KALU - Earnings call transcript Q2 2022 | Kaiser Aluminum Corporation

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Operator

Welcome to the Kaiser Aluminum Second Quarter 2022 Earnings Conference Call. My name is Darryl and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. the to turn Ellsworth. now will call Melinda over I Melinda, begin. you may

Melinda Ellsworth

welcome afternoon, XXXX Aluminum's Good you. to earnings everyone, call. half Thank first and Kaiser and second conference quarter

release, seen our on at kaiseraluminum.com. of have Relations website a you the Investor not our If earnings please visit page copy

We posted version a of for slide presentation have call. also this PDF the

Chief Chief Chief Accounting Vice Harvey; Executive Keith Joining the me Officer, and Huey. call on Jennifer West; President Officer, today Financial and Executive President Neal are and President and Officer, Vice

I'd we expectations. the constitute made that contained Before that and refer first information three like presentation current statements begin, to remind forward-looking you statements slides by the presentation the this to management are and of based our in management's you on

Factors refer for to December statement with company's reports expectations. to summary on or cause those to statements the the Report Exchange specific conform Annual undertakes The in could Securities from materially the to changes and update including a any results full-year the duty please in differ XX, the Form actual company's no of the statements, company XXXX. and filed expressed forward-looking Risk that the earnings release forward-looking XX-K company's ended results to For Commission,

and/or Harvey. certain for and control of financial non-GAAP the certain items Reconciliations information GAAP release presentation. discussion. in are provided measures because provided such questions. Appendix for effort. In comparable like rate addition, Keith of we of have reconciliations Keith? for outside are the over included non-GAAP the in of to to to included would discussion Reconciliations EBITDA, means earnings the be conclusion which to we open financial forward-looking measures the the presentation, excludes the most to in required we've I reasonably comparable our our At EBITDA not unreasonable financial items are Any the financial in measures will GAAP references our turn predicted reconciliations Appendix. today call cannot provided company's call or adjusted the non-run which in without now

Keith Harvey

And thank results. for joining us review second Melinda. Thanks, for of you quarter our all XXXX a

delivered quarter, North a to in chain Warrick second mainly turned American the ongoing of challenging food issues be supply the very out and what rolling $XX businesses markets. to due in sheet Our supply quarter, which million packaging mill for beverage EBITDA in our in

have impact us last supplies Smelter smelters Magnesium over erupt worsening the the Mill. we've conditions stopped have US US Warrick supply the Warrick quarters, communicating several with the continued efficient abruptly of main our our Alcoa to business of worsened and at and while we few and minimize substantially on performance June. -- months last issues Mag both impact deteriorated to low-cost, performance Rolling when our run a operations to consistent For which diligently our customers, been ability and supplier and have material And shipments all contracted, provide in results. our of the struggled negatively These the to negatively metal requirements conforming portion worked how our impacted magnesium, have of

have actions million the first detail issues of to on been of approximately $XX half supply in year. have period provide taking issues the the force declare products of both majeure sheet what on abrupt for are to customers on drag forced we of unacceptable addition July. lengthy by and through early Allow and put these us Rolling us. These unexpected In US a from change to suppliers, packaging more me to combined these and our Mill shipments issues Mag's supply performance a Warrick earnings behind two

declared X, as force of our majeure of Warrick US Mag, declaration to supply force September months on previously led majeure which at nine magnesium of and our over ago July in Regarding stated, the XXXX. events we

the plans last In the the little will identify shipments. on continue share now as In We we qualify quarter projected material we of additional to we situation this to weeks, the Mag this at to expected and operation previous and for reliance no number months, we supply shortfalls anticipated. were Since either US production of to XX% on the stated a of previously be as communication unable new to or reduced the issue quarter. to much normal disruption nine XX% has each in mid-June of the XX% suppliers to XX% the efforts short declaration on than case, provided we of return communication up new supplies. cause During shipments operations. more contracted third the our US to made expect volumes two We're deliveries magnesium establishing their Mag's progress US as on supplies unexpectedly than contain have make full of additional shipments the to no than and magnesium and as to much shipments with to issues believe US timelines, and Mag's US period, in received cessation have force ceased announcement In over of to at as the we the contracted Mag and all to magnesium, Mag daily when last approximately levels of US month until announcement we been have based establish deliveries third be of has we've the expect we based Mag. balance customers and from impacted time, sooner our notice. and And all the based further received July the pre-warning projected no and assuming us. all in to such the improved to majeure higher our on on our qualifying US Warrick return their shipments in replace remaining customers, balance on our minimize allocations. our With deliveries and Mag

