December 31,

September 30,

December 31,

Sales

Cost of goods sold (exclusive of expenses below)

Selling, general administrative, and other expenses

Research and development expenses

Provision for depreciation and amortization

Impairment of goodwill⁽¹⁾

Restructuring and other charges⁽²⁾

Operating income (loss)

Interest expense

Other expenses, net⁽³⁾

(Loss) Income before income taxes

Provision (Benefit) for income taxes

Net (loss) income

Less: Net income attributable to noncontrolling interest

NET (LOSS) INCOME ATTRIBUTABLE TO ARCONIC

CORPORATION

EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC

CORPORATION COMMON STOCKHOLDERS:

Basic:

Net (loss) income

Weighted-average number of shares

Diluted:

Net (loss) income

Weighted-average number of shares⁽⁴⁾

COMMON STOCK OUTSTANDING AT THE END OF THE

PERIOD

In the quarter ended December 31, 2021, Arconic completed its annual review of goodwill for impairment for each of its three reporting units: Rolled Products, Building and Construction Systems, and Extrusions. The results of this review indicated that the carrying value of the Extrusions reporting unit’s goodwill was fully impaired. Accordingly, in the quarter ended December 31, 2021, the Company recognized an impairment charge of $65. This impairment was primarily driven by a combination of market-based factors, including delays in aerospace market improvement and significant cost inflation, resulting in increasingly limited margin expansion. The Company had not previously identified any triggering events during 2021 prior to the annual review.

In the quarters ended December 31, 2021 and September 30, 2021, Restructuring and other charges includes $11 and $5, respectively, related to the settlement of a portion of the Company’s U.S. defined benefit pension plan obligations as a result of elections by certain plan participants to receive lump-sum benefit payments. In the quarter ended December 31, 2020, Restructuring and other charges includes a $140 settlement charge related to the annuitization of a portion of the Company’s U.S. defined benefit pension plan obligation and a $25 benefit for contingent consideration received related to the October 2018 sale of the Texarkana (Texas) rolling mill.

In the quarter ended December 31, 2020, Other expenses, net includes a $20 benefit for the reversal of a liability previously established on April 1, 2020 related to a potential indemnification to Howmet Aerospace by Arconic for an outstanding income tax matter in Spain. In November 2020, Howmet Aerospace received a favorable ruling from Spain’s Supreme Court bringing a final conclusion to this matter as this decision may not be appealed any further. As no further income tax payment was required of Howmet Aerospace likewise Arconic no longer has a requirement to perform under the indemnification.

For periods in which the Company generates net income, the diluted weighted-average number of shares include common share equivalents associated with outstanding employee stock awards. For periods in which the Company generates a net loss, the diluted weighted-average number of shares does not include any common share equivalents as their effect is anti-dilutive.

Year ended

December 31,

Sales

Cost of goods sold (exclusive of expenses below)

Selling, general administrative, and other expenses

Research and development expenses

Provision for depreciation and amortization

Impairment of goodwill⁽²⁾

Restructuring and other charges⁽³⁾

Operating (loss) income

Interest expense

Other expenses, net⁽⁴⁾

Loss before income taxes

(Benefit) Provision for income taxes

Net loss

Less: Net income attributable to noncontrolling interest

NET LOSS ATTRIBUTABLE TO ARCONIC CORPORATION

EARNINGS PER SHARE ATTRIBUTABLE TO ARCONIC

CORPORATION COMMON SHAREHOLDERS:

Basic:

Net loss

Weighted-average number of shares

Diluted:

Net loss

Weighted-average number of shares⁽⁵⁾

COMMON STOCK OUTSTANDING AT THE END OF THE PERIOD

Prior to April 1, 2020, Arconic’s financial statements were prepared on a carve-out basis, as the underlying operations of the Company were previously consolidated as part of Arconic’s former parent company’s financial statements. Accordingly, the Company’s results of operations for the first three months included in the year ended December 31, 2020 were prepared on such basis. The carve-out financial statements of Arconic are not necessarily indicative of the Company’s consolidated results of operations had it been a standalone company during the referenced period. See the Combined Financial Statements included in each of (i) Exhibit 99.1 to the Company’s Form 10 Registration Statement (filed on February 7, 2020), (ii) the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (filed on March 30, 2020), and (iii) the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 (filed on May 18, 2020), for additional information.

In the quarter ended December 31, 2021, Arconic completed its annual review of goodwill for impairment for each of its three reporting units: Rolled Products, Building and Construction Systems, and Extrusions. The results of this review indicated that the carrying value of the Extrusions reporting unit’s goodwill was fully impaired. Accordingly, in the quarter ended December 31, 2021, the Company recognized an impairment charge of $65. This impairment was primarily driven by a combination of market-based factors, including delays in aerospace market improvement and significant cost inflation, resulting in increasingly limited margin expansion. The Company had not previously identified any triggering events during 2021 prior to the annual review.

