UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2022
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number: 1-09447
KAISER ALUMINUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 94-3030279 | |
(State of incorporation) | (I.R.S. Employer Identification No.) |
1550 West McEwen Drive, Suite 500 | ||
Franklin, Tennessee | 37067 | |
(Address of principal executive offices) | (Zip Code) |
(629) 252-7040
(Registrant’s telephone number, including area code)
27422 Portola Parkway, Suite 200 Foothill Ranch, California 92610-2831
(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 class | Trading symbol | Name of each exchange on which registered |
Common stock, par value $0.01 per share | KALU | |
Nasdaq Global Select Market |
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, and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
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“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
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
As of October 16, 2017,April 18, 2022, there were 16,903,79115,904,321 shares of common stock of the registrant outstanding.
TABLE OF CONTENTS
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34 |
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
PART I – FINANCIAL INFORMATION
Item 1.
Financial StatementsCONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||
|
| (In millions of dollars, except share and per share amounts) |
| |||||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 261.0 |
|
| $ | 303.2 |
|
Receivables: |
|
|
|
|
|
|
|
|
Trade receivables, net |
|
| 432.2 |
|
|
| 332.7 |
|
Other |
|
| 50.6 |
|
|
| 53.0 |
|
Contract assets |
|
| 74.9 |
|
|
| 63.2 |
|
Inventories |
|
| 431.5 |
|
|
| 404.6 |
|
Prepaid expenses and other current assets |
|
| 71.2 |
|
|
| 48.7 |
|
Total current assets |
|
| 1,321.4 |
|
|
| 1,205.4 |
|
Property, plant and equipment, net |
|
| 960.2 |
|
|
| 955.2 |
|
Operating lease assets |
|
| 44.9 |
|
|
| 46.2 |
|
Deferred tax assets, net |
|
| 3.2 |
|
|
| 3.4 |
|
Intangible assets, net |
|
| 64.2 |
|
|
| 67.7 |
|
Goodwill |
|
| 39.3 |
|
|
| 39.3 |
|
Other assets |
|
| 108.2 |
|
|
| 105.2 |
|
Total |
| $ | 2,541.4 |
|
| $ | 2,422.4 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 442.8 |
|
| $ | 351.4 |
|
Accrued salaries, wages and related expenses |
|
| 40.9 |
|
|
| 46.9 |
|
Other accrued liabilities |
|
| 70.9 |
|
|
| 58.4 |
|
Total current liabilities |
|
| 554.6 |
|
|
| 456.7 |
|
Long-term portion of operating lease liabilities |
|
| 40.5 |
|
|
| 40.8 |
|
Pension and other postretirement benefits |
|
| 88.7 |
|
|
| 92.5 |
|
Net liabilities of Salaried VEBA |
|
| 20.3 |
|
|
| 20.6 |
|
Deferred tax liabilities |
|
| 17.9 |
|
|
| 10.5 |
|
Long-term liabilities |
|
| 74.4 |
|
|
| 72.5 |
|
Long-term debt |
|
| 1,036.8 |
|
|
| 1,036.3 |
|
Total liabilities |
|
| 1,833.2 |
|
|
| 1,729.9 |
|
Commitments and contingencies – Note 6 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, 5,000,000 shares authorized at both March 31, 2022 and December 31, 2021; 0 shares were issued and outstanding at March 31, 2022 and December 31, 2021 |
|
| — |
|
|
| — |
|
Common stock, par value $0.01, 90,000,000 shares authorized at both March 31, 2022 and December 31, 2021; 22,739,402 shares issued and 15,904,116 shares outstanding at March 31, 2022; 22,700,404 shares issued and 15,865,118 shares outstanding at December 31, 2021 |
|
| 0.2 |
|
|
| 0.2 |
|
Additional paid in capital |
|
| 1,081.0 |
|
|
| 1,078.9 |
|
Retained earnings |
|
| 88.6 |
|
|
| 93.0 |
|
Treasury stock, at cost, 6,835,286 shares at both March 31, 2022 and December 31, 2021 |
|
| (475.9 | ) |
|
| (475.9 | ) |
Accumulated other comprehensive income (loss) |
|
| 14.3 |
|
|
| (3.7 | ) |
Total stockholders’ equity |
|
| 708.2 |
|
|
| 692.5 |
|
Total |
| $ | 2,541.4 |
|
| $ | 2,422.4 |
|
September 30, 2017 | December 31, 2016 | ||||||
(In millions of dollars, except share and per share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 73.9 | $ | 55.2 | |||
Short-term investments | 191.4 | 231.0 | |||||
Receivables: | |||||||
Trade receivables, net | 138.2 | 137.7 | |||||
Other | 15.4 | 11.9 | |||||
Inventories | 212.2 | 201.6 | |||||
Prepaid expenses and other current assets | 31.5 | 18.5 | |||||
Total current assets | 662.6 | 655.9 | |||||
Property, plant and equipment, net | 557.8 | 530.9 | |||||
Deferred tax assets, net | 118.7 | 159.7 | |||||
Intangible assets, net | 25.3 | 26.4 | |||||
Goodwill | 18.8 | 37.2 | |||||
Other assets | 39.5 | 33.4 | |||||
Total | $ | 1,422.7 | $ | 1,443.5 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 94.4 | $ | 75.8 | |||
Accrued salaries, wages and related expenses | 39.0 | 49.1 | |||||
Other accrued liabilities | 43.3 | �� | 40.1 | ||||
Total current liabilities | 176.7 | 165.0 | |||||
Net liabilities of Salaried VEBA | 27.8 | 28.6 | |||||
Deferred tax liabilities | 3.3 | 3.3 | |||||
Long-term liabilities | 61.9 | 73.2 | |||||
Long-term debt | 369.4 | 368.7 | |||||
Total liabilities | 639.1 | 638.8 | |||||
Commitments and contingencies – Note 8 | |||||||
Stockholders' equity: | |||||||
Preferred stock, 5,000,000 shares authorized at both September 30, 2017 and December 31, 2016; no shares were issued and outstanding at September 30, 2017 and December 31, 2016 | — | — | |||||
Common stock, par value $0.01, 90,000,000 shares authorized at both September 30, 2017 and at December 31, 2016; 22,392,946 shares issued and 16,905,368 shares outstanding at September 30, 2017; 22,332,732 shares issued and 17,651,461 shares outstanding at December 31, 2016 | 0.2 | 0.2 | |||||
Additional paid in capital | 1,052.8 | 1,047.4 | |||||
Retained earnings | 109.0 | 75.2 | |||||
Treasury stock, at cost, 5,487,578 shares at September 30, 2017 and 4,681,271 shares at December 31, 2016, respectively | (345.7 | ) | (281.4 | ) | |||
Accumulated other comprehensive loss | (32.7 | ) | (36.7 | ) | |||
Total stockholders' equity | 783.6 | 804.7 | |||||
Total | $ | 1,422.7 | $ | 1,443.5 |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (In millions of dollars, except share and per share amounts) |
| |||||
Net sales |
| $ | 948.8 |
|
| $ | 324.0 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of products sold, excluding depreciation and amortization and other items |
|
| 865.9 |
|
|
| 262.5 |
|
Depreciation and amortization |
|
| 27.5 |
|
|
| 13.5 |
|
Selling, general, administrative, research and development |
|
| 30.2 |
|
|
| 31.8 |
|
Restructuring costs (benefit) |
|
| — |
|
|
| (0.7 | ) |
Total costs and expenses |
|
| 923.6 |
|
|
| 307.1 |
|
Operating income |
|
| 25.2 |
|
|
| 16.9 |
|
Other expense: |
|
|
|
|
|
|
|
|
Interest expense |
|
| (12.2 | ) |
|
| (12.3 | ) |
Other expense, net – Note 8 |
|
| (1.6 | ) |
|
| (0.4 | ) |
Income before income taxes |
|
| 11.4 |
|
|
| 4.2 |
|
Income tax (provision) benefit |
|
| (3.3 | ) |
|
| 0.3 |
|
Net income |
| $ | 8.1 |
|
| $ | 4.5 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
| $ | 0.51 |
|
| $ | 0.28 |
|
Diluted |
| $ | 0.51 |
|
| $ | 0.28 |
|
Weighted-average number of common shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
Basic |
|
| 15,866 |
|
|
| 15,805 |
|
Diluted |
|
| 16,038 |
|
|
| 15,987 |
|
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions of dollars, except share and per share amounts) | |||||||||||||||
Net sales | $ | 332.8 | $ | 320.6 | $ | 1,044.4 | $ | 998.7 | |||||||
Costs and expenses: | |||||||||||||||
Cost of products sold: | |||||||||||||||
Cost of products sold, excluding depreciation and amortization and other items | 267.2 | 254.7 | 822.7 | 767.1 | |||||||||||
Lower of cost or market inventory write-down | — | — | — | 4.9 | |||||||||||
Unrealized gain on derivative instruments | (10.8 | ) | (2.0 | ) | (14.0 | ) | (16.9 | ) | |||||||
Depreciation and amortization | 10.2 | 9.0 | 29.3 | 26.7 | |||||||||||
Selling, general, administrative, research and development: | |||||||||||||||
Selling, general, administrative, research and development | 24.7 | 25.6 | 74.7 | 79.2 | |||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | 1.2 | 0.8 | 3.4 | 2.5 | |||||||||||
Loss (gain) on removal of Union VEBA net assets – Note 6 | 0.5 | — | (0.8 | ) | (0.1 | ) | |||||||||
Total selling, general, administrative, research and development | 26.4 | 26.4 | 77.3 | 81.6 | |||||||||||
Goodwill impairment | — | — | 18.4 | — | |||||||||||
Other operating charges, net | — | 2.7 | — | 2.8 | |||||||||||
Total costs and expenses | 293.0 | 290.8 | 933.7 | 866.2 | |||||||||||
Operating income | 39.8 | 29.8 | 110.7 | 132.5 | |||||||||||
Other (expense) income: | |||||||||||||||
Interest expense | (5.3 | ) | (5.5 | ) | (16.4 | ) | (14.7 | ) | |||||||
Other income (expense), net – Note 13 | 1.5 | — | 3.1 | (10.4 | ) | ||||||||||
Income before income taxes | 36.0 | 24.3 | 97.4 | 107.4 | |||||||||||
Income tax provision | (16.1 | ) | (9.4 | ) | (36.8 | ) | (40.2 | ) | |||||||
Net income | $ | 19.9 | $ | 14.9 | $ | 60.6 | $ | 67.2 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 1.18 | $ | 0.84 | $ | 3.55 | $ | 3.76 | |||||||
Diluted | $ | 1.16 | $ | 0.82 | $ | 3.49 | $ | 3.70 | |||||||
Weighted-average number of common shares outstanding (in thousands): | |||||||||||||||
Basic | 16,834 | 17,841 | 17,072 | 17,858 | |||||||||||
Diluted | 17,160 | 18,175 | 17,363 | 18,181 | |||||||||||
Dividends declared per common share | $ | 0.50 | $ | 0.45 | $ | 1.50 | $ | 1.35 |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (In millions of dollars) |
| |||||
Net income |
| $ | 8.1 |
|
| $ | 4.5 |
|
Other comprehensive income (loss), net of tax – Note 7: |
|
|
|
|
|
|
|
|
Defined benefit pension plan and Salaried VEBA |
|
| 0.9 |
|
|
| 0.7 |
|
Cash flow hedges |
|
| 17.1 |
|
|
| 8.5 |
|
Foreign currency translation |
|
| — |
|
|
| (0.1 | ) |
Other comprehensive income, net of tax |
|
| 18.0 |
|
|
| 9.1 |
|
Comprehensive income |
| $ | 26.1 |
|
| $ | 13.6 |
|
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions of dollars) | |||||||||||||||
Net income | $ | 19.9 | $ | 14.9 | $ | 60.6 | $ | 67.2 | |||||||
Other comprehensive income, net of tax – Note 14: | |||||||||||||||
Salaried VEBA and defined benefit pension plan | 0.8 | 0.7 | 2.5 | 2.2 | |||||||||||
Available for sale securities | 0.3 | 0.3 | 0.6 | 0.6 | |||||||||||
Other | 0.5 | 0.1 | 0.9 | 0.1 | |||||||||||
Other comprehensive income, net of tax | 1.6 | 1.1 | 4.0 | 2.9 | |||||||||||
Comprehensive income | $ | 21.5 | $ | 16.0 | $ | 64.6 | $ | 70.1 |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS
Quarter Ended March 31, 2022
|
| Common Shares Outstanding1,2 |
|
| Common Stock |
|
| Additional Paid in Capital |
|
| Retained Earnings |
|
| Treasury Stock |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Total |
| |||||||
|
| (In millions of dollars, except share and per share amounts) |
| |||||||||||||||||||||||||
BALANCE, December 31, 2021 |
|
| 15,865,118 |
|
| $ | 0.2 |
|
| $ | 1,078.9 |
|
| $ | 93.0 |
|
| $ | (475.9 | ) |
| $ | (3.7 | ) |
| $ | 692.5 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8.1 |
|
|
| — |
|
|
| — |
|
|
| 8.1 |
|
Other comprehensive income, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18.0 |
|
|
| 18.0 |
|
Common shares issued (including impacts from Long-Term Incentive programs) |
|
| 58,641 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares |
|
| (19,643 | ) |
|
| — |
|
|
| (1.9 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.9 | ) |
Cash dividends declared3 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (12.5 | ) |
|
| — |
|
|
| — |
|
|
| (12.5 | ) |
Amortization of unearned equity compensation |
|
| — |
|
|
| — |
|
|
| 4.0 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4.0 |
|
BALANCE, March 31, 2022 |
|
| 15,904,116 |
|
| $ | 0.2 |
|
| $ | 1,081.0 |
|
| $ | 88.6 |
|
| $ | (475.9 | ) |
| $ | 14.3 |
|
| $ | 708.2 |
|
1 | At March 31, 2022, 593,072shares were available for awards under the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan (“2021 Plan”). |
2 | There were 0 repurchases of common stock during the quarter ended March 31, 2022. At March 31, 2022, $93.1million remained available to repurchase our common shares pursuant to the stock repurchase program. |
3 | Dividends declared per common share were $0.77 for the quarter ended March 31, 2022. |
Common Shares Outstanding | Common Stock | Additional Paid in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||
(In millions of dollars, except share and per share amounts) | ||||||||||||||||||||||||||
BALANCE, December 31, 2016 | 17,651,461 | $ | 0.2 | $ | 1,047.4 | $ | 75.2 | $ | (281.4 | ) | $ | (36.7 | ) | $ | 804.7 | |||||||||||
Net income | — | — | — | 60.6 | — | — | 60.6 | |||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | 4.0 | 4.0 | |||||||||||||||||||
Issuance of non-vested shares to non-employee directors | 11,817 | — | — | — | — | — | — | |||||||||||||||||||
Issuance of common shares to non-employee directors | 2,282 | — | 0.2 | — | — | — | 0.2 | |||||||||||||||||||
Issuance of common shares to employees upon vesting of restricted stock units and performance shares | 102,737 | — | — | — | — | — | — | |||||||||||||||||||
Cancellation of employee non-vested shares | (427 | ) | — | — | — | — | — | — | ||||||||||||||||||
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares | (56,195 | ) | — | (4.5 | ) | — | — | — | (4.5 | ) | ||||||||||||||||
Repurchase of common stock | (806,307 | ) | — | — | — | (64.9 | ) | — | (64.9 | ) | ||||||||||||||||
Cancellation of treasury stock | — | — | (0.2 | ) | (0.4 | ) | 0.6 | — | — | |||||||||||||||||
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares | — | — | — | (26.4 | ) | — | — | (26.4 | ) | |||||||||||||||||
Amortization of unearned equity compensation | — | — | 9.9 | — | — | — | 9.9 | |||||||||||||||||||
BALANCE, September 30, 2017 | 16,905,368 | $ | 0.2 | $ | 1,052.8 | $ | 109.0 | $ | (345.7 | ) | $ | (32.7 | ) | $ | 783.6 |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWSSTOCKHOLDERS’ EQUITY CONTINUED (UNAUDITED)
Quarter Ended March 31, 2021
|
| Common Shares Outstanding1 |
|
| Common Stock |
|
| Additional Paid in Capital |
|
| Retained Earnings |
|
| Treasury Stock |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Total |
| |||||||
|
| (In millions of dollars, except share and per share amounts) |
| |||||||||||||||||||||||||
BALANCE, December 31, 2020 |
|
| 15,812,169 |
|
| $ | 0.2 |
|
| $ | 1,068.6 |
|
| $ | 158.2 |
|
| $ | (475.9 | ) |
| $ | (18.7 | ) |
| $ | 732.4 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4.5 |
|
|
| — |
|
|
| — |
|
|
| 4.5 |
|
Other comprehensive income, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 9.1 |
|
|
| 9.1 |
|
Common shares issued (including impacts from Long-Term Incentive programs) |
|
| 56,394 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares |
|
| (20,625 | ) |
|
| — |
|
|
| (2.4 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2.4 | ) |
Cash dividends declared2 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11.7 | ) |
|
| — |
|
|
| — |
|
|
| (11.7 | ) |
Amortization of unearned equity compensation |
|
| — |
|
|
| — |
|
|
| 3.1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3.1 |
|
BALANCE, March 31, 2021 |
|
| 15,847,938 |
|
| $ | 0.2 |
|
| $ | 1,069.3 |
|
| $ | 151.0 |
|
| $ | (475.9 | ) |
| $ | (9.6 | ) |
| $ | 735.0 |
|
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
(In millions of dollars) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 60.6 | $ | 67.2 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property, plant and equipment | 28.3 | 25.5 | |||||
Amortization of definite-lived intangible assets | 1.0 | 1.2 | |||||
Amortization of debt discount and debt issuance costs | 0.9 | 0.8 | |||||
Deferred income taxes | 38.6 | 40.7 | |||||
Non-cash equity compensation | 10.1 | 8.8 | |||||
Lower of cost or market inventory write-down | — | 4.9 | |||||
Gain on sale of available for sale securities | (1.8 | ) | — | ||||
Non-cash unrealized gain on derivative instruments | (14.0 | ) | (16.9 | ) | |||
Loss on extinguishment of debt | — | 11.1 | |||||
Non-cash intangible asset impairment charge | 18.4 | 2.6 | |||||
(Gain) loss on disposition of property, plant and equipment | (0.4 | ) | 0.2 | ||||
Non-cash net periodic postretirement benefit cost relating to Salaried VEBA | 3.4 | 2.5 | |||||
Other non-cash changes in assets and liabilities | (0.8 | ) | 1.1 | ||||
Changes in operating assets and liabilities: | |||||||
Trade and other receivables | (4.0 | ) | (26.7 | ) | |||