against we US US we with this year As discussed, April of connection in force in litigation Mag Mag's declaration. majeure previously initiated

supply Now XX% smelter, approximately of molten and of form smelter in site. Alcoa our the We Warrick the mainly Alcoa the performance supply aluminum effectively. receive operating mill moving issues smelter for the metal on when rolling to the from Warrick is about the

the reported a conforming operations. due of impacted resulting the and performance While negatively of delivered financial further operational in timely replacement has the the curtailment performance in make impacting shortfall to for metal three ingots deliveries our molten the smelters the up was degraded efficiency now, operating quarter, performance smelters on not rolling Furthermore, further one quarters of challenges. the mill second several basis, in lines

The carbon the preparing supply. run lower plans to successfully the of rolling we run continue mill ensure to without objectives the are to smelter the and this Warrick attempt the impact rolling And of from through Alcoa an have alternative qualifying mill operational work mill. metal financial will to sources part of of sources challenges long-term challenges forward, as metal at the we smelter past in Warrick footprint we and to hot those work we with rolling the the has the are rolling of without will smelter. on for in going sustainability While and to mill meet other the process for our mitigate the mill, Warrick

rely we've to world. of the number most in pounds new plant at there our and us coated houses process scrap sources. in of and reduce one plans are of With cold further and diversifying And continue XXX for set to Last cast painted sophisticated need Warrick Warrick ability hot improve metal will packaging to third-party to excess for we magnesium and scrap that the the that a has initiated a chain the week, ultimately Warrick of sourcing. largest on we metal the less intent underway annually. scrap initiatives objectives The current strengthening its business, meet our low supply or utilize and will cost metal and prime startup bear million of more have enable our plant

We greater acted products. impact enhanced our supply and new thereby of mainly this provide impactful operations at impacted Commercially, the changes our for strengthen to significantly already lower other needs scrap. business issues. and Mill. US issues Alcoa loop from food alloys cost recyclability and return closed a with insight contracts to all customer's few increased for areas Mag content just Rolling a providing we've had our scrap Warrick testing our negotiated are into These no more All of business. sheet have have or new magnesium with are low Smelter Again, and have these developing sustainable operations highly can the characteristics also meet and beverage currently provisions,

on demand business quarter due continued shipments in improving with of supply year reflecting forward continued demand now the aerospace prices. in solid We outlook of for in and been these of remainder jets, expected automotive, despite tepid improving where successful applications on in the We the the for have our year. continued shortages, strong chain continued shipments anticipate delivered markets moving remainder Looking declarations exception the with we defense, all market we have to XXXX. into improvement and another commercial strengthening

strong solid demand along pricing. plate other and various improved for general with Our engineering extrusions applications in with business remains strong. Packaging continued exceptionally remains demand and semiconductor

call, our As facility a at stretcher there. have heavy outage noted refurbish begun we last gauge in multi-week quarter's to Trentwood our earnings the long-planned

XXXX qualifications to with with continues In be Neil? production full Neil back with quarter investment addition, and the slated early at I'll the detail, then, more comments. of Warrick new roll the and scheduled XXXX. the forward coat now review for closing to half over line call to turn some in second I'll move for startup

Neal West

Good afternoon, Keith. Thanks, everyone.

the reflecting of $XXX revenue the to second on X, shipments revenue XX% $XX XXXX XX% shipments slides. for costs. high-strength six engineering or of inclusion following value-added $XXX slide million or the as application first of a and primarily addition half quarter quarter will compared to first the of general to Value-added increased increase value-added inflationary and pricing in the for on the flat applications, a with in XXXX, as months to driven to of XXXX our full Turning $XXX XX%, cover increased million higher million of of of aerospace packaging mitigate compared XXXX million relatively by improved second I revenue half which in

