Kaiser Aluminum(KALU) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Kaiser Aluminum's Q3 2025 performance exceeded expectations, leading to an upward revision of the full-year Adjusted EBITDA outlook despite significant startup costs Third Quarter 2025 Performance Overview Kaiser Aluminum reported strong third quarter 2025 results, significantly exceeding expectations with substantial year-over-year increases in both net income and adjusted net income, alongside improved adjusted EBITDA and a better net debt leverage ratio | Metric | Q3 2025 | Q3 2024 | | :-------------------------------- | :------ | :------ | | Net Income ($ million) | $40 | $9 | | Net Income per Diluted Share ($) | $2.38 | $0.54 | | Adjusted Net Income ($ million) | $31 | $5 | | Adjusted Net Income per Diluted Share ($) | $1.86 | $0.31 | | Metric | Q3 2025 | | :-------------------------- | :------ | | Net Sales ($ million) | $844 | | Conversion Revenue ($ million) | $351 | | Adjusted EBITDA ($ million) | $81 | | Adjusted EBITDA Margin (%) | 23.2% | | Net Debt Leverage Ratio (x) | 3.6x | Management Commentary The CEO highlighted the company's fourth consecutive quarter of exceeding expectations, leading to an upward revision of the full-year 2025 Adjusted EBITDA outlook. Despite non-recurring startup costs at key facilities, favorable metal tailwinds provided an offset, and the company is now prioritizing cost discipline and operational excellence - Delivered fourth consecutive quarter of results above expectations, prompting an upward revision to full-year 2025 Adjusted EBITDA outlook[4] - Third quarter results included approximately $20 million in non-recurring startup costs tied to major investments at the Trentwood and Warrick facilities[4] - Favorable metal tailwinds offset the non-recurring startup costs[4] - Reinvigorated focus on cost discipline, operational excellence, and restoring strong operating performance[4] Consolidated Financial Results The company's Q3 2025 consolidated financial results show improved profitability metrics, including net income and Adjusted EBITDA, despite a slight decrease in shipments and conversion revenue Key Financial Metrics The consolidated financial results for Q3 2025 demonstrate significant year-over-year improvements in profitability, with operating income, net income, and Adjusted EBITDA all showing substantial growth, despite a decrease in shipments and conversion revenue | Metric | Q3 2025 | Q3 2024 (As Adjusted) | 9M 2025 | 9M 2024 (As Adjusted) | | :-------------------------------- | :------ | :-------------------- | :------ | :-------------------- | | Shipments (million lbs.) | 270 | 292 | 834 | 880 | | Net sales ($ million) | $844 | $748 | $2,444 | $2,259 | | Conversion revenue ($ million) | $351 | $362 | $1,088 | $1,098 | | Operating income ($ million) | $49 | $13 | $128 | $74 | | Net income ($ million) | $40 | $9 | $84 | $46 | | Net income per share, diluted ($) | $2.38 | $0.54 | $5.10 | $2.81 | | Adjusted Operating income ($ million) | $49 | $17 | $131 | $88 | | Adjusted EBITDA ($ million) | $81 | $46 | $222 | $174 | | Adjusted EBITDA margin (%) | 23.2% | 12.7% | 20.4% | 15.9% | | Adjusted Net income ($ million) | $31 | $5 | $75 | $42 | | Adjusted EPS, diluted ($) | $1.86 | $0.31 | $4.51 | $2.56 | - Net sales for Q3 2025 increased to $844 million (vs. $748 million in Q3 2024), primarily driven by a 28% increase in the Hedged Cost of Alloyed Metal, which is a direct pass-through[12] - Shipments for Q3 2025 decreased 8% year-over-year, mainly due to a planned partial outage at the Trentwood facility for its Phase VII investment[12] - Conversion Revenue for Q3 2025 was $351 million, reflecting a 3% decrease compared to the prior year period[13] Detailed Revenue Analysis A detailed analysis reveals that net sales increased due to higher average realized prices, while conversion revenue varied across end markets, with Aero/HS Products showing growth despite overall shipment declines Net Sales and Shipments Net sales for the third quarter of 2025 increased due to a higher average realized sales price, largely influenced by the increased hedged cost of alloyed metal, while overall shipments decreased due to a planned facility outage - Net sales for Q3 2025 increased to $844 million compared to $748 million in Q3 2024, primarily driven by an increase in average realized sales price[12] - The increase in average selling price reflects a 28% increase in the Hedged Cost of Alloyed Metal, which is a direct pass-through[12] - Shipments for Q3 2025 decreased 8% year-over-year, primarily due to a planned partial outage at the Trentwood facility in conjunction with its Phase VII investment[12] Conversion Revenue by End Market Conversion revenue performance varied across end markets in Q3 2025. Aero/HS Products saw an increase in conversion revenue and per pound, while Packaging, GE Products, and Automotive Extrusions experienced declines in conversion revenue, contributing to the overall decrease | End Market | Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :------------------- | :-------------------------- | :------ | :------ | :------ | :------ | | Aero/HS Products | Shipments (million lbs.) | 41.8 | 59.5 | 158.0 | 184.6 | | | Conversion Revenue ($ million) | $127.9 | $99.5 | $347.2 | $397.8 | | | Conversion Revenue ($/lb) | $2.38 | $2.15 | $2.20 | $2.15 | | Packaging | Shipments (million lbs.) | 144.1 | 150.9 | 415.4 | 439.2 | | | Conversion Revenue ($ million) | $128.4 | $137.8 | $394.9 | $365.3 | | | Conversion Revenue ($/lb) | $0.96 | $0.85 | $0.95 | $0.83 | | GE Products | Shipments (million lbs.) | 60.4 | 55.6 | 188.9 | 173.2 | | | Conversion Revenue ($ million) | $76.1 | $81.9 | $251.1 | $238.9 | | | Conversion Revenue ($/lb) | $1.36 | $1.37 | $1.33 | $1.38 | | Automotive Extrusions | Shipments (million lbs.) | 23.9 | 25.2 | 71.9 | 79.8 | | | Conversion Revenue ($ million) | $28.7 | $31.5 | $94.9 | $92.8 | | | Conversion Revenue ($/lb) | $1.32 | $1.14 | $1.32 | $1.16 | | Total | Shipments (million lbs.) | 270.2 | 292.2 | 834.2 | 880.0 | | | Conversion Revenue ($ million) | $350.7 | $362.0 | $1,088.1 | $1,097.8 | | | Conversion Revenue ($/lb) | $1.30 | $1.24 | $1.30 | $1.25 | Financial Position & Outlook Kaiser Aluminum improved its financial position through strong Adjusted EBITDA generation and enhanced liquidity, leading to an upward revision of its full-year 2025 Adjusted EBITDA outlook Cash Flow and Liquidity Kaiser Aluminum generated $222 million in Adjusted EBITDA in the first nine months of 2025, which funded working capital, capital investments, interest payments, and shareholder dividends. The company improved its net debt leverage ratio and enhanced liquidity by amending and extending its revolving credit facility - Adjusted EBITDA of $222 million reported in the first nine months of 2025[15] - Cash on hand funded $71 million of working capital, $106 million of capital investments, $33 million of interest payments, and $39 million of cash returned to stockholders through quarterly dividends[15] - Net debt leverage ratio improved to 3.6x as of September 30, 2025, from 4.3x at December 31, 2024[15] - Amended and extended its $575 million Revolving Credit Facility, maturing in October 2030[16] - Total liquidity as of October 14, 2025, was $602 million, consisting of $42 million cash and $560 million borrowing availability[16] - Declared a quarterly cash dividend of $0.77 per share on October 14, 2025[17] 2025 Outlook Kaiser Aluminum has raised its full-year 2025 Adjusted EBITDA outlook, projecting a significant year-over-year improvement, while Conversion Revenue is expected to remain relatively stable - Full-year 2025 Conversion Revenue expected to be flat to up 5% year-over-year[18] - Full-year 2025 Adjusted EBITDA outlook raised to improve 20% to 25% year-over-year[18] - The increase in Adjusted EBITDA is attributed to strengthening underlying performance and rising metal prices, partially offset by start-up costs from key strategic investments[18] Additional Information This section provides essential background on Kaiser Aluminum, clarifies non-GAAP financial measures, and outlines the inherent risks associated with forward-looking statements Company Description Kaiser Aluminum Corporation, headquartered in Franklin, Tenn., is a leading global producer of semi-fabricated specialty aluminum products, offering highly-engineered solutions for diverse industrial applications including aerospace, packaging, general engineering, and automotive extrusions - Kaiser Aluminum Corporation is headquartered in Franklin, Tenn[20] - The company is a leading producer of semi-fabricated specialty aluminum products[20] - Serves customers worldwide with highly-engineered solutions for aerospace and high-strength, packaging, general engineering, automotive extrusions, and other industrial applications[20] - North American facilities produce value-added plate, sheet, coil, extrusions, rod, bar, tube, and wire products[20] Non-GAAP Financial Measures Explanation This section clarifies the non-GAAP financial measures used in the earnings release, such as Conversion Revenue, Adjusted operating income, Adjusted EBITDA, Adjusted net income, and Adjusted EPS. These measures exclude 'non-run-rate' items, which are material, externally driven, and potentially non-recurring, providing management and investors with a clearer view of underlying financial performance - Non-GAAP financial measures include Conversion Revenue, Adjusted operating income, Adjusted EBITDA, Adjusted net income, and Adjusted earnings per diluted share[23] - These measures exclude 'non-run-rate' items, which are defined as material items impacting costs primarily due to external market factors and may not occur in future periods at the same level of underlying performance[23] - Management uses this information to monitor and evaluate financial results and trends, believing it is also useful for investors[23] Forward-Looking Statements The press release contains forward-looking statements based on management's current expectations, which are subject to