Kaiser Aluminum Corporation · NASDAQ:KALU
Kaiser Aluminum — Q3 2023 Earnings Presentation
32 slides from Kaiser Aluminum's earnings presentation, Oct 26, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
THIRD QUARTER 2023 EARNINGS CONFERENCE CALL October 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: Commonly Used or Defined Terms and Measures
COMMONLY USED OR DEFINED TERMS AND MEASURES Term/Measure Description Adjusted EPS Reported net income per diluted share (calculated using the treasury stock method) excluding non-run-rate items. Adjusted Net Income Reported net income excluding non-run-rate items. Annualized Quarterly Average Calcul
Slide 6: Third Quarter 2023 Highlights
THIRD QUARTER 2023 HIGHLIGHTS KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 7: Third Quarter 2023 Highlights
THIRD QUARTER 2023 HIGHLIGHTS RESULTS EXCEED OUTLOOK DRIVEN BY STRONG AEROSPACE DEMAND AND CONTINUED SOLID OPERATIONAL EXECUTION ▪ Commercial aerospace demand remained strong; on-track to meet or exceed prior peak levels achieved in 2019 by the end of this year ▪ Packaging beverage container and coa
Slide 8: End Market Demand Trends: Aerospace and Packaging
END MARKET DEMAND TRENDS ANNUALIZED QUARTERLY AVERAGE AEROSPACE PACKAGING 80 140 200 150 190 145 70 120 180 140 60 100 170 135 Millions of Pounds 50 Millions of Pounds 160 130 $ Millions $ Millions 80 40 150 125 60 30 140 120 40 130 115 20 120 110 10 20 110 105 0 0 100 100 2018 2019 2020 2021 2022 2
Slide 9: End Market Demand Trends: General Engineering, Automotive, Extrusions
END MARKET DEMAND TRENDS ANNUALIZED QUARTERLY AVERAGE 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 202
Slide 10: Warrick Priority List
WARRICK PRIORITY LIST REFINED STRATEGY TO ENHANCE LONGER-TERM GROWTH PROSPECTS NEAR-TERM LONGER-TERM EMBEDDED SEVERAL SEASONED KAISER CONTRACT RE-NEGOTIATIONS WITH KEY LEADERSHIP MEMBERS AT WARRICK CUSTOMERS RE-NEGOTIATING CONTRACTS WITH KEY ROLL COAT 4 INVESTMENT STRATEGY TO CUSTOMERS TO HELP MITIG
Slide 11: Third Quarter 2023 Financial Recap
THIRD QUARTER 2023 FINANCIAL RECAP NEAL E. WEST EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 12: Conversion Revenue
CONVERSION REVENUE QUARTERLY CONVERSION REVENUE ANNUAL CONVERSION REVENUE $millions Shipments in millions lbs. $ millions Shipments in millions lbs. $1,461 $1,383 $379 $1,111 $356 $369 $357 1,254 1,215 $322 $856 1,122 314 $697 302 299 299 282 625 502 3Q22 4Q22 1Q23 2Q23 3Q23 2019 2020 2021 2022 LTM
Slide 13: Consolidated Financial Highlights
CONSOLIDATED FINANCIAL HIGHLIGHTS Quarterly Full Year (in $millions except Shipments & EPS) 3Q22 4Q22 1Q23 2Q23 3Q23 2022 LTM Shipments (in millions of lbs.) 282 302 299 314 299 1,254 1,215 Net Sales $749 $776 $808 $814 $744 $3,428 $3,141 Conversion Revenue $322 $356 $369 $379 $357 $1,383 $1,461 As
Slide 14: Adjusted EBITDA and EBITDA Margin
ADJUSTED EBITDA AND EBITDA MARGIN QUARTERLY ADJUSTED EBITDA AND EBITDA MARGIN ANNUAL ADJUSTED EBITDA AND EBITDA MARGIN $MILLIONS EBITDA MARGIN $millions EBITDA margin $64 $209 $47 $48 $185 $188 $151 $142 $29 $30 24.5% 16.8% 21.7% 12.7% 13.3% 16.6% 8.9% 8.4% 12.8% 10.3% 3Q22 4Q22 1Q23 2Q23 3Q23 2019
Slide 15: Outlook
OUTLOOK KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 16: 4Q 2023 Outlook - Aero/High Strength
4Q 2023 OUTLOOK ‒ AERO/HIGH STRENGTH AEROSPACE / HIGH STRENGTH CONVERSION REVENUE $millions Shipments in millions lbs. ▪ Aero/HS shipments expected to increase 3-5% and conversion revenue expected to decline 1-2% vs. 3Q 2023 $131 $134 $122 ▪ Recovery in commercial aerospace trending ahead of initial
Slide 17: 4Q 2023 Outlook - Packaging
4Q 2023 OUTLOOK – PACKAGING PACKAGING CONVERSION REVENUE $millions Shipments in millions lbs. ▪ Packaging shipments expected to decrease 5-6% and conversion $129 $134 $133 $134 revenue expected to be flat to slightly higher vs. 3Q 2023 $118 ▪ Coated food can destocking; product mix reflects less coa