Inventories, excluding lower of cost or market write-down | (10.6 | ) | (8.9 | ) | |||
Prepaid expenses and other current assets | (1.8 | ) | (0.9 | ) | |||
Accounts payable | 21.6 | 0.8 | |||||
Accrued liabilities | 0.9 | 27.9 | |||||
Annual variable cash contributions to VEBAs | (20.0 | ) | (19.5 | ) | |||
Long-term assets and liabilities, net | 1.1 | (15.0 | ) | ||||
Net cash provided by operating activities | 131.5 | 107.4 | |||||
Cash flows from investing activities1: | |||||||
Capital expenditures | (56.1 | ) | (57.4 | ) | |||
Purchase of available for sale securities | (196.0 | ) | (201.1 | ) | |||
Proceeds from disposition of available for sale securities | 237.2 | 30.0 | |||||
Proceeds from disposal of property, plant and equipment | 0.6 | — | |||||
Net cash used in investing activities | (14.3 | ) | (228.5 | ) | |||
Cash flows from financing activities1: | |||||||
Repayment of principal and redemption premium of 8.25% Senior Notes | — | (206.0 | ) | ||||
Issuance of 5.875% Senior Notes | — | 375.0 | |||||
Cash paid for debt issuance costs | — | (6.8 | ) | ||||
Proceeds from stock option exercises | — | 1.0 | |||||
Repayment of capital lease | (0.2 | ) | (0.1 | ) | |||
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares | (4.5 | ) | (2.8 | ) | |||
Repurchase of common stock | (66.7 | ) | (13.6 | ) |
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Cash dividends and dividend equivalents paid | (26.4 | ) | (24.4 | ) | |||
Net cash (used in) provided by financing activities | (97.8 | ) | 122.3 | ||||
Net increase in cash, cash equivalents and restricted cash during the period | 19.4 | 1.2 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 67.7 | 83.7 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 87.1 | $ | 84.9 |
1 | There were 0 repurchases of common stock during the quarter ended March 31, 2021. |
2 | Dividends declared per common share were $0.72for the |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (In millions of dollars) |
| |||||
Cash flows from operating activities1: |
|
|
|
|
|
|
|
|
Net income |
| $ | 8.1 |
|
| $ | 4.5 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
| 24.0 |
|
|
| 12.8 |
|
Amortization of definite-lived intangible assets |
|
| 3.5 |
|
|
| 0.7 |
|
Amortization of debt premium and debt issuance costs |
|
| 0.6 |
|
|
| 0.7 |
|
Deferred income taxes |
|
| 2.0 |
|
|
| (0.9 | ) |
Non-cash equity compensation |
|
| 4.0 |
|
|
| 3.1 |
|
Loss on disposition of property, plant and equipment |
|
| 0.3 |
|
|
| — |
|
Changes in operating assets and liabilities, net of effects of acquisition: |
|
|
|
|
|
|
|
|
Trade and other receivables |
|
| (97.1 | ) |
|
| (31.7 | ) |
Contract assets |
|
| (11.7 | ) |
|
| (8.3 | ) |
Inventories |
|
| (26.9 | ) |
|
| (24.3 | ) |
Prepaid expenses and other current assets |
|
| (2.5 | ) |
|
| (0.4 | ) |
Accounts payable |
|
| 92.9 |
|
|
| 33.0 |
|
Accrued liabilities |
|
| 6.5 |
|
|
| 4.2 |
|
Annual variable cash contributions to Salaried VEBA |
|
| — |
|
|
| (1.7 | ) |
Long-term assets and liabilities, net |
|
| (2.3 | ) |
|
| (3.1 | ) |
Net cash provided by (used in) operating activities |
|
| 1.4 |
|
|
| (11.4 | ) |
Cash flows from investing activities1: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (28.3 | ) |
|
| (9.1 | ) |
Cash payment for acquisition of the Warrick rolling mill |
|
| — |
|
|
| (617.5 | ) |
Net cash used in investing activities |
|
| (28.3 | ) |
|
| (626.6 | ) |
Cash flows from financing activities1: |
|
|
|
|
|
|
|
|
Repayment of finance lease |
|
| (0.5 | ) |
|
| (0.4 | ) |
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares |
|
| (1.9 | ) |
|
| (2.4 | ) |
Cash dividends and dividend equivalents paid |
|
| (12.5 | ) |
|
| (11.7 | ) |
Net cash used in financing activities |
|
| (14.9 | ) |
|
| (14.5 | ) |
Net decrease in cash, cash equivalents and restricted cash during the period |
|
| (41.8 | ) |
|
| (652.5 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
|
| 317.0 |
|
|
| 794.3 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 275.2 |
|
| $ | 141.8 |
|
1 | See Note 11 for supplemental cash flow information. |
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
6
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTES INDEX
8 | |||
9 | |||
10 | |||
Derivatives, Hedging Programs and Other Financial Instruments | 12 | ||
15 | |||
16 | |||
18 | |||
18 | |||
19 | |||
19 | |||
20 | |||
20 | |||
21 |
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
1. SummaryBasis of SignificantPresentation and Recent Accounting Policies
This Quarterly Report on Form 10-Q (this "Report"“Report”) should be read in conjunction with the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2016.2021. Unless the context otherwise requires, references in these notes to interim consolidated financial statements - unaudited to "Kaiser“Kaiser Aluminum Corporation," "we," "us," "our," "the Company"” “we,” “us,” “our,” “the Company” and "our Company"“our Company” refer collectively to Kaiser Aluminum Corporation and its subsidiaries.
Principles of Consolidation and Basis of Presentation.
The accompanying unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries and are prepared in accordance with United States generally accepted accounting principlesUse of Estimates in the Preparation of Financial Statements.
The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results of operations.Supply Chain Financing. We are statedparty to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions without recourse. We sell our undivided interests in certain of these receivables at our discretion when we determine that the lowercost of these arrangements is less than the cost of servicing our receivables with existing debt. Under the terms of the agreements, we retain no rights or market value. On March 31, 2016, we recorded a lower of cost or market inventory write-down of $4.9 millioninterest, have no obligations with respect to the sold receivables and do not service the receivables after the sale. As such, these transactions are being accounted for as a result of a decrease in our net realizable value of inventory. The net realizable value reflected commitments as of that date from customers to purchase our inventory at prices that exceeded the Midwest Transaction Price ("Midwest Price"), which reflects the primary aluminum supply/demand dynamics in North America, reduced by an approximate normal profit margin. There were no additional lower of cost or market inventory adjustments sincesale. During the quarter ended March 31, 2016.
Government Grants. From time-to-time, we receive grants from certain governmental agencies such as states and municipalities. We do not meetrecognize government grants when we have reasonable assurance that we will comply with any conditions attached to the documentation requirements for hedge (deferral) accountinggrant and the grant will be received. Government grants related to aluminum and energy derivatives. Accordingly, we record unrealized gain or loss associated with these hedges in the Statements of Consolidated Income within Unrealized gain on derivative instruments. As such derivatives settle, we reverse any previously recorded unrealized gain or loss associated with these hedges and record the realized gain or loss within Cost of products sold, excluding depreciation and amortization and other items.
Adoption of our other non-financial assets and liabilities subject to fair value assessments on a non-recurring basis required a material adjustment to the carrying amount of such assets and liabilities for the quarter and nine months ended September 30, 2017.
Accounting StandardsStandard Update ("ASU"(“ASU”) No. 2014-09,
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12,
8
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
Rate (“LIBOR”). Our adoption of this ASU willTopic 848 did not have on our consolidated financial statements.
2. Supplemental Balance Sheet Information
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||
|
| (In millions of dollars) |
| |||||
Trade Receivables, Net |
|
|
|
|
|
|
|
|
Billed trade receivables |
| $ | 432.8 |
|
| $ | 333.5 |
|
Allowance for doubtful receivables |
|
| (0.6 | ) |
|
| (0.8 | ) |
Trade receivables, net |
| $ | 432.2 |
|
| $ | 332.7 |
|
|
|
|
|
|
|
|
|
|
Inventories1 |
|
|
|
|
|
|
|
|
Finished products |
| $ | 83.7 |
|
| $ | 90.3 |
|
Work-in-process |
|
| 169.2 |
|
|
| 162.2 |
|
Raw materials |
|
| 169.0 |
|
|
| 143.0 |
|
Operating supplies |
|
| 9.6 |
|
|
| 9.1 |
|
Total |
| $ | 431.5 |
|
| $ | 404.6 |
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net |
|
|
|
|
|
|
|
|
Land and improvements |
| $ | 26.5 |
|
| $ | 26.0 |
|
Buildings and leasehold improvements |
|
| 182.5 |
|
|
| 179.0 |
|
Machinery and equipment |
|
| 1,160.4 |
|
|
| 1,151.5 |
|
Construction in progress2 |
|
| 89.8 |
|
|
| 75.3 |
|
Property, plant and equipment, gross |
|
| 1,459.2 |
|
|
| 1,431.8 |
|
Accumulated depreciation and amortization |
|
| (503.4 | ) |
|
| (480.4 | ) |
Assets held for sale |
|
| 4.4 |
|
|
| 3.8 |
|
Property, plant and equipment, net |
| $ | 960.2 |
|
| $ | 955.2 |
|
|
|
|
|
|
|
|
|
|
Other Accrued Liabilities |
|
|
|
|
|
|
|
|
Uncleared cash disbursements |
| $ | 16.7 |
|
| $ | 10.9 |
|
Accrued income taxes and other taxes payable |
|
| 16.3 |
|
|
| 9.5 |
|
Accrued interest |
|
| 10.3 |
|
|
| 9.9 |
|
Short-term environmental accrual – Note 6 |
|
| 2.3 |
|
|
| 2.6 |
|
Other – Note 4 |
|
| 25.3 |
|
|
| 25.5 |
|
Total |
| $ | 70.9 |
|
| $ | 58.4 |
|
|
|
|
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
|
|
|
|
Workers' compensation accrual |
| $ | 31.8 |
|
| $ | 31.9 |
|
Long-term environmental accrual – Note 6 |
|
| 14.1 |
|
|
| 14.2 |
|
Other long-term liabilities |
|
| 28.5 |
|
|
| 26.4 |
|
Total |
| $ | 74.4 |
|
| $ | 72.5 |
|
1 | At March 31, 2022 and December 31, 2021 the current cost of our inventory exceeded its stated last-in, first-out (“LIFO”) value by $210.5 million and $137.1 million, respectively. |
2 | Based on market conditions, we temporarily idled projects within Construction in progress totaling $20.6 million and $24.9 million as of March 31, 2022 and December 31, 2021, respectively, all of which are expected to resume at a future date. |
September 30, 2017 | December 31, 2016 | ||||||
(In millions of dollars) | |||||||
Cash and Cash Equivalents | |||||||
Cash and money market funds | $ | 17.3 | $ | 37.9 | |||
Commercial paper | 56.6 | 17.3 | |||||
Total | $ | 73.9 | $ | 55.2 | |||
3. Employee Benefits
Defined Contribution Plans
We sponsor defined contribution 401(k) savings plans for certain hourly and salaried employees. Employees may contribute a portion of their compensation to the plans and we match a specified percentage of these contributions in equivalent form of the
9
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
September 30, 2017 | December 31, 2016 | ||||||
(In millions of dollars) | |||||||
Trade Receivables, Net | |||||||
Billed trade receivables | $ | 138.8 | $ | 138.2 | |||
Unbilled trade receivables | 0.2 | 0.3 | |||||
Trade receivables, gross | 139.0 | 138.5 | |||||
Allowance for doubtful receivables | (0.8 | ) | (0.8 | ) | |||
Trade receivables, net | $ | 138.2 | $ | 137.7 | |||
Inventories | |||||||
Finished products | $ | 64.8 | $ | 73.8 | |||
Work-in-process | 86.1 | 71.7 | |||||
Raw materials | 56.9 | 51.1 | |||||
Operating supplies | 4.4 | 5.0 | |||||
Total | $ | 212.2 | $ | 201.6 | |||
Property, Plant and Equipment, Net | |||||||
Land and improvements | $ | 22.7 | $ | 22.7 | |||
Buildings and leasehold improvements | 90.2 | 88.6 | |||||
Machinery and equipment | 675.0 | 615.1 | |||||
Construction in progress | 27.8 | 34.8 | |||||
Property, plant and equipment, gross | 815.7 | 761.2 | |||||
Accumulated depreciation | (258.2 | ) | (230.6 | ) | |||
Assets held for sale | 0.3 | 0.3 | |||||
Property, plant and equipment, net | $ | 557.8 | $ | 530.9 | |||
Other Accrued Liabilities | |||||||
Uncleared cash disbursements | $ | 7.1 | $ | 5.8 | |||
Accrued income taxes and taxes payable | 9.0 | 4.3 | |||||
Accrued annual contribution to VEBAs | 12.0 | 20.0 | |||||
Accrued interest | 8.4 | 2.9 | |||||
Other | 6.8 | 7.1 | |||||
Total | $ | 43.3 | $ | 40.1 | |||
Long-Term Liabilities | |||||||
Workers' compensation accruals | $ | 25.0 | $ | 25.0 | |||
Long-term environmental accrual – Note 8 | 16.1 | 15.8 | |||||
Long-term portion of contingent contribution to Union VEBA – Note 6 | — | 12.8 | |||||
Other long-term liabilities | 20.8 | 19.6 | |||||
Total | $ | 61.9 | $ | 73.2 |
investments elected by the employee. Additionally, we issued $375.0 million principal amount of 5.875% unsecured senior notes due May 15, 2024 ("5.875% Senior Notes") at 100% of the principal amount. The unamortized amount of debt issuance costs as of September 30, 2017 was $5.6 million. Interest expense, including amortization of debt issuance costs, relating to the 5.875% Senior Notes was $5.7 million and $17.1 million for the quarter and nine months ended September 30, 2017, respectively, and $5.7 million and $8.8 million for the quarter and nine months ended September 30, 2016. A portion of the interest relating to the 5.875% Senior Notes was capitalized as construction in progress. The effective interest rate of the 5.875% Senior Notes is approximately 6.1% per annum, taking into account the amortization of debt issuance costs. The fair value of the outstanding 5.875% Senior Notes, which are Level 1 liabilities, was calculated based on broker quotes and was approximately $402.1 million and $390.8 million at September 30, 2017 and December 31, 2016, respectively.
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Domestic | $ | 15.7 | $ | 9.1 | $ | 35.8 | $ | 39.5 | |||||||
Foreign | 0.4 | 0.3 | 1.0 | 0.7 | |||||||||||
Total | $ | 16.1 | $ | 9.4 | $ | 36.8 | $ | 40.2 |
Deferred Compensation Plan
We sponsor a non-qualified, unfunded, unsecured plan of deferred compensation for key employees who would otherwise suffer a loss of benefits under our defined contribution plan; (iii) multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO, CLC ("USW"), the International Association of Machinists and certain other unions at certain of our production facilities; and (iv) a defined benefit plan for salaried employees at our London, Ontario (Canada) facility.
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Salaried VEBA1: | |||||||||||||||
Interest cost | $ | 0.8 | $ | 0.7 | $ | 2.3 | $ | 2.2 | |||||||
Expected return on plan assets | (1.0 | ) | (1.0 | ) | (3.1 | ) | (3.0 | ) | |||||||
Amortization of prior service cost | 1.2 | �� | 1.0 | 3.6 | 3.0 | ||||||||||
Amortization of net actuarial loss | 0.2 | 0.1 | 0.6 | 0.3 | |||||||||||
Total net periodic postretirement benefit cost relating to Salaried VEBA | $ | 1.2 | $ | 0.8 | $ | 3.4 | $ | 2.5 |
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Included within Fabricated Products: | |||||||||||||||
Deferred compensation plan | $ | 0.1 | $ | 0.1 | $ | 0.3 | $ | 0.2 | |||||||
Defined contribution plans | 1.3 | 1.6 | 6.8 | 6.7 | |||||||||||
Multiemployer pension plans | 1.1 | 1.2 | 3.4 | 3.5 | |||||||||||
Total Fabricated Products | $ | 2.5 | $ | 2.9 | $ | 10.5 | $ | 10.4 | |||||||
Included within All Other: | |||||||||||||||
Deferred compensation plan | 0.4 | 0.4 | 1.1 | 0.6 | |||||||||||
Defined contribution plans | 0.1 | 0.1 | 0.7 | 0.7 | |||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | 1.2 | 0.8 | 3.4 | 2.5 | |||||||||||
Loss (gain) on removal of Union VEBA net assets | 0.5 | — | (0.8 | ) | (0.1 | ) | |||||||||
Total All Other | $ | 2.2 | $ | 1.3 | $ | 4.4 | $ | 3.7 | |||||||
Total | $ | 4.7 | $ | 4.2 | $ | 14.9 | $ | 14.1 |
Other Benefits
Short-Term Incentive Plans ("(“STI Plans"Plans”)
We provide other benefits for certain members of senior management, including certain of our named executive officers, related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officer with good reason.
Defined Benefit Plans
Pension. We sponsor defined benefit pension plans for certain hourly bargaining unit employees and salaried employees. Pension benefits generally depend on length of service, job grade and remuneration. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due. We use a December 31 measurement date for our pension plans. We also provide contributions to multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, the International Association of Machinists and certain other unions at certain of our production facilities.
