Alcoa AA Form 10-Q filing Q2 FY2025

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

The accompanying notes are an integral part of the consolidated financial statements.

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The accompanying notes are an integral part of the consolidated financial statements.

2

The accompanying notes are an integral part of the consolidated financial statements.

3

The accompanying notes are an integral part of the consolidated financial statements.

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The accompanying notes are an integral part of the consolidated financial statements.

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Alcoa Corporation and Subsidiaries

Notes to the Consolidated Financial Statements (unaudited)

(dollars in millions, except per-share amounts; metric tons in thousands (kmt))

A. Basis of Presentation – The interim Consolidated Financial Statements of Alcoa Corporation and its subsidiaries (Alcoa Corporation, Alcoa, or the Company) are unaudited. These Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The results reported in these Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the entire year. The 2024 year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which includes disclosures required by GAAP.

In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They also may affect the reported amounts of revenues and expenses during the reporting periods. Management uses historical experience and all available information to make these estimates. Management regularly evaluates the judgments and assumptions used in its estimates, and results could differ from those estimates upon future events and their effects or new information.

Principles of Consolidation. The Consolidated Financial Statements of the Company include the accounts of Alcoa Corporation and companies in which Alcoa Corporation has a controlling interest, including those that comprise the San Ciprián joint venture (see Note C). Intercompany transactions have been eliminated. The equity method of accounting is used for investments in affiliates and other joint ventures over which the Company has significant influence but does not have effective control. Investments in affiliates in which Alcoa Corporation cannot exercise significant influence are accounted for at cost less any impairment, a measurement alternative in accordance with GAAP.

Prior to Alcoa’s acquisition of Alumina Limited on August 1, 2024 (see Note C), Alcoa consolidated its 60% ownership in the entities comprising the Alcoa World Alumina & Chemicals (AWAC) joint venture and Alumina Limited’s interest in the equity of such entities was reflected as Noncontrolling interest within Equity on the accompanying Consolidated Balance Sheet.

B. Recently Adopted and Recently Issued Accounting Guidance

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2024-03 which requires detailed disclosures about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) included within commonly presented expense captions (including cost of goods sold; selling, general administrative, and other expense; and research and development expenses). The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The adoption of this guidance will not have a material impact on the Company’s financial position or results of operations and will provide enhanced disclosures regarding expenses beginning in the Company’s Annual Report on Form 10-K for the year ended December 31, 2027.

In December 2023, the FASB issued ASU No. 2023-09 which includes changes to income tax disclosures, including greater disaggregation of information in the rate reconciliation and disclosure of taxes paid by jurisdiction. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance will not have a material impact on the Company’s financial position or results of operations and will provide enhanced disclosures regarding income taxes beginning in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

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C. Acquisitions and Divestitures

San Ciprián Joint Venture

On March 31, 2025, Alcoa and IGNIS Equity Holdings, SL (IGNIS EQT) entered into a joint venture agreement whereby Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations.

Alcoa and IGNIS EQT contributed $81 (€75) and $27 (€25), respectively, to form the joint venture. Additionally, up to approximately $117 (€100) may be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding requires agreement by both partners and would be shared 75% by Alcoa and 25% by IGNIS EQT.

The transaction was accounted for as an equity transaction where IGNIS EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. Noncontrolling interest was measured at 25% of the net assets included in the joint venture at formation ($103), which includes the contributions described above ($108). Additionally, certain amounts related to foreign currency translation adjustments previously included within Accumulated other comprehensive loss ($31) were reclassified to Additional capital.

Under the terms of the joint venture agreement, IGNIS EQT has a put option whereby IGNIS EQT can require Alcoa Corporation to purchase from IGNIS EQT its 25% interest at the then fair market value upon certain change in control provisions. Alcoa classified the Noncontrolling interest within Mezzanine equity on the Consolidated Balance Sheet, as IGNIS EQT’s redemption of the put option is not solely within the Company’s control. Changes in the carrying value of Noncontrolling interest on the Consolidated Balance Sheet in the second quarter of 2025 were solely comprised of the comprehensive loss attributable to IGNIS EQT’s 25% interest, as a change in control of the San Ciprián operations was not deemed probable.

Alumina Limited Acquisition

On August 1, 2024, Alcoa completed the acquisition of all of the ordinary shares of Alumina Limited (Alumina Shares) through a wholly-owned subsidiary, AAC Investments Australia 2 Pty Ltd. At acquisition, Alumina Limited held a 40% ownership interest in the AWAC joint venture, consisting of several affiliated operating entities, which own, have an interest in, or operate the bauxite mines and alumina refineries within Alcoa Corporation’s Alumina segment (except for the Poços de Caldas mine and refinery and portions of the São Luís refinery, all in Brazil) and a portion (55%) of the Portland smelter (Australia) within Alcoa Corporation’s Aluminum segment. Upon completion of the Alumina Limited acquisition, Alumina Limited and, as a result, the operations held by the AWAC joint venture, became wholly-owned subsidiaries of Alcoa Corporation.

Earnings attributable to Alumina Limited’s ownership interest were recognized within Noncontrolling interest through July 31, 2024.

Saudi Arabia Joint Venture

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, comprised of the Ma’aden Bauxite and Alumina Company (MBAC) and the Ma’aden Aluminium Company (MAC), to Saudi Arabian Mining Company (Ma’aden) in exchange for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at $1,200 (SAR 4,501) as of closing) and $150 (SAR 562) in cash (to be used primarily for related taxes and transaction costs). The fair value of the shares is based on the quoted price on the Saudi Exchange (Tadawul). The carrying value of Alcoa’s investment was $546 as of June 30, 2025. In the third quarter of 2025, Alcoa will recognize a gain of approximately $780 and subsequent changes in fair value of the shares within Other (income) expenses, net.

The shares of Ma’aden are subject to transfer and sale restrictions, including a restriction requiring Alcoa to hold its Ma’aden shares for a minimum of three years, with one-third of the shares becoming transferable after each of the third, fourth, and fifth anniversaries of closing of the transaction (the holding period). During the holding period, Alcoa is permitted, under certain conditions, to hedge and borrow against its Ma’aden shares. Under certain circumstances, such minimum holding period would be reduced.

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Warrick Rolling Mill Divestiture

In March 2021, Alcoa completed the sale of its rolling mill located at Warrick Operations (Warrick Rolling Mill) and recorded estimated liabilities for site separation commitments.

During the second quarter and the six-month period of 2025, the Company spent $3 and $5 against the reserve, respectively.

The Company recorded charges of $4 and $15 in the second quarter and the six-month period of 2024, respectively, in Other (income) expenses, net on the accompanying Statement of Consolidated Operations related to these commitments. During the second quarter and the six-month period of 2024, the Company spent $5 and $12 against the reserve, respectively.

The remaining balance of $3 at June 30, 2025 is expected to be spent in 2025. The cash spent against the reserve is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

D. Restructuring and Other Charges, Net

In the second quarter and the six-month period of 2025, Alcoa Corporation recorded Restructuring and other charges, net, of $14 and $19, respectively, which were primarily comprised of:

• A charge of $20 (both periods) to record net additional asset retirement obligation and environmental reserves at previously closed sites;
• A charge of $6 and $9, respectively, for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián (Spain) aluminum smelter; and,
• A net benefit of ($12) and ($10), respectively, for take-or-pay contract costs at previously closed sites.

In the second quarter and the six-month period of 2024, Alcoa Corporation recorded Restructuring and other charges, net, of $18 and $220, respectively, which were primarily comprised of:

• A charge of $8 and $205, respectively, for the curtailment of the Kwinana (Australia) refinery; and,
• A charge of $8 and $12, respectively, for take-or-pay contract costs at a previously closed site.

In June 2024, Alcoa completed the full curtailment of the Kwinana refinery, as planned, which was announced in January 2024. As of June 2025, the refinery had approximately 230 employees to manage certain processes, including water management. In the first quarter of 2024, the Company recorded charges of $197 in Restructuring and other charges, net on the Statement of Consolidated Operations comprised of other costs of $136 for water management costs ($123) and take-or-pay contracts ($13), severance and employee termination costs of $41, asset retirement obligations of $15, and asset impairments of $5. The Company recorded net charges of $8 and $82 in Restructuring and other charges, net on the Statement of Consolidated Operations in the second quarter and fourth quarter of 2024, respectively, comprised of others costs of $96, partially offset by an adjustment to decrease the asset retirement obligation by $6. Payments related to other costs were $45 and $86 in the second quarter and six-month period of 2025, respectively. Remaining cash outlays of approximately $60 are expected to be spent in 2025.

Alcoa Corporation does not include Restructuring and other charges, net in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:

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Activity and reserve balances for restructuring charges were as follows:

The activity and reserve balances include only Restructuring and other charges, net that impacted the reserves for Severance and employee termination costs and Other costs. Restructuring and other charges, net that affected other liability accounts such as Accrued pension benefits (see Note L), Asset retirement obligations, and Environmental remediation (see Note O) are excluded from the above activity and balances. Reversals and other includes reversals of previously recorded liabilities and foreign currency translation impacts.

The noncurrent portion of the reserve was $2 and $8 at June 30, 2025 and December 31, 2024, respectively.

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E. Segment Information – Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. The primary measure of performance reported to Alcoa Corporation’s President and Chief Executive Officer (identified as the Company’s CODM) is Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for each segment.

The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The CODM regularly reviews Segment Adjusted EBITDA to assess performance and allocate resources (including employees, property, and financial or capital resources) in the planning and strategic review process.

The operating results, capital expenditures, and assets of Alcoa Corporation’s reportable segments were as follows (differences between segment totals and consolidated amounts are in Corporate):

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(1)

Adjusted operating costs include all production related costs for alumina or aluminum produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses.

(2)

Other segment items include costs associated with trading activity, the Alumina segment’s purchase of bauxite from offtake or other supply agreements, the Alumina segment’s commercial shipping services, and the Aluminum segment’s energy assets; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

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The following table reconciles Total Segment Adjusted EBITDA to Consolidated net income (loss) attributable to Alcoa Corporation:

(1)

Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

(2)

Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

(3)

Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.

The following table details Alcoa Corporation’s Sales by product division:

(1)

Other includes realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum (see Note M).

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F. Earnings Per Share

Basic earnings per share (EPS) is calculated using the two-class method. Under the two-class method, earnings are allocated to Alcoa common stock and preferred stock based on the pro-rata share of each class outstanding. Diluted EPS assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. Diluted EPS is calculated under both the two-class and if-converted methods, and the more dilutive amount is reported.

