Kaiser Aluminum (NasdaqGS:KALU) Q3 2025 Earnings Call October 23, 2025 10:00 AM ET Company ParticipantsNeal West - EVP and CFOKeith Harvey - Chairman, President, and CEOKim Orlando - Senior Managing DirectorConference Call ParticipantsTimna Tanners - Managing Director and Senior Equity Research AnalystBill Peterson - Equity Research AnalystOperatorGreetings, and welcome to the Kaiser Aluminum Corporation third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A ...

Kaiser Aluminum (NasdaqGS:KALU) Q3 2025 Earnings Call October 23, 2025 10:00 AM ET Company ParticipantsNeal West - EVP and CFOKeith Harvey - Chairman, President, and CEOKim Orlando - Senior Managing DirectorConference Call ParticipantsTimna Tanners - Managing Director and Senior Equity Research AnalystBill Peterson - Equity Research AnalystOperatorGreetings, and welcome to the Kaiser Aluminum Corporation Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A ...

Financial Data and Key Metrics Changes - The company reported a third-quarter EBITDA margin of 23%, with over 20% year-to-date, and raised its full-year EBITDA outlook by 10% [2][4][19] - Reported operating income for Q3 was $49 million, an increase of approximately $36 million from $13 million in the prior year quarter [9][10] - Adjusted net income for Q3 was $31 million, or $1.86 per diluted share, compared to $5 million, or $0.31 per diluted share in the prior year [11][12] Business Line Data and Key Metrics Changes - Aerospace and high-strength conversion revenue totaled $100 million, down $28 million, or approximately 22%, primarily due to a 30% decline in shipments [7][8] - Packaging conversion revenue totaled $138 million, up $9 million, or approximately 7% year-over-year, despite a 5% decline in shipments [8][9] - General engineering conversion revenue for Q3 was $81 million, up $5 million, or 6% year-over-year, on a 7% increase in shipments [8][9] Market Data and Key Metrics Changes - Demand in aerospace is trending positively, with expectations for improved conditions as destocking eases [6][14] - Packaging supply remains tight, with strong demand expected to continue [6][14] - Automotive conversion revenue increased 10% year-over-year, despite a 5% decrease in shipments due to tariff-related uncertainties [9][10] Company Strategy and Development Direction - The company is focused on managing costs, restoring operating efficiencies, and regaining best-in-class operating metrics [6][14] - Major investments in aerospace and packaging are expected to strengthen the company's market position [5][14] - The strategy includes shifting the majority of output to higher-margin coated products at the Warwick mill [5][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of aerospace shipments and conversion revenue, expecting a return to first-half levels in Q4 [22][23] - The outlook for packaging remains strong, with expectations for conversion revenue to increase by 12% to 15% year-over-year [15][16] - General engineering is expected to see continued growth, with shipments and conversion revenue anticipated to be up approximately 5% to 10% year-over-year [17][18] Other Important Information - The company had $577 million in total liquidity as of September 30, 2025, with a net debt leverage ratio improved to 3.6 times [12][13] - Capital expenditures for the full year 2025 are expected to be approximately $130 million, with free cash flow anticipated to be in the range of $30 to $50 million [12][13] Q&A Session Summary Question: Impact of planned maintenance on aerospace shipments - Management confirmed that the 30% decline in aerospace shipments was primarily due to planned maintenance, with expectations for recovery in Q4 [22][23] Question: Status of packaging contract negotiations - Management indicated progress in contract negotiations, expecting a 300 to 400 basis points increase in EBITDA margins [25][26] Question: Impact of tariffs on customer pricing and market share - Management stated that the impact of tariffs has been neutral to slightly positive, with better demand for domestic products [32][33] Question: Demand for packaging products amid cost inflation - Management noted strong demand for aluminum substrate products, particularly in food-related markets, which has held up well [37][38] Question: Ramp-up of new facilities in 2026 - Management indicated a gradual ramp-up of new facilities, with expectations for strong demand and operational readiness [39][40]

Kaiser Aluminum (NasdaqGS:KALU) Q3 2025 Earnings Call October 23, 2025 10:00 AM ET Speaker0Greetings, and welcome to the Kaiser Aluminum Corporation Third Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando with ADDO Investor Relations.Thank you. You may begin.Speaker1Tha ...