OPEB. We sponsor a healthcare and life insurance postretirement benefit plan (“OPEB”)
Salaried VEBA Postretirement Obligation. Certain retirees who retired prior to 2004 and certain employees ofwho were hired prior to February 2002 and have subsequently retired or will retire with the Company, as well as non-employee directors of the Company, wererequisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in the Kaiser Aluminum Corporation 2016 Equitya voluntary employees’ beneficiary association (“VEBA”) that provides healthcare cost, medical cost and Incentive Compensation Plan ("2016 Plan"long-term care insurance cost reimbursement benefits (“Salaried VEBA”). The 2016 Plan was approved by stockholders on May 26, 2016 and replaced and succeeded in its entirety the Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan. At September 30, 2017, 735,724 shares were available for awards under the 2016 Plan.
10
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Non-vested common shares and restricted stock units | $ | 1.4 | $ | 1.2 | $ | 3.9 | $ | 3.5 | |||||||
TSR-Based Performance Shares | 1.2 | 1.5 | 3.7 | 4.0 | |||||||||||
CP-Based Performance Shares | 0.8 | 0.4 | 2.0 | 0.9 | |||||||||||
EVA-Based Performance Shares | 0.2 | — | 0.4 | 0.3 | |||||||||||
Total non-cash compensation expense | $ | 3.6 | $ | 3.1 | $ | 10.0 | $ | 8.7 |
The following table presents the allocation of the charges detailed above, by segmenttotal expense related to all postretirement benefit plans (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Defined contribution plans1 |
| $ | 5.7 |
|
| $ | 3.4 |
|
Deferred compensation plan2 |
|
| (0.3 | ) |
|
| — |
|
Multiemployer pension plans1 |
|
| 1.2 |
|
|
| 1.1 |
|
Salaried VEBA2 |
|
| 0.9 |
|
|
| 0.6 |
|
Pension plans3 |
|
| 1.4 |
|
|
| — |
|
OPEB3 |
|
| 0.9 |
|
|
| — |
|
Total |
| $ | 9.8 |
|
| $ | 5.1 |
|
1 | Substantially all of the expense related to employee benefits are in Cost of products sold, excluding depreciation and amortization and other items (“Cost of products sold” or “COGS”) with the remaining balance in Selling, general, administrative, research and development (“SG&A and R&D”). |
2 | The deferred compensation plan and the current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA are included within our Statements of Consolidated Income in SG&A and R&D for all periods presented. All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other expense, net, on our Statements of Consolidated Income. |
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Fabricated Products | $ | 1.3 | $ | 1.2 | $ | 3.8 | $ | 3.1 | |||||||
All Other | 2.3 | 1.9 | 6.2 | 5.6 | |||||||||||
Total non-cash compensation expense | $ | 3.6 | $ | 3.1 | $ | 10.0 | $ | 8.7 |
3 | The current service cost component of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB are included within our Statements of Consolidated Income in COGS for all periods presented. All other components of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB are included within Other expense, net, on our Statements of Consolidated Income. |
Components of Net Periodic Postretirement Benefit Cost. Our results of operations included the following impacts associated with the Salaried VEBA, pension plans and OPEB: (i) a charge for service rendered by employees; (ii) a charge for accretion of interest; (iii) a benefit for the expected return on plan assets; (iv) amortization of prior service costs associated with plan amendments; and (v) amortization of net actuarial differences.
The following table presents the components of Net periodic postretirement benefit cost (in millions of dollars):
|
| Pension Plans1 |
|
| OPEB |
| Salaried VEBA |
| ||||||||||||||
|
| Quarter Ended March 31, |
|
| Quarter Ended March 31, |
| Quarter Ended March 31, |
| ||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| 2022 |
|
| 2021 |
| |||||
Service cost |
| $ | 1.4 |
|
| $ | — |
|
| $ | 0.4 |
|
| n/a |
| $ | — |
|
| $ | — |
|
Interest cost |
|
| 0.2 |
|
|
| — |
|
|
| 0.5 |
|
| n/a |
|
| 0.5 |
|
|
| 0.4 |
|
Expected return on plan assets |
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
| n/a |
|
| (0.8 | ) |
|
| (0.8 | ) |
Amortization of prior service cost2 |
|
| — |
|
|
| — |
|
|
| — |
|
| n/a |
|
| 1.2 |
|
|
| 0.9 |
|
Amortization of net actuarial loss |
|
| — |
|
|
| — |
|
|
| — |
|
| n/a |
|
| — |
|
|
| 0.1 |
|
Total net periodic postretirement benefit cost |
| $ | 1.4 |
|
| $ | — |
|
| $ | 0.9 |
|
| n/a |
| $ | 0.9 |
|
| $ | 0.6 |
|
1 | Net periodic benefit cost for the quarter ended March 31, 2021 included only the Canadian pension plan. Net periodic benefit cost for the U.S. pension plan was not included in our Statements of Consolidated Income until the March 31, 2021 acquisition date of our Warrick County, Indiana (“Warrick”) facility. |
2 | We amortize prior service cost on a straight-line basis over the average remaining years of service to full eligibility for benefits of the active plan participants |
11
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
4. Derivatives, Hedging Programs and Other Financial Instruments
Overview.In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our exposure to: (i) metal price risk related to our sale of awardfabricated aluminum products and the purchase of metal, including primary and scrap, or recycled, aluminum, our main raw material, and certain alloys used as raw material for our fabrication operations; (ii) energy price risk relating to fluctuating prices of September 30, 2017:
Unrecognized Gross Compensation Costs (in millions of dollars) | Expected Period (in years) Over Which the Remaining Gross Compensation Costs Will Be Recognized | ||||
Non-vested common shares and restricted stock units | $ | 9.6 | 2.6 | ||
TSR-Based Performance Shares | $ | 5.6 | 1.7 | ||
CP-Based Performance Shares | $ | 6.1 | 2.1 | ||
EVA-Based Performance Shares | $ | 1.5 | 2.4 |
Our derivative activities are overseen by a committee (“Hedging Committee”), which is composed of our chief executive officer, chief financial officer, chief accounting officer, vice president of treasury, risk and procurement and other officers and employees selected by the chief executive officer.The Hedging Committee meets regularly to review commodity price exposure, derivative positions and strategy. Management reviews the scope of the Hedging Committee’s activities with our Board of Directors.
We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties, allocating our hedging positions among multiple counterparties to limit exposure to any single entity and using options as part of the hedging strategy. Our counterparties are major investment grade financial institutions or trading companies and our hedged transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds which may adjust up or down, depending on our liquidity. As a result, we believe the risk of loss is remote and contained. The aggregate fair value of our derivative instruments that were in a net liability position was0 at March 31, 2022 and December 31, 2021 and we had 0 collateral posted as of those dates.
Additionally, our firm-price customer sales commitments create incremental customer credit risk related to metal price movements. Under certain circumstances, we mitigate this risk by periodically requiring cash collateral from them, which we classify as deferred revenue and include as a component of Other accrued liabilities. We had 0 cash collateral posted from our customers at March 31, 2022 and December 31, 2021.
Cash Flow Hedges
We designate as cash flow hedges forward swap contracts for aluminum, energy and, from time-to-time, zinc and copper (“Alloying Metals”) used in our fabrication operations and foreign currency forward contracts for supplies and services for which payments are due in foreign currency. Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive income, net of tax, and reclassified to COGS when such hedges settle or when it is probable that the original forecasted transactions will not occur by the end of the originally specified time period. See Note 7 for the nine months ended September 30, 2017 istotal amount of gain or loss on derivative instruments designated and qualifying as follows:
Non-Vested Common Shares | Restricted Stock Units | TSR-Based Performance Shares | CP-Based Performance Shares | EVA-Based Performance Shares | ||||||||||||||||||||||||||||||
Shares | Weighted-Average Grant-Date Fair Value per Share | Units | Weighted-Average Grant-Date Fair Value per Unit | Shares | Weighted-Average Grant-Date Fair Value per Share | Shares | Weighted-Average Grant-Date Fair Value per Share | Shares | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||||||||||
Outstanding at December 31, 2016 | 114,658 | $ | 69.51 | 61,800 | $ | 74.94 | 394,525 | $ | 90.30 | 63,678 | $ | 80.46 | — | $ | — | |||||||||||||||||||
Granted1 | 11,817 | 86.92 | 92,275 | 76.13 | 65,044 | 97.88 | 65,044 | 79.69 | 32,504 | 79.69 | ||||||||||||||||||||||||
Vested | (46,689 | ) | 71.46 | (8,655 | ) | 76.94 | (94,082 | ) | 83.18 | — | — | — | — | |||||||||||||||||||||
Forfeited1 | (427 | ) | 69.83 | (6,412 | ) | 77.70 | (5,519 | ) | 95.88 | (3,342 | ) | 79.92 | (1,164 | ) | 79.69 | |||||||||||||||||||
Canceled1 | — | — | — | — | (55,288 | ) | 83.18 | — | — | — | — | |||||||||||||||||||||||
Outstanding at September 30, 2017 | 79,359 | $ | 70.96 | 139,008 | $ | 75.72 | 304,680 | $ | 95.31 | 125,380 | $ | 80.07 | 31,340 | $ | 79.69 |
Aluminum Hedges. Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabrication process(es)) and to pass through aluminum price fluctuations to our customers. For some of our higher value added products sold on a spot basis, the pass through of aluminum price movements can sometimes lag by as much as several months, with a favorable impact to us when aluminum prices decline and an adverse impact to us when aluminum prices increase. Additionally, in certain instances, we enter into firm-price arrangements with our customers for shares granted by typestipulated volumes to be delivered in the future. Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through aluminum price movements to customers on some of award was as followsour higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create aluminum price risk for each period presented:
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Non-vested common shares | $ | — | $ | — | $ | 86.92 | $ | 86.11 | |||||||
Restricted stock units | $ | 82.33 | $ | — | $ | 76.13 | $ | 75.57 | |||||||
TSR-Based Performance Shares | $ | — | $ | — | $ | 97.88 | $ | 93.02 | |||||||
CP-Based Performance Shares | $ | — | $ | — | $ | 79.69 | $ | 80.46 | |||||||
EVA-Based Performance Shares | $ | — | $ | — | $ | 79.69 | $ | — |
12
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
Alloying Metals Hedges. We are exposed to have us withhold common sharesrisk of fluctuating prices for alloying metals used as raw materials in our fabrication operations. We, from time to satisfy minimum statutory tax withholding obligations arisingtime, in connectionthe ordinary course of business, enter into hedging transactions and/or physical delivery commitments with the exercise of stock options and vesting of non-vested shares, restricted stock units and performance shares. We cancel any such shares withheld on the applicable vesting dates or earlier dates when service requirementsthird parties to mitigate our risk from fluctuations in alloying metals prices that are satisfied, which correspondnot passed through pursuant to the times at which incometerms of our customer contracts.
Energy Hedges. We are exposed to risk of fluctuating prices for natural gas and electricity. We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices that are not passed through pursuant to the employeeterms of our customer contracts.
The following table summarizes the percentages as of March 31, 2022 of our expected variable priced purchases of metal alloys and energy for which we have executed derivative and/or physical delivery commitments to reduce price fluctuations for each of the following years:
|
| Remainder of 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
| ||||
Zinc |
| 63% |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Copper |
| 63% |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Magnesium1 |
| 100% |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Silicon |
| 100% |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Natural Gas |
| 48% |
|
| 48% |
|
| 46% |
|
| 25% |
|
| 20% |
| ||||
Electricity |
| 78% |
|
| 43% |
|
|
| — |
|
|
| — |
|
|
| — |
|
1 | We have contracts in place to cover the noted percentage of our requirements at a firm or predetermined price, however our primary supplier of magnesium declared force majeure and is supplying less than the full volume contracted and our magnesium cost will fluctuate for any shortfalls until our supplier’s capacity is fully restored. |
Foreign Currency Hedges. We are exposed to foreign currency exchange risk related to certain supply and service agreements with vendors for which payments are due in foreign currency. We, from time to time, in the ordinary course of business, use foreign currency forward contracts in order to mitigate the exposure to currency exchange rate fluctuations related to these purchases.
Non-Designated Hedges of Operational Risks
From time-to-time, we enter into commodity contracts that are not designated as hedging instruments to mitigate certain short‑term commodity impacts, as identified. The gain or loss on these derivatives is recognized. When we withhold these common shares, werecognized within COGS.
Notional Amount of Derivative Contracts
The following table summarizes our derivative positions at March 31, 2022:
Aluminum | Maturity Period (month/year) | Notional Amount of Contracts (mmlbs) | ||||
Fixed price purchase contracts | 4/22 through 12/23 | 109.3 | ||||
Fixed price sales contracts | 8/22 through 10/22 | 3.0 | ||||
Midwest premium swap contracts1 | 4/22 through 12/23 | 92.0 |
Alloying Metals | Maturity Period (month/year) | Notional Amount of Contracts (mmlbs) | ||||
Fixed price purchase contracts | 4/22 through 12/22 | 4.8 |
Natural Gas | Maturity Period (month/year) | Notional Amount of Contracts (mmbtu) | ||||
Fixed price purchase contracts | 4/22 through 12/25 | 4,740,000 |
Electricity | Maturity Period (month/year) | Notional Amount of Contracts (Mwh) | ||||
Fixed price purchase contracts | 4/22 through 12/22 | 165,025 |
13
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
Euro | Maturity Period (month/year) | Notional Amount of Contracts (euro) | ||||
Fixed price forward contracts | 6/22 through 3/23 | 138,720 |
1 | Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum. |
Gain
The following table summarizes the amount of gainincluded on our Statements of Consolidated Incomeassociated with all derivative contracts (in millions of dollars):
|
| Quarter Ended March 31, |
| Statements of Consolidated | |||||
|
| 2022 |
|
| 2021 |
| Income Classification | ||
Total of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded: |
|
|
|
|
|
|
|
|
|
Cash flow hedges |
| $ | 865.9 |
|
| $ | 262.5 |
| Cost of products sold |
|
|
|
|
|
|
|
|
|
|
Gain recognized in our Statements of Consolidated Income related to cash flow hedges: |
|
|
|
|
|
|
|
|
|
Aluminum |
| $ | (18.7 | ) |
| $ | (2.9 | ) | Cost of products sold |
Alloying Metals |
|
| — |
|
|
| (0.9 | ) | Cost of products sold |
Natural gas |
|
| (0.9 | ) |
|
| — |
| Cost of products sold |
Electricity |
|
| (0.3 | ) |
|
| — |
| Cost of products sold |
Total gain recognized in our Statements of Consolidated Income related to cash flow hedges |
| $ | (19.9 | ) |
| $ | (3.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
Gain recognized in our Statements of Consolidated Income related to non-designated hedges: |
|
|
|
|
|
|
|
|
|
Alloying Metals – Realized (gain) loss |
| $ | (0.6 | ) |
| $ | — |
| Cost of products sold |
Alloying Metals – Unrealized gain |
|
| (1.0 | ) |
|
| (0.3 | ) | Cost of products sold |
Total gain recognized in our Statements of Consolidated Income related to non-designated hedges |
| $ | (1.6 | ) |
| $ | (0.3 | ) |
|
14
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
Fair Values of Derivative Contracts
The fair values of our derivative contracts are requiredbased upon trades in liquid markets. Valuation model inputs can be verified, and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy.
All of our derivative contracts with counterparties are subject to remit to the appropriate taxing authoritiesenforceable master netting arrangements. We reflect the fair value of our derivative contracts on a gross basis on our Consolidated Balance Sheets. The following table presents the shares withheldfair value of our derivative financial instruments (in millions of dollars):
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||||||||||||||||||
|
| Assets |
|
| Liabilities |
|
| Net Amount |
|
| Assets |
|
| Liabilities |
|
| Net Amount |
| ||||||
Cash Flow Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price purchase contracts |
| $ | 26.5 |
|
| $ | (1.0 | ) |
| $ | 25.5 |
|
| $ | 12.2 |
|
| $ | (1.1 | ) |
| $ | 11.1 |
|
Fixed price sales contracts |
|
| 0 |
|
|
| (0.7 | ) |
|
| (0.7 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Midwest premium swap contracts |
|
| 6.9 |
|
|
| (0.2 | ) |
|
| 6.7 |
|
|
| 5.5 |
|
|
| (0.1 | ) |
|
| 5.4 |
|
Natural gas – Fixed price purchase contracts |
|
| 8.0 |
|
|
| 0 |
|
|
| 8.0 |
|
|
| 3.0 |
|
|
| (0.1 | ) |
|
| 2.9 |
|
Electricity – Fixed price purchase contracts |
|
| 6.1 |
|
|
| 0 |
|
|
| 6.1 |
|
|
| 4.4 |
|
|
| (0.6 | ) |
|
| 3.8 |
|
Total cash flow hedges |
|
| 47.5 |
|
|
| (1.9 | ) |
|
| 45.6 |
|
|
| 25.1 |
|
|
| (1.9 | ) |
|
| 23.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Designated Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alloying Metals – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price purchase contracts |
|
| 2.5 |
|
|
| 0 |
|
|
| 2.5 |
|
|
| 1.6 |
|
|
| (0.1 | ) |
|
| 1.5 |
|
Total non-designated hedges |
|
| 2.5 |
|
|
| 0 |
|
|
| 2.5 |
|
|
| 1.6 |
|
|
| (0.1 | ) |
|
| 1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 50.0 |
|
| $ | (1.9 | ) |
| $ | 48.1 |
|
| $ | 26.7 |
|
| $ | (2.0 | ) |
| $ | 24.7 |
|
The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets (in millions of dollars):
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||
Derivative assets: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
| $ | 45.9 |
|
| $ | 25.0 |
|
Other assets |
|
| 4.1 |
|
|
| 1.7 |
|
Total derivative assets |
| $ | 50.0 |
|
| $ | 26.7 |
|
Derivative liabilities: |
|
|
|
|
|
|
|
|
Other accrued liabilities |
| $ | (1.8 | ) |
| $ | (1.9 | ) |
Long-term liabilities |
|
| (0.1 | ) |
|
| (0.1 | ) |
Total derivative liabilities |
| $ | (1.9 | ) |
| $ | (2.0 | ) |
Fair Value of Other Financial Instruments
All Other Financial Assets and Liabilities. We believe that the fair values of our accounts receivable, contract assets, accounts payable and accrued liabilities approximate their respective carrying values due to their short maturities and nominal credit risk.
