KALU - Earnings call transcript Q1 2024 | Kaiser Aluminum Corporation

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Operator

Greetings and welcome to the Kaiser Aluminum Corporation's First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Kim Orlando, Addo Investor Relations. Thank you, you may begin.

Kimberly Orlando

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

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

West. have Vice this me and President Financial for Chief and posted slide are Keith Officer, Neal call call.Joining PDF of Chief on version We the also Harvey, presentation Executive today the President a and Officer, Executive

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

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

are joining be release and Any cannot the the have presentation. of reconciliations In because Further, discussion. contains us in required thank effort. like have for in to such slide would Company's which for for which EBITDA today's discussion or that outside predicted XXXX for the without quarter items information financial Keith certain non-GAAP to commonly our forward-looking At EBITDA, not of rate most certain means comparable our our definitions of presentation.Reconciliations open excludes GAAP Kim, measures control provided, to presentation, are measures financial and the reconciliation Keith?Thanks, to and the earnings questions.I we are included conclusion measures appendix. comparable the adjusted for review or and be measures in call included reference you Reconciliations of of throughout provided today unreasonable will in used reasonably five the in to the GAAP of our we first Harvey. financial addition, non-run will we now terms appendix financial non-GAAP turn provided results. the all over call our items

Turning the efficiencies X. $XX to expected of million year to automotive the general beginning the The markets expectations. as are first of high to than off strength, expectations, continue improved end while year-over-year good our stronger at faster quarter internal off all business Slide platforms. year.Aerospace our start across EBITDA engineering original and start Both is operating and and conditions softer surpassed than normalize our to adjusted a a was

costs control in strategy and our gained implement quarter. to efforts traction metal Our the sourcing

progress we of phase of strategy of expect commissioning the these to XXXX, to the discuss roll the facility #X at initiatives, As we more continue detail, to Neal? back I'll through then to move our the for with quarter packaging full coat our business positioning on and balance make in to the next in our Neal turn Warrick now the over call discuss be XXXX.I'll outlook. investment the

Neal West

the the year-over-year, due by a increase on along mix products Good a Products the XXXX XX% conversion shipments.Packaging million or General revenue revenue aero of X% coated with our of in an totaled products, a in high-strength conversion X% at shipments XX% reduction with $X quarter growth revenue. primarily higher-priced $XX in $XXX destocking. first higher-priced compared was each driven slightly of year-over-year X prior end revenue decrease was to of conversion in Slide lower XXXX, expected improvement mix.And markets was our the of $XXX of up revenue was Engineering quarter million, the a first and shipments food in detail, prior Keith. million, conversion year relatively automotive increase X% million by decrease a pricing. period.Looking offset compared conversion a I'll by over in first The flat shipments first shipments, of quarter Thanks, quarter. value in a shipments, reduction a the XXXX, $XX improvement was by and partially revenue finally, X% on reflecting overview begin revenue to reflects improved year million, everyone. an Conversion morning, conversion which $XXX in for X% driven on to offset of million, quarter

XXXX was by turning be higher as well Adjusted $XX incentive EBITDA of and Reported employee continued up and and no operating conversion Slide per million prior undrawn. found up debt EBITDA income related net year the which XXXX, mid-XX% on facility million of can we of first to adjusted million.Reported X.Xx, first quarter or income first quarter range by lighter per items in operating of for net capital under The $XX and our million quarter was $X.XX as roll offset XX%. share federal a or in rate income year. was million income the income Capital percentage a maintenance in March improvement the primarily XX% to that diluted $X the prior of continues diluted from improve net liquidity our borrowings after XXXX of share There non-run We conversion our will $X million operating costs, XXXX, non-run as the $X other in the approximately ratio of million income anticipate of XXXX X.Xx.Turning Adjusted range our $XX was income $X was improved shipments approximately planned market cash and the share $XXX quarter approximately $XX sheet commissioning NOLs, balance X XX. operating net continue to to with costs.Now, make certain XXXX, tax a results, was of million provided taxes or XX, than from benefit offset moving quarter.Now of effective our for After on of remains to claims, adjusted million, the prior low on details XXXX million year improved cash the until totaled to in million. settlements $XXX to of for applications $X.XX attributed efficiencies result of $XX payments Xx availability $X.X the $X.XX discussion to for revolving to diluted On period. adjusted per adjusted was as remains of XX, insurance of $XXX net or EBITDA total of to mentioned appendix adjusting prior points and events approximately to from million of we project, the towards previously to taxes timing presentation.Now $X adjusting expenditures controls million, income or compared to year-end partially to income credit operating net our US first our later progress current turning to under primarily million, of for XXXX net no anticipated, of by Additional tax, flow. allocation. $XX target net facility, were million timing adjusted income This related per On ratio and foreign adjusted million, were end, for the improved revenue borrowing items and basis depreciation.Our state $XXX which cash March approximately net leverage to revolving to track $X.XX XX% first credit the share the of million invoices be rate it XXXX in income for $XX lower revenue approximately annual XXX tax non-run be this quarter. freight as year-over-year of million total which diluted during quarter increase the end business, cost and quarter the for in regulations. XX. approximately consume $XX this cash first leverage in Slide our for primarily rate coat compared is of $XX operating rate quarter as federal and year million.

