PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the company's unaudited consolidated financial statements and notes, reflecting a retrospective change in inventory valuation from LIFO to WAC Consolidated Balance Sheets (Unaudited) The balance sheets show an increase in total assets and liabilities from year-end 2024 to June 30, 2025 Consolidated Balance Sheet Summary | Metric | As of June 30, 2025 (Millions $) | As of December 31, 2024 (As Adjusted, Millions $) | | :--------------------------------- | :------------------------------- | :------------------------------------------------ | | Assets | | | | Total current assets | 1,150.6 | 1,074.6 | | Total assets | 2,512.8 | 2,409.9 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | 426.2 | 400.5 | | Total liabilities | 1,736.8 | 1,666.8 | | Total stockholders' equity | 776.0 | 743.1 | - Total assets increased by $102.9 million from December 31, 2024, to June 30, 2025, primarily driven by increases in trade receivables and property, plant, and equipment, net11 - Total liabilities increased by $70.0 million, mainly due to higher accounts payable and long-term debt, net11 Statements of Consolidated Income (Unaudited) The income statements reflect year-over-year growth in net sales and net income for both the quarter and six-month periods Consolidated Income Summary | Metric | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (As Adjusted, Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :--------------------------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Net sales | 823.1 | 773.4 | 1,600.5 | 1,510.9 | | Operating income | 38.0 | 36.2 | 79.4 | 60.5 | | Net income | 23.2 | 18.9 | 44.8 | 37.1 | | Basic net income per common share | 1.44 | 1.18 | 2.77 | 2.31 | | Diluted net income per common share | 1.41 | 1.15 | 2.72 | 2.27 | - Net sales increased by $49.7 million (6%) for the quarter and $89.6 million (6%) for the six months ended June 30, 2025, compared to the prior year periods14 - Net income increased by $4.3 million (22.8%) for the quarter and $7.7 million (20.8%) for the six months ended June 30, 2025, compared to the prior year periods14 Statements of Consolidated Comprehensive Income (Unaudited) Comprehensive income grew year-over-year, driven by higher net income and other comprehensive income from cash flow hedges Consolidated Comprehensive Income Summary | Metric | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (As Adjusted, Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :----------------------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Net income | 23.2 | 18.9 | 44.8 | 37.1 | | Other comprehensive income, net of tax | 4.1 | 3.2 | 6.7 | 1.1 | | Comprehensive income | 27.3 | 22.1 | 51.5 | 38.2 | - Comprehensive income increased by $5.2 million (23.5%) for the quarter and $13.3 million (34.8%) for the six months ended June 30, 2025, driven by higher net income and other comprehensive income16 - Other comprehensive income, net of tax, for the six months ended June 30, 2025, was significantly higher at $6.7 million compared to $1.1 million in the prior year, primarily due to cash flow hedges16 Statements of Consolidated Stockholders' Equity (Unaudited) Stockholders' equity increased during the first half of 2025, primarily due to net income offsetting cash dividend payments Consolidated Stockholders' Equity Summary | Metric | As of Dec 31, 2024 (As Adjusted, Millions $) | As of June 30, 2025 (Millions $) | | :--------------------------------- | :------------------------------------------- | :------------------------------- | | Total Stockholders' Equity | 743.1 | 776.0 | | Net income (6 months) | - | 44.8 | | Other comprehensive income (6 months) | - | 6.7 | | Cash dividends declared (6 months) | - | (25.7) | | Amortization of unearned equity compensation (6 months) | - | 8.5 | - Total stockholders' equity increased from $743.1 million at December 31, 2024, to $776.0 million at June 30, 2025, primarily due to net income and other comprehensive income, partially offset by cash dividends20 - Cash dividends declared were $0.77 per common share for both the March 31, 2025, and June 30, 2025 quarters, totaling $25.7 million for the six months ended June 30, 20252130 Statements of Consolidated Cash Flows (Unaudited) Cash from operations decreased year-over-year due to working capital changes, while financing activities improved from net borrowings