In last year’s letter to Alcoa Inc. shareholders, I outlined our conviction and commitment that the separation of Alcoa Inc. would unlock the Company’s full value for our investors. On November 1, 2016, we completed the separation into two powerful, independent companies: Arconic and Alcoa Corporation. Within one hundred days, Arconic’s stock price increased 47.8 percent, significantly more than the 12.6 percent increase of the S&P Industrials Index or the 14 percent increase of the S&P Aerospace and Defense ETF.

THE SEPARATION WAS THE CULMINATION OF TRANSFORMING ALCOA INC.

It took years of restructuring and strengthening the businesses in Alcoa’s upstream portfolio to ensure it could stand well on its own as an independent public company. We closed, sold or curtailed 43 percent of high-cost smelting operating capacity and 35 percent of high-cost refining operating capacity to enable the aluminum and alumina businesses to remain globally competitive throughout the volatile swings of commodity prices. To further enhance upstream profitability, we expanded our higher-margin cast products business, introduced an alumina pricing mechanism to free our refineries from the London Metal Exchange price and established a third-party bauxite business.

To strengthen our value-add portfolio, we relentlessly drove productivity and operational improvements, more than doubling segment margins since 2008. Building on investments in new technologies, upgrading our plants and making strategic acquisitions, we expanded further into high performance materials, such as titanium and nickel superalloys, and transformed the portfolio into a precision engineering and advanced manufacturing leader. In our aerospace segment, Arconic can now supply 90 percent of the structural and rotating components of a commercial aero engine, and on airframes our content flies from nose to tail on both metallic and carbon-fiber-reinforced plastic aircraft. Our customers are responding to those investments and innovations, awarding Arconic $13 billion in aerospace contracts during 2015 and 2016.

2016 was a pivotal year in completing the transformation. The Company’s leaders and employees did “double duty,” successfully executing a complex separation process on schedule and on budget, while delivering on commitments to our customers. The Company formed a Separation Program Office to maintain tight cross-functional coordination over 35 workstreams with more than 20,000 milestones, involving 294 projects affecting 266 sites in 27 countries. At the same time, the team was able to increase profits and margins of all three Arconic segments and reduce debt by $750 million. The Company finished the year with $1.9 billion in cash.

While we were conducting the separation, commodity prices fell to unusually low levels, resulting in a substantially reduced debt-carrying capacity of Alcoa Corporation. To allow the separation to conclude on time, and for Alcoa Corporation to start with a strong balance sheet built to weather commodity cycles, Arconic took on extra debt burden. As a counter balance, Arconic retained a 19.9 percent stake in Alcoa Corporation with the intention of managing it to maximize the upside for our shareholders. On February 14, 2017, after a 65 percent rise in Alcoa Corporation stock, Arconic monetized more than 60 percent of its stake. The resulting proceeds of approximately $890 million strengthen Arconic’s cash balance, which provides financial flexibility to pay down debt and/or pursue share repurchases, based on an assessment of relative return.

ARCONIC HAS A COMPELLING LONG-TERM INVESTMENT VALUE PROPOSITION

In launching Arconic, we have stressed an owner mindset: every leader and employee working every day as if Arconic were their own family business. Frugal in spending, efficient in allocating capital, dedicated and passionate about helping customers win and constantly focused on building talent, we are committed to creating value for Arconic’s shareholders that surpasses the performance of our peers. And we’ve only just begun. Let me outline a few of the many value creation opportunities we are tapping for our shareholders.

Solid market positions and margin profile. With approximately 80 percent of Arconic’s revenues in 2016 from businesses where the Company holds either the number one or number two market position, we have a highly competitive portfolio that we believe has strong margin and cash-generation potential in profitable segments. We expect our adjusted EBITDA margins to continue to expand from approximately 15 percent in 2017 to approximately 17 percent in 2019, and our free cash flow is forecast to double from more than $350 million in 2017 to approximately $700 million in 2019.

In every core market, Arconic’s businesses are positioned to capture near-term growth tailwinds. The aerospace industry is gearing up for the next generation of commercial aircraft engines and structures. Following the dramatic success of Arconic’s innovations for Ford’s top-selling F-150, aluminum penetration is accelerating across the automotive industry. Energy and environmental trends are creating new opportunities for our commercial transportation and building and construction businesses. Our customers’ appreciation of Arconic’s differentiated technologies are producing sustainable share gains for our businesses in each of those segments.