In the second quarter and the six-month period of 2025, dividends paid on preferred stock were $1 (both periods) and undistributed earnings of $1 and $10, respectively, were allocated to preferred stock under the two-class method.

The share information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions):

In the six-month period of 2024, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive. Had Alcoa generated net income in the six-month period of 2024, two million common share equivalents related to three million outstanding stock units and stock options combined would have been included in diluted average shares outstanding for the period.

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G. Accumulated Other Comprehensive (Loss) Income

The following table details the activity of the three components that comprise Accumulated other comprehensive (loss) income for Alcoa Corporation’s shareholders and Noncontrolling interest:

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(1)

These amounts were included in the computation of net periodic benefit cost for pension and other postretirement benefits (see Note L).

(2)

These amounts were reported in Provision for income taxes on the accompanying Statement of Consolidated Operations.

(3)

These amounts were reported in Sales on the accompanying Statement of Consolidated Operations.

(4)

These amounts were reported in Cost of goods sold on the accompanying Statement of Consolidated Operations.

(5)

These amounts were reported in Other (income) expenses, net on the accompanying Statement of Consolidated Operations.

(6)

A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

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H. Investments – A summary of unaudited financial information for Alcoa Corporation’s equity investments is as follows (amounts represent 100% of investee financial information):

The Company’s basis in the ELYSISTM Limited Partnership (ELYSIS) as of June 30, 2025 and 2024, included in Other in the table above, has been reduced to zero for its share of losses incurred to date. As a result, the Company has $63 in unrecognized losses as of June 30, 2025 that will be recognized upon additional contributions into the partnership.

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, comprised of MBAC and MAC, to Ma’aden in exchange for issuance by Ma’aden of 85,977,547 shares and $150 (SAR 562) in cash (see Note C).

During the second quarter of 2025, Alcoa sold a non-core investment for total cash consideration of $13, resulting in a gain of $3 within Other (income) expenses, net. Cash received of $11 is presented within investing activities in the Statement of Cash Flows. The remaining $2 is expected to be received in May 2026 and was included in Other receivables on the Consolidated Balance Sheet at June 30, 2025.

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I. Receivables

In November 2024, a wholly-owned special purpose entity (SPE) of the Company amended an agreement with a financial institution to increase the amount of certain customer receivables that can be transferred without recourse on a revolving basis from $130 to $150 and to extend the maturity to November 14, 2025. The agreement was initially entered into in 2023. Company subsidiaries sell customer receivables to the SPE, which then transfers the receivables to the financial institution. The Company does not maintain effective control over the transferred receivables and therefore accounts for the transfers as sales of receivables.

Alcoa Corporation guarantees the performance obligations of the Company subsidiaries, and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. The SPE held unsold customer receivables of $355 and $247 pledged as collateral against the sold receivables as of June 30, 2025 and December 31, 2024, respectively.

The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash.

In the second quarter of 2025, the Company sold gross customer receivables of $248 and reinvested collections of $248 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In the six-month period of 2025, the Company sold gross customer receivables of $447 and reinvested collections of $447 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution.

In the second quarter of 2024, the Company sold gross customer receivables of $293 and reinvested collections of $293 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In the six-month period of 2024, the Company sold gross customer receivables of $600 and reinvested collections of $584 from previously sold receivables, resulting in net cash proceeds from the financial institution of $16.

Cash collections from previously sold receivables yet to be reinvested of $58 and $50 were included in Accounts payable, trade on the Consolidated Balance Sheet as of June 30, 2025 and December 31, 2024, respectively. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows.

J. Inventories

K. Debt

Short-term Borrowings

Inventory Repurchase Agreements

The Company entered into inventory repurchase agreements whereby the Company sold aluminum to a third party and agreed to subsequently repurchase substantially similar inventory. The Company did not record sales upon each shipment of inventory and the net cash received of $8 and $50 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of June 30, 2025 and December 31, 2024, respectively. The associated inventory sold was reflected in Prepaid expenses and other current assets on the accompanying Consolidated Balance Sheet.

During the second quarter and six-month period of 2025, the Company recorded borrowings of $7 and $51, respectively, and repurchased $44 and $93, respectively, of inventory related to these agreements. During the second quarter and six-month period of 2024, the Company recorded borrowings of $24 and $45, respectively, and repurchased $45 and $70, respectively, of inventory related to these agreements.

The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

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144A Debt

2030 and 2032 Notes

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs. The Company utilized certain proceeds of these transactions to fund contributions to Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation and the issuer of the outstanding $750 aggregate principal amount of 5.500% Notes due 2027 (the Existing 2027 Notes) and $500 aggregate principal amount of 6.125% Notes due 2028 (the Existing 2028 Notes). These contributions were funded through a series of intercompany transactions, including the repayment of intercompany indebtedness and the issuance of intercompany dividends. ANHBV used such funds, along with cash on hand, to fund the purchase price pursuant to the cash tender offers announced and settled in March 2025, including premiums and transaction costs (see Tender Offers). The net proceeds also support Alcoa’s general corporate purposes.

The discount to the initial purchasers of the Notes, as well as costs to complete the financing, were deferred and are being amortized to interest expense over the term of the Notes. Interest on the Notes is paid semi-annually in March and September, and interest payments will commence on September 15, 2025. The indentures contain customary affirmative and negative covenants that are similar to those included in the indenture that governs ANHBV’s 7.125% Senior Notes due 2031 issued in March 2024, such as limitations on liens, limitations on sale and leaseback transactions, and the calculation of certain financial ratios.

Alumina Pty Ltd has the option to redeem the Notes on at least 10 days, but not more than 60 days, notice to the holders of the Notes under multiple scenarios, including, in whole or in part, at any time or from time to time on and after March 15, 2027 and March 15, 2028 for the 2030 Notes and 2032 Notes, respectively, at the applicable redemption price specified in the indenture (up to 103.063% and 103.188% of the principal amount plus any accrued and unpaid interest in each case for the 2030 Notes and 2032 Notes, respectively). Also, the Notes are subject to repurchase upon the occurrence of a change in control repurchase event (as defined in the indenture) at a repurchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest on the Notes repurchased.

The Notes are guaranteed on a senior unsecured basis by the Company and its subsidiaries that are party to the indentures. The Notes and related guarantees rank equally in right of payment with all existing and future senior unsecured indebtedness of Alumina Pty Ltd, the Company, and such subsidiaries; rank senior in right of payment to any future subordinated obligations of Alumina Pty Ltd, the Company, and such subsidiaries; and are effectively subordinated to the existing and future secured indebtedness of Alumina Pty Ltd, the Company, and such subsidiaries, including under the Revolving Credit Agreement, to the extent of the value of property and assets securing such indebtedness.

See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information related to the Company’s and such subsidiaries’ existing debt and related covenants.

Tender Offers

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the Existing 2027 Notes and Existing 2028 Notes were determined to be issuances of new debt and extinguishments of existing debt. As a result, the Company incurred $12 of debt settlement expenses in the first quarter of 2025 in Interest expense, which was comprised of the settlement premiums, transaction costs, and the write-off of unamortized discounts and deferred financing costs. The cash flows related to the transaction were included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

Credit Facilities

Revolving Credit Facility

The Company and ANHBV, a wholly-owned subsidiary of Alcoa Corporation and the borrower, have a $1,250 revolving credit and letter of credit facility in place for working capital and/or other general corporate purposes (the Revolving Credit Facility). The Revolving Credit Facility, established in September 2016, most recently amended and restated in June 2022 and amended in January 2024, is scheduled to mature in June 2027. Subject to the terms and conditions under the Revolving Credit Facility, the Company or ANHBV may borrow funds or issue letters of credit. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Revolving Credit Facility.

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As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025 and December 31, 2024, and no amounts were borrowed during the second quarter and six-month periods of 2025 and 2024 under the Revolving Credit Facility.

Japanese Yen Revolving Credit Facility

The Company and ANHBV have a revolving credit facility available to be drawn in Japanese yen (the Japanese Yen Revolving Credit Facility). In April 2025, the Company and ANHBV entered into an amendment to the Japanese Yen Revolving Credit Facility, reducing the aggregate commitments from $250 to $200 and extending the maturity from April 2025 to April 2026. Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds.

The Japanese Revolving Credit Facility, established in April 2023 and amended in January 2024, April 2024, and April 2025, includes covenants that are substantially the same as those included in the Revolving Credit Facility. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Japanese Yen Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Japanese Yen Revolving Credit Facility.

As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Japanese Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025 and December 31, 2024. During the second quarter and six-month period of 2025, no amounts were borrowed. During the second quarter of 2024, no amounts were borrowed. During the six-month period of 2024, $201 (JPY 29,686) was borrowed and $196 (JPY 29,686) was repaid.

Other

In April 2025, the Company amended a $74 term loan extending maturity from May 2025 to November 2025.

L. Pension and Other Postretirement Benefits

The components of net periodic benefit cost were as follows:

(1)

These amounts were reported in Other (income) expenses, net on the accompanying Statement of Consolidated Operations (see Note P).

(2)

These amounts were reported in Restructuring and other charges, net on the accompanying Statement of Consolidated Operations and Cash Flows.

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Funding and Cash Flows. It is Alcoa’s policy to fund amounts for defined benefit pension plans sufficient to meet the minimum requirements set forth in each applicable country’s benefits laws and tax laws, including the Employee Retirement Income Security Act of 1974 (ERISA) for U.S. plans. From time to time, the Company contributes additional amounts as deemed appropriate.

Under ERISA regulations, a plan sponsor that establishes a pre-funding balance by making discretionary contributions to a U.S. defined benefit pension plan may elect to apply all or a portion of this balance toward its minimum required contribution obligations to the related plan in future years.

In the first and second quarters of 2025, management made such elections related to the Company’s U.S. plans and intends to do so for the remainder of 2025. As a result, Alcoa’s minimum required contribution to defined benefit pension plans in 2025 is estimated to be approximately $21, of which $2 was contributed to non-U.S. plans during the second quarter of 2025. In the six-month period of 2025, $14 was contributed to non-U.S. plans.

In the second quarter and six-month period of 2024, $4 and $10, respectively, were contributed to non-U.S. plans.