in steady in of the XX% revenue Slide jet. first in and million, increase half up $XXX of on shipments and prior-year improved to $XX value-added XXXX underlying second The Moving commercial aerospace on from XXXX high-strength or shipments an of half travel commercial strength for demand half new jet Compared defense of defense value-added or continuing XX%, XXXX, shipments first in $XX or increase and quarter reflect million a and was shipments continue first of $XX second revenue our revenue business demand applications period, million XX%, increase revenue and pricing aerospace X, half to continued million for XXXX. value-added in to see increased improving the and in both improved Aerospace the the value-added of XX% in to business the improvements compared $XX commercial and aircrafts higher for an reflecting and the for we as aerospace million airframe strengthen XXXX of major compared shipments XX% on producers. increase to high-strength air XX% recovery shipments.

XX, to X% quarter to improved second lower commodity million increased higher reflecting $XXX and $XX revenue shipments period, Slide XXXX were the or surcharges inflationary and from packaging contract on million, pricing value-added offset costs. Moving prior-year XX% up

from improved on the million million pounds a or packaging half March to months revenue Warrick Compared under and improved XXX half XX% revenue offset Value-added XXXX. million XXXX, full Rolling first of pricing Mill packaging relatively XXXX, increased half acquisition $XXX and six the For value-added of revenue million of total of value-added commodity surcharges second flat of reflected first was the up to XXXX. the of reflecting inflationary shipments, following on $XX costs. shipments, our revenue on XX, shipments $XXX and

reflect increase prices tool million also value-added of strong costs. of to XX% increase Turning XX% to shipments. a in reflecting engineering revenue on to to commodity recovery. half in for first XX% the to quarter revenue of XXXX, value-added in The XX% half XXXX. or million higher increase alloy and our machine in Slide Compared alloy value-added increased on compared the first general $XXX applications, shipments to to demand relatively second General million XXXX revenue shipments plate, compared inflationary and the of shipments quarter strong improved improved GE continued XX, offset of $XX XX%, and semiconductor second increased on revenue engineering of half the XXXX the recovery demand, pricing addition second flat $XX million in and a $XX XXXX underlying continue industrial or value-added

million impact value-added of XXXX $X the period, Compared up industry. reduction the revenue XXXX $XX XX. shipments, a million X% flat or improvement the second the of supply auto first Slide compared X% the down disruptions in chain ongoing Automotive to for in a on continuing value-added value-added of little shipments and to demand. to XXXX. a a shipments, half quarter improvement second in in was semiconductor revenue as $XX was or change half half for other the relatively and shortages in first reflecting of X% was Moving million, of reflecting Automotive prior on compared slight $X XX% increase the pricing in XXXX chip million automotive revenue to

Appendix by the of shipments applications and Additional be in end presentation. market detail value-added found this can in revenue

the Turning to period XX% the XXXX was second to Adjusted for down million EBITDA compared quarter. quarter prior $XX Slide million, or XX. $XX

The second and chain incremental impacted in by $XX quarter costs. related by addition employee-related maintenance, to was costs Keith, as major issues XXXX primarily discussed of manufacturing, to energy million higher supply

and partially and to performance, in consistent of Warrick improved offset to commodity for pricing energy top to the metal delivery was $XX to the half Warrick materially cost, operational the were XXXX EBITDA first lack operations Our the equivalent quality first freight and high surcharges. which addition impacted Alcoa higher and Adjusted were of smelter related XXXX. million, due was of by which half alloy freight

out operational by of costs, million incremental of first and half approximately chain smelter supply $XX were Trentwood and discussed freight by recovered million disruptions than of Warrick inflation was higher $XX that operations, $X EBITDA driven energy, cost and including actions. XXXX manufacturing higher results, pricing and approximately in our Alcoa the as impacted fully US normal timely cost driven first our performance XXXX operations not international through at Mag employee-related the additional The quarter million

the was non-run in Moving loss on year was operating approximately quarter, reflecting EBITDA million $XX second of adjusting the million, items, primarily a operating Reported adjusted $XX compared net depreciation year quarter. items prior made previously the discussed rate down $XX amortization the quarter non-run of $X million the loss half first for million as XXXX operating loss acquisition for adjusted $XX $X reflecting $XX and XXXX, reflecting adjusted operating $XX non-run Reported down to an million XXXX to prior expense. as of additional Adjusting of the on the the $X Reported was primarily additional million, for of quarter Compared XXXX net to income for to compared additional income was the million. Slide operating XX. changes second in to addition discussed. XX, income rate was EBITDA million, of million, first million of of items $XX March depreciation, was half of million, loss adjusted million in rate related quarter in amortization second half million the XXXX as $X income XXXX. second compared adjusted for for from $XX and to was adjusting income prior $XX changes the net year in Warrick to million previously depreciation $X the for XXXX, quarter