Clear execution path to incremental value by continuing to improve our businesses. We are focused on major end markets

like aerospace, automotive, commercial transportation and building and construction. The initiatives and actions we have underway are set to improve margins, free cash flow and return on capital.

Strong balance sheet profile with financial flexibility. In addition to a strong liquidity base, Arconic’s remaining stake in Alcoa Corporation will continue to be managed responsibly for shareholder value. To guide investments and other allocations of capital, we have established exacting criteria to maximize and track returns.

ARCONIC’S MANAGEMENT AND BOARD ARE COMMITTED TO MAXIMIZE SHAREHOLDER VALUE

Arconic managers and employees understand the obligations and expectations of an owner mindset. Having proved themselves during a difficult economic downturn and a demanding transformation, they are ready and eager to capture the many opportunities ahead for our shareholders and customers. We have a winning combination of seasoned leaders who led the Company during those challenging times and recruited executives with excellent track records and outstanding experience to bring their unique talents to Arconic.

The leadership team benefits greatly from the counsel and guidance of a highly qualified, proactive Board of Directors. Our 12 independent directors, including seven current or former CEOs, have deep experience relevant to our core industries, technologies and financial needs. They’ve applied their experience and insights in guiding Arconic’s strategy and reviewing and approving the Company’s goals. Based on investor feedback and industry benchmarks, they have created an executive compensation system that is fully aligned with shareholder value creation. The Board also set high standards for themselves, adopting important new governance best practices for Arconic.

I greatly appreciate the strong support that our directors have given to me personally. In addition to generously sharing wise counsel and practical solutions, they’ve joined me in delivering the good news of Arconic to our shareholders, prospective investors and analysts.

On behalf of our entire Board of Directors, I hope that this first Arconic Annual Highlights Report demonstrates that our 2016 performance, progress and plans for the future reinforce our firm commitment and unparalleled capability to create significant long-term value for you and for all Arconic shareholders.

In 2016, we completed the successful separation of Alcoa Inc., unlocking substantial value for our shareholders. Today, Arconic is a major supplier to industry leaders in all the sectors it serves, and holds strong positions in attractive markets; approximately 80 percent of Arconic’s revenues in 2016 came from businesses where we hold either the number one or two market position.

Approximately 64 percent of Arconic’s total revenue in 2016 was derived primarily from aerospace and transportation markets; the balance was from markets such as industrial and building and construction.

FINANCIAL HIGHLIGHTS

In the face of significant market challenges, we continued to improve our businesses in 2016, recording margin improvements in each of our three segments and delivering strong net savings. Arconic also strengthened its balance sheet, paid down $750 million of debt and ended the year with a strong cash balance of $1.9 billion.

Excluding the impact of special items, primarily due to charges and costs associated with the separation of Alcoa Inc., Arconic reported 2016 adjusted income from continuing operations of $505 million, or $0.98 per share.

Full year 2016 combined segment adjusted EBITDA was $2.1 billion, up nine percent year over year, with Arconic recording a margin expansion of 140 basis points across all business segments. Full year 2016 consolidated adjusted EBITDA, excluding separation costs, was $1.7 billion. Our employees delivered $710 million in gross productivity savings in 2016, with net savings of $310 million.

At the separation of Alcoa Inc., Arconic chose to retain a 19.9 percent stake in Alcoa Corporation, indicating it would review options for responsibly managing the stake, taking into account its continued upside potential. In early 2017, we monetized more than 60 percent of our stake, resulting in approximately $890 million in proceeds. The timing and structure of the transaction considered minimizing risk and transaction costs. The proceeds bolster Arconic’s cash balance, which provides financial flexibility to pay down debt and/or pursue share repurchases, based on a relative-return assessment.

Strong Productivity Delivers Savings to the Bottom Line

SEGMENTS DELIVER SOLID PERFORMANCE

Engineered Products and Solutions (EPS) develops and manufactures high performance, engineered products and solutions for the aerospace, industrial gas turbine, commercial transportation and industrial markets.