Consolidated Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Operating activities | 72.9 | 89.6 | | Investing activities | (81.9) | (73.6) | | Financing activities | 4.0 | (28.0) | | Net decrease in cash | (5.0) | (12.0) | | Cash at end of period | 32.9 | 88.7 | - Net cash provided by operating activities decreased to $72.9 million for the six months ended June 30, 2025, from $89.6 million in the prior year, mainly due to changes in working capital30155156 - Net cash used in investing activities increased to $81.9 million, primarily due to higher capital expenditures30 - Net cash provided by financing activities was $4.0 million, a significant improvement from $28.0 million used in the prior year, driven by net borrowings under the Revolving Credit Facility30 Notes to Interim Consolidated Financial Statements – Unaudited These notes provide detailed explanations of accounting policies, financial statement line items, and other required disclosures Note 1. Basis of Presentation and Recent Accounting Pronouncements This note details the basis of financial statement presentation, including a significant retrospective change in inventory valuation from LIFO to WAC - Effective January 1, 2025, the Company changed its inventory valuation methodology from LIFO to WAC, retrospectively applying this change to all prior periods presented to improve comparability and better reflect the physical flow of goods38 - New accounting pronouncements (ASU 2023-06, ASU 2023-09, ASU 2024-03) are not expected to have a material impact on the Company's consolidated financial statements, primarily affecting disclosure and presentation requirements394041 Note 2. Supplemental Balance Sheet Information This note provides detailed breakdowns of selected balance sheet accounts, showing changes in key assets and liabilities Selected Balance Sheet Accounts | Account | As of June 30, 2025 (Millions $) | As of December 31, 2024 (As Adjusted, Millions $) | | :-------------------------------- | :------------------------------- | :------------------------------------------------ | | Trade receivables, net | 378.7 | 319.7 | | Inventories | 595.6 | 601.9 | | Property, plant and equipment, net | 1,204.9 | 1,161.2 | | Other assets | 67.9 | 78.6 | | Other accrued liabilities | 55.1 | 79.3 | | Long-term liabilities | 84.8 | 84.0 | - Trade receivables, net, increased by $59.0 million, while inventories slightly decreased by $6.3 million, reflecting ongoing inventory management efforts44 - Machinery and equipment increased significantly, with $18.3 million of assets associated with the Warrick acquisition conveyed and placed in service during the quarter ended March 31, 20254448 Note 3. Employee Benefits This note details the company's various employee benefit plans and associated expenses, which increased year-over-year Employee Benefit Plan Expenses | Benefit Plan Expense | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Defined contribution plans | 4.6 | 4.2 | 10.6 | 10.0 | | Deferred compensation plan | 0.4 | — | 0.6 | 0.7 | | Multiemployer pension plans | 1.6 | 1.5 | 3.1 | 3.0 | | Net periodic defined benefit plans | 2.5 | 2.8 | 4.8 | 4.3 | | Total | 9.1 | 8.5 | 19.1 | 18.0 | - Total employee benefit plan expenses increased to $9.1 million for the quarter and $19.1 million for the six months ended June 30, 2025, compared to the prior year periods47 - The Company contributed $3.1 million to its pension plans during the first six months of 2025 and expects to contribute an additional $3.1 million by year-end51 Note 4. Restructuring This note details costs associated with the 2025 and 2024 restructuring plans aimed at cost reduction and facility consolidation - The 2025 Restructuring Plan, initiated in Q1 2025, incurred $1.9 million in charges for severance and related benefits through June 30, 2025, with total estimated costs ranging from $2.0 million to $3.0 million52 - The 2024 Restructuring Plan, initiated in Q2 2024 to exit the Sherman, Texas facility, incurred $7.5 million in charges through June 30, 2025, including a $4.6 million multiemployer pension obligation54 Restructuring Liability Summary | Restructuring Plan | Balance, Dec 31, 2024 (Millions $) | Restructuring Costs (6 months ended June 30, 2025, Millions $) | Costs Paid (6 months ended June 30, 2025, Millions $) | Balance, June 30, 2025 (Millions $) | | :----------------- | :--------------------------------- | :----------------------------------------------------------- | :---------------------------------------------------- | :---------------------------------- | | 2025 Plan | — | 1.9 | (1.7) | 0.2 | | 2024 Plan | 4.7 | — | (0.1) | 4.6 | Note 5. Derivatives, Hedging Programs and Other Financial Instruments This note details the company's use of derivative instruments to manage commodity price and foreign currency risks - The Company uses derivatives to limit exposure to metal price, energy price, and foreign currency risks, primarily through cash flow hedges, and does not use them for speculative purposes5761 Notional Amounts of Derivative Contracts | Derivative Type | Notional Amount (June 30, 2025) | | :---------------- | :------------------------------ | | Aluminum | 139.0 mmlbs | | Alloying Metals | 5.8 mmlbs | | Natural Gas | 3,360,000 mmbtu | | Euro | €3.2 million | Gains and Losses on Cash Flow Hedges | (Gain) Loss on Cash Flow Hedges | Quarter Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | | :-------------------------------- | :------------------------------------- | :------------------------------------------ | | Aluminum | (2.2) | (7.4) | | Alloying Metals | (0.5) | (0.9) | | Natural gas | 0.3 | 0.3 | | Electricity | — | — | | Foreign exchange contracts | (0.1) | — | | Total | (2.5) | (8.0) | Note 6. Debt and Credit Facility This note provides details on the company's outstanding Senior Notes and its Revolving Credit Facility, including terms and availability Outstanding Debt Summary | Debt Instrument | Principal Amount (June 30, 2025, Millions $) | Effective Interest Rate | Maturity | | :---------------- | :------------------------------------------- | :---------------------- | :------- | | 4.625% Senior Notes | 500.0 | 4.8% | March 2028 | | 4.50% Senior Notes | 550.0 | 4.7% | June 2031 | | Total Debt | 1,050.0 | | | - The Revolving Credit Facility has a maximum commitment of $575.0 million, with $524.6 million remaining borrowing availability as of June 30, 20257677 - Outstanding borrowings under the Revolving Credit Facility were $32.8 million as of June 30, 2025, with $217.6 million borrowed and $184.8 million repaid during the six months ended June 30, 202576 Interest Expense Components | Interest Expense Component | Quarter Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | | :------------------------- | :------------------------------------- | :------------------------------------------ | | Senior Notes | 12.4 | 24.8 | | Revolving Credit Facility | 0.7 | 1.3 | | Finance lease liabilities | 0.2 | 0.4 | | Capitalized interest | (0.8) | (2.8) | | Total Interest Expense | 12.5 | 23.7 | Note 7. Commitments and Contingencies This note details the company's environmental remediation liabilities and other legal contingencies - The Company is actively engaged in remediation activities for historical PCB contamination at its Trentwood facility, including the implementation of a full-scale UV/AOP treatment system82 - For the Newark facility, the Company increased its environmental accrual by $2.9 million in Q3 2024 based on proposed remediation options and expects to submit a revised Alternate Arrays Document (AAD) by September 30, 202583 - As of June 30, 2025, the environmental accrual was $18.2 million, with a reasonably possible additional undiscounted cost of up to $13.4 million over the remediation period8485 Note 8. Accumulated Other Comprehensive Income This note presents the changes in Accumulated Other Comprehensive Income (AOCI), driven primarily by cash flow hedges Changes in AOCI Components | AOCI Component | Beginning Balance (June 30, 2025, Millions $) | Other Comprehensive Income (Loss), Net of Tax (Q2 2025, Millions $) | Ending Balance (June 30, 2025, Millions $) | | :--------------- | :-------------------------------------------- | :---------------------------------------------------------------- | :----------------------------------------- | | Defined Benefit Plans | 19.2 | 0.4 | 19.6 | | Cash Flow Hedges | 3.9 | 3.7 | 7.6 | | Total AOCI | 23.1 | 4.1 | 27.2 | - AOCI increased from $20.5 million at December 31, 2024, to $27.2 million at June 30, 2025, primarily driven by a net unrealized gain on cash flow hedges1188 - The Company estimates a net mark-to-market gain of $9.1 million before tax in AOCI will be reclassified into Net income upon settlement within the next 12 months89 Note 9. Other Income (Expense), Net This note details the components of other income and expense, highlighting a significant gain from business interruption insurance Components of Other Income (Expense), Net | Component | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Interest income | 0.2 | 1.2 | 0.4 | 2.1 | | Net periodic postretirement benefit cost | (1.4) | (1.5) | (2.6) | (1.8) | | Gain on business interruption insurance | 5.0 | — | 5.0 | 10.5 | | Other income (expense), net | 4.4 | (0.5) | 3.0 | 10.4 | - Other income (expense), net, significantly improved to $4.4 million for the quarter ended June 30, 2025, from an expense of $0.5 million in the prior year, primarily due to $5.0 million in business interruption insurance recoveries90 - The Company sold $484.2 million in trade accounts receivable through supply chain financing arrangements during the six months ended June 30, 2025, with associated discount fees of $11.0 million, substantially reimbursed by customers91 Note 10. Income Tax Matters This note provides a breakdown of the income tax provision and discusses the potential impact of new tax legislation Income Tax Provision | Income Tax Provision | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (As Adjusted, Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Domestic | (6.0) | (5.1) | (12.6) | (10.1) | | Foreign | (0.7) | (0.6) | (1.3) | (1.1) | | Total | (6.7) | (5.7) | (13.9) | (11.2) | - The income tax provision increased to $6.7 million for the quarter and $13.9 million for the six months ended June 30, 2025, with effective tax rates of 22% and 24%, respectively929394 - The Company is evaluating the impact of the One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, which makes permanent key elements of the Tax Cuts and Jobs Act, and will reflect results in the Q3 2025 10-Q96 Note 11. Earnings Per Share This note details the computation of basic and diluted earnings per share, which increased year-over-year Earnings Per Share Calculation | EPS Metric | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 (As Adjusted) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (As Adjusted) | | :--------------------------------------- | :-------------------------- | :---------------------------------------- | :----------------------------- | :---------------------------------------- | | Net income available to common shareholders (Millions $) | 23.2 | 18.9 | 44.8 | 37.1 | | Basic EPS | 1.44 | 1.18 | 2.77 | 2.31 | | Diluted EPS | 1.41 | 1.15 | 2.72 | 2.27 | - Diluted EPS increased to $1.41 for the quarter and $2.72 for the six months ended June 30, 2025, compared to $1.15 and $2.27, respectively, in the prior year periods98 - Approximately 565 and 241 shares were excluded from the diluted EPS computation for the quarter and six months ended June 30, 2025, respectively, as their inclusion would have been anti-dilutive100 Note 12. Supplemental Cash Flow Information This note provides additional details on cash flow items, including non-cash activities and a reconciliation of cash balances Supplemental Cash Flow Data | Supplemental Cash Flow Item | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | | Interest paid | 22.1 | 21.0 | | Unpaid purchases of PPE | 22.9 | 32.5 | | Operating lease liabilities | 1.0 | 0.5 | | Finance lease liabilities | 0.7 | 2.0 | Reconciliation of Cash | Cash Components | As of June 30, 2025 (Millions $) | As of June 30, 2024 (Millions $) | | :---------------- | :------------------------------- | :------------------------------- | | Cash & equivalents | 13.1 | 70.4 | | Restricted cash | 19.8 | 18.3 | | Total | 32.9 | 88.7 | - Restricted cash, held as collateral for workers' compensation and other agreements, increased to $19.8 million as of June 30, 2025101 Note 13. Business, Product, and Geographical Area Information This note provides a breakdown of net sales by end market, showing strong growth in Packaging and GE Products - The Company operates as a single reportable segment, producing semi-fabricated specialty aluminum mill products for Aero/HS Products, Packaging, GE Products, and Automotive Extrusions end markets102121 Net Sales by End Market | End Market | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (Millions $) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Aero/HS Products | 227.9 | 226.1 | 442.6 | 446.6 | | Packaging | 340.9 | 312.4 | 655.1 | 610.5 | | GE Products | 185.4 | 162.6 | 367.0 | 315.6 | | Automotive Extrusions | 68.9 | 69.7 | 135.8 | 133.2 | | Total Net Sales | 823.1 | 773.4 | 1,600.5 | 1,510.9 | - Packaging and GE Products showed strong net sales growth for both the quarter and six months ended June 30, 2025, while Aero/HS Products and Automotive Extrusions experienced slight declines or minimal growth107 Note 14. Change in Accounting Principle This note details the significant positive impact on reported income from changing the inventory valuation method from LIFO to WAC - The Company retrospectively changed its inventory valuation from LIFO to WAC, impacting Cost of Products Sold, Operating Income, Net Income, and EPS across all presented periods108110111 Impact of WAC Change on Q2 2024 Results | Metric (Q2 2024) | Previously Reported (LIFO, Millions $) | Effect of WAC Change (Millions $) | As Adjusted (WAC, Millions $) | | :--------------------------------------- | :------------------------------------- | :-------------------------------- | :---------------------------- | | Cost of products sold, excl. D&A | 690.5 | (20.7) | 669.8 | | Operating income | 15.5 | 20.7 | 36.2 | | Net income | 3.1 | 15.8 | 18.9 | | Diluted EPS | 0.19 | 0.96 | 1.15 | Impact of WAC Change on Q2 2025 Results | Metric (Q2 2025) | Computed (using LIFO, Millions $) | Effect of Change (Millions $) | As Reported (using WAC, Millions $) | | :--------------------------------------- | :-------------------------------- | :---------------------------- | :---------------------------------- | | Cost of products sold, excl. D&A | 745.5 | (22.7) | 722.8 | | Operating income | 15.3 | 22.7 | 38.0 | | Net income | 5.0 | 18.2 | 23.2 | | Diluted EPS | 0.30 | 1.11 | 1.41 | Note 15. Subsequent Events This note discloses the declaration of a quarterly cash dividend subsequent to the reporting period - On July 15, 2025, the Board of Directors declared a quarterly cash dividend of $0.77 per common share, totaling approximately $12.8 million, payable around August 15, 2025112 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides its perspective on financial performance, key operational drivers, liquidity, and capital resources, including the impact of accounting changes Forward-Looking Statements This section outlines the inherent risks and uncertainties associated with the report's forward-looking statements - The report contains forward-looking statements, which are not guarantees of future performance and involve significant risks and uncertainties, with actual results potentially varying due to factors like economic conditions, strategic execution, and market dynamics113 Basis of Presentation The discussion reflects a retrospective change in inventory valuation from LIFO to WAC, impacting all periods presented - The Company retrospectively applied a change in inventory valuation methodology from LIFO to WAC, effective January 1, 2025, impacting both current and prior period financial information presented in this discussion115 Non-GAAP Financial Measures The company uses non-GAAP measures like Conversion Revenue and Adjusted EBITDA to provide additional insight into financial performance - The Company uses non-GAAP financial measures, including Conversion Revenue (Net sales less Hedged Cost of Alloyed Metal) and Adjusted EBITDA, to monitor and evaluate financial results and trends, believing they provide useful information to investors116 - Non-run-rate items, which may recur but are material and affected by external market factors, are highlighted to allow users to consider results both with and without their impact117 Metal Pricing Policies The company's business model aims for metal price neutrality by passing through costs, using hedging to mitigate timing risks - The Company's business model aims for metal price neutrality, earning profit primarily from the conversion of aluminum, by passing through underlying index costs to customers119 - Metal price risk arises from lagged pass-through on spot sales and firm-price customer agreements, which the Company mitigates through hedging programs119 - Conversion Revenue, defined as Net sales less Hedged Cost of Alloyed Metal, is disclosed to show earnings predominantly associated with the fabrication process, excluding metal price fluctuations120 Business Overview The company manufactures specialized aluminum products for key industrial markets, focusing on technically demanding applications - Kaiser Aluminum manufactures semi-fabricated specialty aluminum mill products for Aero/HS Products, Packaging, GE Products, and Automotive Extrusions, focusing on technically challenging applications requiring high strength and specific properties121123 - The Company operates 10 extrusion/drawing facilities in North America and a multi-material advanced manufacturing facility in Columbia, New Jersey, serving blue-chip customers123124 - The manufacturing process, taking one to four months, can result in 'Metal Price Lag' where inventory costs lag current metal selling prices, leading to favorable impacts when prices increase and adverse impacts when prices decrease127 Results of Operations This section provides a detailed analysis of the company's consolidated financial performance and key operational metrics Consolidated Results of Operations This analysis details the drivers of changes in sales, costs, and expenses for the quarter and six-month periods Consolidated Operating Results Summary | Metric | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (As Adjusted, Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :--------------------------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Net Sales | 823.1 | 773.4 | 1,600.5 | 1,510.9 | | COGS (excl. D&A) | 722.8 | 669.8 | 1,396.2 | 1,321.1 | | SG&A and R&D | 32.6 | 31.6 | 63.4 | 64.2 | | Restructuring costs | 0.1 | 6.8 | 1.9 | 6.9 | - Net sales increased by 6% for both the quarter and six months, driven by a higher average realized sales price per pound, despite a decrease in shipment volume129131132 - COGS increased by 8% for the quarter and 6% for the six months, primarily due to an 11% increase in Hedged Cost of Alloyed Metal, partially offset by lower shipment volume and favorable metal consumption133134135 - SG&A and R&D expenses remained relatively stable, with a slight increase for the quarter due to higher incentive compensation and a slight decrease for the six months due to lower legal and consulting fees136137 Selected Operational and Financial Information This section reconciles Net Income to Adjusted EBITDA and breaks down shipments and Conversion Revenue by end market Reconciliation of Net Income to Adjusted EBITDA | Metric | Quarter Ended June 30, 2025 (Millions $) | Quarter Ended June 30, 2024 (As Adjusted, Millions $) | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :--------------------------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Net income | 23.2 | 18.9 | 44.8 | 37.1 | | Total non-run-rate items | 0.1 | 9.0 | 2.1 | 9.9 | | Adjusted EBITDA | 67.7 | 74.2 | 141.1 | 128.2 | - Adjusted EBITDA for the quarter ended June 30, 2025, decreased by $6.5 million to $67.7 million, primarily due to higher manufacturing and major maintenance costs, partially offset by improved product pricing and mix146 - Adjusted EBITDA for the six months ended June 30, 2025, increased by $12.9 million to $141.1 million, driven by improved product pricing and mix and favorable metal costs, despite higher manufacturing and major maintenance costs147 Operational Metrics by End Market (Q2 2025) | End Market (Q2 2025) | Shipments (mmlbs) | Net Sales (Millions $) | Conversion Revenue (Millions $) | Conversion Revenue per lb ($/lb) | | :------------------- | :---------------- | :--------------------- | :------------------------------ | :------------------------------- | | Aero/HS Products | 59.9 | 227.9 | 127.2 | 2.12 | | Packaging | 141.1 | 340.9 | 129.7 | 0.92 | | GE Products | 63.4 | 185.4 | 85.7 | 1.35 | | Automotive Extrusions | 24.0 | 68.9 | 31.6 | 1.32 | | Total | 288.4 | 823.1 | 374.2 | 1.30 | Liquidity and Capital Resources This section details the company's liquidity position, cash flows, and capital allocation strategies Summary The company's total liquidity decreased slightly due to reduced availability under its Revolving Credit Facility Liquidity Summary | Metric | As of June 30, 2025 (Millions $) | As of December 31, 2024 (Millions $) | | :---------------------------------------------------- | :------------------------------- | :----------------------------------- | | Available cash and cash equivalents | 13.1 | 18.4 | | Borrowing availability under Revolving Credit Facility | 524.6 | 553.4 | | Total liquidity | 537.7 | 571.8 | - Total liquidity decreased to $537.7 million as of June 30, 2025, from $571.8 million at December 31, 2024, primarily due to a decrease in borrowing availability under the Revolving Credit Facility151 Cash Flows Operating cash flow decreased due to working capital changes, while financing cash flow improved from net borrowings Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (Millions $) | Six Months Ended June 30, 2024 (As Adjusted, Millions $) | | :------------------------- | :------------------------------------------ | :---------------------------------------------------- | | Operating activities | 72.9 | 89.6 | | Investing activities | (81.9) | (73.6) | | Financing activities | 4.0 | (28.0) | - Cash provided by operating activities decreased by $16.7 million, mainly due to an increase in trade and other receivables and a decrease in accrued liabilities, partially offset by an increase in accounts payable and a decrease in inventory155 - Cash used in investing activities increased by $8.3 million, primarily due to higher capital expenditures154 - Cash provided by financing activities improved significantly by $32.0 million, driven by net borrowings under the Revolving Credit Facility154 Sources of Liquidity The company relies on cash, its credit facility, and operations for liquidity, which are deemed sufficient for future obligations - Key liquidity sources include available cash, borrowing availability under the Revolving Credit Facility, and funds generated from operations, which are believed to be sufficient for short-term and long-term obligations158 - The Revolving Credit Facility and Senior Notes covenants are not expected to limit the Company's ability to operate or raise additional debt/equity in the next 12 months159 - Customer-based supply chain financing programs, where receivables are sold without recourse, constituted approximately 27% of Net sales for the quarter ended June 30, 2025161 Material Cash Requirements No material changes in cash requirements have occurred since year-end, outside of the ordinary course of business - No material changes in material cash requirements from significant contractual obligations, commercial commitments, or off-balance sheet arrangements have occurred since December 31, 2024, other than in the ordinary course of business163 Capital Expenditures and Investments The company's capital investment strategy focuses on capacity expansion, efficiency, and product quality - Capital investment plans focus on supporting demand growth, sustaining operations, enhancing product quality, and increasing operating efficiencies, with significant past investments in modernization at Trentwood and capacity expansion at Warrick164165 - Anticipated total capital spending for 2025 is approximately $120.0 million to $130.0 million, to be funded by cash from operations, available cash, and borrowings165167 Dividends The company maintains a consistent quarterly dividend policy, subject to Board discretion and financial performance - The Company has consistently paid a quarterly cash dividend since Q2 2007, with future declarations subject to Board discretion based on financial results, liquidity, and contractual restrictions168 - Quarterly dividend equivalents are paid to holders of restricted stock units, while performance share holders receive a one-time payment upon vesting169 Repurchases of Common Stock Share repurchases remain suspended, with significant authorization still available under the existing program - Share repurchases have been suspended since March 2020, with $93.1 million remaining authorized and available for future repurchases under the stock repurchase program as of June 30, 2025171 Critical Accounting Estimates and Policies No material changes have been made to the company's critical accounting estimates and policies since year-end 2024 - The Company's financial statements are prepared using GAAP, requiring management to make assumptions and estimates that affect reported amounts, with no material changes in critical accounting estimates and policies since December 31, 2024173174 New Accounting Pronouncements Information regarding new accounting pronouncements is detailed in the notes to the financial statements - Information regarding new accounting pronouncements is included in Note 1 of the Interim Consolidated Financial Statements175 Availability of Information The company's SEC filings are publicly available on its corporate and the SEC's websites - The Company's SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, are available free of charge on its website and the SEC's website176 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks from commodity