M. Derivatives and Other Financial Instruments

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

• Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Derivatives

Alcoa Corporation is exposed to certain risks relating to its ongoing business operations, including the risks of changing commodity prices, foreign currency exchange rates, and interest rates. Alcoa Corporation’s commodity and derivative activities include aluminum, energy, foreign exchange, and interest rate contracts, which are held for purposes other than trading. They are used to mitigate uncertainty and volatility, and to cover underlying exposures. While Alcoa does not generally enter into derivative contracts to mitigate the risk associated with changes in aluminum price, the Company may do so in isolated cases to address discrete commercial or operational conditions. Alcoa is not involved in trading activities for energy, weather derivatives, or other nonexchange commodities.

Alcoa Corporation’s commodity and derivative activities are subject to the management, direction, and control of the Strategic Risk Management Committee (SRMC), which consists of at least three members, including the chief executive officer, the chief financial officer, and the chief commercial officer. The remaining member(s) are other officers and/or employees of the Company as the chief executive officer may designate from time to time. The SRMC meets on a periodic basis to review derivative positions and strategy and reports to the Audit Committee of Alcoa Corporation’s Board of Directors on the scope of its activities.

During the first and second quarters of 2025, Alcoa entered into financial contracts with multiple counterparties to mitigate financial risks associated with changes in aluminum prices, natural gas prices, electricity prices, and foreign currency exchange rates. The aluminum, natural gas, and electricity financial contracts qualify for cash flow hedge accounting. The foreign exchange financial contracts do not qualify for hedge accounting treatment. These contracts are held by a separate wholly-owned subsidiary of Alcoa Corporation and are intended to limit the Company’s net cash outlays to the committed funding under the San Ciprián joint venture agreement. The associated realized gains or losses have no impact on the results of the San Ciprián operations. Due to the widespread power outage across Spain that occurred on April 28, 2025, it became probable that certain of the original forecasted electricity purchases would not occur in 2025. As a result, Alcoa dedesignated certain electricity financial contracts and recognized a gain of $3 in Cost of goods sold.

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In June 2025, Alcoa entered into a firming contract to manage the variability and intermittency of renewable energy sources and reduce exposure to the spot energy market for the Mosjøen smelter (Norway) for the period from July 2025 through December 2028. The firming contract converts a certain pay-as-produced wind contract into baseload power. The contract does not qualify for hedge accounting treatment.

Alcoa Corporation’s aluminum, foreign exchange, natural gas and electricity contracts are classified as Level 1 or Level 2 under the fair value hierarchy. All of the Level 1 and 2 contracts are designated as either fair value or cash flow hedging instruments (except as described above). Alcoa Corporation also has several derivative instruments classified as Level 3 under the fair value hierarchy, which are either designated as cash flow hedges or undesignated. Alcoa included the changes in its equity method investee’s Level 2 derivatives in Accumulated other comprehensive loss through June 30, 2024, when the underlying contracts expired.

The following tables present the detail for Level 1, 2, and 3 derivatives (see additional Level 3 information in further tables below):

For the second quarter of 2025, the realized loss of $2 on Level 1 and 2 cash flow hedges was recognized in Cost of goods sold. For the second quarter of 2024, the realized gains and losses on Level 1 and 2 cash flow hedges were immaterial.

For the six-month period of 2025, the realized loss of $4 on Level 1 and 2 cash flow hedges was comprised of a $2 loss recognized in Sales and a $2 loss recognized in Cost of goods sold. For the six-month period of 2024, the realized gain of $4 on Level 1 and 2 cash flow hedges was recognized in Sales.

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The following table presents the outstanding quantities of derivative instruments classified as Level 1 or Level 2:

Alcoa Corporation routinely uses Level 1 aluminum derivative instruments to manage exposures to changes in the fair value of firm commitments for the purchases or sales of aluminum. Additionally, Alcoa uses aluminum derivative instruments to manage LME exposures related to profitability improvement actions (expires December 2025) and the San Ciprián smelter (see above) (expires December 2027).

Alcoa Corporation uses Level 1 foreign exchange forward contracts to mitigate the risk of foreign exchange exposure related to euro power purchases in Norway (expires June 2028), U.S. dollar alumina and aluminum sales in Brazil (expires October 2026), U.S. dollar alumina sales in Australia (expires December 2032) and euro expenses (primarily energy and labor) (expires December 2027). Additionally, Alcoa used Level 1 foreign exchange forward contracts to mitigate the risk of foreign exchange exposure related to Canadian dollar expenses in Canada (expired March 2025) and U.S. dollar aluminum sales in Norway (expired June 2025).

Alcoa Corporation uses Level 1 natural gas derivative instruments to mitigate the risk of price fluctuations on natural gas purchases in Spain (expires December 2027).

Alcoa Corporation uses Level 2 electricity derivative instruments to mitigate the risk of price fluctuations on electricity purchases in Spain (expires December 2027).

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Additional Level 3 Disclosures

The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative instruments (megawatt hours in MWh; megawatts in MW):

(1)

Increases in the power market or in renewable energy production would result in a higher fair value measurement of the derivative asset or a lower fair value measurement of the derivative liability.

The fair values of Level 3 derivative instruments recorded in the accompanying Consolidated Balance Sheet were as follows:

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Assuming market rates remain constant with the rates at June 30, 2025, a realized loss of $264 related to power contracts is expected to be recognized in Sales over the next 12 months.

At June 30, 2025 and December 31, 2024, the power contracts with embedded derivatives designated as cash flow hedges include hedges of forecasted aluminum sales of 1,118 kmt and 1,230 kmt, respectively.

The following tables present the reconciliation of activity for Level 3 derivative instruments:

There were no purchases, sales, or settlements of Level 3 derivative instruments in the periods presented.

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Other Financial Instruments

The carrying values and fair values of Alcoa Corporation’s other financial instruments were as follows:

The following methods were used to estimate the fair values of other financial instruments:

Cash and cash equivalents and Restricted cash. The carrying amounts approximate fair value because of the short maturity of the instruments. The fair value amounts for Cash and cash equivalents and Restricted cash were classified in Level 1 of the fair value hierarchy.

Short-term borrowings and Long-term debt, including amounts due within one year. The fair value of Long-term debt, less amounts due within one year was based on quoted market prices for public debt and on interest rates that are currently available to Alcoa Corporation for issuance of debt with similar terms and maturities for non-public debt. The fair value amounts for all Short-term borrowings and Long-term debt were classified in Level 2 of the fair value hierarchy.

N. Income Taxes – Alcoa Corporation’s estimated annualized effective tax rate (AETR) for 2025 as of June 30, 2025 differs from the U.S. federal statutory rate of 21% primarily due to income in certain jurisdictions with full valuation allowances resulting in no incremental tax expense, partially offset by income in foreign jurisdictions with higher statutory tax rates.

The Inflation Reduction Act of 2022 (IRA) contains a number of tax credits and other incentives for investments in renewable energy production, carbon capture, and other climate-related actions, as well as the production of critical minerals. In December 2023, the U.S. Treasury issued guidance on Section 45X of the Advanced Manufacturing Tax Credit. The Notice of Proposed Rulemaking (the Proposed Regulations) clarified that commercial grade aluminum is included in the definition of aluminum eligible for the credit, which was designed to incentivize domestic production of critical materials important for the transition to clean energy.

On October 24, 2024, the U.S. Treasury finalized the Proposed Regulations under Section 45X with important modifications including the ability to include the cost of certain direct and indirect materials in the cost base of the credit. The Proposed Regulation on the definition of aluminum was not finalized; however, management believes that commercial grade aluminum continues to qualify for the Section 45X credit. In the Preamble to the Final Regulations, the U.S. Treasury indicated it will finalize the definition at a later date. The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, which set a progressive phase-out of Section 45X credits beginning in 2031 and fully eliminates these credits beginning in 2034. Previously under the IRA, there was no phase out for critical materials, including aluminum. The Company is currently evaluating the OBBBA and does not expect other provisions of this legislation will have a material impact on the Company’s financial position or results of operations.

In the second quarter and six-month period of 2025, the Company recorded benefits related to the Section 45X credits of $17 and $31 in Cost of goods sold, respectively, for its Massena West smelter (New York) and its Warrick smelter (Indiana). In the second quarter and six-month period of 2024, the Company recorded benefits of $10 and $20 in Cost of goods sold, respectively, related to its Massena West smelter and its Warrick smelter. As of June 30, 2025, benefits of $36 were included in Other receivables and $102 were included in Other noncurrent assets on the Consolidated Balance Sheet. As of December 31, 2024, benefits of $36 were included in Other receivables and $71 were included in Other noncurrent assets on the Consolidated Balance Sheet.

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ANHBV has a full valuation allowance recorded against deferred tax assets, which was established in 2016, as the Company believes it is more likely than not that these tax benefits will not be realized. The majority of ANHBV’s net deferred tax assets relate to prior net operating losses and interest expense; the loss carryforwards are not subject to an expiration period. If ANHBV continues to demonstrate sustained profitability, management may conclude that ANHBV’s deferred tax assets related to loss carryforwards may be realized, resulting in a future reversal of the related valuation allowance, generating a non-cash benefit in the period recorded. ANHBV’s net deferred tax assets related to loss carryforwards, excluding the valuation allowance, were $111 as of June 30, 2025.

Alcoa World Alumina Brasil Ltda. (AWAB) has a full valuation allowance recorded against deferred tax assets, which was established in 2023, as the Company believes it is more likely than not that these tax benefits will not be realized. The majority of AWAB’s net deferred tax assets relate to prior net operating losses; the loss carryforwards are not subject to an expiration period. If AWAB continues to demonstrate sustained profitability, management may conclude that AWAB’s deferred tax assets may be realized, resulting in a future reversal of the valuation allowance, generating a non-cash benefit in the period recorded. AWAB’s net deferred tax assets, excluding the valuation allowance, were $121 as of June 30, 2025.

O. Contingencies

Environmental Matters

Alcoa Corporation participates in environmental assessments and cleanups at several locations. These include currently or previously owned or operated facilities and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)) sites.

Alcoa Corporation’s environmental remediation reserve balance reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated. The following table details the changes in the carrying value of recorded environmental remediation reserves:

At June 30, 2025 and December 31, 2024, the current portion of the environmental remediation reserve balance was $37 and $38, respectively.

During the second quarter and six-month period of 2025, the Company incurred liabilities of $13 (both periods), which were primarily comprised of:

• $8 related to investigation of potential contamination at various sites in Australia, which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations; and,
• $3 for an increase in estimated scope associated with ongoing remediation work at various other sites, which was recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

Payments related to remediation expenses applied against the reserve were $5 and $13 in the second quarter and six-month period of 2025, respectively. Payments related to remediation expenses applied against the reserve were $10 and $16 in the second quarter and six-month period of 2024, respectively. Cash payments include mandated expenditures as well as those not required by any regulatory authority or third party.

