Kaiser Aluminum Corporation · NASDAQ:KALU
Kaiser Aluminum — Q2 2023 Earnings Presentation
31 slides from Kaiser Aluminum's earnings presentation, Jul 26, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
SECOND QUARTER 2023 EARNINGS CONFERENCE CALL July 26, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The information contained in this presentation includes statements based on management’s current expectations, estimates and projections that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements
Slide 3: Non-Run-Rate Items
NON-RUN-RATE ITEMS Non-run-rate items to us are items that, while they may recur from period to period, (1) are particularly material to results, (2) impact costs as a result of external market factors and (3) may not recur in future periods if the same level of underlying performance were to occur.
Slide 4: Non-GAAP Financial Measures
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 calculate
Slide 5: Second Quarter 2023 Highlights
SECOND QUARTER 2023 HIGHLIGHTS KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 6: Second Quarter 2023 Highlights
SECOND QUARTER 2023 HIGHLIGHTS BETTER THAN EXPECTED 2Q RESULTS DRIVEN BY SOLID EXECUTION AND STRONG AEROSPACE DEMAND ▪ Commercial aerospace momentum continues to recover faster than anticipated; annualized 2Q23 conversion revenue ahead of prior peak ▪ Packaging shipments exceeded expectations despit
Slide 7: End Market Demand Trends: Aerospace and Packaging
END MARKET DEMAND TRENDS ANNUALIZED QUARTERLY AVERAGE¹ AEROSPACE PACKAGING 200 150 80 140 190 145 70 120 180 140 60 170 135 100 Millions of Pounds Millions of Pounds 50 160 130 $ Millions $ Millions 80 40 150 125 60 140 120 30 130 115 40 20 120 110 10 20 110 105 0 0 100 100 2018 2019 2020² 2021 2022
Slide 8: End Market Demand Trends: General Engineering and Automotive
END MARKET DEMAND TRENDS ANNUALIZED QUARTERLY AVERAGE¹ GENERAL ENGINEERING AUTOMOTIVE EXTRUSIONS 100 100 40 40 90 90 35 35 80 80 30 30 70 70 Millions of Pounds Millions of Pounds 25 25 60 60 $ Millions $ Millions 50 50 20 20 40 40 15 15 30 30 10 10 20 20 5 5 10 10 0 0 0 0 2018 2019 2020 2021 2022 20
Slide 9: Second Quarter 2023 Highlights
SECOND QUARTER 2023 HIGHLIGHTS BETTER THAN EXPECTED 2Q RESULTS DRIVEN BY SOLID EXECUTION AND STRONG AEROSPACE DEMAND ▪ Commercial aerospace momentum continues to recover faster than anticipated; annualized 2Q23 conversion revenue ahead of prior peak ▪ Packaging shipments exceeded expectations despit
Slide 10: Second Quarter 2023 Financial Recap
SECOND QUARTER 2023 FINANCIAL RECAP NEAL E. WEST EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 11: Conversion Revenue
CONVERSION REVENUE QUARTERLY CONVERSION REVENUE1 ANNUAL CONVERSION REVENUE1 $millions Shipments in millions lbs. $ millions Shipments in millions lbs. $1,383 $1,425 $379 $1,111 $356 $369 1,254 $351 1,197 $322 $856 1,122 335 $697 302 299 314 282 625 502 2Q22 3Q22 4Q22 1Q23 2Q23 2019 2020² 2021³ 2022
Slide 12: Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTS Quarterly Full Year (in $millions except Shipments & EPS) 2Q22 3Q22 4Q22 1Q23 2Q23 2022 LTM⁷ Shipments (in millions of lbs.) 335 282 302 299 314 1,254 1,197 Net Sales $954 $749 $776 $808 $814 $3,428 $3,147 Conversion Revenue 1 $351 $322 $356 $369 $379 $1,383 $1,425
Slide 13: Adjusted EBITDA and EBITDA Margin
ADJUSTED EBITDA AND EBITDA MARGIN QUARTERLY ADJUSTED EBITDA1 AND EBITDA MARGIN2 ANNUAL ADJUSTED EBITDA1 AND EBITDA MARGIN2 $millions EBITDA Margin $millions EBITDA margin $64 $209 $47 $185 $169 $151 $142 $31 $30 24.5% $29 16.8% 21.7% 12.7% 16.6% 8.9% 8.9% 8.4% 11.8% 10.3% 2Q22 3Q22 4Q22 1Q23 2Q23 20
Slide 14: Outlook
OUTLOOK KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 15: 3Q 2023 Outlook - Aero/High Strength
3Q 2023 OUTLOOK ‒ AERO/HIGH STRENGTH AEROSPACE / HIGH STRENGTH CONVERSION REVENUE1 $millions Shipments in millions lbs. ▪ Aero/HS shipments and conversion revenue expected to increase $131 $122 2-4% from strong 2Q 2023 performance $103 ▪ Strong year over year momentum expected to continue into $88 $
Slide 16: 3Q 2023 Outlook - Packaging
3Q 2023 OUTLOOK – PACKAGING PACKAGING CONVERSION REVENUE 1 $millions Shipments in millions lbs. ▪ Packaging shipments expected to increase 1-2% and conversion revenue expected to be flat vs. 2Q 2023 $146 ▪ Continued beverage can destocking; product mix reflects $129 $134 $133 $134 less coated produc