EPS recorded revenue of $5.7 billion in 2016, up seven percent year over year, with after-tax operating income (ATOI) of $642 million, up eight percent year over year, adjusted EBITDA of $1.2 billion, up eight percent year over year and an adjusted EBITDA margin of 20.9 percent. EPS businesses secured a number of landmark contracts in 2016, including three with Airbus for 3D-printed metal parts.

Global Rolled Products (GRP) manufactures highly-differentiated aluminum sheet and plate products for the aerospace, automotive, commercial transportation, brazing, industrial and regional specialty markets.

GRP recorded revenue of $4.9 billion in 2016, down seven percent year over year, ATOI of $269 million, up 20 percent year over year, adjusted EBITDA of $577 million, up 13 percent year over year, and adjusted EBITDA of $364 per metric ton. GRP also continued to benefit from the aluminization of the automotive market: in 2016, automotive sheet shipments increased 39 percent year over year. Automotive sheet revenue is expected to grow from $117 million in 2011 to $1.3 billion in 2018.

Transportation and Construction Solutions (TCS) brands invented the industries they continue to lead today: both Kawneer and Alcoa Wheels brands hold number one market positions, and customers, architects and end users ask for them by name.

TCS recorded revenue of $1.8 billion in 2016, down four percent year over year, ATOI of $176 million, up six percent year over year, adjusted EBITDA of $291 million, up seven percent year over year, and an adjusted EBITDA margin of 16.1 percent.

2016: Margin Expansion in Every Segment

Geographic Breakdown of 2016 Revenue

2016 REVENUE BY REGION

Arconic’s largest and fastest growing market is aerospace – an industry in which we have had a major presence since the Wright Brothers’ first flight. Fueled by an expanding global middle class and increasing air travel, worldwide demand for aircraft has led to the largest order book in aviation history, with a nine-year production order book for both commercial aircraft and aero engines. With a range of high-performance multi-material and highly engineered products and solutions for aero engines and airframes on virtually every aircraft platform, we are well positioned to benefit from this growth.

In 2016, approximately 43 percent of Arconic’s revenues were generated from the aerospace industry, and approximately 80 percent of aerospace revenues were derived from products where we hold either the number one or number two market position. From 2015 through 2016, Arconic won $13 billion worth of new aerospace contracts, from engine and airframe components to 3D-printed metal parts.

The quest for fuel efficiency has been a driver of innovation in the aerospace industry since the dawn of flight, with every new generation of aircraft becoming approximately 10-15 percent more efficient than the previous one. The vast majority of this efficiency is achieved inside the engine, where Arconic technology plays a critical role.

Our engineers, backed by decades of materials science expertise and working closely with leading aero engine manufacturers, enable:

In addition to airfoils, Arconic holds the number one global market position in aero engine seamless rings and fastening systems. In addition, we are a world-class producer of other structural aero engine components, including those produced with vacuum-melted alloys, machining, performance coatings and hot isostatic pressing.

In 2016, leveraging the earlier expansion of cutting-edge aero engine capabilities in La Porte, Indiana (USA), Arconic signed a long-term contract with GE Aviation for aero engine components in an agreement valued at more than $1.5 billion over the contract life. Under the terms of the transaction, we are supplying advanced nickel-based superalloy, titanium and aluminum components for a broad range of GE Aviation engine programs.

Also in 2016, we invested in state-of-the-art titanium-aluminide alloy melting technology at our facility in Niles, Ohio (USA). The investment is enabling Arconic to capture growing demand for aero engine parts made with its advanced, lightweight titanium-aluminide alloy. This alloy significantly improves material properties and substantially reduces the weight of low-pressure turbine blades compared to traditional nickel-based alloy materials. It is being used for the first time on single-aisle commercial jets as part of the new CFM International¹ LEAP engines.

₁ The CFM56 and LEAP engines are produced and marketed by CFM International, a 50/50 joint company between GE and Safran Aircraft Engines.

 Arconic Sheet and Plate on Every Airbus Platform

With the potential to achieve more complex geometries, using less material and producing lighter weight parts, we believe additive manufacturing – or 3D-printing – is poised to revolutionize aerospace manufacturing. Bringing together comprehensive capabilities to harness the full potential of additive manufacturing – design optimization to qualification expertise – Arconic is at the cutting edge of commercializing this technology for aerospace.