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The estimated timing of cash outflows from the environmental remediation reserve at June 30, 2025 was as follows:

Reserve balances at June 30, 2025 and December 31, 2024, associated with significant sites with active remediation underway or for future remediation were $149 and $154, respectively. In management’s judgment, the Company’s reserves are sufficient to satisfy the provisions of the respective action plans. Upon changes in facts or circumstances, a change to the reserve may be required. The Company’s significant sites include:

Suriname—The reserve associated with the 2017 closure of the Suralco refinery and bauxite mine is for treatment and disposal of refinery waste and soil remediation. The work began in 2017 and is expected to be completed by the end of 2029.

Hurricane Creek, Arkansas—The reserve associated with the 1990 closure of two mining areas and refineries near Hurricane Creek, Arkansas is for ongoing monitoring and maintenance for water quality surrounding the mine areas and residue disposal areas.

Massena, New York—The reserve associated with the 2015 closure of the Massena East smelter by the Company’s subsidiary, Reynolds Metals Company, is for subsurface soil remediation to be performed after demolition of the structures. Remediation work commenced in 2021 and will take up to eight years to complete.

Point Comfort, Texas—The reserve associated with the 2019 closure of the Point Comfort alumina refinery is for disposal of industrial wastes contained at the site, subsurface remediation, and post-closure monitoring and maintenance. The final remediation plan is currently being developed, which may result in a change to the existing reserve.

Addy, Washington—The reserve associated with the 2022 closure of the Addy magnesium smelter facility is for site-wide remediation and investigation and post-closure monitoring and maintenance. Remediation work is not expected to begin until 2027 and will take three to five years to complete. The final remediation plan is currently being developed, which may result in a change to the existing reserve.

Ferndale, Washington—The reserve associated with the 2023 closure of the Intalco aluminum smelter in Ferndale, Washington is for below grade site remediation and five years of post-closure maintenance and monitoring. The final remediation plan is under review.

Other Sites—The Company is in the process of decommissioning various other plants and remediating sites in several countries for potential redevelopment or to return the land to a natural state. In aggregate, there are remediation projects at 31 other sites that are planned or underway. These activities will be completed at various times in the future over the next two to four years, after which ongoing monitoring and other activities may be required. At June 30, 2025 and December 31, 2024, the reserve balance associated with these activities was $73 and $66, respectively.

Tax

Brazil (AWAB)—Under Brazilian law, taxpayers who generate non-cumulative federal value added tax credits related to exempt exports may either request a refund in cash (monetization) or offset them against other federal taxes owed. In 2012, AWAB requested monetization of $136 (R$273) from the Brazilian Federal Revenue Office (RFB) and received $68 (R$136) that year. In March 2013, AWAB was notified by the RFB that approximately $110 (R$220) of value added tax credits previously claimed were being disallowed and a penalty of 50% was assessed. $41 (R$82) of the cash received in 2012 related to the disallowed amount. The value added tax credits were claimed by AWAB for both fixed assets and export sales related to the Juruti bauxite mine and Alumar refinery expansion for tax years 2009 through 2011. The RFB has disallowed credits they allege belong to the consortium in which AWAB owns an interest and should not have been claimed by AWAB. Credits have also been disallowed as a result of challenges to apportionment methods used, questions about the use of the credits, and an alleged lack of documented proof. AWAB presented defense of its claim to the RFB on April 8, 2013.

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In February 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2012 and disallowed $4 (R$19). In its decision, the RFB allowed credits of $14 (R$65) that were similar to those previously disallowed for 2009 through 2011. In July 2022, the RFB notified AWAB that it had inspected the value added tax credits claimed for 2013 and disallowed $13 (R$66). In its decision, the RFB allowed credits of $10 (R$53) that were similar to those previously disallowed for 2009 through 2011. In September 2024, the RFB notified AWAB that it had further inspected the value added tax credits claimed for 2013 and issued a first administrative decision allowing additional credits of $1 (R$5) that were similar to those previously disallowed for 2009 through 2011. AWAB received the 2012 allowed credits with interest of $9 (R$44) in March 2022, the 2013 allowed credits with interest of $6 (R$31) in August 2022, and the additional 2013 allowed credits with interest of $1 (R$6) in December 2024. The decisions on the 2012 and 2013 credits provide positive evidence to support management’s opinion that there is no basis for these credits to be disallowed. AWAB will continue to dispute the credits that were disallowed for 2012 and 2013. If AWAB is successful in this administrative process, the RFB would have no further recourse. If unsuccessful in this process, AWAB has the option to litigate at a judicial level. Separately from AWAB’s administrative appeal, in June 2015, a new tax law was enacted repealing the provisions in the tax code that were the basis for the RFB assessing a 50% penalty in this matter. As such, the estimated range of reasonably possible loss for these matters is $0 to $55 (R$300). It is management’s opinion that the allegations have no basis; however, at this time, the Company is unable to reasonably predict an outcome for this matter.

Australia (AofA)—On April 30, 2025 (the decision date), the Administrative Review Tribunal of Australia (ART) issued its decision related to the proceedings Alcoa of Australia Limited (AofA) filed against the Australian Taxation Office (ATO) in April 2022 to contest the Notices of Assessment (the Notices) issued by the ATO in July 2020 (described below) related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter.

The Notices asserted claims for income tax payable by AofA of approximately $139 (A$214) and claims for compounded interest on the tax amount totaling approximately $460 (A$707). In addition to the Notices, the ATO issued a position paper in September 2020 with its preliminary view on the imposition of administrative penalties related to the tax assessment which proposed penalties of approximately $83 (A$128).

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020. The prepaid tax asset of $69 (A$107) and related interest of $9 (A$13) were included within Other receivables at June 30, 2025. The prepaid tax asset of $66 (A$107) was included within Other noncurrent assets at December 31, 2024.

Interest on the unpaid tax was accrued through the decision date, which, along with the initial interest assessment, was deductible against taxable income by AofA. AofA applied this deduction beginning in the third quarter of 2020 through the decision date, resulting in reductions in cash tax payments. The accrued tax liability of $225 (A$346) was included within Taxes, including income taxes at June 30, 2025. The accrued tax liability of $206 (A$332) was included within Other noncurrent liabilities and deferred credits at December 31, 2024.

The ATO did not appeal the ART’s decision, and the disputed tax claims (and additional related interest and penalties) have been withdrawn. With the withdrawal of the ATO’s claims, the prepaid tax asset and related interest of $78 (A$120) were refunded to AofA in July 2025, and accrued cash taxes of $225 (A$346) related to the interest deductions are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $147 (A$226) through June 2026.

References to any assessed U.S. dollar amounts presented in connection with this matter have been converted into U.S. dollars from Australian dollars based on the exchange rate in the respective period.

General

In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, safety and health, commercial, tax, product liability, intellectual property infringement, governance, employment, and employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability is not readily determinable because of the considerable uncertainties that exist. Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company.

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P. Other Financial Information

Other (Income) Expenses, Net

In the second quarter and six-month period of 2025, Other, net was primarily comprised of interest income on interest bearing accounts and the deposit related to the Australia tax matter (see Note O).

In the second quarter and six-month period of 2024, Other, net was primarily comprised of interest income on interest bearing accounts.

Other Noncurrent Assets

Cash and Cash Equivalents and Restricted Cash

Restricted cash primarily relates to commitments included in the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021, and subsequently updated in February 2023. $11 was released from restricted cash in the first quarter of 2025, related to smelter restart and capital expenditures incurred in the fourth quarter of 2024 and first quarter of 2025. At June 30, 2025, the Company had restricted cash of $75 available for capital improvements at the site and smelter restart costs.

Q. Supplier Finance Programs

The Company has various supplier finance programs with third-party financial institutions that are made available to suppliers to facilitate payment term negotiations. Under the terms of these agreements, participating suppliers receive payment in advance of the payment date from third-party financial institutions for qualifying invoices. Alcoa’s obligations to its suppliers, including amounts due and payment terms, are not impacted by its suppliers’ participation in these programs. The Company does not pledge any assets as security or provide any guarantees beyond payment of outstanding invoices at maturity under these arrangements. The Company does not pay fees to the financial institutions under these arrangements. At June 30, 2025 and December 31, 2024, qualifying supplier invoices outstanding under these programs were $117 and $94, respectively, and have payment terms ranging from 50 to 110 days. These obligations are included in Accounts payable, trade on the accompanying Consolidated Balance Sheet.

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R. Subsequent Events

On June 30, 2025, the collective bargaining agreement with the Australian Workers Union (AWU) representing approximately 400 hourly employees at the Portland, Australia smelter expired. The AWU did not accept the latest offer, proposed by the Company on July 25, 2025, and elected to undertake protected industrial action in the form of a 48-hour work stoppage beginning August 5, 2025. While negotiations continue, the Company has contingency plans to maintain safety and minimize operating disruptions at the Portland smelter if the industrial action were to occur.

On July 14, 2025, Alcoa Corporation and IGNIS EQT announced the restart for the San Ciprián smelter in Spain would resume, after the restart was paused following a widespread power outage across Spain on April 28, 2025. The Company estimates that the restart will be completed by mid-2026.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollars in millions, except per-share amounts, average realized prices, and average cost amounts; metric tons in thousands (kmt); dry metric tons in millions (mdmt))

Business Update

During the second quarter of 2025, Alcoa continued to execute on its strategic priorities while maintaining strong operational performance, which included progressing the sale of the Company’s full ownership interest in the joint venture with Saudi Arabian Mining Company (Ma’aden) and successfully concluding a five-year tax dispute in Australia with a favorable ruling for the Company. Additionally, Alcoa maintained advocacy efforts with policy makers regarding the impacts of U.S. tariffs.

On March 12, 2025, the United States government imposed a 25% tariff on certain aluminum imports from Canada under Section 232 of the Trade Expansion Act of 1962 (Section 232) which increased to a 50% tariff on June 4, 2025. Prior to March 12, 2025, the Section 232 tariff was 10%, and Canadian metal imported into the U.S. was exempted. Historically, approximately 70% of the aluminum Alcoa produced in Canada was shipped to U.S. customers, with the majority associated with annual customer contracts.