Slide 17: 3Q 2023 Outlook - General Engineering
3Q 2023 OUTLOOK – GENERAL ENGINEERING GENERAL ENGINEERING CONVERSION REVENUE 1 $millions Shipments in millions lbs. ▪ GE shipments expected to decline 7-10% and conversion revenue to decline 10-15% vs. 2Q 2023 $92 ▪ Softening demand for semiconductor plate and extruded rod $90 $89 $80 $81 and bar pr
Slide 18: 3Q 2023 Outlook - Automotive Extrusions
3Q 2023 OUTLOOK ‒ AUTOMOTIVE EXTRUSIONS AUTOMOTIVE EXTRUSION CONVERSION REVENUE 1 $millions Shipments in millions lbs. $31 $30 ▪ Auto shipments and conversion revenue expected to decline $25 $24 $25 3-5% vs. 2Q 2023; reflecting typical seasonal demand ▪ 2023 N.A. build rates expected to increase to
Slide 19: 3Q 2023 Summary Outlook
3Q 2023 SUMMARY OUTLOOK ▪ Remain well positioned to execute in the current demand environment ▪ 3Q 2023 adjusted EBITDA1 and adjusted EBITDA margin2 to be in line with our adjusted 1Q 2023 results ▪ Focus remains on: ▪ Cost reductions ▪ Efficiency improvements ▪ Managing higher inflationary & other
Slide 20: Closing Remarks
CLOSING REMARKS KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 21: Summary
SUMMARY ▪ Strong diversified portfolio - secular demand growth for aerospace, packaging, and automotive with solid market dynamics continuing to support growth in general engineering applications ▪ Solid market position; strong customer relationships and multi-year contracts with strategic partners
Slide 22: Appendix
APPENDIX
Slide 23: Sales Analysis by Application - Quarterly
SALES ANALYSIS BY APPLICATION - QUARTERLY 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Shipments (lbs, mm) Aero & High Strength 66.4 48.2 27.3 31.4 36.1 40.8 42.1 42.6 45.5 48.3 38.0 54.7 58.2 63.9 Packaging - - - - - 185.9 173.6 182.2 174.7 179.8 147.5 153.3 153.7 163.3 Gen
Slide 24: Sales Analysis by Application - Annual
SALES ANALYSIS BY APPLICATION - ANNUAL FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LTM⁴ Shipments (lbs, mm) Aero & High Strength 248.8 273.6 173.3 161.6 186.5 214.8 Packaging - - - 541.7 655.3 617.8 General Engineering 266.9 236.3 235.6 298.2 303.9 249.5 Automotive Extrusions 104.4 94.3 84.1 94.0 96.5 1
Slide 25: Conversion Revenue - Quarterly
RECONCILIATION OF NET SALES TO CONVERSION REVENUE – QUARTERLY 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Net Sales ($mm) Aero & High Strength $ 196.0 $ 144.6 $ 100.9 $ 96.4 $ 111.7 $ 133.9 $ 142.0 $ 146.1 $ 176.6 $ 175.4 $ 140.8 $ 183.3 $ 214.0 $ 225.1 Packaging - - - - -
Slide 26: Conversion Revenue - Annual
RECONCILIATION OF NET SALES TO CONVERSION REVENUE – ANNUAL FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LTM⁴ Net Sales ($mm) Aero & High Strength $ 739.4 $ 803.2 $ 537.9 $ 533.7 $ 676.1 $ 763.2 Packaging - - - 1,119.3 1,585.3 1,395.5 General Engineering 546.0 480.1 458.8 706.1 883.8 706.4 Automotive Extr
Slide 27: Adjusted Net Income and EPS - Quarterly
ADJUSTED NET INCOME AND EPS - QUARTERLY (in $ millions except EPS) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Reported Net Income (Loss) $ 29.1 $ (6.6) $ 0.4 $ 5.9 $ 4.5 $ (22.4) $ (2.3) $ 1.7 $ 8.1 $ (13.8) $ 2.5 $ (26.4) $ 15.9 $ 18.3 1 2 Operating NRR Items 1.3 14.0 5.1
Slide 28: Adjusted Net Income and EPS - Annual
ADJUSTED NET INCOME AND EPS - ANNUAL (in $ millions except EPS) 2019 2020 2021 2022 LTM 4 Reported Net Income (Loss) $ 62.0 $ 28.8 $ (18.5) $ (29.6) $ 10.3 1 Operating NRR Items 34.5 18.1 28.9 31.0 28.0 2 Non-Operating NRR Items 26.9 4.7 38.1 (4.6) (18.1) Tax impact of above NRR items (15.0) (5.6) (
Slide 29: Reconciliation of Reported Net Income to Adjusted EBITDA - Quarterly
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED EBITDA - QUARTERLY (in $ millions) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Consolidated - Reported Net Income (Loss) $ 29.1 $ (6.6) $ 0.4 $ 5.9 $ 4.5 $ (22.4) $ (2.3) $ 1.7 $ 8.1 $ (13.8) $ 2.5 $ (26.4) $ 15.9 $ 18.3 Int
Slide 30: Reconciliation of Reported Net Income to Adjusted EBITDA - Annual
RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED EBITDA - ANNUAL (in $ millions) 2019 2020 2021 2022 LTM ⁴ Consolidated - Reported Net Income (Loss) $ 62.0 $ 28.8 $ (18.5) $ (29.6) $ 10.3 Interest Expense 24.6 40.9 49.5 48.3 47.9 Other Expense (Income) 20.7 1.4 38.9 (6.4) (22.8) Income Tax Provisio
Slide 31: www.KaiserAluminum.com
www.KaiserAluminum.com