Metal powders used for 3D-printing durable, high-quality aerospace parts are available in limited quantities. In 2016, Arconic opened a state-of-the-art 3D-printing metal powder production facility at the Arconic Technology Center, the world’s largest light metal research center.

This expansion has allowed Arconic to produce proprietary titanium, nickel and aluminum powders optimized for 3D-printed aerospace parts, and is part of a $60 million investment in advanced 3D-printing materials and processes. It builds on our 3D-printing capabilities in California, Georgia, Michigan, Pennsylvania and Texas (USA).

In addition to producing powders, we are advancing a range of additive techniques, including the recently unveiled Ampliforge™ process, a hybrid technique that combines additive and advanced manufacturing processes. Using the Ampliforge™ process, Arconic designs and 3D-prints an optimized pre-form, then forges it using our most advanced techniques. In 2016, we continued to pilot the Ampliforge™ technique in Pittsburgh, Pennsylvania (USA), Sheffield, England and Cleveland, Ohio (USA).

In 2016, we entered into three agreements with Airbus to supply 3D-printed metal parts for its commercial aircraft. The first covers titanium fuselage and engine pylon components; the second, 3D-printed ducting components made of high-temperature nickel superalloys for the A320 family of aircraft. Advanced nickel superalloys offer superior heat resistance for these components, which flow hot air from the aero engine to other parts of the airframe. Under the third agreement, Arconic will supply 3D-printed titanium airframe brackets, also for the A320 platform. Airbus chose to work with Arconic because of our comprehensive capabilities, from materials science leadership to additive manufacturing and aerospace parts qualification.

Aerospace manufacturers are increasingly turning to additive manufacturing for complex, high-performance parts that cannot be made using traditional manufacturing techniques, for components with a lower “buy-to-fly” ratio – that is, components that require less material to create the final part – and to speed time to market for new products.

With our wide-ranging expertise in materials science, manufacturing, design and product qualification, Arconic is already a well-established leader in additive manufacturing. We have the in-house expertise and resources to engineer and control essentially every step of the process – important, given the interdependent nature of these steps. For example, we can create a powder tailored to the needs of a specific application; develop the part design and process for a particular

machine; grow the part; complete it via secondary processes; and inspect and qualify it.

Demonstrating this integrated strategy, we developed the proprietary Ampliforge™ process, which combines additive and advanced manufacturing processes. Using the Ampliforge™ process, Arconic designs and 3D-prints an optimized preform, then forges it using our most advanced techniques. This process enhances the properties of 3D-printed parts and significantly reduces material input and tooling requirements while simplifying production relative to traditional forging processes.

Additive manufacturing is just beginning to realize its full potential, and at Arconic, we are proud to be at its cutting edge.

Arconic Automotive

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The automotive industry is increasingly using more aluminum on vehicles for improved safety, performance and fuel efficiency. By 2020, pounds of aluminum per vehicle is projected to increase nearly 20 percent over 2015 levels; from 2010 to 2015, pounds per vehicle increased 19 percent¹.

Today, Arconic has cemented its position as the premier partner to the automotive industry: our lightweight alloys and aluminum sheet solutions are found bumper to bumper – from doors and hoods to heat exchangers. Arconic estimates that it will grow its automotive sheet revenue from $117 million in 2011 to $1.3 billion in 2018.

Across its automotive portfolio, 98 percent of Arconic revenues come from products where it is number one or number two in its market.

In 2016, automotive expansions at our facilities in Alcoa, Tennessee (USA), and Davenport, Iowa (USA) – each backed by customer contracts – continued to pay off , as auto sheet shipments rose 39 percent year over year. Through these expansions, we continue to support Ford Motor Company by supplying its best-selling Ford F-150 and F-250 models. We also signed new contracts with Nissan North America, to become its sole supplier of aluminum sheet for seven programs, including the Altima, Murano, Maxima and Titan, and with Fiat Chrysler Automobiles, for the 2017 Chrysler Pacifica.

Our breakthrough Arconic Micromill^® technology – which produces metal 40 percent more formable and 30 percent stronger than today’s incumbent automotive aluminum and twice as formable and at least 30 percent lighter than parts made from high-strength steel – was recognized with a prestigious 2016 R&D 100 Award. The annual R&D 100 Awards, known as the “Oscars of Innovation,” is an international competition that recognizes the 100 most technologically significant products introduced in the marketplace over the past year.

