Alcoa Corporation earnings

Management highlights

### Safety - Safety remains Alcoa's top priority; key injury metrics have declined on a 12-month rolling basis, showing improving trends - The company has launched an initiative to eliminate fatality risks from live work and expanded its global fatality prevention team to strengthen safety culture and risk management ### Operational Performance - Stable operational delivery across most assets; year-to-date production records were achieved at 4 smelters and 1 refinery - Primary aluminum production increased 30,000 metric tons sequentially following multiple capacity restarts; the Alumar smelter achieved its highest year-to-date shipment volume since its 2022 restart - Multi-year collective labor agreements through 2030 were secured for major operations in Western Australia{

Guidance

- Full year 2026 alumina production guidance is lowered to 9.5–9.6 million metric tons, and shipment guidance is lowered to 11.5–11.6 million metric tons, due to Q2 production losses at the Panjara Refinery from operational instability and cyclone-related natural gas supply disruptions; lost volumes are not expected to be recovered - Full year 2026 other corporate expenses guidance is increased to approximately $180 million, driven by unfavorable currency impacts and costs for strategic initiatives - Full year 2026 depreciation expense guidance is increased to approximately $660 million, driven by currency impacts and accounting changes for certain bauxite mining assets - For Q3 2026, the Alumina segment is expected to deliver a net $10 million favorable performance compared to Q2, driven by restored stability at Panjara and lower energy prices, partially offset by planned maintenance at the Alumar Refinery and Giroudi Mine - For Q3 2026, the Aluminum segment performance is expected to be flat sequentially, as productivity gains and operating efficiencies fully offset higher carbon prices and seasonally lower third-party energy sales in Brazil - Q3 2026 operational tax expense is expected to range between $80 million and $90 million

Segment performance

Alcoa's total Q2 2026 revenue increased 24% sequentially to $4 billion, the highest quarterly revenue in the company's history. The Bauxite (Alumina) segment recorded third-party revenue of $637 million, a 3% sequential decrease, contributing 15.9% of total third-party revenue. Its adjusted EBITDA decreased $56 million sequentially due to higher production costs, operational instability at the Panjara Refinery, and elevated fuel prices. The Aluminum segment recorded third-party revenue of $3.3 billion, a 31% sequential increase, contributing 84.1% of total third-party revenue. Its adjusted EBITDA increased $379 million sequentially to a record $1.1 billion, representing an EBITDA margin of 32.3%. The gain was driven by higher metal prices, increased shipment volumes, improved margins from value-added product mix, and strong customer demand for alternative supply following Middle East production disruptions.

Risks & headwinds

- Aluminum price volatility in late Q2 resulted in lower-than-expected revenue realization that missed consensus estimates, driven by a sharp decline in LME prices in the final two weeks of June that was not captured by standard pricing lag assumptions - Persistent operational instability at the Panjara Refinery in Q2, caused by an oxalate outbreak in bauxite compounded by cyclone-related natural gas supply disruptions, led to permanent production losses for full year 2026 - Mining approval timing for Alcoa's Australian projects may extend beyond the original end-of-year 2026 target for ministerial approval, though the company maintains confidence in final approval - New aluminum smelting capacity additions in Indonesia and the Middle East could delay rebalancing of the ex-China aluminum market - Geopolitical disruptions in the Middle East have kept a large volume of aluminum production offline with uncertain restart timelines, creating ongoing market uncertainty - The expiration of the power contract for the acquired South African smelter in five years creates uncertainty around future power costs, as current market rates for other customers are significantly higher than the existing contracted rate

Analyst Q&A

• Q: What diesel and fuel oil price assumptions underpin the Q3 2026 energy cost outlook, and what is the update on planned asset monetization? /

  A: Alcoa assumes $90 per barrel fuel oil for Q3 2026, resulting in a $5 million favorable impact for combined diesel and fuel oil costs compared to Q2 2026. The company remains on target to generate $500 million to $1 billion in monetization proceeds by 2030, and the Massena East transaction is substantially negotiated with only final documentation remaining.

• Q: What additional capacity does Alcoa have to expand value-add casting production, and what is the trajectory for further restarts of curtailed capacity outside the acquired assets? /

  A: Alcoa is already ~95% full on value-add capacity across Europe and North America, with only small incremental capacity available. The only remaining restart upside is full completion of the Alumar restart (currently ~95% complete) and small incremental volume at the Portland smelter, which is already operating at its highest level since Alcoa became independent.

• Q: Why did aluminum prices return to pre-Iran conflict levels despite unchanged fundamentals of offline Middle East capacity, and what is Alcoa's view on Chinese aluminum production? /

  A: The price decline is purely sentiment-driven following announcements of conflict de-escalation; 3-3.5 million metric tons of Middle East capacity remains offline, so core fundamentals have not changed. Chinese production is tracking 45-46 million metric tons for 2026, slightly above the official 45 million ton cap, which reflects creep of existing asset utilization rather than a policy shift to approve new capacity.

• Q: What is the status of Australian mining permitting, and could approvals be delayed? /

  A: Permitting remains on track for final approval, and stakeholder meetings confirm confidence in a positive outcome, but there are more remaining steps than initially expected. Ministerial approval may be delayed beyond the original end-of-2026 target; a 6-month delay would have no impact on supply, quality or costs, and secondary contingencies exist for longer delays.

• Q: What is causing U.S. aluminum demand softness, and is it destocking or true demand destruction? /

  A: Alcoa sees notably strong demand for foundry and billet in North America, driven in part by customers backfilling lost Middle East supply, with steady slab demand led by packaging. Only modest softness is seen in building and construction, with no widespread true demand destruction across major end markets in North America.