5. Debt and Credit Facility
Senior Notes
4.50% Senior Notes. In May 2021, we issued $550.0 million aggregate principal amount of 4.50% unsecured senior notes due June 1, 2031 at 100% of the principal amount (“4.50% Senior Notes”). The unamortized amount of debt issuance costs as of March 31, 2022 relating to the vesting date. During4.50% Senior Notes was $7.8 million. Interest expense, including amortization of debt issuance costs and debt premium, relating to the nine months4.50% Senior Notes was $6.4 million for the quarter ended
15
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
rate of the common shares.
6.50% Senior Notes. In April 2020 and May 2020, we issued $300.0 million and $50.0 million, respectively, aggregate principal amounts of our 6.50% unsecured senior notes due May 1, 2025 at 100% and 101%, respectively, of the principal amounts (“6.50% Senior Notes”). On May 21, 2021 we redeemed in full the remaining balance of our 6.50% Senior Notes at a redemption price of 108.83% of the principal amount plus $1.3 million of accrued and unpaid interest for a total net cash outflow of $382.2 million. Upon redemption of the 6.50% Senior Notes, we recorded a loss on extinguishment of debt of $35.9 millionwithin Other expense, net on our Statements of Consolidated Income, which included the premium payment of $30.9 million and a write-off of the remaining unamortized premium and debt issuance costs of $5.0 million. The effective interest rate of the 6.50% Senior Notes was approximately 6.8% per annum, taking into account the amortization of premium and debt issuance costs. Interest expense, including amortization of debt issuance costs, relating to the 6.50% Senior Notes was $6.0 million for the quarter ended March 31, 2021.
4.625% Senior Notes. In November 2019, we issued $500.0 million aggregate principal amount of 4.625% unsecured senior notes due March 1, 2028 at 100% of the principal amount (“4.625% Senior Notes”). The unamortized amount of debt issuance costs as of March 31, 2022 was $5.4 million. Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $6.0 million for both quarters ended March 31, 2022 and March 31, 2021, respectively. The effective interest rate of the 4.625% Senior Notes was approximately 4.8% per annum, taking into account the amortization of debt issuance costs. The fair value of the outstanding 4.625% Senior Notes, which are Level 1 liabilities, was approximately $470.2 millionand $506.9 million at March 31, 2022 and December 31, 2021, respectively.
The amount of interest expense capitalized as construction in progress was $0.6 million and $0.1 million during the quarters ended March 31, 2022 and March 31, 2021, respectively.
Revolving Credit Facility
Our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”) provides us with a $375.0 million funding commitment through October 2024.
On April 7, 2022, we entered Amendment No. 3 to our Revolving Credit Facility. See Note 13 for details regarding the revised terms of the Revolving Credit Facility as amended.
6. Commitments and Contingencies
Commitments.
We have a variety of financial commitments, including purchase agreements, forward foreign exchange and forward sales contracts, indebtedness and letters of credit (see NoteEnvironmental Contingencies.
We are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches of such laws and regulations and to potential claims based upon such laws and regulations. We are also subject to legacy environmental contingencies related to activities that occurred at operating facilitiesWe continue to pursue remediation activities, primarily to address the historical use of oils containing polychlorinated biphenyls ("PCBs"(“PCBs”) at our Spokane, Washington ("Trentwood"(“Trentwood”) facility. Our remediation efforts are in collaboration with the Washington State Department of Ecology ("Washington State Ecology"(“Ecology”), to which we submitted a feasibility study in 2012 of remediation alternatives and from which we received permission to begin certain remediation activities pursuant to a signed work order. As weWe have finishedcompleted a number of sections of the work plan weand have received satisfactory completion approval from Washington State Ecology on satisfactory completion of those sections. Additionally, inIn cooperation with Washington State Ecology, we constructed an experimental treatment facility to determine the treatability and evaluate the feasibility of removing PCBs from ground water under the Trentwood facility,facility. In 2015, we constructed a pilot test facility and began treatment operations atinvolving a walnut shell filtration system, which we optimized for maximum PCB capture during 2020. Furthermore, based on advancements in technology, we signed an Amended Agreed Order with Ecology in 2020 to evaluate and implement new technologies for PCB removal from groundwater on a pilot basis.
16
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
The primary technology we are evaluating is Ultraviolet Light Advanced Oxidation Process. As the test facility in the first half of 2016. As thelong-term success of the new methodology cannot be reasonably determined at this time, it is possible we may need to make upward adjustments to our related accruals as facts and cost estimates regardingas the groundwater treatment method and the operation of the treatment facilitylong term results become available.
Pursuant to a consent agreement with the Ohio Environmental Protection Agency ("OEPA"(“OEPA”), we initiated an investigational study of theour Newark, Ohio ("Newark"(“Newark”) facility related to historical on-site waste disposal. Since 2014,During the quarter ended December 31, 2018, we have completed a number of preliminary steps insubmitted our remedial investigation study to the preparation of completingOEPA for review and approval. The final remedial investigation report was approved by the final risk assessment andOEPA during the quarter ended December 31, 2020. We are currently preparing the required feasibility study, both of which are subjectwe expect to submit to the OEPA for review and approval byduring the OEPA. As work continues and progresses to a final risk assessment and feasibility study, we will establish and update estimates for probable and estimable remediation, if any.quarter ending September 30, 2022. The actual and final remediation cost for remediationestimates will not be fully determinable until a finalthe feasibility study is submitted andhas been accepted by the OEPA and the selected remediation design work plans are prepared,completed, which is expectedwe expect to occur in the next 1217 to 1523 months.
At September 30, 2017,March 31, 2022, our environmental accrual of $16.9$16.4 million represented our estimate of the incremental remediation cost based on: (i) proposed alternatives in the final feasibility study related to the Trentwood facility; (ii) currently available facts with respect to our Newark facility; and (iii) facts related to certain other locations owned or formerly owned by us. In accordance with approved and proposed remediation action plans, we expect that the implementation and ongoing monitoring could occur over a period of 30 or more years.
As additional facts are developed, feasibility studies are completed, draft remediation plans are modified, necessary regulatory approvals for the implementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management'smanagement’s estimates and actual costs may exceed the current environmental accruals. We believe at this time that it is reasonably possible that undiscounted costs associated with these environmental matters may exceed current accruals by amounts that could be, in the aggregate, up to an estimated $12.2$11.7 million over the remediation period. It is reasonably possible that our recorded estimate will change in the next 12 months.
Warrick Rolling Mill CARO Liability. During the quarter ended March 31, 2022, we identified conditional asset retirement obligations (“CAROs”) related to the future removal and disposal of asbestos that is contained within the Warrick rolling mill facility. We believe that the asbestos is appropriately contained in accordance with current environmental regulations. If the facility were demolished or subject to renovation activities that disturb the asbestos, certain environmental regulations are in place which specify the manner in which the asbestos must be handled and disposed. We are required to record the fair value of CAROs if they can be reasonably estimated. As of March 31, 2022, we established a liability of $2.3 million related to these CAROs within Long-term liabilities on our Consolidated Balance Sheets.
Other Contingencies.
We are party to various lawsuits, claims, investigations and administrative proceedings that arise in connection with past and current operations. We evaluate such matters on a case-by-case basis and our policy is to vigorouslyKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
7. Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of AOCI (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Defined Benefit Pension Plan and Salaried VEBA: |
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (21.4 | ) |
| $ | (19.8 | ) |
Amortization of net actuarial loss1 |
|
| — |
|
|
| 0.1 |
|
Amortization of prior service cost1 |
|
| 1.2 |
|
|
| 0.9 |
|
Less: income tax expense2 |
|
| (0.3 | ) |
|
| (0.3 | ) |
Other comprehensive income, net of tax |
|
| 0.9 |
|
|
| 0.7 |
|
Ending balance |
| $ | (20.5 | ) |
| $ | (19.1 | ) |
|
|
|
|
|
|
|
|
|
Cash Flow Hedges: |
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 17.7 |
|
| $ | 1.1 |
|
Unrealized gain on cash flow hedges |
|
| 42.3 |
|
|
| 13.9 |
|
Less: income tax expense |
|
| (10.0 | ) |
|
| (3.3 | ) |
Net unrealized gain on cash flow hedges |
|
| 32.3 |
|
|
| 10.6 |
|
Reclassification of unrealized gain upon settlement of cash flow hedges |
|
| (19.9 | ) |
|
| (2.7 | ) |
Less: income tax benefit2 |
|
| 4.7 |
|
|
| 0.6 |
|
Net gain reclassified from AOCI to Net income |
|
| (15.2 | ) |
|
| (2.1 | ) |
Other comprehensive income, net of tax |
|
| 17.1 |
|
|
| 8.5 |
|
Ending balance3 |
| $ | 34.8 |
|
| $ | 9.6 |
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation: |
|
|
|
|
|
|
|
|
Beginning balance |
| $ | — |
|
| $ | — |
|
Other comprehensive income (loss), net of tax |
|
| — |
|
|
| (0.1 | ) |
Ending balance |
| $ | — |
|
| $ | (0.1 | ) |
|
|
|
|
|
|
|
|
|
Total AOCI ending balance |
| $ | 14.3 |
|
| $ | (9.6 | ) |
1 | Amounts amortized out of AOCI relating to Salaried VEBA adjustments were included within Other expense, net, as a component of Net periodic postretirement benefit cost relating to Salaried VEBA. |
2 | Income tax amounts reclassified out of | |||
AOCI were included as a component of Income tax (provision) benefit. |
3 | ||||
As of | ||||
March 31, 2022, we estimate a net mark-to-market gain before tax of $41.6 million in AOCI will be reclassified into Netincomeupon settlement within the next 12 months. |
8. Other Expense, Net
Other expense, net, consisted of the expected electricity purchases for both 2018 and 2019 and 18%following (in millions of the expected electricity purchases for 2020.dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Interest income |
| $ | — |
|
| $ | 0.1 |
|
Net periodic postretirement benefit cost |
|
| (1.4 | ) |
|
| (0.6 | ) |
Unrealized loss on equity securities |
|
| (0.4 | ) |
|
| (0.1 | ) |
All other, net |
|
| 0.2 |
|
|
| 0.2 |
|
Other expense, net |
| $ | (1.6 | ) |
| $ | (0.4 | ) |
18
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
9. Income associated with all derivative contractsTax Matters
The income tax (provision) benefit consisted of the following for each period presented (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Domestic |
| $ | (2.9 | ) |
| $ | 0.6 |
|
Foreign |
|
| (0.4 | ) |
|
| (0.3 | ) |
Total |
| $ | (3.3 | ) |
| $ | 0.3 |
|
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Realized (gain) loss: | |||||||||||||||
Aluminum | $ | (4.0 | ) | $ | 0.4 | $ | (13.8 | ) | $ | 4.1 | |||||
Natural gas | 0.2 | 0.9 | 0.3 | 4.2 | |||||||||||
Alloy Hedges | (0.3 | ) | — | (0.2 | ) | — | |||||||||
Foreign exchange | (0.1 | ) | — | (0.1 | ) | — | |||||||||
Total realized (gain) loss1 | $ | (4.2 | ) | $ | 1.3 | $ | (13.8 | ) | $ | 8.3 | |||||
Unrealized (gain) loss: | |||||||||||||||
Aluminum | $ | (10.6 | ) | $ | (1.7 | ) | $ | (15.3 | ) | $ | (11.7 | ) | |||
Natural gas | (0.2 | ) | (0.3 | ) | 1.3 | (5.2 | ) | ||||||||
Total unrealized gain2 | $ | (10.8 | ) | $ | (2.0 | ) | $ | (14.0 | ) | $ | (16.9 | ) |
The income tax (provision) benefit for the quarters ended March 31, 2022 and March 31, 2021 was $(3.3) millionand $0.3 million, respectively, reflecting an effective tax rate of Derivative Contracts.
The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended March 31, 2021 was primarily due to: (i) a decrease of15% of pre-tax income for a change in state tax rate due to the Warrick rolling mill acquisition; (ii) a decrease of10% of pre-tax income related to the valuation allowance for certain state net operating losses; and (iii) a decrease of6% of pre-tax income for the recognition of excess tax benefits from stock-based compensation.
Our gross unrecognized benefits relating to uncertain tax positions were $4.6 million and $4.1 million at March 31, 2022 and December 31, 2021, respectively, of which, $4.6 million and $4.1 million would be recorded through our derivative contracts are based upon trades in liquid markets. Valuation model inputs canincome tax provision and thus impact the effective tax rate at March 31, 2022 and December 31, 2021, respectively, if the gross unrecognized tax benefits were to be verified, and valuation techniquesrecognized.
We do not involve significant judgment.expect our gross unrecognized tax benefits to significantly change within the next 12 months.
10. Net Income Per Share
Basic net income per share is computed by dividing distributed and undistributed net income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period. The fair valuesbasic weighted-average number of such financial instruments are classified within Level 2 ofcommon shares outstanding during the fair value hierarchy.