various known and unknown risks and uncertainties. These factors could cause actual results, performance, or achievements to differ materially from those expressed or implied - Statements are based on management's current expectations, estimates, and projections[24] - Involve known and unknown risks and uncertainties that may cause actual results, performance, or achievements to be materially different[24] - Risk factors include the effectiveness of management's strategies, execution and timing of strategic investments, general economic and business conditions, changes in defense spending, pricing and market conditions, technological developments, and new regulatory requirements[24] Unaudited Financial Statements This section presents the unaudited consolidated income statements, cash flow summaries, balance sheets, and non-GAAP reconciliations for the reported periods Statements of Consolidated Income The unaudited consolidated income statement for Q3 and 9M 2025 shows significant growth in net sales and net income compared to the prior year, driven by increased revenue and improved operating income, despite higher costs and expenses | Metric | Q3 2025 | Q3 2024 (As Adjusted) | 9M 2025 | 9M 2024 (As Adjusted) | | :-------------------------------------------------- | :------ | :-------------------- | :------ | :-------------------- | | Net sales ($ million) | $843.5 | $747.7 | $2,444.0 | $2,258.6 | | Cost of products sold, excluding depreciation and amortization ($ million) | $728.8 | $676.0 | $2,125.0 | $1,997.1 | | Depreciation and amortization ($ million) | $32.0 | $29.0 | $91.6 | $86.8 | | Selling, general, administrative, research and development ($ million) | $33.9 | $28.8 | $97.3 | $93.0 | | Total costs and expenses ($ million) | $794.7 | $734.5 | $2,315.8 | $2,184.9 | | Operating income ($ million) | $48.8 | $13.2 | $128.2 | $73.7 | | Interest expense ($ million) | $(12.4) | $(10.7) | $(36.1) | $(33.3) | | Other income, net ($ million) | $11.4 | $8.7 | $14.4 | $19.1 | | Income before income taxes ($ million) | $47.8 | $11.2 | $106.5 | $59.5 | | Income tax provision ($ million) | $(8.3) | $(2.4) | $(22.2) | $(13.6) | | Net income ($ million) | $39.5 | $8.8 | $84.3 | $45.9 | | Diluted EPS ($) | $2.38 | $0.54 | $5.10 | $2.81 | Summary of Cash Flows The unaudited summary of cash flows for the nine months ended September 30, 2025, indicates an increase in cash provided by operating activities and a decrease in cash used in investing activities compared to the same period in the prior year | Cash Flow Activity | 9M 2025 | 9M 2024 (As Adjusted) | | :------------------------- | :------ | :-------------------- | | Operating activities ($ million) | $132.0 | $123.7 | | Investing activities ($ million) | $(89.7) | $(118.6) | | Financing activities ($ million) | $(43.2) | $(41.8) | Consolidated Balance Sheets The unaudited consolidated balance sheet as of September 30, 2025, shows an increase in total assets, primarily driven by higher current assets such as trade receivables and inventories, and an increase in total liabilities compared to December 31, 2024 | Balance Sheet Item | As of Sep 30, 2025 | As of Dec 31, 2024 (As Adjusted) | | :------------------------------------ | :----------------- | :------------------------------- | | Total current assets ($ million) | $1,244.2 | $1,074.6 | | Property, plant and equipment, net ($ million) | $1,199.8 | $1,161.2 | | Total assets ($ million) | $2,592.1 | $2,409.9 | | Total current liabilities ($ million) | $500.7 | $400.5 | | Long-term debt, net ($ million) | $1,042.9 | $1,041.6 | | Total liabilities ($ million) | $1,786.0 | $1,666.8 | | Total stockholders' equity ($ million) | $806.1 | $743.1 | Reconciliation of Non-GAAP Measures This section provides a detailed reconciliation of GAAP net income to Adjusted EBITDA and Adjusted net income, outlining the specific adjustments for non-run-rate items, interest, taxes, and depreciation/amortization for both the third quarter and nine months ended September 30, 2025 and 2024 | Metric | Q3 2025 | Q3 2024 (As Adjusted) | 9M 2025 | 9M 2024 (As Adjusted) | | :------------------------------------ | :------ | :-------------------- | :------ | :-------------------- | | GAAP net income ($ million) | $39.5 | $8.8 | $84.3 | $45.9 | | GAAP operating income ($ million) | $48.8 | $13.2 | $128.2 | $73.7 | | Operating income, excluding operating NRR items ($ million) | $49.3 | $17.2 | $130.8 | $87.6 | | Depreciation and amortization ($ million) | $32.0 | $29.0 | $91.6 | $86.8 | | Adjusted EBITDA ($ million) | $81.3 | $46.2 | $222.4 | $174.4 | | Adjusted net income ($ million) | $31.0 | $5.1 | $74.6 | $41.9 | | Adjusted earnings per diluted share ($) | $1.86 | $0.31 | $4.51 | $2.56 | - Adjusted EBITDA for Q3 2025 includes a favorable metal price lag of approximately $28.0 million, compared to $7.0 million in Q3 2024[39] - Adjusted EBITDA for the nine months ended September 30, 2025, includes a favorable metal price lag of approximately $64.0 million, compared to $31.0 million in the prior year period[39]