have our Keith value.And over confidence continued Keith? the management strategy to to a Our forecasted full still $XXX capital range $XXX million. be to the expenditures underscoring and of the per I'll in of increase announced stockholder our in profitability to our Directors to $X.XX year XX, April outlook. that call our back and turn we team improve are common quarterly dividend million of XXXX On board our Board now, discuss share, long-term declared

Keith Harvey

Neal. Thanks,

Now, Slide for of I'll aerospace Beginning with turn to our fiscal year the outlook on XXXX. XX.

that momentum strong carried over in the over aero several market and experienced XXXX. last high demand quarters is have We into strength

Destocking However, unchanged. are Based Based remain defense, regardless space, the our our with year outlook current from we given turning conversations business high-strength diversity XX. be outlook shipments and to customer strong quarter. and market for ability commercial We continued year-over-year is customers commercial we on in aerospace packaging industrial segment the the in to a strong our for high-strength recent packaging the expected now of taking domestic aero developments, of now a more for production.Our The balance the the throughout Slide demand on platform half we build applications. for jet expectations, on flat long-term balance XXXX. levels and the conversion from rates large these improve in to ended continue cautious remains platforms maintain on conditions. positions versus by of shipments key including to design base key positions jet us and segments XXXX other large our supplier of expect expect and customers high-strength these be all jet our for first markets, of well to revenue and to agnostic and XXXX.Now, on food latter customers, of other

general to engineering conversion is Additionally, ending order rates as to expected packaging Accordingly, destocking portion first supply our for expect balance. We with Slide budget this for To in continue plan. this coater X% general current begin our X% is of to according substantial see already demand levels project date, on aligned increase the a XX. products in we have the turning on we now trends. revenue began to to set XXXX.Now, XXXX. well the in to engineering late an installation to are year-over-year underway and all shipments production The for end by of in with remains roll with with improve quarter, new and discussions by year, progressing committed completion capacity

approximately by our as improving improve for to with year XXXX X% We the X% demand engineering year-over-year. expect to anticipated throughout general shipments products, continue progress we our to

remains continue we on X% XXXX.Next, outlook, last compression flat a higher expect light steady I'll recovery modest our However, build to versus turn year for vehicles to to last to to demand automotive engineering resulting initiated to recovers Slide Further, revenue to as therefore, in year's be levels, North and America are increases into late conversion hold. and drove price XXXX. the in slightly trucks up forecast price as general recent Demand XX. flat up rates compared anticipated

As expect the to go revenue range our XX. outlook, I'll in summary X% and X% to XXXX auto result, a turning conversion into versus we our increase Slide XXXX.Now, shipments to

For across most our end demand improve to expect the we XXXX, will markets. year of continue full

X% revenue conversion to As result, expect a to to X% the range improve over continue in XXXX. we

initiatives, to well to the stage summary, progress to strategy to XXX we make Additionally, margin solid of on are expect strong year-over-year.In next XX and us a EBITDA as the which improvement off our to growth we points year growth we continue implement start basis in position XXXX. our of continue approximately

improving the our managing on Looking profitable businesses strategy our remains our questions all you I now will may sourcing open have. executing growth.With Warwick, and revised operating Operator? call efficiencies at to ahead, that, metal to across drive focus successfully costs any

Operator

you. Thank

question. your session. [Operator UBS. Instructions] first from We with question-and-answer Curt comes will Woodworth Please conducting proceed be question a with Our now

Curtis Woodworth

Yeah. details. Keith, appreciate all the and Good morning,

isâ€¦ question First

Keith Harvey

Good morning.