charge million refinancing that related our our notes with XXXX second senior in XXXX. due $XX million due As X.X% of X.X% senior $XXX $XXX in to a net a reflected million notes quarter reported XXXX, loss reminder, the were

quarter XXXX, of second quarter $X.XX per As earnings for of per of Adjusted year the in of in the an to prior XXXX loss the second a share loss share the in to quarter. adjusted were compared was diluted reported $X loss $X.XX XXXX. diluted share per compared second quarter $X.XX diluted of

XXXX half per were half share XXXX $X.XX respectively. $X.XX per loss first diluted $X.XX diluted the and respectively. Adjusted reported of share XXXX $X.XX XXXX reported first and As the for were earnings and and of for

effective second XXXX Our quarter for the rate XX%. of was tax

long-term, taxes to as rate be remain and NOLs cash current our mid-XX% and fully we until continue regulations. the statutory in will rate rate tax XXXX. the full-year will $XXX tax believe anticipate paid million federal our range of the effective the we utilize $X be tax million cash in approximately of our under XXXX year-end We will For the tax below

providing Slide facility the facility June expires XX, during million, of was $XXX Now of undrawn. revolving borrowings in facility, as under $XXX Total our the of credit total moving to were revolving recently $XXX liquidity we no XX, credit equivalents. million had and quarter which $XXX cash XXXX, remains and million. There availability cash under amended million

to recent half XXXX, second not for the the we compared working easing of requirements any the of With do during cash as year. quarter expect funding first aluminum prices the capital of

of Capital fixed have first interest million were half cost Our and senior notes expenditures at $XX maturing annual the debt no an we are million. XXXX. $XX until of XXXX for

the For expect our in quarterly and to per and finally, our long-term to $XXX the coater quarterly common we our ability be additional reflecting expenditures mainly million $XXX predominantly directors to for our million, remain to of that long-term a XX, generate previously million full-year, return operations. continue announced shareholders. board related we to capital announced we $XX between On roll confident a And continuing strategy share, solid $X.XX July dividend of declared returns. packaging

We each Keith? Keith the and I'll our to the XXXX we back XX increased paid over have consistently over now since And quarterly have outlook. turn payment discuss annual to past dividends steadily years. call business

Keith Harvey

Thanks, Neal.

slide XX. Turning to

profitable growth the we Rolling markets supplier integration a packaging about into the has industry. of in standalone has strengthening opportunities proven remain well challenges. Kaiser its in within are Warrick serve. history long-term of a being along executing to establishment had and other our important And and a leader further position. and While packaging facility the business Warrick we the to strategy the the market Mill The that organization excited We and

We strong and a and we of long-term in are we The number agreements very securing are making remains market support customers. our with strategy there investments our well-positioned. been have to successful outlook

We are The our levels have shows to taking demand And strong catching half for risen watermark strong continue earlier, the to the jet to elevated confident forward. second to XXXX/XXXX moving defense experienced issues steadily in timeframe. actions remain current strong remained discussed achieve and robust. continuing. we we low data quite since aerospace highest address these inventory of record products improving up times expect products of supply demand supply the supply XXXX Recent recent slightly the have to regulatory for to are previous strong other We of been have experiencing. in general have markets we at Warrick the we've on products the will industrial XXXX. experiencing and businesses, Airframer number demand, especially is we for applications track periods, to high-strength have lead Demand we are The and hurdles demand as markets at high-strength and Pricing as and are record our over issues service and aerospace and been centers suggesting chain return semiconductor resolved. levels the in levels market in in operational with as a chain aerospace excellence continued since all in improve experienced for Declarations business sector. commercial achieved XXXX. in XXXX are shipments

first shortages of to assembly through of from second in Not on our in of is remain understand notice, half with demand the much the we our the short strong also balance expect customers. year these with shutdowns relatively demand expected in multiple for half. begin the plants at We other a year Periodic on shortages supply chips, to impacted automotive the continue change position have customers grow issues but strong times abate. these We based applications. many

at markets strong. in demand have general While remained in present, our pending slowdown widely a concerns discussed of been economy the

plans to prepared markets adjust with to necessary. are place in in We businesses as any our downturn quickly our adjust for

spending we the We with sheet quickly as significant strong have continue and playbook to to conditions adjust dictate. maintain liquidity, cost a and balance

