0001790982-23-000022.txt : 20230731 0001790982-23-000022.hdr.sgml : 20230731 20230731170809 ACCESSION NUMBER: 0001790982-23-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230731 DATE AS OF CHANGE: 20230731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Arconic Corp CENTRAL INDEX KEY: 0001790982 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 842745636 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39162 FILM NUMBER: 231128318 BUSINESS ADDRESS: STREET 1: 201 ISABELLA STREET CITY: PITTSBURGH STATE: PA ZIP: 15212-5872 BUSINESS PHONE: (412) 992-2500 MAIL ADDRESS: STREET 1: 201 ISABELLA STREET CITY: PITTSBURGH STATE: PA ZIP: 15212-5872 FORMER COMPANY: FORMER CONFORMED NAME: Arconic Rolled Products Corp DATE OF NAME CHANGE: 20191011 10-Q 1 arnc-20230630.htm 10-Q arnc-20230630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-39162
ARCONIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 84-2745636
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
     
201 Isabella Street,Suite 400,Pittsburgh,Pennsylvania 15212-5872
(Address of principal executive offices) (Zip Code)
(412)-992-2500
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareARNCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
As of July 28, 2023, there were 100,346,464 shares of common stock, par value $0.01 per share, of the registrant outstanding.


TABLE OF CONTENTS

Forward-Looking Statements
This Quarterly Report on Form 10-Q 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,” “goal,” “guidance,” “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, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements relating to the condition of, or trends or developments in, the ground transportation, aerospace, building and construction, industrial, packaging and other end markets; Arconic’s future financial results, operating performance, working capital, cash flows, liquidity and financial position; cost savings and restructuring programs; Arconic’s strategies, outlook, business and financial prospects; share repurchases; costs associated with pension and other postretirement benefit plans; projected sources of cash flow; potential legal liability; the impact of inflationary price pressures; and the potential impact of public health epidemics or pandemics, including the COVID-19 pandemic. These statements reflect beliefs and assumptions that are based on Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond Arconic’s control. Such risks and uncertainties include, but are not limited to:
continuing uncertainty regarding the impact of the COVID-19 pandemic on our business and the businesses of our customers and suppliers;
deterioration in global economic and financial market conditions generally;
unfavorable changes in the end markets we serve;
the inability to achieve the level of revenue growth, cash generation, cost savings, benefits of our management of legacy liabilities, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted;
adverse changes in discount rates or investment returns on pension assets;
competition from new product offerings, disruptive technologies, industry consolidation or other developments;
the loss of significant customers or adverse changes in customers’ business or financial condition;


manufacturing difficulties or other issues that impact product performance, quality or safety, or timely delivery;
the impact of pricing volatility in raw materials and inflationary pressures on our costs of production, including energy;
a significant downturn in the business or financial condition of a key supplier or other supply chain disruptions;
challenges to or infringements on our intellectual property rights;
the inability to successfully implement or to realize the expected benefits of strategic initiatives or projects;
the inability to identify or successfully respond to changing trends in our end markets;
the impact of potential cyber attacks and information technology or data security breaches;
geopolitical, economic, and regulatory risks relating to our global operations, including compliance with U.S. and foreign trade and tax laws and other regulations, potential expropriation of properties located outside the U.S., sanctions, tariffs, embargoes and renegotiation or nullification of existing agreements;
the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation and compliance matters;
the impact of the ongoing conflict between Russia and Ukraine on economic conditions in general and on our business and operations, including sanctions, tariffs, and increased energy prices;
the timing, receipt, and terms and conditions of any required governmental and regulatory approvals of our proposed transaction with funds managed by affiliates of Apollo and Irenic (each as defined below) that could reduce anticipated benefits or cause the parties to abandon the proposed transaction;
the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction;
the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all;
risks related to disruption of management time from ongoing business operations due to the proposed transaction;
the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of our common stock;
the risk of any unexpected costs or expenses resulting from the proposed transaction;
the risk of any litigation relating to the proposed transaction;
the risk that the proposed transaction and its announcement could have an adverse effect on our ability to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders, and other business relationships and on our operating results and business generally; and
the other risk factors summarized in our Form 10-K for the year ended December 31, 2022 and other reports filed with the U.S. Securities and Exchange Commission.
The above list of factors is not exhaustive or necessarily in order of importance. Market projections are subject to the risks discussed above and in this report, and other risks in the market. For additional information concerning factors that could cause actual results to differ materially from the information contained in this report, reference is made to the information in Part II Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and Part I Item 1A, “Risk Factors” in Arconic’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Arconic disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Arconic Corporation and subsidiaries
Statement of Consolidated Operations (unaudited)
(in millions, except per-share amounts)
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Sales (C and D)
$1,990 $2,548 $3,919 $4,739 
Cost of goods sold (exclusive of expenses below)
1,724 2,258 3,448 4,214 
Selling, general administrative, and other expenses79 73 151 138 
Research and development expenses9 9 18 18 
Provision for depreciation and amortization52 62 105 122 
Restructuring and other charges (E)
9 2 9 7 
Operating income117 144 188 240 
Interest expense
25 26 50 51 
Other expenses (income), net (F)
16 (35)27 (18)
Income before income taxes76 153 111 207 
Provision for income taxes (H)
17 38 27 50 
Net income59 115 84 157 
Less: Net income attributable to noncontrolling interest (O)
 1  1 
Net income attributable to Arconic Corporation$59 $114 $84 $156 
Earnings Per Share Attributable to Arconic Corporation Common Stockholders (I):
Basic$0.59 $1.08 $0.84 $1.48 
Diluted$0.58 $1.05 $0.82 $1.44 
The accompanying notes are an integral part of the consolidated financial statements.
1