During the second quarter of 2025, the Company redirected certain Canadian production to customers outside the U.S. to mitigate additional tariff costs. Approximately 30% of the Company’s Canadian aluminum production is available for spot sales, and a portion of this production historically imported into the U.S. can be redirected when economically favorable. Additionally, Alcoa continued to maintain active engagement with administrations, governments, and policy makers, primarily in the U.S. and Canada, regarding the impacts of tariffs.

San Ciprián Operations

Following the formation of the joint venture with IGNIS Equity Holdings, SL (IGNIS EQT) on March 31, 2025 (described below), Alcoa resumed the restart of the San Ciprián smelter that had been operating approximately 6 percent of total pots since March 2024. The restart was paused on April 28, 2025, following a widespread power outage across Spain, until the Spanish government could provide sufficient details on the cause of the power outage and the measures being taken to prevent a reoccurrence. On July 14, 2025, Alcoa and IGNIS EQT announced the restart would resume. The announcement was made after reviewing the Spanish government’s report on the circumstances that caused the power outage, and the planned measures and investments aimed at providing improved grid resilience, and receiving assurances from the Spanish government that it will continue to promote measures to provide reliable and competitive energy. The Company expects that the restart will be completed by mid-2026.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement whereby Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations. Alcoa and IGNIS EQT contributed $81 (€75) and $27 (€25), respectively, to form the joint venture. Additionally, up to approximately $117 (€100) may be funded by Alcoa as needed for operations with a priority position in future cash returns. Further funding requires agreement by both partners and would be shared 75% by Alcoa and 25% by IGNIS EQT.

The transaction was accounted for as an equity transaction where IGNIS EQT’s noncontrolling interest was reflected as a decrease to Additional capital on the accompanying Consolidated Balance Sheet. Under the terms of the joint venture agreement, IGNIS EQT has a put option whereby IGNIS EQT can require Alcoa Corporation to purchase from IGNIS EQT its 25% interest at the then fair market value upon certain change in control provisions. Alcoa classified the Noncontrolling interest within Mezzanine equity on the Consolidated Balance Sheet, as IGNIS EQT’s redemption of the put option is not solely within the Company’s control. Net loss attributable to noncontrolling interest was $13 in the second quarter of 2025.

Saudi Arabia Joint Venture

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, comprised of the Ma’aden Bauxite and Alumina Company (MBAC) and the Ma’aden Aluminium Company (MAC), to Ma’aden in exchange for total consideration of $1,350, comprised of 85,977,547 shares of Ma’aden (valued at $1,200 (SAR 4,501) as of closing) and $150 (SAR 562) in cash (to be used primarily for related taxes and transaction costs). The carrying value of Alcoa’s investment was $546 as of June 30, 2025. In the third quarter of 2025, Alcoa will recognize a gain of approximately $780 and subsequent changes in fair value of the shares within Other (income) expenses, net.

Australia Tax Decision

On April 30, 2025, the Administrative Review Tribunal of Australia (ART) issued its decision related to the proceedings Alcoa of Australia Limited (AofA) filed against the Australian Taxation Office (ATO) in April 2022 to contest the Notices of Assessment issued by the ATO in July 2020 related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter.

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020. Interest on the unpaid tax was accrued through the decision date, which, along with the initial interest assessment, was deductible against taxable income by AofA. AofA applied this deduction beginning in the third quarter of 2020 through the decision date, resulting in reductions in cash tax payments.

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The ATO did not appeal the ART’s decision, and the disputed tax claims (and additional related interest and penalties) have been withdrawn. With the withdrawal of the ATO’s claims, the prepaid tax asset and related interest of $78 (A$120) were refunded to AofA in July 2025, and accrued cash taxes of $225 (A$346) related to the interest deductions are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $147 (A$226) through June 2026.

Australia Mine Plan Approvals

On May 29, 2025, the Western Australian Environmental Protection Authority (WA EPA) opened a 12-week public comment period on the Company’s two mine plans in Western Australia, which include the plan for the next major mine regions (Myara North and Holyoake) and the rolling five-year mine plans (2022-2027) referred to the WA EPA by a third party in 2023. Following this public consultation period and the Company’s response to any clarifications requested by the WA EPA, the Company expects that the WA EPA will publish its assessment and recommendations. An appeals process of the assessment and recommendations will follow before Ministerial decisions are finalized.

The Ministerial decisions were expected by the first quarter of 2026 per the indicative timeline the WA EPA set in the third quarter of 2024. From both the Company’s and the WA EPA’s perspective, the indicative timeline is no longer achievable primarily due to the complexity related to advancing both mine approvals, the extensive documentation provided by the Company and independent experts, and the additional work expected in summarizing and responding to submissions received in the public comment period. Following the public consultation, the Company expects that a revised indicative timeline will be published. The Company is committed to continuing to work collaboratively with the WA EPA and other stakeholders to achieve Ministerial decisions as early as possible in 2026. The Company has multiple contingency plans and expects to access bauxite similar to recent grades until the Company can transition to the new mine regions.

Debt Repositioning

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs. The Company utilized certain proceeds of these transactions to fund contributions to Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation and the issuer of the outstanding $750 aggregate principal amount of 5.500% Notes due 2027 (the Existing 2027 Notes) and $500 aggregate principal amount of 6.125% Notes due 2028 (the Existing 2028 Notes). These contributions were funded through a series of intercompany transactions, including the repayment of intercompany indebtedness and the issuance of intercompany dividends. ANHBV used such funds, along with cash on hand, to fund the purchase price pursuant to the cash tender offers announced and settled in March 2025, including premiums and transaction costs. The net proceeds also support Alcoa’s general corporate purposes.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase. The issuance of the 2030 Notes and 2032 Notes and the cash tender of the Existing 2027 Notes and Existing 2028 Notes were determined to be issuances of new debt and extinguishments of existing debt. As a result, the Company incurred $12 of debt settlement expenses in the first quarter of 2025 in Interest expense, which was comprised of the settlement premiums, transaction costs, and the write-off of unamortized discounts and deferred financing costs.

Other Matters

The Company is actively engaged in negotiations related to the following collective bargaining agreements:

• The three collective bargaining agreements with le Syndicat des Métallos (FTQ) representing approximately 1,000 hourly employees at the Bécancour smelter in Québec, Canada that expired on July 19, 2025;
• The collective bargaining agreement with the Australian Workers Union (AWU) representing approximately 400 hourly employees at the Portland, Australia smelter that expired on June 30, 2025. The AWU did not accept the latest offer, proposed by the Company on July 25, 2025, and elected to undertake protected industrial action in the form of a 48-hour work stoppage beginning August 5, 2025. While negotiations continue, the Company has contingency plans to maintain safety and minimize operating disruptions at the Portland smelter if the industrial action were to occur; and,
• The collective bargaining agreement with the Starfsgreinafélag Islands (AFL) and the Rafiðnaðarsamband Íslands (RSÍ) representing approximately 400 hourly employees at the Fjarðaál, Iceland smelter that expired on February 28, 2025.

See the below sections for additional details on the above-described actions.

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Results of Operations

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the quarterly and year-to-date periods outlined in the table below.

Selected Financial Data:

(1)

API (Alumina Price Index) is a pricing mechanism that is calculated by the Company based on the weighted average of a prior month’s daily spot prices published by the following three indices: CRU Metallurgical Grade Alumina Price; Platts Metals Daily Alumina PAX Price; and FastMarkets Metal Bulletin Non-Ferrous Metals Alumina Index.

(2)

LME (London Metal Exchange) is a globally recognized exchange for commodity trading, including aluminum. The LME pricing component represents the underlying base metal component, based on quoted prices for aluminum on the exchange.

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Overview

Sequential period comparison

Net income (loss) attributable to Alcoa Corporation was $164 in the second quarter of 2025 compared with $548 in the first quarter of 2025. The unfavorable change of $384 is primarily a result of:

• Lower alumina and aluminum prices
• Tariffs on U.S. imports of aluminum from Canada

Partially offset by:

• Lower taxes on lower earnings
• Favorable mark-to-market results on derivative instruments

Year-to-date comparison

Net income (loss) attributable to Alcoa Corporation was $712 in the six-month period of 2025 compared with $(232) in the six-month period of 2024. The favorable change of $944 is primarily a result of:

• Higher aluminum and alumina prices
• Lower intersegment profit elimination
• Lower restructuring charges
• Favorable currency impacts
• Higher volumes and price from bauxite offtake and supply agreements
• Favorable mark-to-market results on derivative instruments

Partially offset by:

• Tariffs on U.S. imports of aluminum from Canada
• Higher taxes on higher earnings

Sales

Sequential period comparison

Sales decreased $351 primarily as a result of:

• Lower average realized price of alumina and aluminum

Partially offset by:

• Higher shipments of aluminum and alumina
• Favorable currency impacts

Year-to-date comparison

Sales increased $882 primarily as a result of:

• Higher average realized price of alumina and aluminum
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina and aluminum

Cost of goods sold

Sequential period comparison

Cost of goods sold as a percentage of sales increased 16% primarily as a result of:

• Lower average realized price of alumina and aluminum
• Tariffs on U.S. imports of aluminum from Canada
• Higher production costs across both segments

Partially offset by:

• Lower average alumina input costs in the Aluminum segment

Year-to-date comparison

Cost of goods sold as a percentage of sales decreased 10% primarily as a result of:

• Higher average realized price of alumina and aluminum
• Lower intersegment profit elimination
• Higher volumes and price from bauxite offtake and supply agreements
• Favorable currency impacts

Partially offset by:

• Higher average alumina input costs in the Aluminum segment
• Tariffs on U.S. imports of aluminum from Canada

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Selling, general administrative, and other expenses

Sequential period comparison

Selling, general administrative, and other expenses increased $11 primarily as a result of:

• Increased fees for professional services
• Unfavorable currency revaluation impacts

Year-to-date comparison

Selling, general administrative, and other expenses increased $24 primarily as a result of:

• Higher labor costs
• Increased fees for professional services
• Increased information technology services

Provision for depreciation, depletion, and amortization

Sequential period comparison

The Provision depreciation, depletion, and amortization increased $5 primarily as a result of:

• Unfavorable currency impacts

Year-to-date comparison

The Provision for depreciation, depletion, and amortization decreased $23 primarily as a result of:

• Favorable currency impacts
• Lower depreciation in Brazil for mine reclamation and bauxite residue storage asset retirement obligations
• Lower depreciation expense related to a group of assets reaching the end of their depreciable lives
• Lower amortization of mine development costs

Interest expense

Sequential period comparison

Interest expense increased $3 primarily as a result of:

