Kaiser Aluminum Corporation · NASDAQ:KALU
Kaiser Aluminum — Investor Presentation (March 2010)
41 slides from Kaiser Aluminum's investor presentation, Mar 30, 2010
Slide 1: Investor Presentation March 2010
Investor Presentation March 2010
Slide 2: Forward-Looking Statements
2 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. You should ke
Slide 3: Non-Run-Rate Items
3 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 occu
Slide 4: Non-GAAP Financial Measures
4 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 calcula
Slide 5: Agenda
5 Agenda Company Overview Business Overview Market Dynamics Financial Review
Slide 6: Overview of Kaiser Aluminum Fabricated Products
6 Overview of Kaiser Aluminum Forgings Headquarters We produce semi-fabricated specialty aluminum products for select end market applications Our chosen end markets offer strong opportunities for profitable growth Aerospace and defense General engineering Automotive We manage the business to be meta
Slide 7: Fabricated Products Sales Growth
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 536.8 396.1 344.2 376 460.6 486.7 526.1 547.8 558.5 428.5 Net Sales 813.4 655.1 549.1 598.6 809.3 939 1158.1 1298.3 1336.8 897.1 VA $/# '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 536.8 396.1 344.2 376 460.6 486.7 526.1 547.8 558.5 428.5 Dollar
Slide 8: Consistent Operating Cash Flow
8 Consistent Operating Cash Flow 2005 2006 2007 2008 2009 East 97 105 165 130 79 1 Adjusted EBITDA = Operating Income (before non-run-rate items) plus depreciation and amortization, for details refer to 2009 form 10-K and our reconciliation of reported operating income to adjusted EBITDA in the appe
Slide 9: Investment Considerations
9 Investment Considerations Leading positions in strategic market segments High barriers to entry Low-cost producer and supplier of choice Blue chip customer base Well positioned to prosper as the economic rebound takes hold Approximately $250 million internal investments since 2006; full benefit ye
Slide 10: Experienced Management
10 Fabricated Products Operations Experienced Management Jack Hockema President, CEO, Chairman Kaiser - 19 years Industry - 41 years John Barneson SVP Corporate Development Kaiser - 34 years Industry - 34 years Dan Rinkenberger SVP & CFO Kaiser - 19 years Industry - 19 years John Donnan SVP & Genera
Slide 11: Agenda
11 Agenda Company Overview Business Overview Market Dynamics Financial Review
Slide 12: Fabricated Products Portfolio Transition
12 Fabricated Products Portfolio Transition Offering included non-strategic products: Can stock Common alloy sheet & plate Castings Non-automotive forgings Forged truck wheels Competitive strength in strategic applications: Aerospace & defense General engineering Automotive Focused on Demanding Appl
Slide 13: Served Market Segment Focus
13 Served Market Segment Focus Focused on Demanding Applications Where We Have Competitive Strength Global Flat Rolled Products Market North American Extrusion Market Typical market size estimates from CRU, Aluminum Association, and Kaiser (based on industry shipments) Heat Treat Sheet & Plate Gener
Slide 14: Well-positioned in Strategic Market Segments
14 Well-positioned in Strategic Market Segments 1 Value-added revenue = net sales less hedged cost of alloyed metal Strong Competitive Position Market presence Leading positions in strategic market segments High barriers to entry Competitive strengths Broad product offering Best-in-Class service com
Slide 15: Blue Chip Customer Base
15 Blue Chip Customer Base OEMs Service Centers
Slide 16: Demand Outlook is Positive
16 Demand Outlook is Positive Commercial Aerospace Trend to larger aircraft and monolithic design Strong and diversified order backlog for aircraft Build rates climbing General Engineering Economic recovery will drive demand Restocking will accompany recovery Automotive CAFE ? growing aluminum conte