The following table presents our financial instruments, classified undersets forth the appropriate levelcomputation of the fair value hierarchy, as of the period presented (in millions of dollars):
September 30, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
DERIVATIVE ASSETS: | |||||||||||||||
Non-Designated Hedges: | |||||||||||||||
Aluminum – | |||||||||||||||
Fixed price purchase contracts | $ | — | $ | 18.4 | $ | — | $ | 18.4 | |||||||
Midwest premium swap contracts | — | 0.8 | — | 0.8 | |||||||||||
Natural gas – Fixed price purchase contracts | — | 0.4 | — | 0.4 | |||||||||||
Designated Hedges: | |||||||||||||||
Alloying metals – Fixed price purchase contracts | — | 0.9 | — | 0.9 | |||||||||||
Total derivative assets1 | $ | — | $ | 20.5 | $ | — | $ | 20.5 | |||||||
September 30, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
DERIVATIVE LIABILITIES: | |||||||||||||||
Non-Designated Hedges: | |||||||||||||||
Aluminum – | |||||||||||||||
Fixed price sales contracts | $ | — | $ | (0.1 | ) | $ | — | $ | (0.1 | ) | |||||
Midwest premium swap contracts | — | (0.8 | ) | — | (0.8 | ) | |||||||||
Natural gas – Fixed price purchase contracts | — | (0.5 | ) | — | (0.5 | ) | |||||||||
Total derivative liabilities2 | $ | — | $ | (1.4 | ) | $ | — | $ | (1.4 | ) |
December 31, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
DERIVATIVE ASSETS: | |||||||||||||||
Non-Designated Hedges: | |||||||||||||||
Aluminum – | |||||||||||||||
Fixed price purchase contracts | $ | — | $ | 3.3 | $ | — | $ | 3.3 | |||||||
Midwest premium swap contracts | — | 0.9 | — | 0.9 | |||||||||||
Natural gas – Fixed price purchase contracts | — | 1.6 | — | 1.6 | |||||||||||
Total derivative assets1 | $ | — | $ | 5.8 | $ | — | $ | 5.8 | |||||||
DERIVATIVE LIABILITIES: | |||||||||||||||
Non-Designated Hedges: | |||||||||||||||
Aluminum – | |||||||||||||||
Fixed price purchase contracts | $ | — | $ | (1.1 | ) | $ | — | $ | (1.1 | ) | |||||
Midwest premium swap contracts | — | (0.2 | ) | — | (0.2 | ) | |||||||||
Natural gas – Fixed price purchase contracts | — | (0.4 | ) | — | (0.4 | ) | |||||||||
Designated Hedges: | |||||||||||||||
Alloying metals – Fixed price purchase contracts | — | (0.1 | ) | — | (0.1 | ) | |||||||||
Total derivative liabilities2 | $ | — | $ | (1.8 | ) | $ | — | $ | (1.8 | ) |
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Assets Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | Net Amount | |||||||||||||||
Counterparty (with netting agreements) | $ | 20.5 | $ | — | $ | 20.5 | $ | 1.4 | $ | 19.1 | |||||||||
Total | $ | 20.5 | $ | — | $ | 20.5 | $ | 1.4 | $ | 19.1 |
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | Net Amount | |||||||||||||||
Counterparty (with netting agreements) | $ | (1.4 | ) | $ | — | $ | (1.4 | ) | $ | (1.4 | ) | $ | — | ||||||
Total | $ | (1.4 | ) | $ | — | $ | (1.4 | ) | $ | (1.4 | ) | $ | — |
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Assets Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | Net Amount | |||||||||||||||
Counterparty (with netting agreements) | $ | 3.3 | $ | — | $ | 3.3 | $ | 1.0 | $ | 2.3 | |||||||||
Counterparty (with partial netting agreements) | 2.5 | — | 2.5 | 0.7 | 1.8 | ||||||||||||||
Total | $ | 5.8 | $ | — | $ | 5.8 | $ | 1.7 | $ | 4.1 |
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | Net Amount | |||||||||||||||
Counterparty (with netting agreements) | $ | (1.0 | ) | $ | — | $ | (1.0 | ) | $ | (1.0 | ) | $ | — | ||||||
Counterparty (with partial netting agreements) | (0.8 | ) | — | (0.8 | ) | (0.7 | ) | (0.1 | ) | ||||||||||
Total | $ | (1.8 | ) | $ | — | $ | (1.8 | ) | $ | (1.7 | ) | $ | (0.1 | ) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and cash equivalents | $ | 17.3 | $ | 56.6 | $ | — | $ | 73.9 | |||||||
Short-term investments | — | 191.4 | — | 191.4 | |||||||||||
Total | $ | 17.3 | $ | 248.0 | $ | — | $ | 265.3 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and cash equivalents | $ | 37.9 | $ | 17.3 | $ | — | $ | 55.2 | |||||||
Short-term investments | — | 231.0 | — | 231.0 | |||||||||||
Total | $ | 37.9 | $ | 248.3 | $ | — | $ | 286.2 |
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Numerator: |
|
|
|
|
|
|
|
|
Net income |
| $ | 8.1 |
|
| $ | 4.5 |
|
Denominator – Weighted-average common shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
Basic |
|
| 15,866 |
|
|
| 15,805 |
|
Add: dilutive effect of non-vested common shares, restricted stock units and performance shares1 |
|
| 172 |
|
|
| 182 |
|
Diluted |
|
| 16,038 |
|
|
| 15,987 |
|
|
|
|
|
|
|
|
|
|
Net income per common share, Basic: |
| $ | 0.51 |
|
| $ | 0.28 |
|
Net income per common share, Diluted: |
| $ | 0.51 |
|
| $ | 0.28 |
|
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 19.9 | $ | 14.9 | $ | 60.6 | $ | 67.2 | |||||||
Denominator – Weighted-average common shares outstanding (in thousands): | |||||||||||||||
Basic1 | 16,834 | 17,841 | 17,072 | 17,858 | |||||||||||
Add: dilutive effect of non-vested common shares, restricted stock units, performance shares and stock options | 326 | 334 | 291 | 323 | |||||||||||
Diluted2 | 17,160 | 18,175 | 17,363 | 18,181 | |||||||||||
Net income per common share, Basic: | $ | 1.18 | $ | 0.84 | $ | 3.55 | $ | 3.76 | |||||||
Net income per common share, Diluted: | $ | 1.16 | $ | 0.82 | $ | 3.49 | $ | 3.70 |
Quarter Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Non-vested common shares, restricted stock units and performance shares | 3 | 3 | 3 | 2 | |||||||
Total excluded | 3 | 3 | 3 | 2 |
19
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Number of common shares repurchased | 806,307 | 170,304 | |||||
Weighted-average repurchase price (dollars per share) | $ | 80.60 | $ | 81.04 | |||
Total cost of repurchased common shares (in millions of dollars) | $ | 64.9 | $ | 13.8 |
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales: | |||||||||||||||
Fabricated Products | $ | 332.8 | $ | 320.6 | $ | 1,044.4 | $ | 998.7 | |||||||
Segment operating income (loss): | |||||||||||||||
Fabricated Products | $ | 53.7 | $ | 42.1 | $ | 149.9 | $ | 172.1 | |||||||
All Other | (13.9 | ) | (12.3 | ) | (39.2 | ) | (39.6 | ) | |||||||
Total operating income | $ | 39.8 | $ | 29.8 | $ | 110.7 | $ | 132.5 | |||||||
Interest expense | (5.3 | ) | (5.5 | ) | (16.4 | ) | (14.7 | ) | |||||||
Other income (expense), net | 1.5 | — | 3.1 | (10.4 | ) | ||||||||||
Income before income taxes | $ | 36.0 | $ | 24.3 | $ | 97.4 | $ | 107.4 | |||||||
Depreciation and amortization: | |||||||||||||||
Fabricated Products | $ | 10.1 | $ | 8.8 | $ | 28.9 | $ | 26.2 | |||||||
All Other | 0.1 | 0.2 | 0.4 | 0.5 | |||||||||||
Total depreciation and amortization | $ | 10.2 | $ | 9.0 | $ | 29.3 | $ | 26.7 | |||||||
Capital expenditures: | |||||||||||||||
Fabricated Products | $ | 16.3 | $ | 15.0 | $ | 55.7 | $ | 57.1 | |||||||
All Other | 0.1 | 0.1 | 0.4 | 0.3 | |||||||||||
Total capital expenditures | $ | 16.4 | $ | 15.1 | $ | 56.1 | $ | 57.4 |
September 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
Fabricated Products | $ | 1,007.9 | $ | 969.4 | |||
All Other1 | 414.8 | 474.1 | |||||
Total assets | $ | 1,422.7 | $ | 1,443.5 |
1 | Quantities in |
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales: | |||||||||||||||
Aero/HS products | $ | 150.2 | $ | 156.1 | $ | 483.2 | $ | 500.7 | |||||||
Automotive Extrusions | 52.7 | 46.5 | 161.6 | 143.6 | |||||||||||
GE products | 115.9 | 105.6 | 361.1 | 318.3 | |||||||||||
Other products | 14.0 | 12.4 | 38.5 | 36.1 | |||||||||||
Total net sales | $ | 332.8 | $ | 320.6 | $ | 1,044.4 | $ | 998.7 |
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income taxes paid: | |||||||||||||||
Domestic | $ | 0.3 | $ | 0.1 | $ | 0.7 | $ | 0.4 | |||||||
Foreign | — | — | 0.1 | 0.5 | |||||||||||
Total income taxes paid | $ | 0.3 | $ | 0.1 | $ | 0.8 | $ | 0.9 |
Quarter Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Percentage of total primary aluminum supply (lbs): | |||||||||||
Supply from our top five major suppliers | 86 | % | 84 | % | 85 | % | 84 | % | |||
Supply from our largest supplier | 35 | % | 28 | % | 36 | % | 32 | % | |||
Supply from our second and third largest suppliers | 35 | % | 33 | % | 33 | % | 31 | % |
11. Supplemental Cash Flow Information
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (In millions of dollars) |
| |||||
Interest paid |
| $ | 11.2 |
|
| $ | 11.7 |
|
Non-cash investing and financing activities (included in Accounts payable): |
|
|
|
|
|
|
|
|
Unpaid purchases of property and equipment |
| $ | 12.6 |
|
| $ | 2.0 |
|
|
|
|
|
|
|
|
|
|
Supplemental lease disclosures: |
|
|
|
|
|
|
|
|
Operating lease liabilities arising from obtaining operating lease assets |
| $ | 1.1 |
|
| $ | 13.6 |
|
Cash paid for amounts included in the measurement of operating lease liabilities |
| $ | 2.4 |
|
| $ | 1.3 |
|
Finance lease liabilities arising from obtaining finance lease assets |
| $ | 0.2 |
|
| $ | 1.8 |
|
|
| As of March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
| (In millions of dollars) |
| |||||
Components of cash, cash equivalents and restricted cash: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 261.0 |
|
| $ | 128.0 |
|
Restricted cash included in Other assets1 |
|
| 14.2 |
|
|
| 13.8 |
|
Total cash, cash equivalents and restricted cash presented on our Statements of Consolidated Cash Flows |
| $ | 275.2 |
|
| $ | 141.8 |
|
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
(In millions of dollars) | |||||||
Interest paid | $ | 10.0 | $ | 6.7 | |||
Non-cash investing and financing activities (included in Accounts payable): | |||||||
Unpaid purchases of property and equipment | $ | 3.4 | $ | 2.4 | |||
Stock repurchases not yet settled | $ | — | $ | 0.2 | |||
Acquisition of property and equipment through capital leasing arrangements | $ | 0.3 | $ | — | |||
Components of cash, cash equivalents and restricted cash: | September 30, 2017 | September 30, 2016 | |||||
Cash and cash equivalents | $ | 73.9 | $ | 72.9 | |||
Restricted cash included in Prepaid expenses and other current assets1 | 0.3 | 0.3 | |||||
Restricted cash included in Other assets1 | 12.9 | 11.7 | |||||
Total cash, cash equivalents and restricted cash shown in the Statements of Consolidated Cash Flows | $ | 87.1 | $ | 84.9 |
1 | |
We are required to keep on deposit certain amounts that are pledged or held as collateral relating to |
12. Business, Product and Geographical Area Information
Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as bare and coated coils, plate and sheet and extruded and drawn products, for the following for each period presented (in millions of dollars):
Quarter Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Interest income | $ | — | $ | — | $ | — | $ | 0.1 | |||||||
Realized gain on investments | 0.8 | 0.1 | 2.2 | 0.4 | |||||||||||
Loss on extinguishment of debt1 | — | — | — | (11.1 | ) | ||||||||||
All other income (expense), net | 0.7 | (0.1 | ) | 0.9 | 0.2 | ||||||||||
Other income (expense), net | $ | 1.5 | $ | — | $ | 3.1 | $ | (10.4 | ) |
20
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -– UNAUDITED
The following table presents the changes in the accumulated balances for each componentNet sales by end market applications and by timing of Accumulated other comprehensive (loss) income ("AOCI") for each period presentedcontrol transfer (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net sales: |
|
|
|
|
|
|
|
|
Aero/HS products |
| $ | 176.6 |
|
| $ | 111.7 |
|
Packaging |
|
| 448.0 |
|
|
| — |
|
Automotive Extrusions |
|
| 63.8 |
|
|
| 57.6 |
|
GE products |
|
| 251.2 |
|
|
| 150.4 |
|
Other products |
|
| 9.2 |
|
|
| 4.3 |
|
Total net sales |
| $ | 948.8 |
|
| $ | 324.0 |
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
Products transferred at a point in time |
| $ | 772.0 |
|
| $ | 200.2 |
|
Products transferred over time |
|
| 176.8 |
|
|
| 123.8 |
|
Total net sales |
| $ | 948.8 |
|
| $ | 324.0 |
|
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Salaried VEBA and defined benefit pension plan: | ||||||||||||||||
Beginning balance | $ | (35.4 | ) | $ | (29.8 | ) | $ | (37.1 | ) | $ | (31.3 | ) | ||||
Amortization of net actuarial loss1 | 0.2 | 0.1 | 0.6 | 0.3 | ||||||||||||
Amortization of prior service cost1 | 1.2 | 1.0 | 3.6 | 3.0 | ||||||||||||
Less: income tax expense2 | (0.5 | ) | (0.4 | ) | (1.6 | ) | (1.2 | ) | ||||||||
Net amortization reclassified from AOCI to Net income | 0.9 | 0.7 | 2.6 | 2.1 | ||||||||||||
Translation impact on Canadian pension plan AOCI balance | (0.1 | ) | — | (0.1 | ) | 0.1 | ||||||||||
Other comprehensive income, net of tax | 0.8 | 0.7 | 2.5 | 2.2 | ||||||||||||
Ending balance | $ | (34.6 | ) | $ | (29.1 | ) | $ | (34.6 | ) | $ | (29.1 | ) | ||||
Available for sale securities: | ||||||||||||||||
Beginning balance | $ | 1.1 | $ | 0.2 | $ | 0.8 | $ | (0.1 | ) | |||||||
Unrealized gain on available for sale securities | 1.0 | 0.9 | 3.1 | 1.3 | ||||||||||||
Less: income tax expense | (0.4 | ) | (0.4 | ) | (1.2 | ) | (0.5 | ) | ||||||||
Net unrealized gain on available for sale securities | 0.6 | 0.5 | 1.9 | 0.8 | ||||||||||||
Reclassification of unrealized gain upon sale of available for sale securities3 | (0.5 | ) | (0.3 | ) | (2.1 | ) | (0.3 | ) | ||||||||
Less: income tax benefit2 | 0.2 | 0.1 | 0.8 | 0.1 | ||||||||||||
Net unrealized gain reclassified from AOCI to Net income | (0.3 | ) | (0.2 | ) | (1.3 | ) | (0.2 | ) | ||||||||
Other comprehensive income, net of tax | 0.3 | 0.3 | 0.6 | 0.6 | ||||||||||||
Ending balance | $ | 1.4 | $ | 0.5 | $ | 1.4 | $ | 0.5 | ||||||||
Other: | ||||||||||||||||
Beginning balance | $ | — | $ | (0.3 | ) | $ | (0.4 | ) | $ | (0.3 | ) | |||||
Unrealized gain | 1.1 | 0.1 | 1.4 | 0.2 | ||||||||||||
Less: income tax expense | (0.4 | ) | — | (0.5 | ) | (0.1 | ) | |||||||||
Net gain | 0.7 | 0.1 | 0.9 | 0.1 | ||||||||||||
Gain reclassified from AOCI to Net income | (0.3 | ) | — | — | — | |||||||||||
Less: income tax benefit2 | 0.1 | — | — | — | ||||||||||||
Net gain reclassified from AOCI to Net income | (0.2 | ) | — | — | — | |||||||||||
Other comprehensive income, net of tax | 0.5 | 0.1 | 0.9 | 0.1 | ||||||||||||
Ending balance | $ | 0.5 | $ | (0.2 | ) | $ | 0.5 | $ | (0.2 | ) | ||||||
Total AOCI ending balance | $ | (32.7 | ) | $ | (28.8 | ) | $ | (32.7 | ) | $ | (28.8 | ) |
The following condensed consolidating financial information as of
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Income taxes paid: |
|
|
|
|
|
|
|
|
Domestic |
| $ | 0.1 |
|
| $ | 0.1 |
|
Foreign |
|
| 0 |
|
|
| 0.3 |
|
Total income taxes paid |
| $ | 0.1 |
|
| $ | 0.4 |
|
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 70.7 | $ | 3.2 | $ | — | $ | 73.9 | ||||||||||
Short-term investments | — | 191.4 | — | — | 191.4 | |||||||||||||||
Receivables: | ||||||||||||||||||||
Trade receivables, net | — | 133.1 | 5.1 | — | 138.2 | |||||||||||||||
Intercompany loans receivable | 55.6 | 0.1 | 0.6 | (56.3 | ) | — | ||||||||||||||
Other | — | 14.6 | 0.8 | — | 15.4 | |||||||||||||||
Inventories | — | 208.5 | 8.6 | (4.9 | ) | 212.2 | ||||||||||||||
Prepaid expenses and other current assets | 0.1 | 31.0 | 0.4 | — | 31.5 | |||||||||||||||
Total current assets | 55.7 | 649.4 | 18.7 | (61.2 | ) | 662.6 | ||||||||||||||
Investments in and advances to subsidiaries | 1,107.0 | 41.9 | — | (1,148.9 | ) | — | ||||||||||||||
Property, plant and equipment, net | — | 527.6 | 30.2 | — | 557.8 | |||||||||||||||
Long-term intercompany loans receivable | — | — | 10.5 | (10.5 | ) | — | ||||||||||||||
Deferred tax assets, net | — | 113.9 | — | 4.8 | 118.7 | |||||||||||||||
Intangible assets, net | — | 25.3 | — | — | 25.3 | |||||||||||||||
Goodwill | — | 18.8 | — | — | 18.8 | |||||||||||||||
Other assets | — | 39.5 | — | — | 39.5 | |||||||||||||||
Total | $ | 1,162.7 | $ | 1,416.4 | $ | 59.4 | $ | (1,215.8 | ) | $ | 1,422.7 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 1.4 | $ | 86.8 | $ | 6.2 | $ | — | $ | 94.4 | ||||||||||
Intercompany loans payable | — | 56.2 | 0.1 | (56.3 | ) | — | ||||||||||||||
Accrued salaries, wages and related expenses | — | 37.2 | 1.8 | — | 39.0 | |||||||||||||||
Other accrued liabilities | 8.3 | 41.0 | 1.1 | (7.1 | ) | 43.3 | ||||||||||||||
Total current liabilities | 9.7 | 221.2 | 9.2 | (63.4 | ) | 176.7 | ||||||||||||||
Net liabilities of Salaried VEBA | — | 27.8 | — | — | 27.8 | |||||||||||||||
Deferred tax liabilities | — | — | 3.3 | — | 3.3 | |||||||||||||||
Long-term intercompany loans payable | — | 10.5 | — | (10.5 | ) | — | ||||||||||||||
Long-term liabilities | — | 59.3 | 2.6 | — | 61.9 | |||||||||||||||
Long-term debt | 369.4 | — | — | — | 369.4 | |||||||||||||||
Total liabilities | 379.1 | 318.8 | 15.1 | (73.9 | ) | 639.1 | ||||||||||||||
Total stockholders' equity | 783.6 | 1,097.6 | 44.3 | (1,141.9 | ) | 783.6 | ||||||||||||||
Total | $ | 1,162.7 | $ | 1,416.4 | $ | 59.4 | $ | (1,215.8 | ) | $ | 1,422.7 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 52.9 | $ | 2.3 | $ | — | $ | 55.2 | ||||||||||
Short-term investments | — | 231.0 | — | — | 231.0 | |||||||||||||||
Receivables: | ||||||||||||||||||||
Trade receivables, net | — | 133.1 | 4.6 | — | 137.7 | |||||||||||||||
Intercompany receivables | 85.8 | 0.1 | 0.6 | (86.5 | ) | — | ||||||||||||||
Other | — | 11.4 | 0.5 | — | 11.9 | |||||||||||||||
Inventories | — | 197.5 | 8.0 | (3.9 | ) | 201.6 | ||||||||||||||
Prepaid expenses and other current assets | 0.1 | 18.0 | 0.9 | (0.5 | ) | 18.5 | ||||||||||||||
Total current assets | 85.9 | 644.0 | 16.9 | (90.9 | ) | 655.9 | ||||||||||||||
Investments in and advances to subsidiaries | 1,012.4 | 40.1 | — | (1,052.5 | ) | — | ||||||||||||||
Property, plant and equipment, net | — | 499.5 | 31.4 | — | 530.9 | |||||||||||||||
Long-term intercompany receivables | 80.2 | — | 4.9 | (85.1 | ) | — | ||||||||||||||
Deferred tax assets, net | — | 154.9 | — | 4.8 | 159.7 | |||||||||||||||
Intangible assets, net | — | 26.4 | — | — | 26.4 | |||||||||||||||
Goodwill | — | 37.2 | — | — | 37.2 | |||||||||||||||
Other assets | — | 33.4 | — | — | 33.4 | |||||||||||||||
Total | $ | 1,178.5 | $ | 1,435.5 | $ | 53.2 | $ | (1,223.7 | ) | $ | 1,443.5 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 2.2 | $ | 68.9 | $ | 4.7 | $ | — | $ | 75.8 | ||||||||||
Intercompany payable | — | 86.4 | 0.1 | (86.5 | ) | — | ||||||||||||||
Accrued salaries, wages and related expenses | — | 47.2 | 1.9 | — | 49.1 | |||||||||||||||
Other accrued liabilities | 2.9 | 52.6 | (0.7 | ) | (14.7 | ) | 40.1 | |||||||||||||
Total current liabilities | 5.1 | 255.1 | 6.0 | (101.2 | ) | 165.0 | ||||||||||||||
Net liabilities of Salaried VEBA | — | 28.6 | — | — | 28.6 | |||||||||||||||
Deferred tax liabilities | — | — | 3.3 | — | 3.3 | |||||||||||||||
Long-term intercompany payable | — | 85.1 | — | (85.1 | ) | — | ||||||||||||||
Long-term liabilities | — | 70.5 | 2.7 | — | 73.2 | |||||||||||||||
Long-term debt | 368.7 | — | — | — | 368.7 | |||||||||||||||
Total liabilities | 373.8 | 439.3 | 12.0 | (186.3 | ) | 638.8 | ||||||||||||||
Total stockholders' equity | 804.7 | 996.2 | 41.2 | (1,037.4 | ) | 804.7 | ||||||||||||||
Total | $ | 1,178.5 | $ | 1,435.5 | $ | 53.2 | $ | (1,223.7 | ) | $ | 1,443.5 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 325.9 | $ | 26.3 | $ | (19.4 | ) | $ | 332.8 | |||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization and other items | — | 261.6 | 24.0 | (18.4 | ) | 267.2 | ||||||||||||||
Unrealized gain on derivative instruments | — | (10.8 | ) | — | — | (10.8 | ) | |||||||||||||
Depreciation and amortization | — | 9.7 | 0.5 | — | 10.2 | |||||||||||||||
Selling, general, administrative, research and development: | ||||||||||||||||||||
Selling, general, administrative, research and development | 1.0 | 23.5 | 0.8 | (0.6 | ) | 24.7 | ||||||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | — | 1.2 | — | — | 1.2 | |||||||||||||||
Loss on removal of Union VEBA net assets | — | 0.5 | — | — | 0.5 | |||||||||||||||
Total selling, general, administrative, research and development | 1.0 | 25.2 | 0.8 | (0.6 | ) | 26.4 | ||||||||||||||
Total costs and expenses | 1.0 | 285.7 | 25.3 | (19.0 | ) | 293.0 | ||||||||||||||
Operating (loss) income | (1.0 | ) | 40.2 | 1.0 | (0.4 | ) | 39.8 | |||||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest expense | (5.0 | ) | (0.4 | ) | — | 0.1 | (5.3 | ) | ||||||||||||
Other income, net | — | 1.3 | 0.3 | (0.1 | ) | 1.5 | ||||||||||||||
(Loss) income before income taxes | (6.0 | ) | 41.1 | 1.3 | (0.4 | ) | 36.0 | |||||||||||||
Income tax provision | — | (18.0 | ) | (0.4 | ) | 2.3 | (16.1 | ) | ||||||||||||
Earnings in equity of subsidiaries | 25.9 | 0.6 | — | (26.5 | ) | — | ||||||||||||||
Net income | $ | 19.9 | $ | 23.7 | $ | 0.9 | $ | (24.6 | ) | $ | 19.9 | |||||||||
Comprehensive income | $ | 21.5 | $ | 25.3 | $ | 0.9 | $ | (26.2 | ) | $ | 21.5 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 1,019.7 | $ | 85.4 | $ | (60.7 | ) | $ | 1,044.4 | |||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization and other items | — | 805.8 | 75.0 | (58.1 | ) | 822.7 | ||||||||||||||
Unrealized gain on derivative instruments | — | (14.0 | ) | — | — | (14.0 | ) | |||||||||||||
Depreciation and amortization | — | 27.7 | 1.6 | — | 29.3 | |||||||||||||||
Selling, general, administrative, research and development: | ||||||||||||||||||||
Selling, general, administrative, research and development | 3.4 | 67.2 | 5.7 | (1.6 | ) | 74.7 | ||||||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | — | 3.4 | — | — | 3.4 | |||||||||||||||
Gain on removal of Union VEBA net assets | — | (0.8 | ) | — | — | (0.8 | ) | |||||||||||||
Total selling, general, administrative, research and development | 3.4 | 69.8 | 5.7 | (1.6 | ) | 77.3 | ||||||||||||||
Goodwill impairment | — | 18.4 | — | — | 18.4 | |||||||||||||||
Total costs and expenses | 3.4 | 907.7 | 82.3 | (59.7 | ) | 933.7 | ||||||||||||||
Operating (loss) income | (3.4 | ) | 112.0 | 3.1 | (1.0 | ) | 110.7 | |||||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest expense | (15.3 | ) | (1.2 | ) | — | 0.1 | (16.4 | ) | ||||||||||||
Other income, net | — | 2.7 | 0.5 | (0.1 | ) | 3.1 | ||||||||||||||
(Loss) income before income taxes | (18.7 | ) | 113.5 | 3.6 | (1.0 | ) | 97.4 | |||||||||||||
Income tax provision | — | (43.0 | ) | (0.9 | ) | 7.1 | (36.8 | ) | ||||||||||||
Earnings in equity of subsidiaries | 79.3 | 1.8 | — | (81.1 | ) | — | ||||||||||||||
Net income | $ | 60.6 | $ | 72.3 | $ | 2.7 | $ | (75.0 | ) | $ | 60.6 | |||||||||
Comprehensive income | $ | 64.6 | $ | 76.3 | $ | 2.7 | $ | (79.0 | ) | $ | 64.6 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 313.9 | $ | 26.6 | $ | (19.9 | ) | $ | 320.6 | |||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization and other items | — | 250.0 | 23.7 | (19.0 | ) | 254.7 | ||||||||||||||
Unrealized gain on derivative instruments | — | (2.0 | ) | — | — | (2.0 | ) | |||||||||||||
Depreciation and amortization | — | 8.5 | 0.5 | — | 9.0 | |||||||||||||||
Selling, general, administrative, research and development: | ||||||||||||||||||||
Selling, general, administrative, research and development | 0.9 | 24.0 | 1.3 | (0.6 | ) | 25.6 | ||||||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | — | 0.8 | — | — | 0.8 | |||||||||||||||
Total selling, general, administrative, research and development | 0.9 | 24.8 | 1.3 | (0.6 | ) | 26.4 | ||||||||||||||
Other operating charges, net | — | 2.7 | — | — | 2.7 | |||||||||||||||
Total costs and expenses | 0.9 | 284.0 | 25.5 | (19.6 | ) | 290.8 | ||||||||||||||
Operating (loss) income | (0.9 | ) | 29.9 | 1.1 | (0.3 | ) | 29.8 | |||||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest (expense) income | (5.7 | ) | 0.1 | — | 0.1 | (5.5 | ) | |||||||||||||
Other (expense) income, net | (0.1 | ) | 0.1 | 0.1 | (0.1 | ) | — | |||||||||||||
(Loss) income before income taxes | (6.7 | ) | 30.1 | 1.2 | (0.3 | ) | 24.3 | |||||||||||||
Income tax provision | — | (11.6 | ) | (0.3 | ) | 2.5 | (9.4 | ) | ||||||||||||
Earnings in equity of subsidiaries | 21.6 | 0.7 | — | (22.3 | ) | — | ||||||||||||||
Net income | $ | 14.9 | $ | 19.2 | $ | 0.9 | $ | (20.1 | ) | $ | 14.9 | |||||||||
Comprehensive income | $ | 16.0 | $ | 20.3 | $ | 0.9 | $ | (21.2 | ) | $ | 16.0 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 976.9 | $ | 80.6 | $ | (58.8 | ) | $ | 998.7 | |||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization and other items | — | 753.1 | 70.3 | (56.3 | ) | 767.1 | ||||||||||||||
Lower of cost or market inventory write-down | — | 4.9 | — | — | 4.9 | |||||||||||||||
Unrealized gain on derivative instruments | — | (16.9 | ) | — | — | (16.9 | ) | |||||||||||||
Depreciation and amortization | — | 25.2 | 1.5 | — | 26.7 | |||||||||||||||
Selling, general, administrative, research and development: | ||||||||||||||||||||
Selling, general, administrative, research and development | 3.3 | 71.4 | 6.5 | (2.0 | ) | 79.2 | ||||||||||||||
Net periodic postretirement benefit cost relating to Salaried VEBA | — | 2.5 | — | — | 2.5 | |||||||||||||||
Gain on removal of Union VEBA net assets | — | (0.1 | ) | — | — | (0.1 | ) | |||||||||||||
Total selling, general, administrative, research and development | 3.3 | 73.8 | 6.5 | (2.0 | ) | 81.6 | ||||||||||||||
Other operating charges, net | — | 2.8 | — | — | 2.8 | |||||||||||||||
Total costs and expenses | 3.3 | 842.9 | 78.3 | (58.3 | ) | 866.2 | ||||||||||||||
Operating (loss) income | (3.3 | ) | 134.0 | 2.3 | (0.5 | ) | 132.5 | |||||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest (expense) income | (15.9 | ) | 1.1 | — | 0.1 | (14.7 | ) | |||||||||||||
Other (expense) income, net | (11.1 | ) | 0.6 | 0.2 | (0.1 | ) | (10.4 | ) | ||||||||||||
(Loss) income before income taxes | (30.3 | ) | 135.7 | 2.5 | (0.5 | ) | 107.4 | |||||||||||||
Income tax provision | — | (51.1 | ) | (0.7 | ) | 11.6 | (40.2 | ) | ||||||||||||
Earnings in equity of subsidiaries | 97.5 | 1.3 | — | (98.8 | ) | — | ||||||||||||||
Net income | $ | 67.2 | $ | 85.9 | $ | 1.8 | $ | (87.7 | ) | $ | 67.2 | |||||||||
Comprehensive income | $ | 70.1 | $ | 88.7 | $ | 1.9 | $ | (90.6 | ) | $ | 70.1 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (12.8 | ) | $ | 137.4 | $ | 6.9 | $ | — | $ | 131.5 | |||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Capital expenditures | — | (55.7 | ) | (0.4 | ) | — | (56.1 | ) | ||||||||||||
Purchase of available for sale securities | — | (196.0 | ) | — | — | (196.0 | ) | |||||||||||||
Proceeds from disposition of available for sale securities | — | 237.2 | — | — | 237.2 | |||||||||||||||
Proceeds from disposal of property, plant and equipment | — | 0.6 | — | — | 0.6 | |||||||||||||||
Intercompany loans receivable | 110.4 | — | (5.6 | ) | (104.8 | ) | — | |||||||||||||
Net cash provided by (used in) investing activities | 110.4 | (13.9 | ) | (6.0 | ) | (104.8 | ) | (14.3 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Repayment of capital lease | — | (0.2 | ) | — | — | (0.2 | ) | |||||||||||||
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares | (4.5 | ) | — | — | — | (4.5 | ) | |||||||||||||
Repurchase of common stock | (66.7 | ) | — | — | — | (66.7 | ) | |||||||||||||
Cash dividends and dividend equivalents paid | (26.4 | ) | — | — | — | (26.4 | ) | |||||||||||||
Intercompany loans payable | — | (104.8 | ) | — | 104.8 | — | ||||||||||||||
Net cash used in financing activities | (97.6 | ) | (105.0 | ) | — | 104.8 | (97.8 | ) | ||||||||||||
Net increase in cash, cash equivalents and restricted cash during the period | — | 18.5 | 0.9 | — | 19.4 | |||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 65.1 | 2.6 | — | 67.7 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 83.6 | $ | 3.5 | $ | — | $ | 87.1 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||
Net cash provided by operating activities | $ | 189.7 | $ | 109.3 | $ | 8.4 | $ | (200.0 | ) | $ | 107.4 | |||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||
Capital expenditures | — | (55.6 | ) | (1.8 | ) | — | (57.4 | ) | ||||||||||||||
Purchase of available for sale securities | — | (201.1 | ) | — | — | (201.1 | ) | |||||||||||||||
Proceeds from disposition of available for sale securities | — | 30.0 | — | — | 30.0 | |||||||||||||||||
Intercompany loans receivable1 | (205.6 | ) | 106.0 | (3.7 | ) | 103.3 | — | |||||||||||||||
Net cash (used in) provided by in investing activities | (205.6 | ) | (120.7 | ) | (5.5 | ) | 103.3 | (228.5 | ) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Repayment of principal and redemption premium of 8.25% Senior Notes | (206.0 | ) | — | — | — | (206.0 | ) | |||||||||||||||
Issuance of 5.875% Senior Notes | 375.0 | — | — | — | 375.0 | |||||||||||||||||
Cash paid for debt issuance costs | (6.8 | ) | — | — | — | (6.8 | ) | |||||||||||||||
Proceeds from stock option exercises | 1.0 | — | — | — | 1.0 | |||||||||||||||||
Repayment of capital lease | — | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||||
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares | (2.8 | ) | — | — | — | (2.8 | ) | |||||||||||||||
Repurchase of common stock | (13.6 | ) | — | — | — | (13.6 | ) | |||||||||||||||
Cash dividends and dividend equivalents paid | (24.4 | ) | — | — | — | (24.4 | ) | |||||||||||||||
Cash dividends paid to Parent | — | (200.0 | ) | — | 200.0 | — | ||||||||||||||||
Intercompany loans payable1 | (106.5 | ) | 209.3 | 0.5 | (103.3 | ) | — | |||||||||||||||
Net cash provided by financing activities | 15.9 | 9.3 | 0.4 | — | 96.7 | — | 122.3 | |||||||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash during the period | — | (2.1 | ) | 3.3 | — | 1.2 | ||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 83.0 | 0.7 | — | 83.7 | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 80.9 | $ | 4.0 | $ | — | $ | 84.9 |
13. Subsequent Events
Dividend Declaration
Revolving Credit Facility Amendment. On April 7, 2022, we entered into the Amendment No. 3 to our Revolving Credit Facility (as amended, the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, the administrative agent, and the other financial institutions party thereto. The Amended Credit Agreement among others: (i) increased the commitment from $375.0 million to $575.0 million (of which up to a maximum of $50 million may be utilized for letters of credit); (ii) extended the maturity date from the earlier of (a) February 15, 2024 (if certain conditions were met) and (b) October 25, 2017.
The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as follows (in millions of dollars):
|
| Pro Forma as of March 31, 20221 |
|
| As of December 31, 2021 |
| ||
Revolving Credit Facility borrowing commitment |
| $ | 575.0 |
|
| $ | 375.0 |
|
Borrowing base availability |
| $ | 575.0 |
|
| $ | 375.0 |
|
Less: Outstanding borrowings under Revolving Credit Facility |
|
| 0 |
|
|
| 0 |
|
Less: Outstanding letters of credit under Revolving Credit Facility |
|
| (12.5 | ) |
|
| (7.7 | ) |
Remaining borrowing availability |
| $ | 562.5 |
|
| $ | 367.3 |
|
1 | Represents borrowing base calculated as if the agreement was in effect at March 31, 2022. |
Item 2.
ManagementForward-Looking Statements
This Item should be read in conjunction with Part I, Item 1.
The following discussion and analysis of our financial condition and results of operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:
Non-GAAP Financial Measures
This information contains certain non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in the statements of income, balance sheets or statements of cash flows of the company. We have provided a reconciliation of non‑GAAP financial measures to the most directly comparable financial measure in the accompanying tables. We have also provided discussion of the reasons we believe that presentation of the non-GAAP financial measures provide useful information to investors, as well as any additional ways in which we use the non-GAAP financial measures. The non-GAAP financial measures used in the following discussions are value added revenue (“VAR”), adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and ratios related thereto. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors.
In the discussion of operating results below, we refer to certain items as non-run-rate“non-run-rate items.” For purposes of such discussion, non-run-rate items are items that, while they may recur from period-to-period: (i) are particularly material to results; (ii) affect costs primarily as a result of external market factors; and (iii) may not recur in future periods if the same level of underlying performance were to occur. Non-run-rate items are part of our business and operating environment but are worthy of being highlighted for the benefit of readers of our financial statements. Our intent is to allow users of the financial statements to consider our results both in light of and separately from items such as unrealized mark-to-market gains or losses on derivatives related to fluctuations in underlying metal and energy prices and currency exchange rates, lower of cost or market inventory write-downs, non-cash impairments, the impact of discount rate changes on workers' compensation liabilities, legacy environmental expenses related to predecessor operations and gains or losses related to the voluntary employee beneficiary associations ("VEBAs").items. For a reconciliation of operatingAdjusted EBITDA to Net income, (loss) excluding non-run-rate items to operating income (loss), see "Results“Results of Operations -
Metal Pricing Policies
A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby earning profit predominately from the conversion of aluminum into semi-fabricated mill products. We refer to this as metal“metal price neutrality.” We purchase primary and scrap, or recycled, aluminum, our main raw material, and alloys at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying cost of metal aluminum and alloys
through to our customers so that we remain neutral to metal pricing. ForHowever, for some of our higher value added revenueVAR products sold on a spot basis,
Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying metal price of primary and scrap, or recycled, aluminum, our main raw material, and alloys so that our earnings are predominantly associated with the conversion of aluminum to semi-fabricatedsemi‑fabricated mill products. To allow users of our financial statements to consider the impact of metalaluminum and alloy cost on our Net sales, we disclose Net sales as well as value added revenue,VAR, which is Net sales less the Hedged Cost of Alloyed Metal. The HedgedAs used in this discussion, “Hedged Cost of Alloyed MetalMetal” is the cost of our metal inputsaluminum at the average Midwest Transaction Price of aluminum ("(“Midwest Price"Price”) plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period. The average Midwest Price of aluminum reflects supply and the primary aluminum supply/demand dynamics for primary aluminum in North America. For a reconciliation of value added revenueVAR to Net sales, see "Results“Results of Operations - SegmentSelected Operational and Financial Information” below.
Business Unit Information" below.