Arconic Corporation and subsidiaries
Statement of Consolidated Comprehensive Income (unaudited)
(in millions)
Arconic Corporation
Noncontrolling interest (O)
Total
Second quarter ended June 30,202320222023202220232022
Net income$59 $114 $ $1 $59 $115 
Other comprehensive income, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits8 26   8 26 
Foreign currency translation adjustments(13)(55)  (13)(55)
Net change in unrecognized losses on cash flow hedges33 190   33 190 
Total Other comprehensive income, net of tax28 161   28 161 
Comprehensive income$87 $275 $ $1 $87 $276 
Arconic Corporation
Noncontrolling interest (O)
Total
Six months ended June 30,202320222023202220232022
Net income$84 $156 $ $1 $84 $157 
Other comprehensive income, net of tax (K):
Change in unrecognized net actuarial loss and prior service cost/benefit related to pension and other postretirement benefits12 84   12 84 
Foreign currency translation adjustments4 (62)  4 (62)
Net change in unrecognized losses on cash flow hedges22 120   22 120 
Total Other comprehensive income, net of tax38 142   38 142 
Comprehensive income$122 $298 $ $1 $122 $299 


The accompanying notes are an integral part of the consolidated financial statements.
2

Arconic Corporation and subsidiaries
Consolidated Balance Sheet (unaudited)
(in millions)
June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$266 $261 
Receivables from customers, less allowances of $2 in 2023 and $1 in 2022 (R)
907 791 
Other receivables138 183 
Inventories (L)
1,544 1,622 
Fair value of hedging instruments and derivatives (Q)
56 21 
Prepaid expenses and other current assets (P)
158 124 
Total current assets3,069 3,002 
Properties, plants, and equipment7,037 6,957 
Less: accumulated depreciation and amortization4,688 4,596 
Properties, plants, and equipment, net
2,349 2,361 
Goodwill294 292 
Operating lease right-of-use assets (M)
110 115 
Deferred income taxes170 188 
Other noncurrent assets54 57 
Total assets$6,046 $6,015 
Liabilities
Current liabilities:
        Accounts payable, trade (R)
$1,489 $1,578 
Accrued compensation and retirement costs112 119 
Taxes, including income taxes34 43 
Environmental remediation (P)
34 40 
Operating lease liabilities (M)
36 34 
Fair value of hedging instruments and derivatives (Q)
13 7 
Other current liabilities (P)
181 150 
Total current liabilities1,899 1,971 
Long-term debt
1,598 1,597 
Accrued pension benefits
582 586 
Accrued other postretirement benefits295 302 
Environmental remediation (P)
38 45 
Operating lease liabilities (M)
78 83 
Deferred income taxes6 3 
Other noncurrent liabilities66 71 
Total liabilities4,562 4,658 
Contingencies and commitments (P)
Stockholders’ Equity
Common stock1 1 
Additional capital3,379 3,373 
Accumulated deficit (650)(734)
Treasury stock (J)
(347)(346)
Accumulated other comprehensive loss (K)
(899)(937)
Total stockholders’ equity1,484 1,357 
Total liabilities and stockholders’ equity$6,046 $6,015 
The accompanying notes are an integral part of the consolidated financial statements.
3