Warrick on of these encountered The operations be focus many achieve issues, addressing in Our supply there. expected is the of the first we've for year. and outlook for to impact chain EBITDA the the supply expected performance now XX% in margins not mitigate our our the year to customers chain of half the XX% achieved will of issues events due level

better However, perform as the issues on these as issues and at our resolved, supply fix our and business is executing continue for positioned perform are customers. strategies, our to these we levels

we previously As remain confident. stated,

of EBITDA in operations with you to $X approximately once billion XX the investments the questions in points, in portfolio Our for deliver any value-added I'll may margins normal planned now are positioned strategies, are the businesses and mid-to-high have. revenue Darrell? percentage open call place.

Operator

Instructions]. our Emily comes first Emily. ahead, from [Operator And Go Chieng. question

Emily Chieng

question, afternoon, for can Keith US Mag And and as imagine is you Neal. you the there. today. update Good announcement thank first the around My just

point? Given from progress qualifying some terms in that you production anticipate you Could new supply received hoc to you or when sort be XXXX be that might full as ad could some Is some additional are this at path of recently. the Warrick? event provide a to early glide XQ you supply at Mag of return some US seeing may and

Keith Harvey

afternoon, Emily, that good for question. and Well, thanks

to the qualifications, tremendous a last fast forward, majeure sources. for we the of could number you a tracking of we of July. number the really of prior at felt suppliers in over low at time other through amount and then we XX% We these and And might we majeure, XX% the quarter. balance for go of down But much when for imagine that all that of two-and-a-half the risk event. X-K had looking weeks we announced force on We've that Our of track provided the at shipments force were the July. the as we that's that that pretty at as we balance to in And activity, amount XX% felt felt impact year. numbers for as supply our underway had looking the moving

this look So more of for expectations And without at then let's our Mag. done activity base balance that to was US year at full now forward supply third that quarter we process on the what and from can in possibly the going end we've focus would that feel that could the Warrick, sometime and that's hard shipments qualification the to in shipment going the with that return the be quarter been we of the any contain work quarter. to before of

imagine, might year, we you only have number a of not of the to we right now, and secure it's improved we're underway, those qualifications supply. the full third As also fluid the negotiating Mag think quarter but for limit of will the have amounts it conditions will we balance for XXXX we and

Emily Chieng

Right. as curtailments at really domestic supply to And other Alcoa. the volumes that the you've seen How there been from then. hear metal of lost question, metal good easy has a was similar of because perhaps but replace around it well? closure also those plotline Understood. That's loss to

Keith Harvey

Well, unable arrangement provide there, metal Emily, us. sources our they're hot is with to Alcoa that to

So locations receive other from we're cold to metal. prime their

use they've So metal, became additional prime hot receiving other with the able to of needs, that cold of and metal timing the our than as reduced, scrap. use of secure been our

cure a I or itself not possibly can prepared Now as we and to preparing issue, going as remarks, to at in We're we're this imagine, are to point. said wait and improve. gunshot for just improve, what you to Emily, that little my

And as prepared metal to metal I sustainable we actively more underway use mentioned, move forward. metal we are take have going and of referred business initiatives remarks that primary prime as less the a qualifying my source. the metal to in will utilize hot like We to sources sourcing really coated I dependent scrap longer-term number ourselves that any scrap this of on of its other

Emily Chieng

qualifications, previously to could and, you Understood. Warrick percentage if one would you this all And you're on upcoming of where magnesium Are is like with a I what maybe able perhaps to final came from been your from clearly share Mag basis, requirements away your perhaps in? shifting resolved? US that squeeze but question, once normalized be at