We manufacture and sell semi-fabricated specialty aluminum mill products for the following end market applications: (i) aerospace and high strength ("(“Aero/HS products"products”); (ii) aluminum beverage and food packaging (“Packaging”); (iii) automotive ("(“Automotive Extrusions"Extrusions”); (iv) general engineering ("(“GE products"products”); and (v) other industrial ("(“Other products"products”). Our fabricated aluminum mill products include flat-rolled (plate, sheet and sheet)coil), extruded (rod, bar, hollows and shapes), drawn (rod, bar, pipe, tube and wire) and certain cast aluminum products. The sophistication of our products is due to the metallurgy and physical properties of the metal and the special characteristics that are required for particular end uses. We strategically choose to serve technically challenging applications for which we can deploy our core metallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us to receive premium pricing and to create long-term profitable growth.
With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higher strength and other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolled heat treat plate and sheet, which are produced at our rolling mill in Spokane, Washington (“Trentwood”), are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America). Similarly,On March 31, 2021, with the completion of our acquisition of Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, “Warrick”), we expanded our flat-rolled aluminum products to include bare and coated aluminum coil for can stock applications in the beverage and food packaging industry in North America. Our Packaging products require demanding attributes and can be further processed to include coating and slitting depending on customer specifications.
In the areas of aluminum extrusions, we focus on demanding Aero/HS products, Automotive Extrusions and GE products that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise, strong production capability and high product quality. We primarily serve North American demand for extruded mill products.
We have long-standing relationships with our customers, which consist primarily of blue-chip companies including leading aerospace and automotive manufacturers, tier one aerospace and automotive suppliers, food and beverage packaging manufacturers and metal service centers. Approximately 50%As of March 31, 2022, approximately 72% of our shipments ishas been sold direct to the manufacturers or tier one suppliers and approximately 50% is28% has been sold to metal service centers. In our served markets, we seek to be the supplier of choice by pursuing "Best“Best in Class"Class” customer satisfaction driven by quality, availability, service and delivery performance. We strive tobelieve we differentiate our product portfolio through our broad product offering and our KaiserSelect
Highlights of the quarter ended September 30, 2017March 31, 2022 include:
• | Strong demand for GE products and Packaging; |
• | Steadily increasing demand for Aero/HS products; |
• | Flat demand for Automotive Extrusions due to continued shortage of semiconductor chips; |
• | Higher freight costs due to rail and port shipping constraints; |
• | Lingering supply chain issues related to metal and magnesium impacted results; and |
• | Cash dividends and dividend equivalents of $0.77 per share or $12.5 million paid during the quarter ended March 31, 2022. |
Results of Operations
Consolidated Results of Operations
Net Sales.
Net sales totaledCost of Products Sold, Excluding Depreciation and Amortization and Other Items.
Cost of products sold, excluding depreciation and amortization and other items for the quarter endedSelling, General, Administrative, Research and Development (“SG&A and R&D”). SG&A and R&D expense totaled $30.2 million and $31.8 million for the quarters ended September 30, 2017March 31, 2022 and September 30, 2016.
Restructuring Cost or Market Inventory Write-Down
Interest Expense. Interest expense represents cash and non-cash interest expense incurred on our unsecured senior notes and our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”), net of capitalized interest. Interest expense was $12.2 million and $12.3 million for the quarters ended March 31, 2022 and March 31, 2021, respectively. See Note 15 of Notes to Interim Consolidated Financial Statements included in this Report for information ona discussion of our inventory lower of cost or market value adjustments.
Other Expense, Net. See Note 68 of Notes to Interim Consolidated Financial Statements included in this Report for disclosure regarding the Salaried VEBA and net periodic postretirement benefit cost relating thereto.
Income Tax (Provision) Benefit.See Note 4 of Notes to Interim Consolidated Financial Statements included in this Report for details.
Selected Operational and Business UnitFinancial Information
The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in Part I, Item 1. "Financial Statements"“Financial Statements” of this Report. See Note 11 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding segments. Interim results are not necessarily indicative of those for a full year.
The table below provides selected operational and financial information for our Fabricated Products segment for each period presented (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net income |
| $ | 8.1 |
|
| $ | 4.5 |
|
Interest expense |
|
| 12.2 |
|
|
| 12.3 |
|
Other expense, net |
|
| 1.6 |
|
|
| 0.4 |
|
Income tax provision (benefit) |
|
| 3.3 |
|
|
| (0.3 | ) |
Depreciation and amortization |
|
| 27.5 |
|
|
| 13.5 |
|
Non-run-rate items: |
|
|
|
|
|
|
|
|
Restructuring cost (benefit) |
|
| — |
|
|
| (0.7 | ) |
Adjustments to plant-level LIFO1 |
|
| 2.7 |
|
|
| (2.9 | ) |
Mark-to-market gain on derivative instruments2 |
|
| (1.0 | ) |
|
| (0.3 | ) |
Acquisition costs3 |
|
| 0.6 |
|
|
| 11.0 |
|
Total non-run-rate items |
|
| 2.3 |
|
|
| 7.1 |
|
Adjusted EBITDA |
| $ | 55.0 |
|
| $ | 37.5 |
|
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Segment operating income | $ | 53.7 | $ | 42.1 | $ | 149.9 | $ | 172.1 | |||||||
Impact to segment operating income of non-run-rate items: | |||||||||||||||
Adjustments to plant-level LIFO1 | (2.0 | ) | (4.1 | ) | (3.9 | ) | (2.2 | ) | |||||||
Mark-to-market gain on derivative instruments | 10.8 | 2.0 | 14.0 | 16.9 | |||||||||||
Non-cash lower of cost or market inventory write-down2 | — | — | — | (4.9 | ) | ||||||||||
Workers' compensation cost due to discounting | 0.1 | (0.1 | ) | (0.1 | ) | — | |||||||||
Goodwill impairment3 | — | — | (18.4 | ) | — | ||||||||||
Asset impairment charges3 | — | (2.7 | ) | — | (2.8 | ) | |||||||||
Environmental expenses | (0.2 | ) | — | (0.2 | ) | — | |||||||||
Total non-run-rate items | 8.7 | (4.9 | ) | (8.6 | ) | 7.0 | |||||||||
Segment operating income excluding non-run-rate items | $ | 45.0 | $ | 47.0 | $ | 158.5 | $ | 165.1 |
1 | We manage our |
2 | Mark-to-market gain on derivative instruments represented: (i) for 2022 and 2021, the gain on non-designated commodity hedges and (ii) for 2021, the reversal of |
3 | Acquisition costs are non-run-rate acquisition-related transaction costs, which include professional fees, as well non‑cash hedging charges recorded in connection with our |
Adjusted EBITDA for the quarter ended September 30, 2017March 31, 2022 was $2.0$17.5 million lowerhigher than segment operating income excluding such itemsAdjusted EBITDA for the quarter ended September 30, 2016. LowerMarch 31, 2021. Adjusted EBITDA for the quarter ended March 31, 2022 reflected the addition of Packaging and improvement in Aero/HS products and GE products, partially offset by higher costs, supply chain challenges and operating income excluding non-run-rate items reflected: (i) a $10.2 million unfavorable sales impact due primarily to a leaner product mix and lower sales margins,inefficiencies as discussed above and (ii) $1.3 millionin “Consolidated Results of higher depreciation and amortization expense, partially offset by: (i) a $3.3 million improvement from favorable price spreads for scrap raw material purchases; (ii) $1.3 million of lower planned major maintenance expense; and (iii) a $4.8 million improvement in net manufacturing conversion and other costs.
The following table below provides our Fabricated Products segment shipment and value added revenueVAR information (in millions of dollars, except shipments and value added revenueVAR per pound) by end market applications for each period presented:applications:
|
| Quarter Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||
Aero/HS Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 45.5 |
|
| 36.1 |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 176.6 |
|
| $ | 3.88 |
|
| $ | 111.7 |
|
| $ | 3.09 |
|
Less: Hedged Cost of Alloyed Metal |
|
| (81.3 | ) |
|
| (1.79 | ) |
|
| (40.9 | ) |
|
| (1.13 | ) |
VAR |
| $ | 95.3 |
|
| $ | 2.09 |
|
| $ | 70.8 |
|
| $ | 1.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Packaging: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 174.7 |
|
| — |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 448.0 |
|
| $ | 2.56 |
|
| $ | — |
|
| $ | — |
|
Less: Hedged Cost of Alloyed Metal |
|
| (301.8 | ) |
|
| (1.72 | ) |
|
| — |
|
|
| — |
|
VAR |
| $ | 146.2 |
|
| $ | 0.84 |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive Extrusions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 23.3 |
|
| 27.2 |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 63.8 |
|
| $ | 2.74 |
|
| $ | 57.6 |
|
| $ | 2.12 |
|
Less: Hedged Cost of Alloyed Metal |
|
| (40.2 | ) |
|
| (1.73 | ) |
|
| (29.9 | ) |
|
| (1.10 | ) |
VAR |
| $ | 23.6 |
|
| $ | 1.01 |
|
| $ | 27.7 |
|
| $ | 1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GE Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 87.6 |
|
| 71.2 |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 251.2 |
|
| $ | 2.87 |
|
| $ | 150.4 |
|
| $ | 2.11 |
|
Less: Hedged Cost of Alloyed Metal |
|
| (149.1 | ) |
|
| (1.70 | ) |
|
| (78.9 | ) |
|
| (1.11 | ) |
VAR |
| $ | 102.1 |
|
| $ | 1.17 |
|
| $ | 71.5 |
|
| $ | 1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Products: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 4.3 |
|
| 2.4 |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 9.2 |
|
| $ | 2.14 |
|
| $ | 4.3 |
|
| $ | 1.79 |
|
Less: Hedged Cost of Alloyed Metal |
|
| (6.0 | ) |
|
| (1.40 | ) |
|
| (2.6 | ) |
|
| (1.08 | ) |
VAR |
| $ | 3.2 |
|
| $ | 0.74 |
|
| $ | 1.7 |
|
| $ | 0.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipments (mmlbs) |
| 335.4 |
|
| 136.9 |
| ||||||||||
|
| $ |
|
| $ / lb |
|
| $ |
|
| $ / lb |
| ||||
Net sales |
| $ | 948.8 |
|
| $ | 2.83 |
|
| $ | 324.0 |
|
| $ | 2.37 |
|
Less: Hedged Cost of Alloyed Metal |
|
| (578.4 | ) |
|
| (1.73 | ) |
|
| (152.3 | ) |
|
| (1.12 | ) |
VAR |
| $ | 370.4 |
|
| $ | 1.10 |
|
| $ | 171.7 |
|
| $ | 1.25 |
|
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||||||
Aero/HS Products: | |||||||||||||||||||||||||||||||
Shipments (mmlbs) | 53.4 | 55.5 | 172.8 | 179.2 | |||||||||||||||||||||||||||
$ | $ / lb | $ | $ / lb | $ | $ / lb | $ | $ / lb | ||||||||||||||||||||||||
Net sales | $ | 150.2 | $ | 2.81 | $ | 156.1 | $ | 2.81 | $ | 483.2 | $ | 2.80 | $ | 500.7 | $ | 2.79 | |||||||||||||||
Less: Hedged Cost of Alloyed Metal | (51.8 | ) | (0.97 | ) | (47.5 | ) | (0.85 | ) | (162.7 | ) | (0.95 | ) | (152.7 | ) | (0.85 | ) | |||||||||||||||
Value added revenue | $ | 98.4 | $ | 1.84 | $ | 108.6 | $ | 1.96 | $ | 320.5 | $ | 1.85 | $ | 348.0 | $ | 1.94 | |||||||||||||||
Automotive Extrusions: | |||||||||||||||||||||||||||||||
Shipments (mmlbs) | 24.5 | 22.6 | 75.9 | 70.8 | |||||||||||||||||||||||||||
$ | $ / lb | $ | $ / lb | $ | $ / lb | $ | $ / lb | ||||||||||||||||||||||||
Net sales | $ | 52.7 | $ | 2.15 | $ | 46.5 | $ | 2.06 | $ | 161.6 | $ | 2.13 | $ | 143.6 | $ | 2.03 | |||||||||||||||
Less: Hedged Cost of Alloyed Metal | (23.8 | ) | (0.97 | ) | (18.9 | ) | (0.84 | ) | (72.9 | ) | (0.96 | ) | (58.0 | ) | (0.82 | ) | |||||||||||||||
Value added revenue | $ | 28.9 | $ | 1.18 | $ | 27.6 | $ | 1.22 | $ | 88.7 | $ | 1.17 | $ | 85.6 | $ | 1.21 | |||||||||||||||
GE Products: | |||||||||||||||||||||||||||||||
Shipments (mmlbs) | 64.1 | 62.8 | 203.1 | 190.5 | |||||||||||||||||||||||||||
$ | $ / lb | $ | $ / lb | $ | $ / lb | $ | $ / lb | ||||||||||||||||||||||||
Net sales | $ | 115.9 | $ | 1.81 | $ | 105.6 | $ | 1.68 | $ | 361.1 | $ | 1.78 | $ | 318.3 | $ | 1.67 | |||||||||||||||
Less: Hedged Cost of Alloyed Metal | (63.3 | ) | (0.99 | ) | (52.6 | ) | (0.84 | ) | (195.9 | ) | (0.97 | ) | (157.9 | ) | (0.83 | ) | |||||||||||||||
Value added revenue | $ | 52.6 | $ | 0.82 | $ | 53.0 | $ | 0.84 | $ | 165.2 | $ | 0.81 | $ | 160.4 | $ | 0.84 | |||||||||||||||
Other Products: | |||||||||||||||||||||||||||||||
Shipments (mmlbs) | 7.6 | 7.4 | 20.9 | 22.1 | |||||||||||||||||||||||||||
$ | $ / lb | $ | $ / lb | $ | $ / lb | $ | $ / lb | ||||||||||||||||||||||||
Net sales | $ | 14.0 | $ | 1.84 | $ | 12.4 | $ | 1.68 | $ | 38.5 | $ | 1.84 | $ | 36.1 | $ | 1.63 | |||||||||||||||
Less: Hedged Cost of Alloyed Metal | (7.4 | ) | (0.97 | ) | (6.2 | ) | (0.84 | ) | (20.3 | ) | (0.97 | ) | (18.1 | ) | (0.82 | ) | |||||||||||||||
Value added revenue | $ | 6.6 | $ | 0.87 | $ | 6.2 | $ | 0.84 | $ | 18.2 | $ | 0.87 | $ | 18.0 | $ | 0.81 | |||||||||||||||
Total: | |||||||||||||||||||||||||||||||
Shipments (mmlbs) | 149.6 | 148.3 | 472.7 | 462.6 | |||||||||||||||||||||||||||
$ | $ / lb | $ | $ / lb | $ | $ / lb | $ | $ / lb | ||||||||||||||||||||||||
Net sales | $ | 332.8 | $ | 2.22 | $ | 320.6 | $ | 2.16 | $ | 1,044.4 | $ | 2.21 | $ | 998.7 | $ | 2.16 | |||||||||||||||
Less: Hedged Cost of Alloyed Metal | (146.3 | ) | (0.97 | ) | (125.2 | ) | (0.84 | ) | (451.8 | ) | (0.96 | ) | (386.7 | ) | (0.84 | ) | |||||||||||||||
Value added revenue | $ | 186.5 | $ | 1.25 | $ | 195.4 | $ | 1.32 | $ | 592.6 | $ | 1.25 | $ | 612.0 | $ | 1.32 |
Outlook
While our 2017 outlook for Automotive Extrusions and GE products remains unchanged, we have lowered the outlook for our Aero/HS products due to constraints on throughput during installation and ramp-up of new equipment and automated controls at Trentwood. For Automotive Extrusions, we continue to expect double-digit year-over-year growthnavigate through an inflationary cost environment and manage supply chain challenges, we remain confident in shipmentsthe initiatives we are taking to further improve manufacturing efficiencies and mid-single-digit growth in value added revenue as new product growth is predominantly in lower value added parts.operating performance. As we have previously noted for our Aero/HS products, we anticipate headwinds from lower sales margins and commercial aerospace supply chain destocking will continue throughlook to the remainder of the year. Whileyear, we had previously anticipatedreiterate our Aero/HS products shipments would be comparable to 2016, we now expect our 2017 Aero/HS shipments will be lower than the prior year due to the slower-than-anticipated Trentwood ramp-up.
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating loss | $ | (13.9 | ) | $ | (12.3 | ) | $ | (39.2 | ) | $ | (39.6 | ) | |||
Impact to operating loss of non-run-rate items: | |||||||||||||||
Net periodic post retirement benefit cost relating to Salaried VEBA | (1.2 | ) | (0.8 | ) | (3.4 | ) | (2.5 | ) | |||||||
(Loss) gain on removal of Union VEBA net assets | (0.5 | ) | — | 0.8 | 0.1 | ||||||||||
Total non-run-rate items | (1.7 | ) | (0.8 | ) | (2.6 | ) | (2.4 | ) | |||||||
Operating loss excluding non-run-rate items | $ | (12.2 | ) | $ | (11.5 | ) | $ | (36.6 | ) | $ | (37.2 | ) |
Liquidity and Capital Resources
Summary
The following table summarizes our liquidity at the dates presented (in millions of dollars):
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||
Available cash and cash equivalents |
| $ | 261.0 |
|
| $ | 303.2 |
|
Borrowing availability under Revolving Credit Facility, net of letters of credit1 |
|
| 562.5 |
|
|
| 367.3 |
|
Total liquidity |
| $ | 823.5 |
|
| $ | 670.5 |
|
1 | Borrowing availability under the Revolving Credit Facility as determined by a borrowing base calculated as of March 31, 2022 using the terms of our amended Revolving Credit Facility (see “Sources of Liquidity” below for discussion of amendment made to our Revolving Credit Facility on April 7, 2022) and December 31, 2021 using the terms of the Revolving Credit Facility in effect as of that date. |
September 30, 2017 | December 31, 2016 | ||||||
Available cash and cash equivalents | $ | 73.9 | $ | 55.2 | |||
Short-term investments | 191.4 | 231.0 | |||||
Net borrowing availability under Revolving Credit Facility after letters of credit | 286.6 | 275.3 | |||||
Total liquidity | $ | 551.9 | $ | 561.5 |
We place our cash in bank deposits and money market funds with high credit quality financial institutions,institutions. Cash equivalents primarily consist of money market funds, which invest primarilyare highly liquid.