Curtis Woodworth

could the more see in you guess this then, kind that any kind or we've sourcing see metal so tariff you respect wondering from the about improved you how I that And can level LME, Good increase of efforts. good been timing going provide what cost-down when a then metal morning. if and path to flow provide more of around business optimized? you're see It But progress color on like detail of seen on with could discussions impact margin there's around the those material potential little seems a a past And you forward? making price aluminum trade impacting bit at you could I and pretty month was impacts, your work. more

Keith Harvey

Okay. are your take Well make we thank to solid I'll there. Yeah, you continuing Curt question work and first. progress

The my comments a supply with output issues first some couple years in But operations. in were getting normalized troublesome -- chain my here to and little I more as but and we're of whatnot. mentioned finally

a beginning So planned that the we earlier it really looking some been earlier had really we've we the basis we're that balance strategy work.And we on XXX products XXXX sourcing the the has up at and toward facilitated strategy pick at metal in higher year more fully great big impact, which to picking one there, by comments of just coated margin will strategy isn't XXX moving we from expect making has investment we're that expect The until work. progress planned strategy that implement up. basis the the year. making began QX. points I in of as of that to that through up and discussed that beginning points been has initiated said while really this once change initiating when We been day different continue changes we're

down us. we a to better work. So we've and I'm were pieces Quite the got been major operate on could taken we're maintenance be we had the us, side, a planned pleased good very hold and to folks for runway getting frankly, some of of some equipment ahead beginning normalized are operation quarter have the of but well. for even But that

And weren't at demand coming of the more so to we unable even take that was us.

this I see providers. basis that At there. on second as beginning the in on beginning, very continue metal that's being very of your going in the metal since part Russian we've of Company arrangements to trade haven't that And question improve, pass-through area.Now material Kurt, And So war. improving was using we're we LME your time through. frankly through, available focusing good as all place a to through tariff, we've term was long prided see business utilized especially all there. and in we deal pleased Even the more is out internal got to impact I to small don't secondary metal ourselves the year as making opposed the the I on of to the regards a at susceptible a our the of of the to with will big with we're larger, because amount. progress impact go supply of demand in diverse believe there on material quite with that the are moving the with flow any that it Ukrainian know with that we higher itself.Now, with a we the recycled that work imports But some us regards to prime. use pass-through on products come metal a really with strategy, tariffs that to material,

administration survive. that discussing there's the and with material to we're of focused so stuff in work And advantage is inputs on the some on regards controls that products unfair we very

these our those, landscape -- and So accordingly. business and be the I how those. continue to on But us cost we'll we we'll and why all like be allows being how watching work changes. But support adapt we and are monitor that's very our to to we continue adjust competitive we'll philosophy

Curtis Woodworth

that when Can do some the inventory think through your Okay. is you your Thank just And looking like in quarter evolving supply us view expectations you -- whipsawed strength is into plate?And high then year? and you as on of half chain on XXXMAX. on supply tempered we've past Boeing it the get a second the follow-up is how of you. back talk just kind kind aero modestly of give market a for and volume a slowdown the know how things the But heavily can pretty you're on seen see that in then expectations the more you maybe chain supply basis big the the chain of seems pretty on sheet aero the little terms aero a side. and customer of bit I again the conservative outlook they've their can tempering

Keith Harvey

Sure.

related that supply issues big issues we with may expected comment had your what OEMs something it believe very quite to on to hear demand of think as from chain regard whether a that mentioned rates. don't that inventories. watch it is very Airbus a Boeing to we and we was be I often, I current perspective, compared follow the a we or challenges little those closely And I supply facing for mainly but the build have intently. expected chain with even muted the discussed lot

side. three to so about for as our what on out it's was X% Curtis, ago. you or we pointed in months pause slight a And reason that X% two said And a change

