Financial Analysis

N. 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 Corporations 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: Balance at December 31, 2024 $ 220 Liabilities incurred 85 Cash payments ( 25 ) Reversals of previously recorded liabilities ( 2 ) Foreign currency translation and other 4 Balance at December 31, 2025 282 Liabilities incurred 9 Cash payments ( 16 ) Reversals of previously recorded liabilities ( 6 ) Foreign currency translation and other 16 Balance at June 30, 2026 $ 285 At June 30, 2026 and December 31, 2025 , the current portion of the remediation reserve balance was $ 76 (both periods). During the second quarter and six-month period of 2026 , the Company incurred liabilities of $ 5 and $ 9 , respectively, and recorded a reversal of $ 6 (both periods). The impacts to the accompanying Statement of Consolidated Operations were primarily comprised of: $ 2 and $ 5 , respectively, for increases in estimated scope and costs associated with ongo …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

J. Debt Short-term Borrowings Inventory Repurchase Agreements The Company periodically enters into inventory repurchase agreements whereby the Company sells aluminum to a third party and agrees to subsequently repurchase substantially similar inventory. Upon shipment of inventory, the Company does not record the sale and reflects cash received in Short-term borrowings within Other current liabilities on the Consolidated Balance Sheet. The cash received and subsequently paid under these agreements is included in Cash (used for) provided from financing activities on the Statement of Consolidated Cash Flows. During the second quarter and six-month period of 2026 , the Company recorded borrowings of $ 104 (six month period only) and repurchased inventory of $ 109 and $ 113 , respectively, related to these agreements. During the second quarter and six-month period of 2025 , the Company recorded borrowings of $ 7 and $ 51 , respectively, and repurchased inventory of $ 44 and $ 93 , respectively, related to these agreements. There were no net borrowings from inventory repurchase agreements as of June 30, 2026 and net borrowings of $ 9 as of December 31, 2025. The associated inventory sold and not yet repurchased was reflected in Prepaid expenses and other current assets on the accompanying Consolidated Balance Sheet. 144A Debt Redemption On May 15, 2026, Alcoa Nederland Holding B.V. (ANHBV), a wholly-owned subsidiary of Alcoa Corporation, redeemed the remaining $ 219 aggregate princ …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

L. 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 entitys 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 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 1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2Inputs 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 b …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

M. Income Taxes Alcoa Corporations estimated annualized effective tax rate (AETR) for 2026 as of June 30, 2026 differs from the U.S. federal statutory rate of 21 percent primarily due to losses in foreign jurisdictions with higher statutory tax rates as well as income in certain jurisdictions with full valuation allowances resulting in immaterial incremental tax expense. Six months ended June 30, 2026 2025 Income before income taxes $ 981 $ 829 Estimated annualized effective tax rate 13.6 % 15.5 % Income tax expense $ 133 $ 128 Unfavorable (favorable) tax impact related to losses in jurisdictions with no tax benefit 6 ( 4 ) Discrete tax expense 16 6 Provision for income taxes $ 155 $ 130 The Company benefits from the Advanced Manufacturing Tax Credit available under Section 45X, enacted as part of the U.S. Inflation Reduction Act of 2022 (IRA). On Oc tober 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. The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, provides for a progressive phase-out of Section 45X credits beginning in 2031 and fully eliminates such credits beginning in 2034. In the second quarter and si …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

K. Pension and Other Postretirement Benefits The components of net periodic benefit cost were as follows: Second quarter ended June 30, Six months ended June 30, Pension benefits 2026 2025 2026 2025 Service cost $ 1 $ 1 $ 3 $ 3 Interest cost (1) 24 25 47 50 Expected return on plan assets (1) ( 29 ) ( 31 ) ( 59 ) ( 62 ) Recognized net actuarial loss (1) 11 9 22 18 Net periodic benefit cost $ 7 $ 4 $ 13 $ 9 Second quarter ended June 30, Six months ended June 30, Other postretirement benefits 2026 2025 2026 2025 Service cost $ 1 $ 1 $ 1 $ 1 Interest cost (1) 5 6 10 11 Recognized net actuarial loss (1) 1 1 2 2 Amortization of prior service benefit (1) ( 3 ) ( 3 ) ( 5 ) ( 6 ) Net periodic benefit cost $ 4 $ 5 $ 8 $ 8 (1) These amounts were reported in Other expenses (income), net on the accompanying Statement of Consolidated Operations (see Note O ). Funding and Cash Flows. It is Alcoas policy to fund amounts for defined benefit pension plans sufficient to meet the minimum requirements set forth in each applicable countrys 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 …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

D. Restructuring and Other Charges, Net In the second quarter and six-month period of 2026, Alc oa Corporation recorded Restructuring and other charges, net, of ($ 4 ) and $ 14 , respectively, which were primarily comprised of : A charge of $ 9 (both periods) to record net additional asset retirement obligations and environmental remediation at previously closed sites; and A benefit of ($ 13 ) and charge of $ 5 , respectively, for take-or-pay power contract costs at previously closed sites. In the second quarter and six-month period of 2025, Alc oa 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 obligations and environmental remediation at previously closed sites; A charge of $ 6 and $ 9 , respectively, for certain employee obligations related to the February 2023 updated viability agreement reached with the workers representatives of the San Ciprian aluminum smelter; and, A net benefit of ($ 12 ) and ($ 10 ), respectively, for take-or-pay contract costs at previously closed sites. 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: Second quarter ended June 30, Six months ended June 30, 2026 2025 2026 2025 Alumina $ $ $ $ Aluminum ( 3 ) 6 ( 3 ) 9 Segment total ( 3 ) 6 ( 3 ) 9 Cor …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

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 Corporations President and Chief Executive Officer , identified as the Companys chief operating decision maker (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 Corporations 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 CODM evaluates actual results versus the annual plan, most recent forecast, and prior period results when making decisions about allocating resources. The operating results, capital expenditures, and assets of Alcoa Corporations reportable segments were as follows (differences between segment totals and consolidated amounts are in Corporate): Alumina Aluminum Total Second quarter ended June 30, 2026 Sales: Third-party sales $ 637 $ 3,330 $ 3,967 Intersegment sales 453 5 458 T …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing