Kaiser Aluminum(KALU) - 2023 Q4 - Annual Results

Kaiser Aluminum Corporation Reports Fourth Quarter and Full Year 2023 Financial Results Management Commentary Kaiser Aluminum achieved a full-year net income of $47 million and a 48% increase in adjusted EBITDA to $210 million in 2023, driven by strong aerospace performance and stabilizing destocking - Full year 2023 adjusted EBITDA increased 48% over 2022 to approximately $210 million, with a net income of $47 million[3] - Aerospace products achieved record-high net sales and conversion revenue, benefiting from strong demand and the company's ability to flex capacity from its Trentwood facility[3] - Destocking for general engineering long products stabilized in Q4 2023, while destocking for food packaging products is expected to end by Q1 2024[3] - The company maintains strong liquidity of nearly $600 million to support growth initiatives, including a new roll coat installation scheduled for completion by year-end[3] Fourth Quarter 2023 Financial Highlights Q4 2023 saw a net income of $8 million, a significant improvement from a $26 million loss, with adjusted EBITDA increasing to $52 million Q4 2023 Key Financial Metrics | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Net Sales | $722 Million | $776 Million | | Conversion Revenue | $361 Million | $356 Million | | Net Income (Loss) | $8 Million | ($26 Million) | | Adjusted Net Income (Loss) | $10 Million | ($6 Million) | | Adjusted EBITDA | $52 Million | $30 Million | | Adjusted EBITDA Margin | 14.3% | 8.4% | | Diluted EPS | $0.47 | ($1.66) | | Adjusted Diluted EPS | $0.60 | ($0.35) | - Net sales decreased due to a 6% decrease in shipments, partially offset by an 8% increase in conversion revenue per pound[10] - Adjusted EBITDA increased by $22 million year-over-year, driven by improved operational performance and a more favorable product mix[13] Full Year 2023 Financial Results Full year 2023 net income reached $47 million, reversing a prior-year loss, with adjusted EBITDA significantly increasing by 48% to $210 million Full Year 2023 Key Financial Metrics | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net Sales | $3.1 Billion | $3.4 Billion | | Conversion Revenue | $1.47 Billion | $1.38 Billion | | Net Income (Loss) | $47 Million | ($30 Million) | | Adjusted Net Income (Loss) | $44 Million | ($9 Million) | | Adjusted EBITDA | $210 Million | $142 Million | | Adjusted EBITDA Margin | 14.3% | 10.3% | | Diluted EPS | $2.92 | ($1.86) | | Adjusted Diluted EPS | $2.74 | ($0.55) | - The decrease in full-year net sales was driven by a 5% decrease in shipments and a 5% decrease in average selling price, which was impacted by a 17% decrease in underlying metal costs[14] - Conversion revenue increased by 6% year-over-year, driven by a 12% increase in conversion revenue per pound[14] Segment Performance Aerospace/High Strength led segment performance with a 50% increase in conversion revenue, while Packaging and General Engineering faced declines due to destocking Q4 2023 Segment Conversion Revenue (vs. Q4 2022) | Segment | Conversion Revenue | YoY Change | | :--- | :--- | :--- | | Aerospace/High Strength | $146 million | +42% | | Packaging | $118 million | -12% | | General Engineering | $69 million | -25% | | Automotive Extrusions | $27 million | +6% | Full Year 2023 Segment Conversion Revenue (vs. FY 2022) | Segment | Conversion Revenue | YoY Change | | :--- | :--- | :--- | | Aerospace/High Strength | $533 million | +50% | | Packaging | $503 million | -9% | | General Engineering | $305 million | -17% | | Automotive Extrusions | $116 million | +21% | Cash Flow, Liquidity, and Outlook Kaiser Aluminum maintained strong liquidity of $599 million at year-end 2023 and anticipates 2-3% conversion revenue growth and 70-170 basis point adjusted EBITDA margin expansion in 2024 - As of December 31, 2023, total liquidity was $599 million, with no outstanding borrowings under the revolving credit facility[20] - Full year 2023 adjusted EBITDA of $210 million funded $143 million in capital investments, $44 million in interest payments, and $50 million in dividends[19] - The company declared a quarterly cash dividend of $0.77 per share, paid on February 15, 2024[21] - 2024 Outlook: Expects conversion revenue to improve 2-3% and adjusted EBITDA margins to improve 70-170 basis points over 2023[23] - Outlook by segment: Strong momentum in aerospace, improvement in packaging as destocking ends, abating destocking in general engineering in H1, and a modest recovery in automotive[22] Financial Statements and Non-GAAP Reconciliation Statements of Consolidated Income (Loss) The consolidated income statement for 2023 shows net sales of $3.087 billion and a net income of $47.2 million, a significant improvement from the prior year's loss Consolidated Income Statement (Year Ended Dec 31, In millions of dollars) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net sales | $3,087.0 | $3,427.9 | | Total costs and expenses | $2,991.2 | $3,423.9 | | Operating income | $95.8 | $4.0 | | Income (loss) before income taxes | $56.3 | ($37.9) | | Net income (loss) | $47.2 | ($29.6) | | Diluted net income (loss) per share | $2.92 | ($1.86) | Consolidated Balance Sheets As of December 31, 2023, total assets were $2.267 billion, with total liabilities at $1.615 billion and stockholders' equity increasing to $652.2 million Consolidated Balance Sheet (As of Dec 31, In millions of dollars) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | ASSETS | | | | Total current assets | $990.2 | $1,042.6 | | Property, plant and equipment, net | $1,052.1 | $1,013.2 | | Total assets | $2,267.4 | $2,288.8 | | LIABILITIES & EQUITY | | | | Total current liabilities | $370.0 | $418.7 | | Long-term debt, net | $1,039.8 | $1,038.1 | | Total liabilities | $1,615.2 | $1,657.6 | | Total stockholders' equity | $652.2 | $631.2 | | Total liabilities and stockholders' equity | $2,267.4 | $2,288.8 | Reconciliation of Non-GAAP Measures - Consolidated The company reconciles GAAP to non-GAAP measures, adjusting 2023 GAAP operating income of $95.8 million to an Adjusted EBITDA of $209.6 million and GAAP net income to $44.3 million FY 2023 Reconciliation of GAAP Operating Income to Adjusted EBITDA (In millions of dollars) | Metric | Full Year 2023 | | :--- | :--- | | GAAP operating income | $95.8 | | Operating NRR items | $5.2 | | Operating income, excluding NRR items | $101.0 | | Depreciation and amortization | $108.6 | | Adjusted EBITDA | $209.6 | FY 2023 Reconciliation of GAAP Net Income to Adjusted Net Income (In millions of dollars) | Metric | Full Year 2023 | | :--- | :--- | | GAAP net income | $47.2 | | Operating NRR items | $5.2 | | Non-operating NRR items | ($8.9) | | Tax impact of above NRR items | $0.8 | | Adjusted net income | $44.3 |