Kaiser Aluminum(KALU) - 2024 Q3 - Quarterly Results

Kaiser Aluminum Q3 2024 Financial Results Financial & Operational Highlights Kaiser Aluminum reported stable financial performance in Q3 2024, highlighting progress on strategic initiatives like margin expansion at Warrick packaging facility, with a $0.77 per share quarterly dividend declared Q3 2024 Key Metrics | Metric | Value | | :--- | :--- | | Net Sales | $748 Million | | Conversion Revenue | $362 Million | | Net Income | $12 Million | | Net Income per Diluted Share | $0.74 | | Adjusted Net Income | $8 Million | | Adjusted Net Income per Diluted Share | $0.51 | | Adjusted EBITDA | $50 Million | | Adjusted EBITDA Margin | 13.9% | | Quarterly Dividend | $0.77 per share | - Management emphasized strong progress on strategic initiatives and the execution of a margin expansion plan, with performance enhancements at the Warrick packaging facility expected to be complete by the end of 2024, providing a clear path to sustained margin improvement[2] Consolidated Financial Performance Q3 2024 saw net sales increase, conversion revenue grow 1%, and Adjusted EBITDA rise to $50 million with margin improving to 13.9% YoY Consolidated Results Summary (Q3 & Nine Months Ended Sep 30) | Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | :--- | :--- | | Shipments (millions of lbs.) | 292 | 299 | 880 | 913 | | Net Sales ($M) | $748 | $744 | $2,259 | $2,365 | | Conversion Revenue ($M) | $362 | $357 | $1,098 | $1,105 | | Net Income ($M) | $12 | $5 | $40 | $40 | | Diluted EPS ($) | $0.74 | $0.34 | $2.44 | $2.46 | | Adjusted Net Income ($M) | $8 | $7 | $36 | $35 | | Adjusted Diluted EPS ($) | $0.51 | $0.46 | $2.18 | $2.14 | | Adjusted EBITDA ($M) | $50 | $48 | $166 | $158 | | Adjusted EBITDA Margin (%) | 13.9% | 13.3% | 15.1% | 14.3% | - Reported net income for Q3 2024 was $12 million ($0.74/share), up from $5 million ($0.34/share) in Q3 2023[7] - Adjusted net income was $8 million, compared to $7 million in the prior year period[7] - Adjusted EBITDA increased by $2 million YoY to $50 million in Q3 2024, with the margin expanding to 13.9%[8] - This was primarily driven by an increase in conversion revenue, partially offset by higher energy costs and a larger GAAP LIFO charge[8] Segment Performance Q3 2024 packaging conversion revenue increased, aerospace/high strength declined, and other segments experienced modest growth Q3 2024 Segment Revenue Performance (YoY) | Application Segment | Net Sales ($M) | Conversion Revenue ($M) | Conversion Revenue Change (YoY) | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | Aerospace/High Strength | $213 | $128 | -5% | 7% decrease in shipments due to supply chain challenges | | Packaging | $320 | $128 | +9% | Improved product mix and pricing | | General Engineering | $151 | $76 | Modest Increase | 5% increase in shipments with stable pricing | | Automotive Extrusions | $62 | $29 | +3% | Improved pricing and product mix | Cash Flow and Liquidity Total liquidity was $595 million as of Sep 30, 2024, with no revolving credit borrowings, enabling capital investments and dividend payments - In the first nine months of 2024, cash was used to fund $47 million of working capital, $125 million of capital investments, $31 million of interest payments, and $38 million in dividends[9] - Total liquidity stood at $595 million as of September 30, 2024, with no outstanding borrowings under the revolving credit facility[9] - The company declared a quarterly cash dividend of $0.77 per share, payable on November 15, 2024[9] 2024 Outlook The company reaffirmed its 2024 guidance, expecting conversion revenue growth and Adjusted EBITDA margin improvement, alongside mixed segment outlooks - The company's end-market outlook for the remainder of 2024 is as follows[10] - Aerospace/High Strength: Cautious near-term outlook due to customer commercial and labor negotiations - Packaging: Momentum and performance improvements expected to continue, with margin improvement driven by the new coating line starting in 2025 - General Engineering: Destocking has concluded, with shipments now better aligned with demand - Automotive Extrusions: Positive outlook as light/heavy truck and SUV platform production outpaces broader auto rates - For the full year 2024, the Company expects overall conversion revenue to grow up to 1% compared to 2023 and Adjusted EBITDA margin to improve by 50 to 100 basis points compared to 2023[11] Financial Statements Statements of Consolidated Income Q3 2024 net sales were $747.7 million, with net income significantly increasing to $12.0 million, while nine-month net income remained stable Consolidated Income Statement Highlights (in millions) | Account | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $747.7 | $743.6 | $2,258.6 | $2,365.3 | | Operating Income | $17.4 | $19.1 | $65.6 | $74.1 | | Net Income | $12.0 | $5.4 | $39.7 | $39.6 | | Diluted EPS | $0.74 | $0.34 | $2.44 | $2.46 | Consolidated Balance Sheets As of Sep 30, 2024, total assets increased to $2.31 billion, total liabilities rose, and stockholders' equity grew to $667.0 million Consolidated Balance Sheet Highlights (in millions) | Account | As of Sep 30, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $994.9 | $990.2 | | Total Assets | $2,311.4 | $2,267.4 | | Total Current Liabilities | $382.2 | $370.0 | | Long-term Debt, net | $1,041.2 | $1,039.8 | | Total Liabilities | $1,644.4 | $1,615.2 | | Total Stockholders' Equity | $667.0 | $652.2 | Summary of Cash Flows Nine-month operating cash flow decreased to $123.7 million, investing activities used $118.6 million, and financing activities remained stable Nine Months Ended Sep 30 - Cash Flow Summary (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Operating Activities | $123.7 | $137.6 | | Investing Activities | $(118.6) | $(105.0) | | Financing Activities | $(41.8) | $(41.2) | Reconciliation of Non-GAAP Measures The company provided reconciliations for its non-GAAP measures, including Adjusted EBITDA and Adjusted Net Income for Q3 2024 Reconciliation to Adjusted EBITDA (Q3, in millions) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP Operating Income | $17.4 | $19.1 | | Non-run-rate (NRR) items | $4.0 | $1.3 | | Operating Income, excluding NRR | $21.4 | $20.4 | | Depreciation and Amortization | $29.0 | $27.2 | | Adjusted EBITDA | $50.4 | $47.6 | Reconciliation to Adjusted Net Income (Q3, in millions) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP Net Income | $12.0 | $5.4 | | Operating NRR items | $4.0 | $1.3 | | Non-operating NRR items | $(8.6) | $1.4 | | Tax impact of NRR items | $1.0 | $(0.7) | | Adjusted Net Income | $8.4 | $7.4 | | Adjusted EPS, diluted | $0.51 | $0.46 |