getting customers, a think are was and been be products bit meeting that of MAX over are. caution when a always place they the that And to on that little fairly depend achieve short-lived. to going really I on And not they're made know their of suppliers. and only emphasis they're I but it's now have we'll back their up chain believe supplier to And believe post sync. with And recently our as in goes to rate defense be is on we've what what lot a on going XX None that which the some confidence to We we're commitments or But that's their reason issues handle other We've and strong I They've whether just on conditions outlets pauses see I operations been at back Boeing their very a back they I going our on really judiciously. also including supply But is the putting last has this the it's well. the the in think operations always by I for the has as to how I years? that's that all good diversity to XX by going certain geopolitical always instance. or think here little pause I the to position. in there's platforms the the seen know uncertainty not this any we part refer and reason our there.The in again little take space linear. whatever. or either ramp in And emphasize growing. of ramp for and a that fast outlook. focusing bit for impact strong still and caution.But a sales further inventory for levels the to haste bizjet field the the or of

perhaps it or I helps lately more lot on with minimize five been think did that going years than us that's ago. anything a four

Curtis Woodworth

for Great. Thank you that.

Keith Harvey

you. Thank

Operator

proceed question from question. Benchmark next Sullivan The your Josh with comes Our Company. with Please

Joshua Sullivan

good Hey, morning.

Keith Harvey

Morning.

Neal West

Morning.

Joshua Sullivan

within If for guide How buckets just your folded large and bizjet, aerospace those year? the have space. commercial different mentioned the in we buckets of you think defense, those

Keith Harvey

Yes.

that So, and total up. jets move been how that between said we've looked and to aerospace little move XX% large the for around But XX% XX% at had of outlook commercial they remaining demand XX% those then the -- for various commercial we imagine buckets and and us can bit. our you other components a the

we're growing a see little those been For instance a space defense stronger jet a starting now drive Biz strong, modifier bit. but to to been numbers. is has

commercial of when commercial a sizable aerospace that's large talking we're aerospace our portion business. So the

components monitor stocking very take that we destocking obviously place. well so these all including and And the

is non-commercial perspective And the a up we're in that demand so aerospace and strong. holding I from good say now still on and very very would stocking inventory position right

period like got balance the They're this the rates really on build them on that about don't through focused until think we've year. the that. what I halfway --so good the assessment for short-term So that where XX XX launching I confidence foresee on saw right we to analysis of comments after And there day I Boeing you in over. the they're And our is going FDA. of quality to on Josh think now back with

back believe year. that think those perhaps half be I on is I think they're But impact have absolutely that probably of rates and to adjustments. I changes committed toward So second more a toward second Boeing expected quarter. going of making And to could continued build the the required the focused then more the and

Joshua Sullivan

And as did the as did then into were kind week's announcement with already service ordering of mean and this it were just far hearing that Or distributors? announcement? and centers of Boeing cadence. they and their turn? heading language of body mean their I When kind the ahead turn I

Keith Harvey

us their a give turned suppliers things say but is Good actions actions. very are of would on to in rates dialogue working their to been and to hasn't it has exactly top this. really transparent. good and I just reached having to that of to because then intend discussion forward. a can't going where I reacting resulting and they've then build as really I they're so much good of about just and do. place, been No, in and communication, they the what out it credit levels everything inventory what conversation to and is principals the to They great And Boeing really supply to had trying that put instead ensuring tell other appreciate due openness base expectations open and with focused

impact will fill of all So process and there's be this management any minimum. that I should believe believe I at strong

Joshua Sullivan

Thank Great. you that. for

Keith Harvey

you. Thank

Operator

with with Bill proceed Our comes question. next question Peterson your from JPMorgan. Please

William Peterson

Good everyone. taking morning the Hi. Thanks Yes. questions. for

Keith Harvey

morning Good

William Peterson

you'd line come the first reiteration and that quarter job expectation. the even Yes. I actually the guess Thanks. year. above for just a full margins we Nice But if were in in flat

helpful. to of the the repeat of progression think that the of that in quarter about be the Maybe sort margin of in doesn't to what nature from second maybe like first balance I'd the trajectory year here. sort would was in any understand for on So color one-time quarter how

Keith Harvey

a a to really One, quarter us. about Well had year. about surprise into the the the in first gone we quarter. pricing first happened experience concern compression were build talked we few not that had that we things the did in as Certainly. as pleasant in We

Now I'm there. that some other of of We to I markets not believe that the tend being and one players doing still strongest the attract countries aren't so well. North lot other away. of America taking out with a

