Kaiser Aluminum Corporation Reports First Quarter 2022 Financial Results
Kaiser Aluminum Corporation (NASDAQ:KALU) reported first quarter 2022 net sales of $949 million, significantly up from $324 million in the prior year, driven by a 145% increase in shipments. Net income rose to $8 million or $0.51 per diluted share.
Adjusted EBITDA was $55 million, reflecting a 20% sequential increase. However, the company faced approximately $6 million in higher freight costs and ongoing supply chain challenges impacting operations.
Management anticipates a year-over-year increase in value-added revenue of 20% to 25% and an adjusted EBITDA margin of 17% to 20% for 2022.
- Net sales increased 145% year-over-year to $949 million.
- Net income of $8 million, up from $5 million in the prior year.
- Adjusted EBITDA increased 20% sequentially to $55 million.
- Value-added revenue rose 116% year-over-year to $370 million.
- Higher freight costs of approximately $6 million due to shipping constraints.
- Supply chain issues related to magnesium and metal availability continue to impact operations.
- Automotive extrusions revenue decreased 15% due to semiconductor chip shortages.
First Quarter 2022 Highlights:
- Net Sales
$949 Million ; Value Added Revenue$370 Million - Net Income
$8 Million ; Net Income per Diluted Share$0.51 - Adjusted Net Income
$11 Million ; Adjusted Earnings per Diluted Share$0.66 - Adjusted EBITDA
$55 Million ; Adjusted EBITDA Margin14.8% - Strong Demand for General Engineering and Packaging; Aerospace Recovery Continues As Expected
- Higher Freight Costs of ~
$6 Million Due to Rail and Port Shipping Constraints - Lingering Supply Chain Issues Related to Metal and Magnesium Continue to Impact Results
FRANKLIN, Tenn., April 20, 2022 (GLOBE NEWSWIRE) -- Kaiser Aluminum Corporation (NASDAQ:KALU), a leading producer of semi-fabricated specialty aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, packaging, general engineering, custom automotive and other industrial applications, today announced first quarter 2022 results.
Management Summary
First quarter 2022 results reflect continued strength in demand for the Company’s general engineering and packaging applications, and steadily improving demand for its aerospace/high strength applications, while the Company’s automotive business remains muted due to the continued shortage of semiconductor chips that have limited North American vehicle production. Value added revenue increased approximately
“While we continue to navigate through an inflationary cost environment and manage supply chain challenges, we remain confident in the initiatives we are taking to further improve manufacturing efficiencies and operating performance,” said Keith A. Harvey, President and Chief Executive Officer. “As we look to the remainder of the year, we reiterate our outlook and continue to anticipate a year-over-year increase in value added revenue of
| First Quarter 2022 Consolidated Results |
| (Unaudited)* |
(In millions of dollars, except shipments, realized price and per share amounts)
| Quarterly | ||||||||||||||||||||
| 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | ||||||||||||||||
| Shipments (millions of lbs.) | 335 | 333 | 315 | 337 | 137 | |||||||||||||||
| Net sales | $ | 949 | $ | 806 | $ | 751 | $ | 741 | $ | 324 | ||||||||||
| Less hedged cost of alloyed metal1 | (578 | ) | (490 | ) | (445 | ) | (423 | ) | (152 | ) | ||||||||||
| Value added revenue | $ | 370 | $ | 316 | $ | 305 | $ | 318 | $ | 172 | ||||||||||
| Realized price per pound ($/lb.) | ||||||||||||||||||||
| Net sales | $ | 2.83 | $ | 2.42 | $ | 2.38 | $ | 2.20 | $ | 2.37 | ||||||||||
| Less hedged cost of alloyed metal | (1.73 | ) | (1.47 | ) | (1.41 | ) | (1.26 | ) | (1.12 | ) | ||||||||||
| Value added revenue | $ | 1.10 | $ | 0.95 | $ | 0.97 | $ | 0.94 | $ | 1.25 | ||||||||||
| As reported | ||||||||||||||||||||
| Operating income | $ | 25 | $ | 17 | $ | 20 | $ | 11 | $ | 17 | ||||||||||
| Net income (loss) | $ | 8 | $ | 2 | $ | (2 | ) | $ | (22 | ) | $ | 5 | ||||||||
| Net income (loss) per share, diluted2 | $ | 0.51 | $ | 0.11 | $ | (0.14 | ) | $ | (1.42 | ) | $ | 0.28 | ||||||||
| Adjusted3 | ||||||||||||||||||||
| Operating income | $ | 28 | $ | 19 | $ | 26 | $ | 33 | $ | 24 | ||||||||||
| EBITDA4 | $ | 55 | $ | 46 | $ | 50 | $ | 59 | $ | 38 | ||||||||||
| EBITDA margin5 | 14.8 | % | 14.5 | % | 16.5 | % | 18.5 | % | 21.8 | % | ||||||||||
| Net income | $ | 11 | $ | 3 | $ | 9 | $ | 16 | $ | 10 | ||||||||||
| EPS, diluted2 | $ | 0.66 | $ | 0.20 | $ | 0.57 | $ | 1.00 | $ | 0.64 | ||||||||||
| 1 | Hedged cost of alloyed metal is our Midwest transaction price of aluminum plus the price of alloying elements plus any realized gains and/or losses on settled hedges, related to the metal sold in the referenced period. |
| 2 | Diluted shares for EPS are calculated using the treasury stock method. |
| 3 | Adjusted numbers exclude non-run-rate items. For all Adjusted numbers and EBITDA refer to Reconciliation of Non-GAAP Measures. |
| 4 | Adjusted EBITDA = Consolidated operating income, excluding operating non-run-rate items, plus Depreciation and amortization. |
| 5 | Adjusted EBITDA margin = Adjusted EBITDA as a percent of Value Added Revenue. |
| * | Please refer to GAAP financial statements. |
| Totals may not sum due to rounding. |
First Quarter 2022
Net sales for the first quarter 2022 increased to
Value added revenue for the first quarter 2022 increased
Adjusted EBITDA of
Reported operating income for the first quarter 2022 was approximately
Reported net income for the first quarter 2022 was
Cash Flow and Liquidity
Adjusted EBITDA of
As of March 31, 2022, the Company had cash and cash equivalents of approximately
Conference Call
Kaiser Aluminum Corporation will host a conference call on Thursday, April 21, 2022, at 10:00am (Pacific Time); 12:00pm (Central Time); 1:00pm (Eastern Time), to discuss first quarter 2022 results. To participate, the conference call can be directly accessed from the U.S. and Canada at (866) 374-5140, and accessed internationally at (404) 400-0571. The conference call ID number is 17782023. A link to the simultaneous webcast can be accessed on the Company’s website at http://investors.kaiseraluminum.com/events.cfm. A copy of a presentation will be available for download prior to the call and an audio archive will be available on the Company’s website following the call.
Company Description
Kaiser Aluminum Corporation, headquartered in Franklin, Tenn., is a leading producer of semi-fabricated specialty aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, packaging, general engineering, custom automotive, and other industrial applications. The Company’s North American facilities produce value-added plate, sheet, coil, extrusions, rod, bar, tube, and wire products, adhering to traditions of quality, innovation, and service that have been key components of the culture since the Company was founded in 1946. The Company’s stock is included in the Russell 2000® index and the S&P Small Cap 600® index.
Available Information
For more information, please visit the Company’s website at www.kaiseraluminum.com. The website includes a section for investor relations under which the Company provides notifications of news or announcements regarding its financial performance, including Securities and Exchange Commission (SEC) filings, investor events, and earnings and other press releases. In addition, all Company filings submitted to the SEC are available through a link to the section of the SEC’s website at www.sec.gov, which includes: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements for the Company’s annual stockholders’ meetings, and other information statements as filed with the SEC. In addition, the Company provides a webcast of its quarterly earnings calls and certain events in which management participates or hosts with members of the investment community.
Non-GAAP Financial Measures
This earnings release contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flow of the Company. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying tables.
The non-GAAP financial measures used within this earnings release are value added revenue, adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share which exclude non-run-rate items and ratios related thereto. As more fully described in these reports, “non-run-rate” items are items that, while they may occur from period to period, are particularly material to results, impact costs primarily as a result of external market factors and may not occur in future periods if the same level of underlying performance were to occur. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors. Reconciliations of certain forward looking non-GAAP financial measures to comparable GAAP measures are not provided because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted or provided without unreasonable effort.