Keith Harvey

a we serve. won't to purchased another a a US Emily, when mag because Mag they supplier agreements we And And lot I were Mag Mill, the utilize put we with established. the a the facility. US applications Well, but of leave they I'll -- Rolling of already it, were Sure. around of it, Warrick facility, mag the issue the significant to Warrick were that more number significant,

So by our other amount that supplying a mag, have that significant food requirement large of a higher for use require products, there can fairly and a of which facility. we

will and had, had facility securing supply I sources, that we've in forward. the to we've issues due say strategic in the level However, actually that any success of other them putting moving we're not for

forward. And with comment would be reliable, able one supplier So that sourcing, feel individual I we're find supplies, faced going we supply, our on well. as that say other moving to to confident not position more also and metal diversified so reflects by we're that

Operator

[Operator from And from Josh. Go Instructions]. Sullivan our comes ahead, The Josh question Benchmark next Company.

Josh Sullivan

hot mentioned you cost source? when past, you know, without the a In cold differential use to metal, run Warrick as what's the metal has

Keith Harvey

ability hot. had there, fully was the integrated a this the cast of is we pretty effectively and of business that we a metal have can house we lot when at owned you've that Where And hot at compared had Warrick as metal because Josh. the that there cold -- it time, the because to utilize reason the Alcoa

When to impact the smelter from utilize was logical sources previously short facility significant they metal in needed Mag was the the therefore, saw no was service. -- time, able amount from in molten to shuttered get the it more additional from of the that hot of they utilize sourcing. and move smelter, to that for to metal them a scrap aluminum, use for So the being amount able

significantly our from on we're that the we'll to other the that metal going scrap focus business, our of and the from Now, the generating reduce resources. sourcing coated tell this metal amount the going we scrap cost cost of you forward in material believe we're lowest utilization by of use and

to period. going able improve we our sourcing be hot we're from believe actually we cost to the move metal away operating once So significantly able

Josh Sullivan

And think Got it. are Just on do are of your you some it. those capacity for industry what Got announcements going how new thoughts the rolling recent market? enter mills? the to

Keith Harvey

to Well, Brady have a finally it's or there's a couple acted frankly, this do decisions on been we And announcement those that quite know, strategies business. somebody initiative. we alter the other announcements. is the little But surprising this for -- really deter

very business has to opposed a I built, site we in has This this a go of a qualified rolling good a of our recall, Warrick the green with that to think products customers. you If you years XX purchased with experience be as -- mill at as we things. number and believe, price, business supplying through see has

a So that, house quality existing. is that well-known they're already

little therefore customers perspective. our from risk So

markets. We common do alloy. intend only actually to Warrick. packaging the that We other some mills that in experience automotive capacity divert mentioned that. having is The that others very factory sheet don't building. other participate to in going Warrick thing, to to these be the weren't going they're are past XXXXs. the with in And We got like the focus in doing a in any doing and have multipurpose the Kaiser's successful approach

in focus other So be And ultimately, really these qualified uniquely mills. our going And by position moving we're in area. we've coating and and investments a that therefore, investments be long-term up to strengthen that's this place. then the And with that forward our with the with able new strategy these we is in our competing to business to made the have we agreement we're putting backed won't coater be in place additional line. niche

mills intend the strategy by built. the in we be eventually any of So are other along time further to this

So worked. We the like mill the it. rolling there We acquire made the investment, supplier. the they're price fact it continue we and and that market to like to like proven fact a

Josh Sullivan

it. Got

more So -- the and players a as think aluminum the are be players existing and for are of lot on you altered a Do market recycling recycling to these How well as going demand historical then lot and scrap. ecosystems new others you see more? do Warrick developing? using focusing

Keith Harvey

in rise. ourselves, to the a and on availability. is the believe to of are be that We our sustainability And scrap the there that coordination And and generated there all only that cost I will markets not fully think positions should strong utilize -- that's customers we in scrap material. moving who this absolutely focused on very, -- of that magic continue think pill. I have of And to with an scrap additional open I us availability capacity also but all the this privy big going that lowering is and very are place forward. know securing isn't

fast being that metal securing all scrap. work said, at needs, which includes our of Now we're

not going it's to we're And from will strategic so be the way. these a need moving sustainability, a And any that additional going that's financial we're I And really that drive thinking forward. only I on how know support think position profits returns we for of businesses businesses. what to also and

in have place strong I a on we're sure forward. thing, strategic that the the position going just business we focused all to support So believe same making it's Josh,