In the year ended December 31, 2021, Restructuring and other charges includes $584 related to the settlement of a portion of the Company’s U.S. defined benefit pension plan obligations as a result of the purchase of a group annuity contract ($549) and elections by certain plan participants to receive lump-sum benefit payments ($35) (see footnote 5 to the Consolidated Balance Sheet included in this release). In the year ended December 31, 2020, Restructuring and other charges includes a $198 settlement charge related to the annuitizations of a portion of the Company’s U.S. and U.K. defined benefit pension plan obligations and a $25 benefit for contingent consideration received related to the October 2018 sale of the Texarkana (Texas) rolling mill.

In the year ended December 31, 2020, Other expenses, net includes a $20 benefit for the reversal of a liability previously established on April 1, 2020 related to a potential indemnification to Howmet Aerospace by Arconic for an outstanding income tax matter in Spain. In November 2020, Howmet Aerospace received a favorable ruling from Spain’s Supreme Court bringing a final conclusion to this matter as this decision may not be appealed any further. As no further income tax payment was required of Howmet Aerospace likewise Arconic no longer has a requirement to perform under the indemnification.

For periods in which the Company generates net income, the diluted weighted-average number of shares include common share equivalents associated with outstanding employee stock awards. For periods in which the Company generates a net loss, the diluted weighted-average number of shares does not include any common share equivalents as their effect is anti-dilutive.

December 31,

2021

December 31,

2020

ASSETS

Current assets:

Cash and cash equivalents

Receivables from customers, less allowances of

$1 in both 2021 and 2020

Other receivables

Inventories

Prepaid expenses and other current assets

Total current assets

Properties, plants, and equipment

Less: accumulated depreciation and amortization

Properties, plants, and equipment, net

Operating lease right-of-use-assets

Deferred income taxes

Other noncurrent assets

Total assets

LIABILITIES

Current liabilities:

Accounts payable, trade

Accrued compensation and retirement costs

Taxes, including income taxes

Environmental remediation

Operating lease liabilities

Other current liabilities

Total current liabilities

Long-term debt⁽²⁾

Accrued pension benefits⁽³⁾

Accrued other postretirement benefits

Environmental remediation

Operating lease liabilities

Deferred income taxes

Other noncurrent liabilities

Total liabilities

EQUITY

Arconic Corporation stockholders’ equity:

Common stock

Additional capital

Accumulated deficit

Treasury stock⁽⁴⁾

Accumulated other comprehensive loss⁽⁵⁾

Total Arconic Corporation stockholders’ equity

Noncontrolling interest

Total equity

Total liabilities and equity

In the quarter ended December 31, 2021, the Company recognized an impairment charge of $65 (see footnote 1 to the Statement of Consolidated Operations for the quarter ended December 31, 2021 included in this release).

In March 2021, Arconic issued $300 aggregate principal amount of 6.125% Senior Secured Second-Lien Notes due 2028 at 106.25% of par. In April 2021, the Company used a portion of the net proceeds of this issuance to contribute a total of $250 to its two funded U.S. defined benefit plans (see footnote 3).

In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of approximately 8,400 participants to an insurance company. On a combined basis, this annuitization resulted in the settlement of $995 in plan obligations and the transfer of $1,007 in plan assets. In connection with this transaction, the Company contributed a total of $250 to these two plans to maintain the funding level of the remaining plan obligations not transferred. This contribution was funded with the net proceeds from a debt offering (see footnote 2). This transaction represents a significant settlement event, and, as a result, the Company was required to complete a remeasurement of these two plans, including an interim actuarial valuation of the plan obligations. The remeasurement of these two plans resulted in a $152 decrease in the Company’s liability, driven by an increase in the weighted-average discount rate used in calculating the plan obligations and higher than expected returns on plan assets. Additionally, these two plans were remeasured three more times during 2021 due to further settlements associated with lump-sum benefit payments (see footnote 3 to the Statement of Consolidated Operations for the year ended December 31, 2021 included in this release) and the required annual remeasurement. These three remeasurements resulted in a net $16 increase in the Company’s liability.

In May 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. Since the program’s inception, the Company has repurchased 4,912,505 shares of its common stock under this program.

In 2021, the Company accelerated the amortization of a portion of the existing combined net actuarial loss associated with the Company’s two funded U.S. defined benefit pension plans due to the settlement of a portion of the Company’s pension plan obligations as a result of the purchase of a group annuity contract (see footnote 3) and elections by certain plan participants to receive lump-sum benefit payments. The impact of this activity on Accumulated other comprehensive loss was a decrease of $450 ($584 before tax impact). The Company recognized the $584 in Restructuring and other charges on its Statement of Consolidated Operations (see footnote 3 to the Statement of Consolidated Operations for the year ended December 31, 2021 included in this release). Additionally, as a result of four remeasurements of these two plans performed in 2021 (see footnote 3), Accumulated other comprehensive loss was reduced by $105 ($136 before tax impact).

See footnote 1 to the Statement of Consolidated Operations for the quarter ended December 31, 2021 included in this release.

See footnote 2 to the Statement of Consolidated Operations for the quarterly periods presented included in this release.