• Interest on unfavorable value added tax assessments in Brazil
• Interest on $500 6.125% Senior Notes and $500 6.375% Senior Notes issued in March 2025

Partially offset by:

• Absence of interest and debt settlement expenses for the Existing 2027 Notes and Existing 2028 Notes extinguished in March 2025

Year-to-date comparison

Interest expense increased $42 primarily as a result of:

• Interest on $500 6.125% Senior Notes and $500 6.375% Senior Notes issued in March 2025
• Interest on unfavorable value added tax assessments in Brazil
• Interest on $750 7.125% Senior Notes issued in March 2024

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Other (income) expenses, net

Sequential period comparison

Other (income) expenses, net was ($112) in the second quarter of 2025 compared with ($26) in the first quarter of 2025. The favorable change of $86 was primarily a result of:

• Favorable mark-to-market results on derivative instruments primarily due to changes in the euro foreign exchange rate and higher power prices in the current quarter
• Interest income on the refund owed to Alcoa from the ATO
• Increase in equity income from MAC primarily due to lower production costs partially offset by lower aluminum prices

Partially offset by:

• Increase in equity losses from MBAC primarily due to lower alumina prices and lower shipments
• Unfavorable currency revaluation impacts primarily due to absence of gains recognized in the first quarter of 2025 due to the U.S. dollar weakening against the Brazilian real and the Australian dollar, partially offset by gains in the current quarter due to the U.S. dollar weakening against the Brazilian real

Year-to-date comparison

Other (income) expenses, net was ($138) in the six-month period of 2025 compared with $37 in the six-month period of 2024. The favorable change of $175 was primarily a result of:

• Favorable currency revaluation impacts primarily due to the absence of losses recognized in the prior year due to the U.S. dollar strengthening against the Brazilian real and gains in the current year due to the U.S. dollar weakening against the Brazilian real, partially offset by losses in the current year due to the U.S. dollar weakening against the euro
• Favorable mark-to-market results on derivative instruments primarily due to changes in the euro foreign exchange rate partially offset by lower power prices in the current year
• Increase in equity income from MBAC primarily due to higher alumina prices, partially offset by lower shipments and higher production costs
• Absence of costs related to site separation commitments associated with the Warrick Rolling Mill sale
• Interest income on the refund owed to Alcoa from the ATO

Partially offset by:

• Increase in equity losses from MAC primarily due to higher alumina input costs, partially offset by higher aluminum prices
• Higher ELYSIS capital contributions, increasing loss recognition

Restructuring and other charges, net

Sequential period comparison

In the second quarter of 2025, Restructuring and other charges, net of $14 primarily related to:

• $20 to record net additional asset retirement obligation and environmental reserves at previously closed sites
• $6 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter

Partially offset by:

• ($12) net benefit for take-or-pay contract costs at previously closed sites

In the first quarter of 2025, Restructuring and other charges, net of $5 primarily related to:

• $3 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter
• $2 for take-or-pay contract costs at a previously closed site

Year-to-date comparison

In the six-month period of 2025, Restructuring and other charges, net of $19 primarily related to:

• $20 to record net additional asset retirement obligation and environmental reserves at previously closed sites
• $9 for certain employee obligations related to the February 2023 updated viability agreement for the San Ciprián aluminum smelter

Partially offset by:

• ($10) net benefit for take-or-pay contract costs at previously closed sites

In the six-month period of 2024, Restructuring and other charges, net of $220 primarily related to:

• $205 for the curtailment of the Kwinana alumina refinery
• $12 for take-or-pay contract costs at a previously closed site

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Provision for income taxes

Sequential period comparison

The Provision for income taxes in the second quarter of 2025 was $10 on income before taxes of $161 or 6.2%. In comparison, the first quarter of 2025 Provision for income taxes was $120 on income before taxes of $668 or 18%.

The decrease in tax expense of $110 is primarily due to decreased income in certain jurisdictions where taxes are paid and the impact of the annualized effective tax rate when applied to current period earnings.

Year-to-date comparison

The Provision for income taxes in the six-month period of 2025 was $130 on income before taxes of $829 or 15.7%. In comparison, the six-month period of 2024 Provision for income taxes was $43 on a loss before taxes of $(233) or (18.5)%.

The increase in tax expense of $87 is primarily attributable to higher income in certain jurisdictions where taxes are paid.

Noncontrolling interest

Through August 1, 2024 when Alcoa completed the acquisition of Alumina Limited, Noncontrolling interest related to Alumina Limited’s 40% ownership interest in the AWAC joint venture. Upon completion of the acquisition by Alcoa, Alumina Limited and, as a result, ownership in the AWAC joint venture, became wholly-owned by Alcoa Corporation.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement. Alcoa owns 75% and continues as the managing operator and IGNIS EQT owns 25% of the San Ciprián operations. Alcoa began recognizing earnings attributable to IGNIS EQT’s ownership interest within Noncontrolling interest in the second quarter of 2025.

Sequential period comparison

Net income (loss) attributable to noncontrolling interest was $(13) in the second quarter of 2025 and $0 in the first quarter of 2025.

Year-to-date comparison

Net income (loss) attributable to noncontrolling interest was $(13) in the six-month period of 2025 compared with $(44) in the six-month period of 2024.

Net income (loss) attributable to noncontrolling interest of $(13) in both the second quarter and six-month period of 2025 reflects losses incurred at the San Ciprián smelter and refinery. Net income (loss) attributable to noncontrolling interest of $(44) in the six-month period of 2024 was driven by restructuring costs partially offset by favorable average realized price of alumina.

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Segment Information

Alcoa Corporation is a producer of bauxite, alumina, and aluminum products. The Company has two operating and reportable segments: (i) Alumina and (ii) Aluminum. The primary measure of performance is Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) for each segment.

The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; and Research and development expenses. Alcoa Corporation’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The Chief Operating Decision Maker regularly reviews Segment Adjusted EBITDA to assess performance and allocate resources.

Alumina

Business Update. The average API of $377 per metric ton decreased 38% compared to the prior quarter. Compared to the six-month period of 2024, the average API trended favorably, reflecting a 32% increase year-over-year.

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 % in the Saudi Arabia joint venture, which includes the Ma’aden Bauxite and Alumina Company (see Portfolio actions above).

In June 2024, Alcoa completed the full curtailment of the Kwinana refinery (Australia), as planned, which was announced in January 2024. As of June 2025, the refinery had approximately 230 employees to manage certain processes, including water management. These processes were expected to continue through the fourth quarter of 2025, when the employee number was expected to be further reduced. Due to the Company’s ongoing assessment of long-term water management, the related processes may need to continue beyond the fourth quarter of 2025 and additional restructuring charges for water management may be required in the second half of 2025.

During the second quarter of 2025, the Company continued to evaluate engineering estimates for improvements on closed bauxite residue areas at the Poços de Caldas refinery (Brazil) to comply with impoundment stability regulations in the region by the end of 2027. Upon completion of these estimates, Alcoa may be required to record a charge in the second half of 2025.

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián refinery (see Portfolio actions above).

Capacity. The Alumina segment had a base capacity of 13,843 kmt with 3,204 kmt of curtailed refining capacity. There was no change in curtailed capacity in 2025.

In the table below, total alumina shipments include metric tons that were not produced by the Alumina segment. Such alumina was purchased to satisfy certain customer commitments. The Alumina segment bears the risk of loss of the purchased alumina until control of the product has been transferred to this segment’s customers.

Adjusted operating costs include all production related costs for alumina produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity, the purchase of bauxite from offtake or other supply agreements, and commercial shipping services; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

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Production

Sequential period comparison

Alumina production was consistent with the first quarter of 2025.

Year-to-date comparison

Alumina production decreased 10% primarily as a result of:

• Full curtailment of the Kwinana refinery in June 2024

Third-party sales

Sequential period comparison

Third-party sales decreased $412 primarily as a result of:

• Lower average realized price of $197/ton principally driven by a lower average API
• Lower volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher shipments of alumina primarily due to timing of shipments and increased trading activity, partially offset by lower sales of externally sourced alumina to satisfy certain customer commitments

Year-to-date comparison

Third-party sales increased $543 primarily as a result of:

• Higher average realized price of $90/ton principally driven by a higher average API
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Lower shipments of alumina primarily due to the full curtailment of the Kwinana refinery and decreased trading activity, partially offset by higher sales of externally sourced alumina to satisfy certain customer commitments
• Unfavorable currency impacts

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Intersegment alumina sales

Sequential period comparison

Intersegment alumina sales decreased $245 primarily as a result of:

• Lower average API on sales to the Aluminum segment

Year-to-date comparison

Intersegment alumina sales increased $327 primarily as a result of:

• Higher average API on sales to the Aluminum segment
• Higher alumina shipments primarily due to timing of shipments and the Alumar (Brazil) smelter restart

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $525 primarily as a result of:

• Lower average realized price
• Higher production costs primarily related to increased maintenance
• Lower volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher shipments of alumina

Year-to-date comparison

Segment Adjusted EBITDA increased $478 primarily as a result of:

• Higher average realized price
• Higher volumes and price from bauxite offtake and supply agreements

Partially offset by:

• Higher production costs primarily related to higher labor costs, increased maintenance, and direct material usage
• Unfavorable raw material costs primarily higher prices for caustic soda and lime

Forward Look. For the third quarter of 2025 in comparison to the second quarter of 2025, the Alumina segment expects lower production costs, primarily due to decreased maintenance costs.

Alcoa expects 2025 total Alumina segment production and shipments to remain unchanged from its prior projection, ranging between 9.5 to 9.7 million metric tons, and between 13.1 and 13.3 million metric tons, respectively. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill customer contracts due to the curtailment of the Kwinana refinery.

Aluminum

Business Update. Aluminum prices decreased sequentially with LME prices on a 15-day lag averaging $2,458 per metric ton in the second quarter of 2025. Additionally, the average Midwest premium (United States and Canada) increased 36% sequentially following the increase on U.S. Section 232 tariff on aluminum imports from Canada from 25% to 50% on June 4, 2025.

In the second quarter of 2025, Alcoa incurred approximately $115 for tariff costs on imports of aluminum to the U.S. from Canada, a sequential increase of approximately $95.

San Ciprián Smelter

On March 31, 2025, Alcoa and IGNIS EQT entered into a joint venture agreement, which includes the San Ciprián smelter (see Portfolio actions above). The joint venture agreement allows for the planned restart of the San Ciprián smelter in 2025, a commitment included in the viability agreement reached with the workers’ representatives of the San Ciprián smelter in December 2021, and subsequently updated in February 2023.

