three-year
period, with 2016 adjusted EBITDA per metric ton at or above
average historical highs of $344;
- Engineered Products and Solutions (EPS)
forecast approximately $3.1 billion of revenue growth between 2013
and 2016, with adjusted EBITDA margin of approximately 23 percent
next year; and
- Transportation and Construction
Solutions, the new segment formed in third quarter 2015 comprising
two businesses formerly part of EPS—Alcoa Wheel and Transportation
Products and Alcoa Building and Construction Solutions—and the
Latin American Extrusions business, forecast approximately $500
million revenue growth over the three-year period, with adjusted
EBITDA margin of at least 15 percent in 2016.
The Upstream businesses:
- Moved down two points on the global
alumina cost curve to the 23rd percentile in 2015 with goal to
improve position to the 21st percentile in 2016;
- On track to achieve its 38th percentile
target on the global aluminum cost curve in 2016, from the 43rd
percentile this year; and
- Increased margins by $1.5 billion from
2010 through 2015 through shaped products from casthouses by
boosting production to 70 percent of sales estimated in 2015, on
target to reach 74 percent in 2016; and grew exports of third-party
bauxite sales, on target to double shipments in 2016.
In addition, Alcoa projected a 2016 global aluminum deficit of
360,000 metric tons, down from a 551,000 metric ton surplus in 2015
estimated in third quarter 2015, driven by strong aluminum demand,
smaller production increases and smelter curtailments. The Company
also projected a 1 million metric ton alumina deficit in 2016 from
a 2.2 million metric ton surplus in 2015 estimated in third quarter
2015, due to record global alumina demand and refinery
curtailments.
Separation Update
Alcoa also provided an update on its separation plans. The
Company has established a well-defined governance structure led by
a steering committee, a separation program office and functional
teams to separate Alcoa into two standalone companies. The
separation program office is ensuring that all deliverables and
deadlines will be met to make the separation effective in the
second half of 2016. Alcoa is targeting a Form 10 filing with the
U.S. Securities and Exchange Commission by mid-2016.
A replay of the Alcoa 2015 Investor Day webcast and archived
slides are available on www.alcoa.com/investorday.
About Alcoa
A global leader in lightweight metals technology, engineering
and manufacturing, Alcoa innovates multi-material solutions that
advance our world. Our technologies enhance transportation, from
automotive and commercial transport to air and space travel, and
improve industrial and consumer electronics products. We enable
smart buildings, sustainable food and beverage packaging, high
performance defense vehicles across air, land and sea, deeper oil
and gas drilling and more efficient power generation. We pioneered
the aluminum industry over 125 years ago, and today, our more than
60,000 people in 30 countries deliver value-add products made of
titanium, nickel and aluminum, and produce best-in-class bauxite,
alumina and primary aluminum products. For more information,
visit www.alcoa.com, follow @Alcoa on Twitter at
www.twitter.com/Alcoa and follow us on Facebook at
www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events
and expectations and as such constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include those containing such
words as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “forecasts,” “intends,” “may,” “outlook,” “plans,”
“projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,”
or other words of similar meaning. All statements that reflect
Alcoa’s expectations, assumptions or projections about the future
other than statements of historical fact are forward-looking
statements, including, without limitation, forecasts concerning
global demand growth for aluminum, supply/demand balances, and
growth of the aerospace, automotive, and other end markets;
statements regarding targeted financial results or operating
performance; statements about Alcoa’s strategies, outlook, business
and financial prospects, and the acceleration of Alcoa’s portfolio
transformation; and statements regarding the separation
transaction, including the future performance of the two
independent companies if the separation is completed, the expected
benefits of the separation, the expected timing of completion of
the separation, and the expected qualification of the separation as
a tax-free transaction. Forward-looking statements are not
guarantees of future performance and are subject to risks,
uncertainties, and changes in circumstances that are difficult to
predict. Although Alcoa believes that the expectations reflected in
any forward-looking statements are based on reasonable assumptions,
it can give no assurance that these expectations will be attained
and it is possible that actual results may differ materially from
those indicated by these forward-looking statements due to a
variety of risks and uncertainties. Such risks and uncertainties
include, but are not limited to: (a) uncertainties as to the timing
of the separation and whether it will be completed; (b) the
possibility that various closing conditions for the separation may
not be satisfied; (c) failure of the separation to qualify for the
expected tax treatment; (d) the possibility that any third-party
consents required in connection with the separation will not be
received; (e) the impact of the separation on the businesses of
Alcoa; (f) the risk that the businesses will not be separated
successfully or such separation may be more difficult,
time-consuming or costly than expected, which could result in
additional demands on Alcoa’s resources, systems, procedures and
controls, disruption of its ongoing business and diversion of
management’s attention from other business concerns; (g) material
adverse changes in aluminum industry conditions; (h) deterioration
in global economic and financial market conditions generally; (i)
unfavorable changes in the markets served by Alcoa; (j) the impact
of changes in foreign currency exchange rates on costs and results;
(k) increases in energy costs; (l) the inability to achieve the
level of revenue growth, cash generation, cost savings, improvement
in profitability and margins, fiscal discipline, or strengthening
of competitiveness and operations (including moving its alumina
refining and aluminum smelting businesses down on the industry cost
curves and increasing revenues and improving margins in its Global
Rolled Products, Engineered Products and Solutions, and
Transportation and Construction Solutions segments) anticipated
from restructuring programs and productivity improvement, cash
sustainability, technology advancements (including, without
limitation, advanced aluminum alloys, Alcoa Micromill, and other
materials and processes), and other initiatives; (m) Alcoa’s
inability to realize expected benefits, in each case as planned and
by targeted completion dates, from acquisitions, divestitures,
facility closures, curtailments, or expansions, or international
joint ventures; (n) political, economic, and regulatory risks in
the countries in which Alcoa operates or sells products; (o) the
outcome of contingencies, including legal proceedings, government
or regulatory investigations, and environmental remediation; (p)
the impact of cyber attacks and potential information technology or
data security breaches; (q) the potential failure to retain key
employees while the separation transaction is pending or after it
is completed; (r) the risk that increased debt levels,
deterioration in debt protection metrics, contraction in liquidity,
or other factors could adversely affect the targeted credit ratings
for the two proposed independent companies; and (s) the other risk
factors discussed in Alcoa’s Form 10-K for the year ended December
31, 2014, and other reports filed with the U.S. Securities and
Exchange Commission (SEC). Alcoa disclaims any obligation to update
publicly any forward-looking statements, whether in response to new
information, future events or otherwise, except as required by
applicable law. Market projections are subject to the risks
discussed above and other risks in the market.
Non-GAAP Financial Measures
Alcoa has not provided a reconciliation of any forward-looking
non-GAAP financial measures to the most directly comparable GAAP
financial measures, due primarily to variability and difficulty in
making accurate forecasts and projections, as not all of the
information necessary for a quantitative reconciliation is
available to the Company without unreasonable effort.
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version on businesswire.com: http://www.businesswire.com/news/home/20151104006533/en/
AlcoaInvestor ContactNahla Azmy,
212-836-2674Nahla.Azmy@alcoa.comorMedia ContactMonica Orbe,
212-836-2632Monica.Orbe@alcoa.com
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