Arconic Corporation and subsidiaries
Statement of Consolidated Cash Flows (unaudited)
(in millions)
Six months ended June 30,
20232022
Operating Activities
Net income$84 $157 
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization105 122 
Deferred income taxes23 26 
Restructuring and other charges (E)
9 7 
Net periodic pension benefit cost (G)
34 34 
Stock-based compensation18 13 
Other23 (12)
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
   (Increase) in receivables (R)
(84)(141)
Decrease (Increase) in inventories82 (304)
(Increase) in prepaid expenses and other current assets(40)(19)
(Decrease) Increase in accounts payable, trade
(43)196 
(Decrease) in accrued expenses(37)(17)
(Decrease) Increase in taxes, including income taxes(26)5 
Pension contributions
(19)(13)
Decrease in noncurrent assets9 1 
Increase in noncurrent liabilities12 4 
Cash provided from operations150 59 
Financing Activities
Net change in short term borrowings (original maturities of three months or less) (N)
 50 
Repurchases of common stock (J)
(1)(53)
Other(12)(11)
Cash used for financing activities(13)(14)
Investing Activities
Capital expenditures
(139)(128)
Other7 1 
Cash used for investing activities(132)(127)
Effect of exchange rate changes on cash and cash equivalents and restricted cash (1)
Net change in cash and cash equivalents and restricted cash5 (83)
Cash and cash equivalents and restricted cash at beginning of year261 335 
Cash and cash equivalents and restricted cash at end of period$266 $252 

The accompanying notes are an integral part of the consolidated financial statements.
4

Arconic Corporation and subsidiaries
Statement of Changes in Consolidated Equity (unaudited)
(dollars in millions)
Common shares outstandingCommon stockAdditional capitalAccumulated deficitTreasury stockAccumulated
other
comprehensive loss
Noncontrolling interest (O)
Total
equity
Balance at March 31, 2022105,784,425$1 $3,363 $(510)$(177)$(1,130)$14 $1,561 
Net income— — — 114 — — 1 115 
Other comprehensive income (K)
— — — — — 161 — 161 
Repurchases of common stock (J)
(1,324,027)— — — (37)— — (37)
Stock-based compensation38,660 — 8 — — — — 8 
Balance at June 30, 2022104,499,058$1 $3,371 $(396)$(214)$(969)$15 $1,808 
Balance at March 31, 202399,424,955$1 $3,379 $(709)$(347)$(927)$ $1,397 
Net income— — — 59 — — — 59 
Other comprehensive income (K)
— — — — — 28 — 28 
Stock-based compensation918,482 — 12 — — — — 12 
Other— — (12)— — — — (12)
Balance at June 30, 2023100,343,437$1 $3,379 $(650)$(347)$(899)$ $1,484 
Balance at December 31, 2021105,326,885$1 $3,368 $(552)$(161)$(1,111)$14 $1,559 
Net income— — — 156 — — 1 157 
Other comprehensive income (K)
— — — — — 142 — 142 
Repurchases of common stock (J)
(1,830,009)— — — (53)— — (53)
Stock-based compensation1,002,182 — 13 — — — — 13 
Other— — (10)— — — — (10)
Balance at June 30, 2022104,499,058$1 $3,371 $(396)$(214)$(969)$15 $1,808 
Balance at December 31, 202299,432,194$1 $3,373 $(734)$(346)$(937)$ $1,357 
Net income— — — 84 — — — 84 
Other comprehensive income (K)
— — — — — 38 — 38 
Repurchases of common stock (J)
(35,615)— — — (1)— — (1)
Stock-based compensation946,858 — 18 — — — — 18 
Other— — (12)— — — — (12)
Balance at June 30, 2023100,343,437$1 $3,379 $(650)$(347)$(899)$ $1,484 
The accompanying notes are an integral part of the consolidated financial statements.
5