In May 2021, Arconic announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase shares of its outstanding common stock up to an aggregate transactional value of $300 over a two-year period expiring April 28, 2023. In the quarters ended December 31, 2021 and September 30, 2021, the Company repurchased 1,803,800 and 2,862,694 shares of its common stock, respectively, under this program.

Cash and cash equivalents and restricted cash at beginning of period for all periods presented and Cash and cash equivalents and restricted cash at end of period for all periods presented includes Restricted cash of less than $0.03.

December 31,

September 30,

December 31,

Total Segment Adjusted EBITDA⁽¹⁾

Unallocated amounts:

Corporate expenses⁽²⁾

Stock-based compensation expense

Metal price lag⁽³⁾

Provision for depreciation and amortization

Impairment of goodwill⁽⁴⁾

Restructuring and other charges⁽⁵⁾

Operating income (loss)

Interest expense

Other expenses, net

(Provision) Benefit for income taxes

Arconic’s profit or loss measure for its reportable segments is Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization). The Company calculates Segment Adjusted EBITDA as Total sales (third-party and intersegment) minus each of (i) Cost of goods sold, (ii) Selling, general administrative, and other expenses, and (iii) Research and development expenses, plus Stock-based compensation expense and Metal price lag (see footnote 3). Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.

Total Segment Adjusted EBITDA is the sum of the respective Segment Adjusted EBITDA for each of the Company’s three reportable segments: Rolled Products, Building and Construction Systems, and Extrusions. This amount is being presented for the sole purpose of reconciling Segment Adjusted EBITDA to the Company’s Consolidated net (loss) income.

Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.

Metal price lag represents the financial impact of the timing difference between when aluminum prices included in Sales are recognized and when aluminum purchase prices included in Cost of goods sold are realized. This adjustment aims to remove the effect of the volatility in metal prices and the calculation of this impact considers applicable metal hedging transactions.

See footnote 1 to the Statement of Consolidated Operations for the quarter ended December 31, 2021 included in this release.

See footnote 2 to the Statement of Consolidated Operations for the quarterly periods presented included in this release.

Other includes certain items that impact Cost of goods sold and Selling, general administrative, and other expenses on the Company’s Statement of Consolidated Operations that are not included in Segment Adjusted EBITDA, including those described as “Other special items” (see footnote 5 to the reconciliation of Adjusted EBITDA within Calculation of Non-GAAP Financial Measures included in this release).

Arconic’s definition of Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for the following items: Provision for depreciation and amortization; Stock-based compensation; Metal price lag (see footnote 4); and Other special items. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items are composed of restructuring and other charges, discrete income tax items, and other items as deemed appropriate by management. There can be no assurances that additional special items will not occur in future periods. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Arconic’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

Prior to April 1, 2020, Arconic’s financial statements were prepared on a carve-out basis, as the underlying operations of the Company were previously consolidated as part of Arconic’s former parent company’s financial statements. Accordingly, the Company’s results of operations for the first three months included in the year ended December 31, 2020 were prepared on such basis. The carve-out financial statements of Arconic are not necessarily indicative of the Company’s consolidated results of operations had it been a standalone company during the referenced period. See the Combined Financial Statements included in each of (i) Exhibit 99.1 to the Company’s Form 10 Registration Statement (filed on February 7, 2020), (ii) the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (filed on March 30, 2020), and (iii) the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 (filed on May 18, 2020), for additional information.

See footnote 2 for the quarterly periods presented and footnote 3 for the annual periods presented to the respective Statement of Consolidated Operations included in this release.

See footnote 1 for the quarter ended December 31, 2021 and footnote 2 for the year ended December 31, 2021 to the respective Statement of Consolidated Operations included in this release.

Metal price lag represents the financial impact of the timing difference between when aluminum prices included in Sales are recognized and when aluminum purchase prices included in Cost of goods sold are realized. This adjustment aims to remove the effect of the volatility in metal prices and the calculation of this impact considers applicable metal hedging transactions.

Other special items include the following:

December 31,

September 30,

June 30,

March 31,

Adjusted EBITDA⁽¹⁾

Change in working capital⁽²⁾

Cash payments for:

Environmental remediation

Pension contributions⁽³⁾

Other postretirement benefits

Restructuring actions

Interest

Income taxes

Capital expenditures

Other

Free Cash Flow⁽⁴⁾

Add-back cash payments for:

Environmental remediation

Pension benefits⁽⁵⁾

Other postretirement benefits

Adjusted Free Cash Flow⁽⁶⁾

Adjusted EBITDA is a non-GAAP financial measure. See the reconciliation of Adjusted EBITDA included in this release for (i) Arconic’s definition of Adjusted EBITDA, (ii) management’s rationale for the presentation of this non-GAAP measure, and (iii) a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure.

Arconic’s definition of working capital is Receivables plus Inventories less Accounts payable, trade.

In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract.

Arconic’s definition of Free Cash Flow is Cash from operations less capital expenditures. Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures, which are both necessary to maintain and expand the Company’s asset base and expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.