Slide 17: Financial Strength to Support Growth Initiatives
17 Financial Strength to Support Growth Initiatives Prudent liquidity & capital management Moderate leverage EVA-based investment criteria Significant U.S. tax attributes1 (~$900 million) Strong cash flows Profitable with positive cash flow through 2009 Maintained dividend through the downturn $250
Slide 18: Internal Investment Initiatives
18 Internal Investment Initiatives Trentwood HT Plate Other (quality, efficiency, capacity) Kalamazoo Rod & Bar World-class heat treat plate expansion Trentwood, WA Completed late in 2008 New, world-class rod & bar plant Kalamazoo, MI Fully operational late 2010 Additional investments for quality an
Slide 19: Trentwood Heat Treat Plate Expansion
19 Trentwood Heat Treat Plate Expansion Continuous Heat Treat Furnace Plate Flow and Stretcher More than doubled heat treat plate capacity for aerospace and general engineering applications Expanded product offering to access growing heavy-gauge plate market Supported by underlying customer contract
Slide 20: New Kalamazoo Rod / Bar Plant
20 New Kalamazoo Rod / Bar Plant 4000T Press Stretcher & Puller Equipment World-class Kaiser Select(r) remelt / extrusion plant Designed to position Kaiser as a premium quality, low cost producer of rod and bar for general engineering applications Expected to provide capacity for growing sales of ex
Slide 21: Agenda
21 Agenda Company Overview Business Overview Market Dynamics Financial Review
Slide 22: Aerospace / High Strength Products / Applications
22 Commercial Aircraft Joint Strike Fighter Business Jets SABOT (Munitions) Aerospace / High Strength Products / Applications Products Plate Sheet & Coil Cold Finish Rod & Bar Seamless Drawn Tube High strength alloys (2x, 7x) Furnace heat treat processing High barriers to entry Metallurgical technol
Slide 23: Commercial Aerospace Trends
23 Commercial Aerospace Trends Global economic growth drives growth in revenue passenger miles Longer routes and larger payloads drive demand for larger aircraft Rising fuel costs, aging fleet drive demand for replacement aircraft Source: Airline Monitor Jan/Feb 2010 Long-term Trends 1980 1981 1982
Slide 24: Aerospace Plate Demand Drivers
24 Aerospace Plate Demand Drivers Long-term Demand Drivers Aerospace Heat Treat Plate Growing build rates Larger airframes Monolithic design Composite materials Graphic Representation Larger Airframes and Monolithic Design Relative Aircraft Weight Plate Consumption per Aircraft Source: Kaiser estima
Slide 25: Aerospace / High Strength Trends
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 75.9 93.7 50.9 70.3 91.3 124.9 141.7 155 157.7 144.7 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 536.8 396.1 344.2 376 460.6 486.7 526.1 547.8 558.5 428.5 Dollars 148.4 172.9 97 116.1 149.1 223.6 255.6 297.4 323.8 278.1 Dollars per Pound 1.96 1
Slide 26: Aerospace / High Strength Summary
26 Short-term Trends Long-term Trends Aerospace / High Strength Summary 1 15 14 13 12 11 10 9 8 7 6 5 4 3 2 YEARS Long-term demand outlook is positive Strong, diversified backlog for commercial aircraft Increased build rates pending (Boeing and Airbus) Larger aircraft + monolithic design F-35 Joint
Slide 27: General Engineering Products / Applications
27 General Engineering Products / Applications Products Plate Sheet Rod & Bar Pipe & Tube 6x series alloys Performance attributes Machinability Ballistics Representative Applications Tooling Plate Semiconductor Vacuum Chambers Air Cylinder Tubes Hydraulic Valve Bodies Armored Vehicles Parts From Sel
Slide 28: General Engineering Trends
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 275.1 173.6 186.9 196.7 231.8 206.8 226.6 245.8 258.1 189 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 536.8 396.1 344.2 376 460.6 486.7 526.1 547.8 558.5 428.5 Dollars 192.7 120.6 123.8 122.6 168.4 168.2 191.4 225.3 248.9 164.7 Dollars per Poun
Slide 29: General Engineering Summary
29 Long-term Trends General Engineering Summary 1 15 14 13 12 11 10 9 8 7 6 5 4 3 2 YEARS Long-term demand Economic recovery, restocking NA industrial growth Relatively strong armor demand Kaiser is well-positioned Strong market presence Broad product offering Best-in-Class service commitment Kaiser
Slide 30: Automotive Extrusions Products / Applications
30 Automotive Extrusions Products / Applications Products Custom extrusions Seamless extruded and drawn tube 4x/6x/7x series alloys Performance attributes Mechanical properties Machinability Formability Energy absorption Representative Applications Characteristics Drive Shafts Bumper Systems ABS Ant
Slide 31: Automotive Extrusion Trends
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Shipments 536.8 396.1 344.2 376 460.6 486.7 526.1 547.8 558.5 428.5 Builds 17.2 15.5 16.4 15.9 15.8 15.8 15.3 15.1 12.6 8.6 # per vehicle 18 20.4 20.3 22.2 24.5 24.7 25.8 26 26.3 25.9 31 Automotive Extrusion Trends Kaiser Value-added Revenue North American Veh
Slide 32: Automotive Extrusions Summary
32 Short-term Trends Long-term Trends Automotive Extrusions Summary 1 15 14 13 12 11 10 9 8 7 6 5 4 3 2 YEARS Long-term demand Cyclic auto build expected to return to pre-recession rates Growing extrusion content per vehicle Kaiser well-positioned Balanced customer mix of traditional and new domesti
Slide 33: Agenda
33 Agenda Company Overview Business Overview Market Dynamics Financial Review
Slide 34: Financial Strength and Flexibility
34 Financial Strength and Flexibility Strong cash flows Maintain revolving credit facility for liquidity cushion Prudent liquidity & debt management Prudent leverage guidelines Available debt capacity to fund additional growth EVA-based investment criteria Significant U.S. tax attributes1 (~$900 mil
Slide 35: Metal Price Neutrality
35 Metal Price Neutrality PRICING MECHANISM HOW IT WORKS EFFECT Spot Metal pass-through Index-Based Metal pass-through Firm Requires back-to-back hedge1 Kaiser can change selling price up to the point of shipment Price is a contractually negotiated conversion spread that "floats" over a published in
Slide 36: Capital Spending Funded From Adjusted EBITDA
36 Capital Spending Funded From Adjusted EBITDA1 20052 20062 2007 2008 INTERNALLY FUNDED INVESTMENT Millions of Dollars Significant growth capital investments through 2009 Trentwood heat treat plate expansion (completed in 2008) Kalamazoo rod and bar project (will be fully operational in late 2010)
Slide 37: Strong Cash Flow & Investment During Recession
37 Strong Cash Flow & Investment During Recession Beginning Net Cash1 EBITDA2 Working Capital3 Other (Net) 1 Beginning Net Cash includes $36.0 million in revolving credit line borrowings 2 EBITDA = Operating Income (before non run rate items) plus depreciation and amortization 3 Working Capital = in
Slide 38: Additional Financial Considerations
38 Additional Financial Considerations SIGNIFICANT TAX ATTRIBUTES1 VEBA2 OBLIGATIONS Approximately $900 million of Net Operating Loss carryforwards and other tax attributes Applies to US and state pretax income Single-digit percentage cash tax rate (lower than book tax rate) Profit-sharing formula b
Slide 39: Investment Considerations
Investment Considerations Leading positions in strategic market segments Well positioned to prosper as economic rebound takes hold Strong platform for long-term organic growth and complementary acquisitions Financial strength and flexibility to support growth initiatives Experienced management team
Slide 40: Reconciliation of Reported Operating Income to Adjusted EBITDA
40 Reconciliation of Reported Operating Income to Adjusted EBITDA1 1 Adjusted EBITDA = Operating Income (before non-run-rate items) plus depreciation and amortization 2 Totals may not sum due to rounding 3 NRR = non-run-rate items
Slide 41: Kaiser Aluminum
KAISER ALUMINUM