Arconic Corporation and subsidiaries
Notes to the Consolidated Financial Statements (unaudited)
(dollars in millions, except per-share and per metric ton amounts)
A.    Basis of Presentation and Proposed Merger
The interim Consolidated Financial Statements of Arconic Corporation and its subsidiaries (“Arconic” 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 2022 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 Form 10-Q report should be read in conjunction with Arconic’s Annual Report on Form 10-K for the year ended December 31, 2022, which includes all 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. Actual results could differ from those estimates upon subsequent resolution of identified matters.
References in these Notes to “ParentCo” refer to Arconic Inc., a Delaware corporation, and its consolidated subsidiaries (through March 31, 2020, at which time it was renamed Howmet Aerospace Inc. (“Howmet”)). On April 1, 2020 (the “Separation Date”), ParentCo separated into two standalone, publicly-traded companies, Arconic Corporation and Howmet (the “Separation”). In connection with the Separation, as of March 31, 2020, the Company and Howmet entered into several agreements to effect the Separation, including a Separation and Distribution Agreement and a Tax Matters Agreement. See Note A to the Consolidated Financial Statements in Part II Item 8 of Arconic Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information. Also, references in these Notes to “2016 Separation Transaction” refer to the November 1, 2016 separation of Alcoa Inc., a Pennsylvania corporation, into two standalone, publicly-traded companies, Arconic Inc. and Alcoa Corporation.
Proposed Merger. On May 4, 2023, Arconic entered into an Agreement and Plan of Merger (the “Merger Agreement”) to be acquired by funds managed by affiliates of Apollo Global Management, Inc., along with a minority investment from funds managed by affiliates of Irenic Capital Management LP, in an all-cash transaction that values Arconic at an enterprise value of approximately $5,000 (the “Transaction”). On the terms and subject to the conditions of the Merger Agreement, the Company’s stockholders will receive $30.00 per share in cash in exchange for each share of outstanding common stock. The Transaction is expected to close in the third quarter of 2023, subject to customary closing conditions, including approval by the Company’s stockholders. The Merger Agreement was adopted by the Company’s stockholders at a special meeting of the Company’s stockholders on July 25, 2023. Upon the closing of the Transaction, Arconic will operate as a privately-held company. In the 2023 second quarter, Arconic recognized $11 in Restructuring and other charges (see Note E) on the accompanying Statement of Consolidated Operations for incurred fees and expenses associated with the Transaction. Additional merger-related costs are expected to be recognized in a future period; however, such amounts are contingent on the outcome of the Transaction. Assuming the Transaction closes, the Company expects to recognize approximately $60 of additional acquisition-related expenses, which have not been accrued to date, associated with contractual agreements that are contingent upon the closing of the Transaction.

6

B.    Recently Adopted and Recently Issued Accounting Guidance
Adopted
On January 1, 2023, Arconic adopted changes issued by the Financial Accounting Standards Board (FASB) to the disclosure of supplier finance programs. The FASB issued this guidance to address a perceived lack of transparency about such programs, which may prevent an understanding by financial statement users of the effect these programs have on an entity’s working capital, liquidity, and cash flows. Supplier finance programs (also may be referred to as reverse factoring, payables finance, or structured payables arrangements) allow a buyer to offer its suppliers the option for access to payment in advance of an invoice due date, which is paid by a third-party finance provider or intermediary on the basis of invoices that the buyer has confirmed as valid. Generally, a buyer (i) enters into an agreement with a finance provider or an intermediary to establish the program, (ii) purchases goods and services from suppliers with a promise to pay at a later date, and (iii) notifies the finance provider or intermediary of the supplier invoices that it has confirmed as valid. The suppliers may then request early payment directly from the finance provider or intermediary for those confirmed invoices. In the fiscal year of adoption, the guidance requires a buyer in a supplier finance program to disclose the following information in all reporting periods: (i) the key terms of the program, including a description of the payment terms and any assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary, and (ii) for the obligations that the buyer has confirmed as valid to the finance provider or intermediary, the amount outstanding that remains unpaid by the buyer as of the end of the reporting period and a description of where those obligations are presented in the balance sheet. In subsequent years, only the amount of obligations outstanding that the buyer has confirmed as valid to the finance provider or intermediary as of the end of the reporting period is required disclosure for interim periods while all the previously mentioned information is required disclosure for annual periods, including an incremental requirement to present a roll forward of the obligations, including the amount of obligations confirmed and the amount of obligations subsequently paid. The Company has an existing arrangement with a financial institution to make available this type of program to its suppliers. Other than disclosing the required information (see Note R), the adoption of this guidance did not have an impact on the Consolidated Financial Statements.
Issued
In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. These expedients and exceptions may be used when applying GAAP, if certain criteria are met, to contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of such reform. The purpose of this guidance is to provide relief to entities from experiencing unintended accounting and/or financial reporting outcomes or consequences due to reference rate reform. This guidance became effective immediately on March 12, 2020 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022, after which time the expedients and exceptions expire (see below). In January 2021, the FASB issued clarifying guidance to specify that certain of the optional expedients and exceptions apply to derivatives that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. This additional guidance may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively in the manner previously described for the guidance issued on March 12, 2020. In December 2022, the FASB extended the expiration of the optional expedients and exceptions to December 31, 2024. Through June 30, 2023, Arconic has not experienced any unintended outcomes or consequences of reference rate reform that would necessitate the adoption of this guidance. Additionally, the Company’s credit agreement, which previously provided a credit facility that was referenced to LIBOR in certain borrowing situations, was amended in February 2022 to replace LIBOR with the Secured Overnight Financing Rate (SOFR) (see Note N). Management will continue to closely monitor all potential instances of reference rate reform to determine if adoption of this guidance becomes necessary in the future.