So there's that little always price there the outlook some a compression. concern about

into And so that we -- work a the going teams outlook great so on a to job outlook cost big operations. perspective for us did the control from forward.The that normalizing of

into we're the bit improvement what be. to gives cost, high operate efficiencies you first that really for to on plan year. start especially itself.And efficiencies, to expected and really get I'm of that, aerospace took the which that or to good, general which we compare go little now ahead on or into It We some like to good goal. and quarters had tactics the something think the that's we So and in to something, perhaps was strong thing got And you of the is how know managing of production we the see acting some got focused commercial about moving final our pauses little and a just we it's a just of starting toward account. year, having back place of bit where your news would five the with as of which or on of perhaps call be to think off some and aerospace other strong we the very great the And how businesses, improving we've caution a four quarter, year.But a what first talking board. as stated, you quarter, will for pause strength. strategies the last that large is good the finished out deploying continue quarter is got the But the balance balance on through we're thing And as I year are balance strong the the I us tone of that just always the we've goes. better we'll across I it, ultimate

William Peterson

Okay. Yes, insights. for thanks those

to segment it's have see are expecting. understand there Is to you're you're to that general the gives trying I'm perhaps you're improvement out that guess mean you improvement engineering, nice I speak seeing you especially the in more On XX the you the the what could in you confidence. aero general considering, call less. confident now ago, about anything industrial visibility days to and I semiconductors? business

any would visibility just So, this on be segment. helpful

Keith Harvey

the flat Yes. X% to And And mean XXXX. actually had, remind I'll from even probably preface down to just aero, Bill. since the moved and X% we've up on I we've best last year-over-year. just the comment was year exceeded I'll XXXX everyone it year

are sync quarter. believe one us at bar products, our service has a this like and saw I centers we supply we're that ago, the certain extrusion that we've been certain and ended level. point good understand inventory first at we pretty in And markets. demand and we've made solid and through side we really business. help some levels a destocking, March, the into that, then tracking.We've XX-months a I gone point are where in And inventories to years than were for that product at and fairly half products, has which destocking we've the the in a coal albeit and it's back pace my perhaps at rod rise of time our of we notes But the actually can key year So your that lines, tell the about Well, of for begin got the to we first engineering, we look, mine been in and our general it you, canaries comment in while we believe track gets again. lower numbers for saw in talked phases about of

that well on has believe I I same packaging. balance So of the always made going forward the then the comments for that.And bodes year, typically done

through anticipated gone business. side XX-months that first have ending not beverage food it in side indeed destocking the more. see destocking we about on in We And pretty sold and the on the We was about those be in the on have of talking -- pack did we we would had could our We destocking that and products. It had quarter the I been that on discussed. we important. outages

two is the big markets So those ended. destocking

so in that Well, we that of we've that we that's have gives sheet year.And that are especially we other and tremendously one really improve, for we rebound seeing aerospace And our I improving. have wouldn't our for a the us balance and up seeing as on traditionally green confidence seen business. been engineering good market general mentioned destock that comment helpful semiconductor, we're to our the and and semiconductors? you on the marry And a shoots plate and demand mode that's us, of say but the

that's certainly, But So, forward. it go on bar I we think going improve to the as saw rod segment. we and

the So our data for that's behind outlook of engineering. some general

William Peterson

guess bit and the the we Okay. a think can back I first the half here about in helpful. That's second year? should trajectory one of And more. the if in quarter. CapEx how is little sneak in I the quarter light

Neal West

that We a thought the Yes, see of of the be spread little to probably would year lighter quarter then to the quarter more highest be but quarters kind Neal. two bit the last equally first and It's first CapEx, for of definitely Bill. normalizing spend way was. equal to second the really now quarter back the the Hey, was we anticipate. quarters the the will year

that we're look get their going of and have contractors completions. at second the all that roll they really as start the to is to as a So lot big spend where coat paid we line quarter delivering and

William Peterson

that for Thanks additional Okay. color.

Operator

There Harvey for back turn time. now would Keith floor no the comments. at this questions over like I are further to to closing

Keith Harvey

All Have right. being Thanks for when us you we in look everyone Maria, and today. I day. to our with quarter XXXX on results, a thanks again meet good second forward updating July.

Operator

This teleconference. concludes today's

participation. your your you You may time. at disconnect Thank lines for this

Kaiser Aluminum (KALU) 25 Apr 242024 Q1 Earnings call transcript