prices and foreign currency, along with its hedging strategies Aluminum The company uses derivative contracts to hedge against aluminum price fluctuations for its sales commitments - The Company uses derivative contracts to hedge aluminum price risk for sales, with 61.5 million pounds hedged during the six months ended June 30, 2025178 - A $0.10/lb decrease in LME aluminum price would result in an unrealized mark-to-market loss of $4.4 million, and a $0.05/lb decrease in Midwest premium would result in a $2.1 million loss, as of June 30, 2025179 Alloying Metals The company hedges against price fluctuations for key alloying metals like copper, zinc, and magnesium - The Company is exposed to fluctuating prices of alloying metals (copper, zinc, magnesium) and uses forward swap contracts to mitigate this risk180 - A $0.10/lb decrease in zinc and copper market prices would result in an unrealized mark-to-market loss of $0.6 million as of June 30, 2025180 Energy The company uses hedging transactions and firm-price commitments to manage exposure to volatile energy prices - The Company hedges against fluctuating natural gas and electricity prices using hedging transactions and firm-price physical delivery commitments181 - A $1.00 per mmbtu decrease in natural gas prices would result in an unrealized mark-to-market loss of $3.4 million as of June 30, 2025181 Foreign Currency The company hedges foreign currency risk associated with Euro-denominated transactions using forward swap contracts - The Company hedges foreign currency exchange rate risk for Euro-denominated lease transactions and equipment purchases using forward swap contracts182 - A 10% decrease in the exchange rate of hedged foreign currencies to U.S. dollars would result in an unrealized mark-to-market loss of $0.4 million as of June 30, 2025183 Item 4. Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures and notes no material changes to internal controls over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, at the reasonable assurance level184 - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025185 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section confirms no material developments in legal proceedings have occurred since the last annual report - No material developments in legal proceedings have occurred since December 31, 2024187 Item 1A. Risk Factors This section states there have been no material changes to the company's risk factors since the last annual report - No material changes in risk factors have occurred since December 31, 2024188 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details minor share repurchases for tax withholding purposes under the company's equity incentive plan Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased (Equity Incentive Plan) | Average Price per Share ($) | Maximum Dollar Value of Shares that May Yet Be Purchased (Millions $) | | :-------------------------- | :------------------------------------------------------- | :-------------------------- | :-------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | — | — | 93.1 | | May 1, 2025 - May 31, 2025 | 38 | 69.16 | 93.1 | | June 1, 2025 - June 30, 2025 | 181 | 75.73 | 93.1 | | Total | 219 | 74.59 | n/a | - 219 common shares were purchased during the quarter ended June 30, 2025, at an average price of $74.59 per share, primarily to cover tax withholdings under the equity incentive plan189 - $93.1 million remained authorized for future repurchases under the stock repurchase program as of June 30, 2025189 Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - There were no defaults upon senior securities190 Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company191 Item 5. Other Information This section confirms no insider trading plans were adopted, modified, or terminated during the quarter - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025192 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - The report includes certifications from the principal executive and financial officers (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 104)193 Signatures This section contains the certifying signatures of the company's executive officers - The report is signed by Neal E. West, Executive Vice President and Chief Financial Officer, and Vijai Narayan, Vice President and Chief Accounting Officer, on July 24, 2025196
Kaiser Aluminum(KALU) - 2025 Q2 - Quarterly Report