7

C.    Revenue from Contracts with Customers
The following table disaggregates revenue by major end market served. Differences between segment totals and the Company’s consolidated totals are in Corporate.
Second quarter ended June 30,Rolled
Products
Building and
Construction
Systems
ExtrusionsTotal
2023
Ground Transportation$764 $ $23 $787 
Building and Construction51 319  370 
Aerospace241  73 314 
Packaging194   194 
Industrial Products and Other279  29 308 
Total end-market revenue$1,529 $319 $125 $1,973 
2022
Ground Transportation$844 $ $28 $872 
Building and Construction94 329  423 
Aerospace200  49 249 
Packaging518   518 
Industrial Products and Other457  28 485 
Total end-market revenue*
$2,113 $329 $105 $2,547 
Six months ended June 30,Rolled
Products
Building and
Construction
Systems
ExtrusionsTotal
2023
Ground Transportation$1,502 $ $49 $1,551 
Building and Construction90 627  717 
Aerospace483  139 622 
Packaging411   411 
Industrial Products and Other547  57 604 
Total end-market revenue$3,033 $627 $245 $3,905 
2022
Ground Transportation$1,570 $ $57 $1,627 
Building and Construction178 620  798 
Aerospace367  92 459 
Packaging915   915 
Industrial Products and Other887  53 940 
Total end-market revenue*
$3,917 $620 $202 $4,739 
__________________
*In November 2022, Arconic completed the sale of all of its operations in Russia (see Note O), the results of which were previously reported in the Company’s Rolled Products segment. In the 2022 second quarter and six-month period, Third-party sales for the Rolled Products segment included $314 and $547, respectively, related to these former operations.

The average aluminum price per metric ton was $2,811 and $2,913 in the 2023 second quarter and six-month period, respectively, and $3,687 and $3,874 in the 2022 second quarter and six-month period, respectively, consisting of the London Metal Exchange aluminum price and the Midwest premium (United States).


8

D.    Segment and Related Information
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 each of (i) Stock-based compensation expense, (ii) Metal price lag, and (iii) Unrealized (gains) losses on mark-to-market hedging instruments and derivatives. Arconic’s Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies’ reportable segments.
The operating results of Arconic’s reportable segments were as follows (differences between segment totals and the Company’s consolidated totals for line items not reconciled are in Corporate):
Second quarter ended June 30,Rolled
Products
Building and
Construction
Systems
ExtrusionsTotal
2023
Sales:
Third-party sales$1,529 $319 $125 $1,973 
Intersegment sales8  5 13 
Total sales$1,537 $319 $130 $1,986 
Segment Adjusted EBITDA$158 $53 $(1)$210 
Provision for depreciation and amortization$42 $4 $4 $50 
2022
Sales:
Third-party sales*
$2,113 $329 $105 $2,547 
Intersegment sales11   11 
Total sales$2,124 $329 $105 $2,558 
Segment Adjusted EBITDA*
$174 $53 $(12)$215 
Provision for depreciation and amortization$49 $5 $6 $60 
Six months ended June 30,Rolled
Products
Building and
Construction
Systems
ExtrusionsTotal
2023
Sales:
Third-party sales$3,033 $627 $245 $3,905 
Intersegment sales19  5 24 
Total sales$3,052 $627 $250 $3,929 
Segment Adjusted EBITDA$275 $107 $(5)377 
Provision for depreciation and amortization$84 $8 $7 $99 
2022
Sales:
Third-party sales*
$3,917 $620 $202 $4,739 
Intersegment sales23  1 24 
Total sales$3,940 $620 $203 $4,763 
Segment Adjusted EBITDA*
$350 $97 $(17)$430 
Provision for depreciation and amortization$97 $9 $10 $116 
__________________
*    In November 2022, Arconic completed the sale of all of its operations in Russia (see Note O), the results of which were previously reported in the Company’s Rolled Products segment. In the 2022 second quarter and six-month period, Third-