Josh Sullivan

And Got last put just this just lawsuit damages at it. key provide? Mag, what pursuing? quantifiable point? the are then one dates US then, Yes. against you you can any Is one, it And to

Keith Harvey

Yes. there that that's certainly total. with when running million, to XXXX. begins to outlook their And the in we April, but a been in added lawsuit performance and the early the contractual meet They've for is in trial we filings, second listed inability their that in quarter Well, right have the the filed obligations. now, $XX roughly

be up. still then running be litigation. And keeps additional even that on to that determined further that into will cost not so it's or rolled And whether

a prepared. And how you we believe a go a customers something into force to not treat to we learned this. We like majeure. want case. period share strong of well when I We're So have

we've how our on returning our treated, short-term soon, we're unlike to minimize daily So customers to basis any been production full communicating with or long-term, and any of very to impact, focused customers. absolutely we are a on

great we intend earnest. So these and take things seriously with we all these to of very pursue

Operator

question Michael. Michael Glick comes from Morgan. from our And JP Go ahead. next

Michael Glick

Hey, guys.

the Just progression for think second How half margin of question year? the me. should one in about we

Keith Harvey

up repeat Michael, didn't on get question? the Can broke We you that. us. you

Michael Glick

How margin progression --? we about should think

Keith Harvey

time? you really up. one still Michael, you're Hey, try breaking Can more

Neal West

something. about margins on We understand it's

Operator

dropped It off. looks like he's

Keith Harvey

Okay.

Neal West

Okay.

Operator

Emily any Go in queue. don't Chieng. the one we from And questions ahead, have wait. more We've Okay. Oh got more Emily.

Emily Chieng

again. was question around and Keith year? think Hi, progression Neal, I margin the the follow-up Maybe just that it of prior for on remainder a

Keith Harvey

Yes.

impacted So by be will the production -- business. from packaging partial know the we third quarter, the by not side of industry, packaging

then hopefully facility. we we'll anticipate, our So back into what at that maybe. really the have outages also and we production We fourth right the have however, levels Trentwood don't have quarter moving an full to of outlook with do now

how the able So a full-year, we the based for And can to quarter return to-be-determined, return this hope margins, Emily, of full expect for, quarter, on be fourth back year. production. to the fast we to I in those to third it's

Emily Chieng

just maybe follow sort and of to that a and energy easing costs on continue or pieces? the elevated I of those of you quarter or know, line of for And But during think, sight path the the manufacturing second manufacturing any topic costs there. be to perhaps Understood. labor sort ahead labor what

Keith Harvey

lag, frankly quite In pricing been on to I Neal move offset I that Well, impacted, we've a products. through that and have a perspective majority those of good not we've reflection it's just and in feel Sure. And of the reflected, category securely. a from a few that really The a our really of cost. every fairly position costs. able cost we're think

the a you ability in there the on move position these timeline than packaging some if we through allow. our customers to costs, remember, of expect in shorter put We especially these contracts annual costs that -- with

supply able believe, believe of these we're behind believe be and costs. efficiency efficiencies, of the chain cutting outages, return there's high overall, so issues costs. of us, But to to a We some our going most in to when once we some we've actually costs. some on that we lag those covered levels, we actually back begin those we of And these get securing

little So a but those higher, think offset labor we costs. we've is obviously

we improving should the into especially our So think go position as the be I fourth quarter.

Operator

We I'll closing it speakers the turn any have no comments. more questions for at to time. back this

Keith Harvey

All We us Bye-bye. year. in to Okay. Well, right. look you Thank forward in thank later our you. quarter third for on the updating you joining results today.

Operator

participating. and you Ladies this for gentlemen, you. conference. Thank today's Thank concludes

now You disconnect. may

Melinda Ellsworth	VP, IR & Corporate Communications
Keith Harvey	President & CEO
Neal West	EVP & CFO
Jennifer Huey	VP & CAO
Emily Chieng	Goldman Sachs
Josh Sullivan	The Benchmark Company
Michael Glick	JP Morgan

Kaiser Aluminum (KALU) 26 Jul 222022 Q2 Earnings call transcript