Arconic Announces Three-Year Targets at Inaugural Investor Day

December 14, 2016

Company outlines execution path to margin expansion and profitable growth

Arconic Inc. (NYSE: ARNC) today announced its levers for value creation
and three-year financial targets through 2019 at its inaugural Investor
Day event in New York.

Arconic is focused on driving shareholder value. The Company has
substantially improved its portfolio and margins since 2008, and today
holds strong market positions across the sectors it serves, with 70
percent of revenues derived from number one or two market positions.
Arconic is well-positioned to capture secular growth tailwinds in
aerospace and automotive, and achieve margin expansion through cost
reductions and share gains across all segments, driven by differentiated

The Company’s $1.2 billion1 retained interest (19.9 percent)
in Alcoa Corporation provides further financial flexibility and Arconic
plans to monetize this stake responsibly, with timing based on market
conditions. Resulting cash would be used for debt pay-down and share

The following three-year business targets were announced for the 2017 to
2019 time period:

  • Arconic Revenue – $11.8-$12.4 billion in 2017, with 7-8 percent
    compound annual growth rate (CAGR) through 2019
  • Adjusted EBITDA margin – approximately 15 percent targeted for
    2017, growing to approximately 17 percent in 2019
  • Combined segment adjusted EBITDA margin (excluding corporate
    spend) – approximately 17 percent targeted for 2017, growing to
    approximately 19 percent in 2019
  • Return on Net Assets (RONA) – approximately 9 percent targeted
    for 2017, growing to 11-12 percent in 2019
  • Leverage – in 2019, target of 2.0-2.5 times net debt to
    adjusted EBITDA
  • Free Cash Flow – more than $350 million in 2017, increasing to
    approximately $700 million in 2019

“We lead the company with an ‘owner mindset’, strongly focused on
shareholder value,” said Arconic Chairman and CEO Klaus Kleinfeld. “Our
value creation model has six priority areas – innovation, market share
and growth, productivity and overhead cost reduction, capital
efficiency, de-leveraging and returning cash to shareholders. Arconic’s
recent separation from Alcoa Corporation has unleashed distinct
advantages; our management team is completely focused on the major end
markets we serve, our technology portfolio is wholly concentrated on
value-add products and processes, we have an exacting capital
expenditure approval process, an efficient operating structure, and are
an attractive employer of choice for high performing talent.”

Kleinfeld continued, “Arconic’s businesses have strong market positions
and margin profiles and are positioned to capture near-term growth
tailwinds in our major segments. We have a clear execution path to
incremental value by improving our businesses, a strong balance sheet
profile and financial flexibility, and are attacking all opportunities
to drive shareholder value. These strengths, combined with our new
three-year targets, provide a clear roadmap for shareholder value

The company also outlined earnings potential for each of its three
segments for the next three to five years:

  • Engineered Products and Solutions – ~400
    basis point margin improvement over 2016 adjusted EBITDA margin target
    of ~21 percent.
  • Global Rolled Products – ~200 basis point
    margin improvement over 2016 adjusted EBITDA margin target of ~11+
  • Transportation and Construction Solutions
    ~250 basis point margin improvement over 2016 adjusted EBITDA margin
    target of ~15 percent.

Arconic has a strong track record of delivering productivity savings and
expects to achieve $650 million in 2016. The Company is targeting net
savings of approximately 2 percent of revenue in 2017. Arconic applies
an ‘owner mindset’ to capital allocation, prioritizing growth,
optimization of financial position, debt pay-down and return of cash to
shareholders. The Company has an exacting approach to capital
expenditure approval, with 2017 expenditures capped at $650 million.

Arconic’s executive compensation structure is aligned with shareholder
value creation.

The Company is targeting a regular dividend to shareholders of
approximately 10 percent of operating cash flows, with periodic,
opportunistic share repurchases based on relative return assessment.