9

party sales and Segment Adjusted EBITDA for the Rolled Products segment included $314 and $24, respectively, and $547 and $42, respectively, related to these former operations.
The following table reconciles total Segment Adjusted EBITDA to consolidated net income attributable to Arconic Corporation:
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Total Segment Adjusted EBITDA$210 $215 $377 $430 
Unallocated amounts:
Corporate expenses(1)
(11)(10)(20)(19)
Stock-based compensation expense(12)(8)(18)(13)
Metal price lag(2)
(20)30 (20)(6)
Unrealized gains (losses) on mark-to-market hedging instruments and derivatives (Q)
18 21 (2)23 
Provision for depreciation and amortization(52)(62)(105)(122)
Restructuring and other charges(3) (E)
(9)(2)(9)(7)
Other(4)
(7)(40)(15)(46)
Operating income117 144 188 240 
Interest expense(25)(26)(50)(51)
Other (expenses) income, net (F)
(16)35 (27)18 
Provision for income taxes (H)
(17)(38)(27)(50)
Net income attributable to noncontrolling interest (O)
 (1) (1)
Consolidated net income attributable to Arconic Corporation$59 $114 $84 $156 
_____________________
(1)Corporate expenses are composed of general administrative and other expenses of operating the corporate headquarters and other global administrative facilities.
(2)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.
(3)In the 2023 second quarter and six-month period, Restructuring and other charges includes $11 for costs incurred related to the Transaction (see Note A and Note E).
(4)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. In the 2022 second quarter and six-month period, the respective amounts include costs related to a new union labor agreement of $19 (see Note G) and environmental remediation charges of $9, both of which were recorded in Cost of goods sold on the accompanying Statement of Consolidated Operations.

10

E.    Restructuring and Other Charges
In the 2023 second quarter and six-month period, Arconic recorded Restructuring and other charges of $9 which were comprised of the following components: an $11 charge for costs incurred related to the Transaction (see Note A) and a $2 net credit for other items.
In the 2022 second quarter and six-month period, Arconic recorded Restructuring and other charges of $2 and $7, respectively, which were comprised of the following components: a $1 and $5, respectively, charge related to several legacy non-U.S. matters, including $1 (six-month period) for an environmental remediation obligation related to Italy and $1 (six-month period) for the full settlement of certain employee retirement benefits related to Brazil (see Note G); and a $1 and $2, respectively, charge related to idling certain operations in the Extrusions segment (actions initiated in 2021).
The Company does not include Restructuring and other charges in the results of its reportable segments. The impact of allocating such charges to segment results would have been as follows:
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Rolled Products$(1)$ $(1)$ 
Building and Construction Systems    
Extrusions 1  2 
Segment total(1)1 (1)2 
Corporate10 1 10 5 
$9 $2 $9 $7 

11

F.    Other Expenses (Income), Net
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Non-service costs — Pension and OPEB (G)
$16 $16 $33 $30 
Foreign currency gains, net(1)(48)(1)(42)
Other, net1 (3)(5)(6)
$16 $(35)$27 $(18)
In the 2022 second quarter and six-month period, Foreign currency gains, net includes a $54 gain for the remeasurement of monetary balances, primarily cash, related to the Company’s former operations in Russia from rubles to U.S. dollar. This gain was the result of a significant strengthening of the ruble against the U.S. dollar in the 2022 second quarter.