In 2016, efforts to commercialize Micromill continued as we signed qualification agreements with more major original equipment manufacturers (OEMs); today, these agreements number 13 worldwide. Arconic also engaged 12 potential licensees in 2016, including potential joint venture partners.

Aluminum Pounds per Vehicle

GRP Automotive Sheet

Revenue ($M)

Arconic’s 41,500 employees across 25 countries are as passionate about our values as we are about industry-changing technology. We pride ourselves on our diverse, high-performance culture.

This year, we were proud to be included on the 2017 FORTUNE World’s Most Admired Companies list, an annual ranking of reputation based on surveys of executives, analysts and directors who rate companies in their own industries. We have proudly been named the most admired metals company in the world for the past six years, and this is the second consecutive year our company received top scores in all key attributes: innovation, people management, social responsibility, use of corporate assets, quality of management, financial soundness, long-term investment value, quality of products and services and global competitiveness.

Arconic was recognized for its performance in 2016, including before its separation from Alcoa Corporation, and was therefore included in the “metals” category, which it topped. The ranking reflects the contributions of both Arconic and Alcoa Corporation employees.

SAFETY

Nothing matters more than human life. This has long been a guiding principle at Arconic, and safety is one of our most cherished values. In 2016, 40 percent of Arconic businesses achieved their best-ever DART (Days Away Restricted or Transfer) rates, a key metric of employee safety.

Importantly, each of our recently acquired businesses – Firth Rixson, RTI and TITAL – also saw dramatic improvements in their historical DART rates, recording improvements of 40 percent, 52 percent and 67 percent, respectively, in 2016. Most importantly, the businesses that today comprise Arconic had zero work-related fatalities in 2016.

ETHICS AND COMPLIANCE

Arconic promotes a “speak-up culture,” in which employees are encouraged to ask questions and raise concerns. Our Ethics and Compliance Program drives a global culture of integrity, compliance, prevention and risk identification and mitigation, with a strong focus on anti-corruption and trade compliance.

In 2016, Arconic launched its new Code of Conduct to guide employees on how to “lead with integrity” every day, everywhere.

Updated Business Conduct, Anti-Retaliation and Conflicts of Interest policies were also launched in 2016. Our ethics hotline (Integrity Line) and Integrity Help Chain provide multiple channels through which employees can voice their questions and concerns.

Arconic’s Integrity Champions partner with their business and resource units to integrate ethics and compliance into their organizations and serve as trusted advisors to their colleagues. In 2016, the Champions were involved in “Project Integrity,” with the goal of conducting live trainings on issues most relevant to employees operating in diverse, global locations.

INCLUSION & DIVERSITY

We are committed to creating an inclusive environment where all individuals feel – and are – valued. In 2016, Arconic continued to diversify our workforce, creating teams that better reflect the communities in which we operate. We were also proud to increase membership in our Employee Resource Groups (ERGs), employee-led groups formed around common interests and/or backgrounds. In 2016, Arconic launched three new ERGs – the Arconic Veterans’ Network, the Arconic Hispanic Network and the Next Generation Network – to further employee engagement and understanding of these diverse communities.

Arconic was once again recognized for its efforts related to lesbian, gay, bisexual and transgender workplace equality, earning a perfect score of 100 on the 2017 Corporate Equality Index, which is administered by the Human Rights Campaign Foundation. This is the eighth consecutive year in which we have earned a perfect score; our previous years’ rankings are listed under Alcoa Inc.

INVESTING IN OUR COMMUNITIES:

ARCONIC FOUNDATION

November 2016 saw the launch of Arconic Foundation, an independently endowed philanthropy that supports programs to help prepare the 21st century engineering and advanced manufacturing workforce. The work of Arconic Foundation is further enhanced by the thousands of employee volunteers who share their talents and time to make a difference in their communities.

Arconic Foundation made its inaugural grant to Engineers Without Borders USA. The $300,000 investment will support organizations around the world working to strengthen and promote engineering education and equip the next generation of global innovators. By 2020, over 1,000 students are targeted to complete the program. The partnership will include activities in select markets where Arconic has an operational footprint and an employee base: the United States, the United Kingdom, Mexico, France, Germany, Canada and Brazil.