Slide 18: 4Q 2023 Outlook - General Engineering
4Q 2023 OUTLOOK – GENERAL ENGINEERING GENERAL ENGINEERING CONVERSION REVENUE $millions Shipments in millions lbs. ▪ GE shipments expected to decline 1-2% and conversion revenue to decline 2-4% vs. 3Q 2023 ▪ Anticipate typical 4Q seasonality ▪ Destocking for semiconductor plate; import plate availabi
Slide 19: 4Q 2023 Outlook - Automotive Extrusions
4Q 2023 OUTLOOK ‒ AUTOMOTIVE EXTRUSIONS AUTOMOTIVE EXTRUSION CONVERSION REVENUE $millions Shipments in millions lbs. $31 $30 ▪ Auto shipments and conversion revenue expected to remain $28 $25 relatively flat vs. 3Q 2023 $24 ▪ Anticipate typical 4Q seasonal demand ▪ Cautious outlook amid ongoing UAW
Slide 20: 4Q 2023 Summary Outlook
4Q 2023 SUMMARY OUTLOOK ▪ Anticipate 4Q 2023 adjusted EBITDA to be in-line to slightly higher than 4Q 2022 adjusted EBITDA ▪ Focus remains on: ▪ Cost reductions ▪ Efficiency improvements ▪ Managing higher inflationary & other costs ▪ Reduction of net debt leverage ▪ Significant progress to stabilize
Slide 21: Closing Remarks
CLOSING REMARKS KEITH A. HARVEY PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 22: Summary
SUMMARY ▪ Strong diversified portfolio - secular demand growth for aerospace, packaging, and automotive with solid long-term market dynamics continuing to support growth in general engineering applications ▪ Solid market position; strong customer relationships and multi-year contracts with strategic
Slide 23: Appendix
APPENDIX
Slide 24: Sales Analysis by Application - Quarterly
SALES ANALYSIS BY APPLICATION - QUARTERLY 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Shipments (lbs, mm) Aero & High Strength 66.4 48.2 27.3 31.4 36.1 40.8 42.1 42.6 45.5 48.3 38.0 54.7 58.2 63.9 64.2 Packaging - - - - - 185.9 173.6 182.2 174.7 179.8 147.5 153.3 153.7
Slide 25: Sales Analysis by Application - Annual
SALES ANALYSIS BY APPLICATION - ANNUAL FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LTM Shipments (lbs, mm) Aero & High Strength 248.8 273.6 173.3 161.6 186.5 241.1 Packaging - - - 541.7 655.3 624.7 General Engineering 266.9 236.3 235.6 298.2 303.9 232.9 Automotive Extrusions 104.4 94.3 84.1 94.0 96.5 10
Slide 26: Reconciliation of Net Sales to Conversion Revenue - Quarterly
RECONCILIATION OF NET SALES TO CONVERSION REVENUE – QUARTERLY 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Net Sales ($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 $ 223.3 Packagi
Slide 27: Reconciliation of Net Sales to Conversion Revenue - Annual
RECONCILIATION OF NET SALES TO CONVERSION REVENUE – ANNUAL FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LTM Net Sales ($mm) Aero & High Strength $ 739.4 $ 803.2 $ 537.9 $ 533.7 $ 676.1 $ 845.7 Packaging - - - 1,119.3 1,585.3 1,366.2 General Engineering 546.0 480.1 458.8 706.1 883.8 649.7 Automotive Extru
Slide 28: 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 3Q23 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 $ 5.4 1 1.3 14.0 5.1 (2.3) 10.0
Slide 29: Adjusted Net Income and EPS - Annual
ADJUSTED NET INCOME AND EPS - ANNUAL (in $ millions except EPS) 2019 2020 2021 2022 LTM Reported Net Income (Loss) $ 62.0 $ 28.8 $ (18.5) $ (29.6) $ 13.2 Operating NRR Items 34.5 18.1 28.9 31.0 29.4 Non-Operating NRR Items 26.9 4.7 38.1 (4.6) (9.4) Tax impact of above NRR items (15.0) (5.6) (15.9) (
Slide 30: 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 3Q23 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.
Slide 31: 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 Consolidated - Reported Net Income (Loss) $ 62.0 $ 28.8 $ (18.5) $ (29.6) $ 13.3 Interest Expense 24.6 40.9 49.5 48.3 47.2 Other Expense (Income) 20.7 1.4 38.9 (6.4) (8.0) Income Tax Provision (
Slide 32: www.KaiserAluminum.com
www.KaiserAluminum.com