12

G.    Pension and Other Postretirement Benefits
The components of net periodic benefit cost for defined benefit pension and other postretirement benefit plans were as follows:
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Pension benefits
Service cost$3 $4 $6 $9 
Interest cost25 17 51 33 
Expected return on plan assets(23)(23)(46)(47)
Amortization of net actuarial loss10 19 20 38 
Amortization of prior service cost2  3  
Settlements   1 
Net periodic benefit cost*
$17 $17 $34 $34 
Other postretirement benefits
Service cost$1 $1 $2 $2 
Interest cost4 3 8 6 
Amortization of net actuarial loss 2 1 4 
Amortization of prior service benefit(2)(2)(4)(4)
Net periodic benefit cost*
$3 $4 $7 $8 
_____________________
*    Service cost was reported in Cost of goods sold, Settlements were reported in Restructuring and other charges, and all other components were reported in Other expenses, net on the accompanying Statement of Consolidated Operations.
United Steelworkers Labor Agreement—On May 14, 2022, the Company and the United Steelworkers reached a tentative four-year labor agreement covering approximately 3,300 employees at four U.S. locations; the previous labor agreement expired on May 15, 2022. The tentative agreement was ratified by the union employees on June 1, 2022. In the 2022 second quarter and six-month period, Arconic recognized $19 in Cost of goods sold on the accompanying Statement of Consolidated Operations primarily for a one-time signing bonus for the covered employees. Additionally, the new labor agreement provides for, among other items, established annual wage increases and higher multipliers used to calculate the union employees’ future pension retirement benefits.
The change to the pension benefits qualifies as a significant plan amendment to the Company’s U.S. hourly defined benefit pension plan, and, as a result, Arconic was required to complete a remeasurement of this plan (generally completed as of December 31st each year), including an interim actuarial valuation of the plan obligations. Communication of the benefit change to the union employees occurred on May 15, 2022, and the effective date of this amendment was May 16, 2022. For purposes of performing an interim remeasurement of the plan, the Company applied a practical expedient to the remeasurement date and selected May 31, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 4.66% at May 31, 2022 from 2.96% at December 31, 2021. The remeasurement of this plan, together with the amendment for increased benefits, resulted in a $13 net decrease to Accrued pension benefits and a $10 (after-tax) net decrease to Accumulated other comprehensive loss (see Note K). Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 increased by $8, comprised of a $2 decrease in service cost and a $10 increase in non-service costs. These amounts were recognized ratably over the remainder of 2022 (June through December).

13

H.    Income Taxes
Arconic’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pretax ordinary income or loss. The tax impacts of unusual or infrequently occurring items, including changes in judgment about the realizability of deferred tax assets in future years and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pretax losses.
For the 2023 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 27.0%. This rate differs by 6.0 percentage points from the U.S. federal statutory rate of 21.0% primarily due to the state tax impact of domestic taxable income, U.S. tax on foreign earnings, and non-deductible costs, partially offset by a valuation allowance release for a capital loss carryforward and non-taxable income. In the 2023 six-month period, Arconic realized capital gain income supporting the utilization of the capital loss carryforward.
For the 2022 six-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary income was 25.6%. This rate differs by 4.6 percentage points from the U.S. federal statutory rate of 21.0% primarily due to estimated U.S. tax on global intangible low-taxed income, the state tax impact of domestic taxable income, and U.S. tax on foreign earnings, partially offset by non-taxable income and foreign income taxed in lower rate jurisdictions.    
The effective tax rate including discrete items was 22.4% and 24.3% in the 2023 second quarter and six-month period, respectively, and 24.8% and 24.2% in the 2022 second quarter and six-month period, respectively.
The following table presents the components of Provision for income taxes:
Second quarter ended June 30,Six months ended June 30,
2023202220232022
Pretax ordinary income at estimated annual effective tax rate$21 $39 $30 $53 
Impact of change in estimated annual effective tax rate on previous quarter’s pretax income
(1)(1)  
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*
   1 
Discrete items(3) (3)(4)
Provision for income taxes$17 $38 $27 $50 
__________________
*    The interim period impact related to operational losses in foreign jurisdictions for which no tax benefit is recognized will reverse by the end of the calendar year.

14

I.    Earnings Per Share
Basic earnings per share (EPS) amounts are computed by dividing Net income attributable to Arconic by the weighted-average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding. Specific to Arconic, such share equivalents consist of outstanding employee stock awards (excluding out-of-the-money stock options – see below). 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, common share equivalents are excluded from the diluted weighted-average number of shares as their effect is anti-dilutive.
The share information used to compute basic and diluted EPS attributable to Arconic common stockholders was as follows (shares in millions):
Second quarter ended June 30,Six months ended June 30,
2023202220232022