The restart of the San Ciprián smelter was paused in April 2025 following a widespread power outage across Spain, until the Spanish government could provide sufficient details on the cause of the power outage and the measures being taken to prevent a reoccurrence. On July 14, 2025, Alcoa and IGNIS EQT announced the restart process of the San Ciprián smelter would resume (see Portfolio actions above).

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In connection with terms of the updated viability agreement, the Company had restricted cash of $75 remaining at June 30, 2025, to be made available for capital improvements at the site and smelter restart costs. In the first quarter of 2025, $11 was released from restricted cash related to smelter restart and capital expenditures incurred in the fourth quarter of 2024 and first quarter of 2025.

Other Matters

On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1% in the Saudi Arabia joint venture, which includes the Ma’aden Aluminium Company (see Portfolio actions above). In accordance with the transaction, the metal offtake agreement with Ma’aden was terminated in the first quarter of 2025.

During the second quarter of 2025, the Company entered into firming contracts and a power purchase agreement (PPA) to manage the variability and intermittency of renewable energy sources and reduce spot market exposure at the Mosjøen smelter (Norway). The firming contracts convert certain pay-as-produced wind contracts into baseload power to eliminate volume risk. One of the firming contracts is a derivative and does not qualify for hedge accounting treatment. See Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

During the first and second quarters of 2025, the Company progressed the restart of the Alumar smelter. The site was operating at approximately 91% of the site’s total annual capacity of 268 kmt (Alcoa share) as of June 30, 2025.

In the table below, total aluminum third-party shipments include metric tons that were not produced by the Aluminum segment. Such aluminum was purchased by this segment to satisfy certain customer commitments. The Aluminum segment bears the risk of loss of the purchased aluminum until control of the product has been transferred to this segment’s customers. Additionally, Total shipments include offtake from a joint venture supply agreement.

The average realized third-party price per metric ton of aluminum includes three elements: a) the underlying base metal component, based on quoted prices from the LME; b) the regional premium, which represents the incremental price over the base LME component that is associated with the physical delivery of metal to a particular region (e.g., the Midwest premium for metal sold in the United States); and c) the product premium, which represents the incremental price for receiving physical metal in a particular shape (e.g., billet, slab, rod, etc.) or alloy.

Adjusted operating costs include all production related costs for aluminum produced and shipped: raw materials consumed; conversion costs, such as labor, materials, and utilities; and plant administrative expenses. Other segment items include costs associated with trading activity and energy assets; other direct and non-production related charges; Selling, general administrative, and other expenses; and Research and development expenses.

(1)

Other includes third-party sales of energy, as well as realized gains and losses related to embedded derivative instruments designated as cash flow hedges of forward sales of aluminum.

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Production

Sequential period comparison

Production increased 1% primarily as a result of:

• Alumar smelter restart

Year-to-date comparison

Production increased 5% primarily as a result of:

• Alumar smelter and Warrick smelter restarts

Third-party sales

Sequential period comparison

Third-party sales increased $55 primarily as a result of:

• Higher shipments primarily due to the timing of shipments
• Favorable currency impacts
• Higher pricing at the Brazil hydro-electric facilities

Partially offset by:

• Lower average realized price of $70/ton driven by a lower average LME (on a 15-day lag) partially offset by higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 36%

Year-to-date comparison

Third-party sales increased $324 primarily as a result of:

• Higher average realized price of $434/ton driven by a higher average LME (on a 15-day lag) and higher regional premiums, particularly the Midwest premium (United States and Canada) which rose by an average of 105%
• Higher pricing at the Brazil hydro-electric facilities
• Favorable currency impacts

Partially offset by:

• Lower shipments primarily due to the absence of volumes from a joint venture supply agreement

Segment Adjusted EBITDA

Sequential period comparison

Segment Adjusted EBITDA decreased $37 primarily as a result of:

• Tariffs on U.S. imports of aluminum from Canada, which were subject to a 25% tariff from March 12, 2025 until increasing to 50% on June 4, 2025 under U.S. Section 232
• Lower average realized price
• Higher production costs primarily related to increased maintenance

Partially offset by:

• Favorable raw material costs primarily on lower average alumina input costs
• Lower energy costs primarily in Europe
• Higher pricing at the Brazil hydro-electric facilities

Year-to-date comparison

Segment Adjusted EBITDA decreased $52 primarily as a result of:

• Unfavorable raw material costs primarily on higher average alumina input costs, partially offset by lower market prices for carbon materials
• Tariffs on U.S. imports of aluminum from Canada, which were subject to a 25% tariff from March 12, 2025 until increasing to 50% on June 4, 2025 under U.S. Section 232

Partially offset by:

• Higher average realized price
• Favorable currency impacts
• Higher pricing at the Brazil hydro-electric facilities
• Lower energy costs primarily in Europe
• Lower production costs primarily due to efficiencies at higher production rates

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The following table provides consolidated capacity and curtailed capacity (each in kmt) for each smelter owned by Alcoa Corporation:

(1)

These figures represent Alcoa Corporation’s share of the facility Nameplate Capacity based on its ownership interest in the respective smelter.

(2)

In the fourth quarter of 2024, the Company completed the restart of 16,000 metric tons per year (mtpy) of previously curtailed capacity at the Portland smelter in Australia that began in the fourth quarter of 2023.

(3)

In 2021, the Company announced the restart of its 268,000 mtpy share of capacity at the Alumar smelter in São Luís, Brazil. Production began in the second quarter of 2022. Curtailed capacity decreased from June 30, 2024 as a result of the restart process.

(4)

In the second quarter of 2025, the Company began the restart of one potline (31,000 mtpy) at the Lista smelter in Norway that was curtailed in August 2022.

Forward Look. For the third quarter of 2025 in comparison to the second quarter of 2025, the Aluminum segment expects increased costs associated with tariffs on U.S. imports of aluminum from Canada.

Alcoa expects 2025 total Aluminum segment production to remain unchanged from its prior projection, ranging between 2.3 and 2.5 million metric tons. The Company has decreased its 2025 projection for aluminum shipments to range between 2.5 and 2.6 million metric tons, a reduction of between 0.1 and 0.2 million metric tons from the prior projection, primarily due to reduced production at the San Ciprián smelter as a result of the delayed restart.

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Reconciliations of Certain Segment Information

Reconciliation of Total Segment Third-Party Sales to Consolidated Sales

Reconciliation of Total Segment Adjusted EBITDA to Consolidated Net Income (Loss) Attributable to Alcoa Corporation

(1)

Transformation includes, among other items, the Adjusted EBITDA of previously closed operations.

(2)

Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities, as well as research and development expenses of the corporate technical center.

(3)

Other includes certain items that are not included in the Adjusted EBITDA of the reportable segments.

Environmental Matters

See the Environmental Matters section of Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Liquidity and Capital Resources

Management believes that the Company’s cash on hand, projected cash flows, and liquidity options, combined with its strategic actions, will be adequate to fund its short-term (at least 12 months) and long-term operating and investing needs. The Company plans to opportunistically access liquidity sources to support its cash position and ongoing cash needs. Further, the Company has flexibility related to its use of cash; the Company has debt maturities of $141 on the Existing 2027 Notes and $219 on the Existing 2028 Notes and no other significant debt maturities until 2029. Additionally, the Company has no significant cash contribution requirements related to its pension plan obligations.

Although management believes that Alcoa’s projected cash flows and other liquidity options will provide adequate resources to fund operating and investing needs, the Company’s access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) Alcoa Corporation’s credit rating; (ii) the liquidity of the overall capital markets; (iii) the current state of the economy and commodity markets, and (iv) short- and long-term debt ratings. There can be no assurances that the Company will continue to have access to capital markets on terms acceptable to Alcoa Corporation.

Changes in market conditions caused by U.S., global, or macroeconomic events, such as ongoing regional conflicts, high inflation, and changing U.S. or global monetary or trade policies could have adverse effects on Alcoa’s ability to obtain additional financing and cost of borrowing. Inability to generate sufficient earnings could impact the Company’s ability to meet the financial covenants in our outstanding debt and revolving credit facility agreements and limit our ability to access these sources of liquidity or refinance or renegotiate our outstanding debt or credit agreements on terms acceptable to the Company. Additionally, the impact on market conditions from such events could adversely affect the liquidity of Alcoa’s customers, suppliers, and joint venture partners and equity method investments, which could negatively impact the collectability of outstanding receivables and our cash flows.

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Cash from Operations

Cash provided from operations was $563 in the six-month period of 2025 compared with cash provided from operations of $64 in the same period in 2024. Notable changes to sources and (uses) of cash included:

• $774 favorable change in net income, excluding the impacts from restructuring charges, primarily due to higher aluminum and alumina pricing, lower intersegment profit elimination, and favorable currency, partially offset by tariffs on U.S. imports of aluminum from Canada; partially offset by,
• ($74) higher income taxes paid on prior year earnings, as well as on higher current year earnings in the jurisdictions where taxes are paid.

On April 30, 2025, the ART issued its decision related to the proceedings AofA filed against the ATO in April 2022 to contest the Notices of Assessment issued by the ATO in July 2020 related to transfer pricing of certain historic third-party alumina sales. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter.

In accordance with the ATO’s dispute resolution practices, AofA paid 50% of the assessed income tax amount exclusive of interest and any penalties, or approximately $74 (A$107), during the third quarter 2020. Interest on the unpaid tax was accrued through the decision date, which, along with the initial interest assessment, was deductible against taxable income by AofA. AofA applied this deduction beginning in the third quarter of 2020 through the decision date, resulting in reductions in cash tax payments.

The ATO did not appeal the ART’s decision, and the disputed tax claims (and additional related interest and penalties) have been withdrawn. With the withdrawal of the ATO’s claims, the prepaid tax asset and related interest of $78 (A$120) were refunded to AofA in July 2025, and accrued cash taxes of $225 (A$346) related to the interest deductions are payable by AofA by June 1, 2026. The net cash impact of both the refunded amount and the accrued cash taxes is approximately $147 (A$226) through June 2026. See description of the tax dispute in Note O to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

The Company utilizes a Receivables Purchase Agreement facility to sell up to $150 of certain receivables through an SPE to a financial institution on a revolving basis. Alcoa Corporation guarantees the performance obligations of the Company subsidiaries, and unsold customer receivables are pledged as collateral to the financial institution to secure the sold receivables. At June 30, 2025, the SPE held unsold customer receivables of $355 pledged as collateral against the sold receivables.

The Company continues to service the customer receivables that were transferred to the financial institution. As Alcoa collects customer payments, the SPE transfers additional receivables to the financial institution rather than remitting cash. In the six-month period of 2025, the Company sold gross customer receivables of $447 and reinvested collections of $447 from previously sold receivables, resulting in no net cash remittance to or proceeds from the financial institution. In the six-month period of 2024, the Company sold gross customer receivables of $600 and reinvested collections of $584 from previously sold receivables, resulting in net cash proceeds from the financial institution of $16. Cash collections from previously sold receivables yet to be reinvested of $58 were included in Accounts payable, trade on the Consolidated Balance Sheet as of June 30, 2025. Cash received from sold receivables under the agreement are presented within operating activities in the Statement of Consolidated Cash Flows. See Note I to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

During the first and second quarters of 2025, Alcoa entered into financial contracts with multiple counterparties to mitigate financial risks associated with changes in aluminum prices, natural gas prices, electricity prices, and foreign currency exchange rates. The aluminum, natural gas, and electricity financial contracts qualify for cash flow hedge accounting. The foreign exchange financial contracts do not qualify for hedge accounting treatment. These contracts are held by a separate wholly-owned subsidiary of Alcoa Corporation and are intended to limit the Company’s net cash outlays to the committed funding under the San Ciprián joint venture agreement. The associated realized gains or losses have no impact on the results of the San Ciprián operations. See Note M to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Financing Activities

Cash provided from financing activities was $10 in the six-month period of 2025 compared with $679 in the same period in 2024.

The source of cash in the six-month period of 2025 was primarily $985 net proceeds from the bond issuance (see below), $27 of contributions from IGNIS EQT (see Noncontrolling interest above), partially offset by $890 used to settle cash tender offers on existing debt (see below), $53 of dividends paid on stock, and $42 of net payments on short-term borrowings (see below).

The source of cash in the six-month period of 2024 was primarily $737 net proceeds from the debt issuance for $750 aggregate principal amount of 7.125% Senior Notes due 2031 and $33 of net contributions from Alumina Limited (see Noncontrolling interest above), partially offset by $37 of dividends paid on common stock and $25 of net payments on short-term borrowings (see below).

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Short-term Borrowings

The Company entered into inventory repurchase agreements whereby the Company sold aluminum to a third party and agreed to subsequently repurchase substantially similar inventory. The Company did not record sales upon each shipment of inventory and the net cash received of $8 related to these agreements was recorded in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet as of June 30, 2025.

During the six-month period of 2025, the Company recorded borrowings of $51 and repurchased $93 of inventory related to these agreements. During the six-month period of 2024, the Company recorded borrowings of $45 and repurchased $70 of inventory related to these agreements.

The cash received and subsequently paid under the inventory repurchase agreements is included in Cash provided from financing activities on the Statement of Consolidated Cash Flows.

144A Debt

In March 2025, Alumina Pty Ltd, a wholly-owned subsidiary of Alcoa Corporation, completed Rule 144A (U.S. Securities Act of 1933, as amended) debt issuances of $500 aggregate principal amount of 6.125% Senior Notes due 2030 (the 2030 Notes) and $500 aggregate principal amount of 6.375% Senior Notes due 2032 (the 2032 Notes, and, collectively with the 2030 Notes, the Notes). The net proceeds of these issuances were $985, reflecting a discount to the initial purchasers of the Notes as well as issuance costs.

In March 2025, ANHBV announced and settled cash tender offers which resulted in the tender and acceptance of $609 of the $750 aggregate principal amount of Existing 2027 Notes and $281 of the $500 aggregate principal amount of Existing 2028 Notes for purchase.

See Note K to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Credit Facilities

Revolving Credit Facility

The Company and ANHBV, a wholly-owned subsidiary of Alcoa Corporation and the borrower, have a $1,250 revolving credit and letter of credit facility in place for working capital and/or other general corporate purposes (the Revolving Credit Facility). The Revolving Credit Facility, established in September 2016, most recently amended and restated in June 2022 and amended in January 2024, is scheduled to mature in June 2027. Subject to the terms and conditions under the Revolving Credit Facility, the Company or ANHBV may borrow funds or issue letters of credit. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Revolving Credit Facility.

As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025, and no amounts were borrowed during the six-month periods of 2025 and 2024 under the Revolving Credit Facility.

Japanese Yen Revolving Credit Facility

The Company and ANHBV have a revolving credit facility available to be drawn in Japanese yen (the Japanese Yen Revolving Credit Facility). In April 2025, the Company and ANHBV entered into an amendment to the Japanese Yen Revolving Credit Facility, reducing the aggregate commitments from $250 to $200 and extending the maturity from April 2025 to April 2026. Subject to the terms and conditions under the facility, the Company or ANHBV may borrow funds.

The Japanese Revolving Credit Facility, established in April 2023 and amended in January 2024, April 2024, and April 2025, includes covenants that are substantially the same as those included in the Revolving Credit Facility. Under the terms of the January 2024 amendment, the Company agreed to provide collateral for its obligations under the Japanese Yen Revolving Credit Facility. See Part II Item 8 of Alcoa Corporation’s Annual Report on Form 10-K in Note M to the Consolidated Financial Statements for the year ended December 31, 2024 for more information on the Japanese Yen Revolving Credit Facility.

As of June 30, 2025, the Company was in compliance with all financial covenants. The Company may access the entire amount of commitments under the Japanese Revolving Credit Facility. There were no borrowings outstanding at June 30, 2025. During the six-month period of 2025, no amounts were borrowed. During the six-month period of 2024, $201 (JPY 29,686) was borrowed and $196 (JPY 29,686) was repaid.

Other

In April 2025, the Company amended a $74 term loan extending maturity from May 2025 to November 2025.

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Dividend

On May 9, 2025, the Board of Directors declared a quarterly cash dividend of $0.10 per share of the Company’s common stock (including common stock underlying CDIs) and Series A convertible preferred stock, to stockholders of record as of the close of business on May 20, 2025. In June 2025, the Company paid cash dividends of $27.

Ratings

Alcoa Corporation’s cost of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term debt ratings assigned to Alcoa Corporation’s debt by the major credit rating agencies.

On March 3, 2025, Standard and Poor’s Global Ratings affirmed the rating of Alcoa Corporation’s long-term debt as BB and revised the outlook from stable to positive.

On March 3, 2025, Moody’s Investor Service affirmed the rating of ANHBV’s long-term debt as Ba1 and affirmed the outlook as stable and published Alumina Pty Ltd’s long-term debt rating as Ba1 with a stable outlook.

On March 3, 2025, Fitch Ratings published Alumina Pty Ltd’s long-term debt rating as BB+ with a stable outlook.

On February 28, 2025, Fitch Ratings affirmed the rating for Alcoa Corporation and ANHBV’s long-term debt as BB+ and affirmed the outlook as stable.

Ratings are not a recommendation to buy or hold any of Alcoa’s securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

Investing Activities

Cash used for investing activities was $240 in the six-month period of 2025 compared with $281 for the same period in 2024.

In the six-month period of 2025, the use of cash was primarily attributable to $224 related to capital expenditures and $29 of cash contributions to the ELYSIS partnership, partially offset by cash received of $11 for the sale of a non-core investment.

In the six-month period of 2024, the use of cash was primarily attributable to $265 related to capital expenditures and $17 of cash contributions to the ELYSIS partnership.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website, https://www.alcoa.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, media broadcasts, and webcasts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

See Part II Item 7A Quantitative and Qualitative Disclosures About Market Risk of Alcoa Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024. Our exposure to market risk has not changed materially since December 31, 2024. Refer to Part I Item 1 of this Form 10-Q in Note M to the Consolidated Financial Statements under caption Derivatives for additional information.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Alcoa Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures were effective as of June 30, 2025.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the second quarter of 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

(dollars in millions)

In the ordinary course of its business, Alcoa is involved in a number of lawsuits and claims, both actual and potential. Various lawsuits, claims, and proceedings have been or may be instituted or asserted against Alcoa Corporation, including those pertaining to environmental, safety and health, commercial, tax, product liability, intellectual property infringement, governance, employment, employee and retiree benefit matters, and other actions and claims arising out of the normal course of business. While the amounts claimed in these other matters may be substantial, the ultimate liability is not readily determinable because of the considerable uncertainties that exist. Accordingly, it is possible that the Company’s liquidity or results of operations in a particular period could be materially affected by one or more of these other matters. However, based on facts currently available, management believes that the disposition of these other matters that are pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of the Company.

SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that Alcoa Corporation reasonably believes will exceed a specified threshold. Pursuant to these regulations, the Company uses a threshold of $1 for purposes of determining whether disclosure of any such proceedings is required.

A discussion of our material pending lawsuits and claims can be found in Part I Item 3 Legal Proceedings of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. See Part I Item 1 of this Form 10-Q in Note O to the Consolidated Financial Statements for additional information regarding legal proceedings.

Item 1A. Risk Factors.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A full discussion of our risk factors can be found in Part I Item 1A. Risk Factors of Alcoa Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(dollars in millions, except share and per-share amounts)

Issuer Purchases of Equity Securities

The table below sets forth information regarding the repurchase of shares of our common stock during the periods indicated.

(1)

On July 20, 2022, Alcoa Corporation announced that its Board of Directors approved a common stock repurchase program under which the Company may purchase shares of its outstanding common stock up to an aggregate transactional value of $500, depending on the Company’s continuing analysis of market, financial, and other factors (the July 2022 authorization).

As of the date of this report, the Company is currently authorized to repurchase up to a total of $500, in the aggregate, of its outstanding shares of common stock under the July 2022 authorization. Repurchases under this program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. This program may be suspended or discontinued at any time and does not have a predetermined expiration date. Alcoa Corporation intends to retire repurchased shares of common stock.

Item 5. Other Information.

Trading Arrangements

None of the Company’s directors or “officers,” as defined in Rule 16a-1(f) of the Exchange Act, adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, during the Company’s fiscal quarter ended June 30, 2025.

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Item 6. Exhibits.

| | |

31.1 Certification of Principal Executive Officer required by Rule 13a-14(a) or 15d-14(a) (filed herewith) 31.2 Certification of Principal Financial Officer required by Rule 13a-14(a) or 15d-14(a) (filed herewith) 32.1 Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (furnished herewith) 32.2 Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (furnished herewith) 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document (104) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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