See Note 11 of Notes to Interim Consolidated Financial Statements included in commercial paper and time deposits of prime quality, short-term repurchase agreements and U.S. government agency notes. Short-term investments represent holdings in investment-grade commercial paper with a maturity at the time of purchase of greater than 90 days.
There were included in Prepaid expenses and other current assets and Other assets, respectively. From time to time, such restricted funds could be returned to us or we could be required to pledge additional cash.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for each period presented (in millions of dollars):
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Total cash provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities |
| $ | 1.4 |
|
| $ | (11.4 | ) |
Investing activities |
| $ | (28.3 | ) |
| $ | (626.6 | ) |
Financing activities |
| $ | (14.9 | ) |
| $ | (14.5 | ) |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Total cash provided by (used in): | |||||||
Operating activities: | |||||||
Fabricated Products | $ | 194.3 | $ | 158.8 | |||
All Other | (62.8 | ) | (51.4 | ) | |||
Total cash provided by operating activities | $ | 131.5 | $ | 107.4 | |||
Investing activities: | |||||||
Fabricated Products | $ | (55.4 | ) | $ | (57.2 | ) | |
All Other | 41.1 | (171.3 | ) | ||||
Total cash used in investing activities | $ | (14.3 | ) | $ | (228.5 | ) | |
Financing activities: | |||||||
Fabricated Products | $ | (0.2 | ) | $ | (0.1 | ) | |
All Other | (97.6 | ) | 122.4 | ||||
Total cash (used in) provided by financing activities | $ | (97.8 | ) | $ | 122.3 |
Cash provided by operating activities was partially offset by:for the quarter ended March 31, 2022 reflected results of business activity described within “Consolidated Results of Operations” above, as well as the following working capital changes: (i) adjustments for other non-cash items of $11.3 million; (ii) an increase in inventory of $10.6 million; and (iii) an increase in trade and other receivables of $0.9 million.
Cash used in operating activities for the quarter ended March 31, 2021 reflected: (i) an increase in accounts payable of $62.8$33.0 million duringdriven predominantly by the nine months ended September 30, 2017 consisted primarilyvolume of payments relating to: (i) general and administrative costs of $24.2 million;metal purchases; (ii) an annual variable cash contribution to the VEBAsincrease in trade and other receivables of $20.0$31.7 million with respect to the 2016 year;driven primarily by improved Net sales; (iii) our short-term incentive programan increase in the amountinventory of $6.7$24.3 million; and (iv) interestan increase in spending of $11.0 million for acquisition costs, primarily comprised of professional fees.
See Statements of Consolidated Cash Flows included in this Report for further details on the 8.25% Senior Notesour cash flows from operating, investing and Revolving Credit Facility of $11.9 million.
Sources of Liquidity
We believe our available cash and cash equivalents, short-term investments, borrowing availability under the Revolving Credit Facility and funds generated from operations are our most significant sources of liquidity.liquidity, and that our Revolving Credit Facility and unsecured notes have covenants that allow us to operate our business with limited restrictions and significant flexibility for the foreseeable future. While we believe these sources will be sufficient to finance our working capital requirements, planned capital expenditures, and
investments, debt service obligations and other cash requirements for at least the next twelve12 months, and while we also believe that alternative sources of liquidity will remain available in the event we seek to add liquidity for opportunistic or other reasons in the future, our ability to fund such cash requirements will depend upon our future operating performance (which will be affected by prevailing economic conditions) and financial, business and other factors, some of which are beyond our control.
October 16, 2017 | September 30, 2017 | ||||||
Revolving Credit Facility borrowing commitment | $ | 300.0 | $ | 300.0 | |||
Borrowing base availability | $ | 290.9 | $ | 294.4 | |||
Less: Outstanding borrowings under Revolving Credit Facility | — | — | |||||
Less: Outstanding letters of credit under Revolving Credit Facility | (7.8 | ) | (7.8 | ) | |||
Net remaining borrowing availability | $ | 283.1 | $ | 286.6 | |||
Borrowing rate (if applicable)1 | 4.50 | % | 4.50 | % |
We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should we choose to do so during the next 12 months, nor do we believe it is likely that during the next 12 months we will trigger the availability threshold that would require measuring and maintaining a fixed charge coverage ratio.
See Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20162021 for information regardinga description of our Revolving Credit Facility.
We engage in certain customer-based supply chain financing programs to accelerate the receipt of payment for outstanding accounts receivable from certain customers. Costs of these programs are typically reimbursed to us by the customer. Receivables transferred under these customer-based supply chain financing programs generally meet the requirements to be accounted for as sales resulting in the derecognition of such receivables from our consolidated balance sheets. Receivables involved with these customer‑based supply chain finance programs for the quarter ended March 31, 2022 constituted approximately 43% of our net sales. See "Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements –
Debt
See Note 9 of Notes to Consolidated Financial Statements included in Part II, Item 7. "Management's Discussion8. “Financial Statements and Analysis of Financial Condition and Results of Operations"Supplementary Data” in our Annual Report on Form 10-K for the year ended December 31, 20162021 for mandatory principal and cash interest payments on the outstanding borrowings.
We do not believe that covenants in the indentureindentures governing the 5.875%4.50% Senior Notes due 2031 (“4.50% Senior Notes”) and 4.625% Senior Notes due 2028 (“4.625% Senior Notes”) are reasonably likely to limit our ability to obtain additional debt or equity financing should we choose to do so during the next 12 months.
Capital Expenditures and Investments
We strive to strengthen our competitive position across our end markets through strategic capital investment. Significant investments over the past decade have positioned us well with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality and promoting operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment, we strategically allocateenvironment. A significant portion of our capital spending on projectsover the past several years related to maintain and improvethe modernization project at our competitive position. Objectives are to target significant improvement in our manufacturing cost efficiency and product quality. Capacity expansion typically is an additional benefit of most projectsTrentwood facility, which focused on cost and quality.
Our capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining our operations, enhancing product quality and increasing operating efficiencies. We anticipate total capital spending in 2018 and beyond. The Trentwood efficiency and modernization initiative was announced in December 2015 and as2022 of September 30, 2017 approximately half$180.0 million to $200.0 million, of the $150.0 million had been spent.
Capital investmentinvestments will be funded using cash generated from operations, available cash and cash equivalents, short-term investments, borrowings under the Revolving Credit Facility and/or other third-party financing arrangements. The level of anticipated capital expenditures may be adjusted from time to time depending on our business plans, our price outlook for fabricated aluminum products, our ability to maintain adequate liquidity and other factors. No assurance can be provided as to the timing of any such expenditures or the operational benefits expected therefrom.
Dividends
We have consistently paid a quarterly cash dividend since the second quarter of 2007 to holders of our common stock, including holders of restricted stock, and have increased the dividend in each year since 2011. Nevertheless, as in the past, the future declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on a number of factors, including our financial and operating results, financial position and anticipated cash requirements and contractual restrictions under our revolving credit facility,Revolving Credit Facility, the indenture for our 5.875%4.50% Senior Notes and 4.625% Senior Notes or other indebtedness we may incur in the future. We can give no assurance that dividends will be declared and paid in the future. See Note 39 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20162021 for additional information about restrictions on dividend payments contained in the Revolving Credit Facility and in the indenture for our 5.875% Senior Notes.
We also pay quarterly dividend equivalents to the holders of certain restricted stock units and performance shares.units. Holders of performance shares granted beginning in 2014 are not paid a quarterly dividend equivalent, but instead are entitled to receive, in connection with the issuance of underlying shares of common stock for performance shares that ultimately vest, a one-time payment equal to the dividends such holder would have received if the number of such shares of common stock so issued had been held of record by such holder from the date of grant of such performance shares through the date of such issuance.
See our Statements of Common Stock
Repurchases of Common Stock
We suspended share repurchases as of March 18, 2020. We will continue to assess share repurchases as a part of our capital allocation priorities and strategic investment opportunities identified to support further growth in our business.
See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding: (i) repurchases of common stock made during the nine monthsquarters ended September 30, 2017March 31, 2022 and September 30, 2016 andMarch 31, 2021; (ii) the amountsamount authorized and available for future repurchases of common stock under our stock repurchase program.
Environmental Commitments and Contingencies
See Note 86 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding our environmental commitments and contingencies.
Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements
During the nine monthsquarter ended September 30, 2017,March 31, 2022, we granted additional stock-based awards to executive officers and certain members of management and our non-employee directorskey employees under our equity incentive plans (seeplan. Additional awards are expected to be made in future years.
Future commitment fees on our Revolving Credit Facility are calculated based on 0.250% of the unused credit under the facility. Future commitment fees are expected to increase beginning in the quarter ended June 30, 2022 due to the incremental $200.0 million of borrowing capacity associated with our April 7, 2022 Amendment No. 3 of the Revolving Credit Facility. See Note 75 and Note 13 of Notes to Interim Consolidated Financial Statements included in this Report). Additional awards are expected to be made in future years.
Except as otherwise disclosed herein,in this Report, there has been no material change in our contractual obligations, commercial commitments or off-balance sheet arrangements other than in the ordinary course of business since December 31, 2016.2021.
Critical Accounting Estimates and Policies
Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates and such differences could be material.
Our significant accounting policies are discussed in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended
December 31,There have been no other material changes in our critical accounting estimates and policies since December 31, 2016.
New Accounting Pronouncements
For a discussion of recently adopted and recently issued but not yet adopted accounting pronouncements, see "
Available Information
Our website is located at
www.kaiseraluminum.com. The website includes a section for investor relations under which we provide notifications of news or announcements regarding our financial performance, including Securities and Exchange CommissionItem 3.
Quantitative and Qualitative Disclosures About Market RiskThe following quantitative and qualitative disclosures about market risk should be read in conjunction with Note 4 and Note 7 of Notes to Interim Consolidated Financial Statements included in this Report. Our operating results are sensitive to changes in the prices of primary aluminum, certain alloying metals, natural gas, electricity and electricity,foreign currency, and also depend to a significant degree upon the volume and mix of all products sold. As discussed more fully in Note 9 of Notessold to Interim Consolidated Financial Statements included in this Report, wecustomers. We have historically utilized hedging transactions to lock in a specified price or range of prices for certain products which we sell or consume in our production process, and to mitigate our exposure to changes in energy prices.
Aluminum
During the nine monthsquarters ended September 30, 2017March 31, 2022 and September 30, 2016,March 31, 2021, settlements of derivative contracts covering 136.761.3 million pounds and 163.620.3 million pounds, respectively, hedged Fabricated Products shipments sold on pricing terms that created metalaluminum price risk for us. At September 30, 2017,March 31, 2022, we had derivative contracts with respect to approximately 47.1 million pounds, 76.4 million pounds, 24.799.5 million pounds and 1.06.8 million pounds to hedge sales to be made in the remainder of 2017, 2018, 2019,2022 and each of 2020 and 2021,2023, respectively, on pricing terms that create metalaluminum price risk for us.
Based on the aluminum derivative positions held by us to hedge firm-price customer sales agreements, we estimate that a $0.10 per pound decrease in the LMELondon Metal Exchange (“LME”) market price of aluminum as of September 30, 2017March 31, 2022 and December 31, 2016,2021, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $15.0$10.6 million and $14.8$8.0 million, respectively, with corresponding changes to the net fair value of our aluminum derivative positions. Additionally, we estimate that a $0.01$0.05 per pound decrease in the Midwest premium for aluminum as of March 31, 2022 and December 31, 2021, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $1.5$4.6 million asand $4.0 million, respectively, with corresponding changes to the net fair value of both September 30, 2017 and December 31, 2016.our aluminum derivative positions.
Alloying Metals
We are exposed to the risk of fluctuating prices of certain alloying metals, especially copper, zinc and zinc,magnesium, to the extent that changes in their prices do not highly correlate with price changes for aluminum. Copper, zinc, magnesium and certain other metals are used in our remelt operations to cast rolling ingot and extrusion billet with the proper chemistry for our products. From time to time, we enter into forward contract swaps and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in the prices of alloying metals, including copper and zinc.these alloys. As of September 30, 2017,March 31, 2022, we had forward swap contracts with settlement dates designed to align with the timing of scheduled purchases of zinc and copper ("Alloy Hedges") by our manufacturing facilities. Our Alloy Hedges are designated and qualify as cash flow hedges. See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for additional information relating to these Alloy Hedges. We estimate that a $0.10 per pound decrease in the LME market price of zinc as of September 30, 2017March 31, 2022 and December 31, 2016,2021, with all other variables held constant, would have resulted in an unrealized mark-to mark‑to‑market loss of $0.3 million and $0.4 million, respectively.respectively, with corresponding changes to the net fair value of our zinc-related derivative positions. We estimate that a $0.10 per pound decrease in the Commodity Exchange ("COMEX")COMEX market price of copper, as of September 30, 2017, with all other variables
Energy
We are exposed to risk of fluctuating prices for natural gas and electricity. We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with firm prices with third parties to mitigate our risk from fluctuations in natural gas and electricity prices.
We estimate that a $1.00 per mmbtu decrease in natural gas prices would have resulted in an unrealized mark-to-market loss of $3.7$4.7 million and $5.0$5.2 million on September 30, 2017as of March 31, 2022 and December 31, 2016,2021, respectively, with corresponding changes to the net fair value of our natural gas derivative positions.
Foreign Currency
As of March 31, 2022, we hedged certain lease transactions denominated in euros using forward swap contracts with settlement dates through March 2023. We estimate that a 10% decrease in the remainderMarch 31, 2022 exchange rate of 2017, 55%euros to U.S. dollars would have resulted in an immaterial unrealized mark-to-market loss with corresponding changes to the net fair value of the expected electricity purchases for both 2018 and 2019 and 18% of the expected electricity purchases for 2020.
Item 4.
Controls and ProceduresEvaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is processed, recorded, summarized and reported within the time periods specified in theChanges in Internal Control Over Financial Reporting.
We had no changes in our internal control over financial reporting during thePART II – OTHER INFORMATION
Item 1.
Legal ProceedingsReference is made to Part I, Item 3. "Legal Proceedings"“Legal Proceedings” included in our Annual Report on Form 10-K for the year ended December 31, 20162021 for information concerning material legal proceedings with respect to the Company. There have been no material developments since December 31, 2016.
Item 1A.
Risk FactorsReference is made to Part I, Item 1A. "Risk Factors"“Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 20162021 for information concerning risk factors. There have been no material changes in risk factors since December 31, 2016.
Item 2.
Unregistered Sales of Equity Securities and Use of ProceedsThe following table provides information regarding our repurchases of our common shares during the quarter ended September 30, 2017:March 31, 2022:
|
| Equity Incentive Plan |
|
| Stock Repurchase Plan |
| ||||||||||||||
|
| Total Number of Shares Purchased1 |
|
| Average Price per Share |
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| Total Number of Shares Purchased2 |
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| Average Price per Share |
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| Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (millions)2 |
| |||||
January 1, 2022 - January 31, 2022 |
|
| — |
|
| $ | — |
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|
| — |
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| $ | — |
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| $ | 93.1 |
|
February 1, 2022 - February 28, 2022 |
|
| — |
|
|
| — |
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| — |
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|
| — |
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|
| 93.1 |
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March 1, 2022 - March 31, 2022 |
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| 19,643 |
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|
| 95.13 |
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|
| — |
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|
| — |
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| 93.1 |
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Total |
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| 19,643 |
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| $ | 95.13 |
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|
| — |
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| $ | — |
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| n/a |
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Amended and Restated 2016 Equity and Performance Incentive Plan | Stock Repurchase Plan | |||||||||||||||||
Total Number of Shares Purchased1 | Average Price per Share | Total Number of Shares Purchased2 | Average Price per Share | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (millions)2 | ||||||||||||||
July 1, 2017 - July 31, 2017 | — | $ | — | 7,571 | $ | 91.57 | $ | 124.5 | ||||||||||
August 1, 2017 - August 31, 2017 | — | — | 5,750 | 96.12 | $ | 123.9 | ||||||||||||
September 1, 2017 - September 30, 2017 | — | — | 5,000 | 99.40 | $ | 123.4 | ||||||||||||
Total | — | $ | — | 18,321 | $ | 95.13 | N/A |
1 | Under our equity incentive |
2 | In September |
See Note 39 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20162021 for additional information about restrictions on dividend payments contained in our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit FacilityFacility”) and in the indenture for our 5.875% Senior Notes.
Item 3.
Defaults Upon Senior SecuritiesNone.
Item 4.
Mine Safety DisclosuresNot applicable.
Item 5.
Other InformationNone.
Item 6.
ExhibitsExhibit |
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| Incorporated by Reference | ||||||
No. |
| Exhibit Description |
| Herewith |
| Form |
| File Number |
| Exhibit |
| Filing Date |
10.1 |
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| 8-K |
| 001-09447 |
| 10.1 |
| March 10, 2022 | |
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10.2 |
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| 8-K |
| 001-09447 |
| 10.2 |
| March 10, 2022 | |
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31.1 |
| Certification of Keith A. Harvey pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2 |
| Certification of Neal E. West pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1 |
| Certification of Keith A. Harvey pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2 |
| Certification of Neal E. West pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| X |
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101.INS |
| Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema |
| X |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation |
| X |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition |
| X |
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101.LAB |
| Inline XBRL Taxonomy Extension Label |
| X |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation |
| X |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| X |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
KAISER ALUMINUM CORPORATION | |||
/s/ Neal E. West | |||
Neal E. West | |||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||
/s/ | |||
Jennifer Huey | |||
Vice President and Chief Accounting Officer (Principal Accounting Officer) | |||
Date: October 27, 2017
34