The webcast of the Arconic Investor Day event is available for replay
and the presentations archived at

About Arconic

Arconic Inc. (NYSE: ARNC) creates breakthrough products that shape
industries. Working in close partnership with our customers, we solve
complex engineering challenges to transform the way we fly, drive, build
and power. Through the ingenuity of our people and cutting-edge advanced
manufacturing techniques, we deliver these products at a quality and
efficiency that ensure customer success and shareholder value. For more
Follow @arconic: Twitter,
and YouTube.

Dissemination of Company Information

Arconic intends to make future announcements regarding Company
developments and financial performance through its website at

Forward–Looking Statements

This communication contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,”
“guidance,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,”
“seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of
similar meaning. All statements that reflect Arconic’s expectations,
assumptions or projections about the future, other than statements of
historical fact, are forward-looking statements, including, without
limitation, forecasts relating to the growth of the aerospace,
automotive, commercial transportation and other end markets; statements
and guidance regarding future financial results or operating
performance; statements about Arconic’s strategies, outlook, business
and financial prospects; and statements regarding potential share gains.
Forward-looking statements are not guarantees of future performance and
are subject to risks, uncertainties, and changes in circumstances that
are difficult to predict. Although Arconic believes that the
expectations reflected in any forward-looking statements are based on
reasonable assumptions, it can give no assurance that these expectations
will be attained and it is possible that actual results may differ
materially from those indicated by these forward-looking statements due
to a variety of risks and uncertainties. Such risks and uncertainties
include, but are not limited to: (a) deterioration in global economic
and financial market conditions generally; (b) unfavorable changes in
the markets served by Arconic; (c) the inability to achieve the level of
revenue growth, cash generation, cost savings, improvement in
profitability and margins, fiscal discipline, or strengthening of
competitiveness and operations anticipated from restructuring programs
and productivity improvement, cash sustainability, technology
advancements, and other initiatives; (d) changes in discount rates or
investment returns on pension assets; (e) Arconic’s inability to realize
expected benefits, in each case as planned and by targeted completion
dates, from acquisitions, divestitures, facility closures, curtailments,
expansions, or joint ventures; (f) the impact of cyber attacks and
potential information technology or data security breaches; (g)
political, economic, and regulatory risks in the countries in which
Arconic operates or sells products; (h) the impact of the separation on
the businesses of Arconic; (i) material adverse changes in aluminum
industry conditions, including fluctuations in London Metal
Exchange-based aluminum prices; (j) the impact of changes in foreign
currency exchange rates on costs and results; (k) the outcome of
contingencies, including legal proceedings, government or regulatory
investigations, and environmental remediation; and (l) the other risk
factors discussed in Arconic’s Form 10-K for the year ended December 31,
2015, and other reports filed with the U.S. Securities and Exchange
Commission (SEC). Arconic disclaims any obligation to update publicly
any forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable law. Market
projections are subject to the risks discussed above and other risks in
the market.

Non-GAAP Financial Measures

Some of the information included in this communication are not prepared
in accordance with accounting principles generally accepted in the
United States of America (GAAP) and are considered “non-GAAP financial
measures” under SEC rules. Arconic has not provided a reconciliation of
any forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measures because Arconic is unable to quantify
certain amounts that would be required to be included in the GAAP
measure without unreasonable efforts, and Arconic believes such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. In particular, reconciliation of
forward-looking non-GAAP financial measures such as EBITDA, Return on
Net Assets, and Free Cash Flow to the most directly comparable GAAP
measure is not available without unreasonable efforts on a
forward-looking basis due to the variability and complexity with respect
to the charges and other components excluded from these non-GAAP
measures, such as the effects of foreign currency movements, equity
income, gains or losses on sales of assets, taxes and any future
restructuring or impairment charges. These reconciling items are in
addition to the inherent variability already included in the GAAP
measure which includes, but is not limited to, price/mix and volume.


1 19.9 percent stake in Alcoa Corporation valued at $1.2
billion as of 12/9/16

Arconic Inc.
Investor Contact:
Patricia Figueroa, 212-836-2674
Media Contact:
Shona Sabnis, 212-836-2626