Financial Performance - Revenue for Q2 2025 reached $116.5 million, an increase of 13.2% compared to Q2 2024, with a 15.1% increase in campus operations revenue [7][10] - Adjusted EBITDA for the quarter was $10.5 million, reflecting a significant increase of 68.4% year-over-year [7][14] - Net income for Q2 2025 was $1.6 million, a turnaround from a net loss of $0.7 million in the previous year [7][14] Student Metrics - Student starts increased by 19.5% overall, or 21.8% when excluding the Transitional segment [7][14] - The quarter-end student population rose by 18.2%, or 20.6% excluding the Transitional segment [7][14] Campus Development - The company completed the relocation of its Nashville campus and the transfer of the Philadelphia automotive campus to Levittown, with new programs set to launch [6][8] - The East Point campus and the relocated Nashville campus are outperforming expectations, contributing to growth [6][8] - Future campus openings are planned, including a new campus in Hicksville, New York, expected to open in Q4 2026 [6][8] Growth Strategy - The growth is attributed to rising demand for career-focused training, effective execution of the growth strategy, and improvements in marketing efficiency [5][9] - The company is exploring opportunities for new campuses in additional markets to meet the growing demand for high-value programs [6][9] Guidance Update - Based on strong performance in the first half of 2025, the company has raised its full-year guidance for revenue to between $490 million and $500 million, and adjusted EBITDA to between $60 million and $65 million [15][16] - The updated guidance reflects an increase in expected student starts to between 12% and 15% for the year [15][16]

Financial Data and Key Metrics Changes - The company reported a 2.1% decrease in revenue year on year, but net revenue adjusted for the flooring divestiture increased by 2.8% [15] - Organic revenue was up 0.4%, with pricing up 0.7% and volume down 0.3% year on year [16] - Adjusted EBITDA for the quarter was $166 million, reflecting a 5% year on year increase [17] - Adjusted earnings per share (EPS) was $1.18, up 5% compared to the second quarter of 2024 [17] - Operating cash flow increased by 36% year on year to $111 million [17] - Net debt to adjusted EBITDA decreased from 3.5 times to 3.4 times [17] Business Line Data and Key Metrics Changes - In HHC, organic revenue increased by 1.8% year on year, driven by positive volume and pricing, although EBITDA margin was down year on year due to higher raw material costs [8] - Engineering Adhesives saw a 0.4% decrease in organic revenue, but EBITDA increased by 24% with EBITDA margin rising to 22.9% [10] - Building Adhesive Solutions experienced a 0.9% decrease in organic sales, while EBITDA increased by 5% and EBITDA margin expanded to 16.7% [11] Market Data and Key Metrics Changes - In the Americas, organic revenue was up 2% year on year, driven by strength in roofing and flexible packaging [11] - EIMEA region saw a 2% decline in year-over-year organic revenue, with strong performance in hygiene offset by weak demand in construction-related markets [12] - Asia Pacific organic revenue was slightly up year on year, with strong performance in transportation-related markets but slower results in solar and electronics [12] Company Strategy and Development Direction - The company is focused on delivering positive organic revenue growth while managing costs and leveraging global sourcing to respond to market uncertainties [6] - A strategic shift towards higher growth, higher margin markets is underway, including the divestiture of lower margin businesses [6] - The company aims to achieve a greater than 20% EBITDA margin target and is optimistic about margin expansion in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expects a challenging operating environment with constrained demand and high uncertainty, particularly in the second half of the year [12] - Despite economic uncertainties, the company is optimistic about its strong execution and expects profit growth to accelerate in the second half [13] - The company is prepared for potential lower volumes due to tariffs and is actively managing costs to mitigate impacts [89] Other Important Information - The company was recognized as one of the world's greenest companies in 2025 by Newsweek, highlighting its commitment to sustainability [23] - The Vice President of Investor Relations announced retirement, with a transition plan in place [24] Q&A Session Summary Question: Can you provide more context on the strong margin performance in Engineering Adhesives? - The strong margin performance was attributed to better-than-expected performance from the ND Industries acquisition and strong cost control measures [34] Question: How did volume velocity compare across business units in fiscal Q2? - Overall volume trends were flat in Q2, with some positive momentum in automotive and flexible packaging, while residential construction showed softness [39] Question: What is the outlook for the electronics market, particularly in China? - There was a temporary pause in electronics exports from China, but the company expects recovery in the second half due to new business opportunities [48] Question: How should we think about the progression of price cost and margin profile in HHC? - The company anticipates significant margin expansion in HHC due to raw material cost reductions and strong pricing actions [50] Question: What is the expected capital expenditure trajectory for the remainder of the year? - The company expects to close the gap in capital spending in the second half of the year, with a total guidance of $150 million for the full year [61] Question: What is the impact of tariffs on the company's operations? - The direct impact of tariffs is limited due to local sourcing, but the company is prepared for potential volume impacts and is actively managing costs [89]