Forward-Looking Statements
This press release contains statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to it at the time such statements are made. Kaiser Aluminum cautions that any forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These factors include: (a) the effectiveness of management's strategies and decisions, including strategic investments, capital spending strategies processes and countermeasures implemented to address operational and supply chain challenges, and the execution of those strategies; (b) general economic and business conditions, including the impact of the global outbreak of Coronavirus Disease 2019 and governmental and other actions taken in response, cyclicality, reshoring, supply interruptions, including the most recent disruptions resulting from the supply demand imbalances in the magnesium and silicon markets, and other conditions that impact demand drivers in the aerospace/high strength, automotive, general engineering, packaging and other end markets the Company serves; (c) the Company's ability to participate in mature and anticipated new automotive programs expected to launch in the future and successfully launch new automotive programs; (d) changes or shifts in defense spending due to competing national priorities; (e) pricing, market conditions and the Company’s ability to effectively execute its commercial and labor strategies, pass through cost increases, including the institution of surcharges, and flex costs in response to changing economic conditions and inflation; (f) developments in technology; (g) the impact of the Company's future earnings, cash flows, financial condition, capital requirements and other factors on its financial strength and flexibility; (h) new or modified statutory or regulatory requirements; (i) the successful integration of the acquired operations and technologies continue to drive innovative solutions and further advance its capabilities; and (j) other risk factors summarized in the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2021. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
| Investor Relations and Public Relations Contact: | |
| Melinda C. Ellsworth | |
| Kaiser Aluminum Corporation | |
| (949) 614-1757 |
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (1)
| Quarter Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| (In millions of dollars, except share and per share amounts) | ||||||||
| Net sales | $ | 948.8 | $ | 324.0 | ||||
| Costs and expenses: | ||||||||
| Cost of products sold, excluding depreciation and amortization and other items | 865.9 | 262.5 | ||||||
| Depreciation and amortization | 27.5 | 13.5 | ||||||
| Selling, general, administrative, research and development | 30.2 | 31.8 | ||||||
| Restructuring costs (benefit) | — | (0.7 | ) | |||||
| Total costs and expenses | 923.6 | 307.1 | ||||||
| Operating income | 25.2 | 16.9 | ||||||
| Other expense: | ||||||||
| Interest expense | (12.2 | ) | (12.3 | ) | ||||
| Other expense, net | (1.6 | ) | (0.4 | ) | ||||
| Income before income taxes | 11.4 | 4.2 | ||||||
| Income tax (provision) benefit | (3.3 | ) | 0.3 | |||||
| Net income | $ | 8.1 | $ | 4.5 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.51 | $ | 0.28 | ||||
| Diluted2 | $ | 0.51 | $ | 0.28 | ||||
| Weighted-average number of common shares outstanding (in thousands): | ||||||||
| Basic | 15,866 | 15,805 | ||||||
| Diluted2 | 16,038 | 15,987 | ||||||
| 1 | Please refer to the Company's Form 10-Q for the quarter ended March 31, 2022 for detail regarding the items in the table. |
| 2 | Diluted shares for EPS are calculated using the treasury stock method. |
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (1)
| As of March 31, 2022 | As of December 31, 2021 | |||||||
| (In millions of dollars, except share and per share amounts) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 261.0 | $ | 303.2 | ||||
| Receivables: | ||||||||
| Trade receivables, net | 432.2 | 332.7 | ||||||
| Other | 50.6 | 53.0 | ||||||
| Contract assets | 74.9 | 63.2 | ||||||
| Inventories | 431.5 | 404.6 | ||||||
| Prepaid expenses and other current assets | 71.2 | 48.7 | ||||||
| Total current assets | 1,321.4 | 1,205.4 | ||||||
| Property, plant and equipment, net | 960.2 | 955.2 | ||||||
| Operating lease assets | 44.9 | 46.2 | ||||||
| Deferred tax assets, net | 3.2 | 3.4 | ||||||
| Intangible assets, net | 64.2 | 67.7 | ||||||
| Goodwill | 39.3 | 39.3 | ||||||
| Other assets | 108.2 | 105.2 | ||||||
| Total | $ | 2,541.4 | $ | 2,422.4 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 442.8 | $ | 351.4 | |||||
| Accrued salaries, wages and related expenses | 40.9 | 46.9 | ||||||
| Other accrued liabilities | 70.9 | 58.4 | ||||||
| Total current liabilities | 554.6 | 456.7 | ||||||
| Long-term portion of operating lease liabilities | 40.5 | 40.8 | ||||||
| Pension and other postretirement benefits | 88.7 | 92.5 | ||||||
| Net liabilities of Salaried VEBA | 20.3 | 20.6 | ||||||
| Deferred tax liabilities | 17.9 | 10.5 | ||||||
| Long-term liabilities | 74.4 | 72.5 | ||||||
| Long-term debt | 1,036.8 | 1,036.3 | ||||||
| Total liabilities | 1,833.2 | 1,729.9 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, 5,000,000 shares authorized at both March 31, 2022 and December 31, 2021; no shares were issued and outstanding at March 31, 2022 and December 31, 2021 | — | — | ||||||
| Common stock, par value March 31, 2022 and December 31, 2021; 22,739,402 shares issued and 15,904,116 shares outstanding at March 31, 2022; 22,700,404 shares issued and 15,865,118 shares outstanding at December 31, 2021 | 0.2 | 0.2 | ||||||
| Additional paid in capital | 1,081.0 | 1,078.9 | ||||||
| Retained earnings | 88.6 | 93.0 | ||||||
| Treasury stock, at cost, 6,835,286 shares at both March 31, 2022 and December 31, 2021 | (475.9 | ) | (475.9 | ) | ||||
| Accumulated other comprehensive income (loss) | 14.3 | (3.7 | ) | |||||
| Total stockholders' equity | 708.2 | 692.5 | ||||||
| Total | $ | 2,541.4 | $ | 2,422.4 | ||||
| 1 | Please refer to the Company's Form 10-Q for the quarter ended March 31, 2022 for detail regarding the items in the table. |
Reconciliation of Non-GAAP Measures - Consolidated
(Unaudited)
(In millions of dollars, except share and per share amounts)
| Quarterly | |||||||||||||||||||
| 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | |||||||||||||||
| GAAP net income (loss) | $ | 8.1 | $ | 1.7 | $ | (2.3 | ) | $ | (22.4 | ) | $ | 4.5 | |||||||
| Interest expense | 12.2 | 12.3 | 12.5 | 12.4 | 12.3 | ||||||||||||||
| Other expense, net | 1.6 | 0.7 | 1.2 | 36.6 | 0.4 | ||||||||||||||
| Income tax provision (benefit) | 3.3 | 1.9 | 8.4 | (15.5 | ) | (0.3 | ) | ||||||||||||
| GAAP operating income | 25.2 | 16.6 | 19.8 | 11.1 | 16.9 | ||||||||||||||
| Mark-to-market (gain) loss1 | (1.0 | ) | (0.7 | ) | 2.0 | 0.4 | (0.3 | ) | |||||||||||
| Restructuring costs (benefits) | — | — | — | (0.1 | ) | (0.7 | ) | ||||||||||||
| Acquisition costs2 | 0.6 | 5.8 | 3.8 | 7.4 | 11.0 | ||||||||||||||
| Other operating NRR loss (gain)3,4 | 2.7 | (3.0 | ) | (0.1 | ) | 14.1 | (2.9 | ) | |||||||||||
| Operating income, excluding operating NRR items | 27.5 | 18.7 | 25.5 | 32.9 | 24.0 | ||||||||||||||
| Depreciation and amortization | 27.5 | 27.3 | 24.9 | 25.8 | 13.5 | ||||||||||||||
| Adjusted EBITDA5 | $ | 55.0 | $ | 46.0 | $ | 50.4 | $ | 58.7 | $ | 37.5 | |||||||||
| GAAP net income (loss) | $ | 8.1 | $ | 1.7 | $ | (2.3 | ) | $ | (22.4 | ) | $ | 4.5 | |||||||
| Operating NRR Items | 2.3 | 2.1 | 5.7 | 21.8 | 7.1 | ||||||||||||||
| Non-operating NRR Items6 | 0.9 | 0.6 | 0.5 | 36.4 | 0.6 | ||||||||||||||
| Tax impact of above NRR Items | (0.7 | ) | (1.2 | ) | 5.3 | (19.9 | ) | (1.9 | ) | ||||||||||
| Adjusted net income | $ | 10.6 | $ | 3.2 | $ | 9.2 | $ | 15.9 | $ | 10.3 | |||||||||
| Net income (loss) per share, diluted7 | $ | 0.51 | $ | 0.11 | $ | (0.14 | ) | $ | (1.42 | ) | $ | 0.28 | |||||||
| Adjusted earnings per diluted share7 | $ | 0.66 | $ | 0.20 | $ | 0.57 | $ | 1.00 | $ | 0.64 | |||||||||
| 1 | Mark-to-market (gain) loss on derivative instruments represents: (i) the reversal of mark-to-market (gain) loss on hedges entered into prior to the adoption of Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and settled in the periods presented above and (ii) (gain) loss on non-designated commodity hedges. Adjusted EBITDA reflects the realized (gain) loss of such settlements. |
| 2 | Acquisition costs are non-run-rate acquisition-related transaction costs, which include professional fees, as well non-cash hedging charges recorded in connection with our Warrick acquisition. |
| 3 | NRR is an abbreviation for Non-Run-Rate; NRR items are pre-tax. |
| 4 | Other operating NRR items primarily represent the impact of adjustments to plant-level LIFO and environmental expenses. |
| 5 | Adjusted EBITDA = Consolidated operating income, excluding operating NRR items, plus Depreciation and amortization. |
| 6 | Non-operating NRR items represents the impact of non-cash net periodic benefit cost related to the Salaried VEBA excluding service cost and debt refinancing charges. |
| 7 | Diluted shares for EPS are calculated using the treasury stock method. |
FAQ
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