Financial Data and Key Metrics Changes - Total net sales for 2024 were just over $3 billion, with conversion revenue at $1.46 billion, a decrease of $10 million or 1% compared to 2023 [8][10] - Adjusted EBITDA for 2024 was $217 million, up approximately $7 million from 2023, with adjusted EBITDA as a percentage of conversion revenue improving by approximately 60 basis points to 14.9% [11][12] - Reported net income for 2024 was $47 million, or $2.87 per diluted share, consistent with 2023 [11] Business Line Data and Key Metrics Changes - Aerospace and high strength conversion revenue totaled $530 million, down $4 million or approximately 1%, reflecting a 4% decline in shipments [9] - Packaging conversion revenue was $490 million, down $13 million or approximately 3%, with a 3% decline in shipments [9] - General engineering conversion revenue for 2024 was $313 million, up 3% year over year due to a 6% increase in shipments [9] - Automotive conversion revenue was $120 million, up 3% over 2023 despite a 3% decline in shipments [10] Market Data and Key Metrics Changes - The market backdrop in 2024 was complex and rapidly changing, with challenges in each end market, particularly in packaging [6][7] - The company expects market conditions to stabilize and become more favorable as it moves through 2025 [8] Company Strategy and Development Direction - The company is focused on niche areas in served markets with significant barriers to entry, building strong competitive positions through product differentiation [16] - Investments are being made to upgrade facilities and expand capacity, particularly in the packaging and aerospace sectors [17][21][23] - The company anticipates a transformational year in 2025, driven by strategic investments and strong market positions [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of customer contracts and the potential for increased demand in the second half of 2025 [41][42] - The company expects to see meaningful EBITDA and EBITDA margin uplift in the second half of 2025, with around 60% of full-year EBITDA expected to come in during that period [31][59] Other Important Information - The company returned approximately $51 million to shareholders through dividend payments in 2024, marking the eighteenth consecutive year of dividends [15] - The company is assessing alternative inventory accounting methods and expects to provide an update prior to the release of first-quarter 2025 results [15] Q&A Session Summary Question: What are the assumptions regarding scrap spreads and their impact on EBITDA? - The company modeled EBITDA improvement based on last year's performance, expecting 150 to 200 basis points of improvement from scrap spreads [35][36] Question: What is the outlook for the aerospace market and inventory levels? - Management expects build rates to increase with large OEM airframers, leading to a potential uptick in demand in the second half of the year [42] Question: What is the impact of pricing in the packaging segment? - The fourth quarter pricing decline was attributed to a mix impact, with strong demand anticipated for higher value-added products in the second half of the year [44][46] Question: What is the expected CapEx for 2025? - The company expects CapEx to be around $125 million for 2025, including finalizing investments in the RollCoat line and Trentwood expansion [61] Question: What is the status of NOLs and cash tax payments? - The company has utilized its NOLs and expects cash tax payments in 2025 to be in the range of $5 million to $7 million [62]