KAISER ALUMINUM CORP Q4 FY2024 earnings call

• 2024 results met expectations for conversion revenue and margin expansion, with EBITDA margin expanding by approximately 60 basis points year-over-year and 460 basis points since 2022. - In 2025, the company aims to continue progress towards achieving EBITDA margin goals in the mid-20% range. - Faced challenges in end markets such as Packaging in 2024 and made significant investments to meet growing demand. - 2024 capital expenditures were $181 million, and 2025 capital expenditures are expected to be closer to the run rate at approximately $125 million. - Returned approximately $51 million to shareholders in 2024 and declared a quarterly dividend of $0.77 per common share in January 2025. - Began assessing alternative inventory accounting methods other than LIFO.

In 2024, total net sales were just over $3 billion. Aero and High Strength conversion revenue totaled $530 million, a decrease of $4 million or approximately 1%, with shipments down 4%. Packaging conversion revenue was $490 million, a decrease of $13 million or approximately 3%, with shipments down 3% or 20 million pounds. General Engineering conversion revenue for 2024 was $313 million, up 3% year-over-year due to a 6% increase in shipments. Automotive conversion revenue was $120 million, up 3% over 2023, with a 3% decline in shipments but an improved product mix.

• 2025 consolidated conversion revenue is expected to increase 5%-10% and EBITDA margin to be up 50 basis points to 100 basis points year-over-year. - Packaging: conversion revenue is expected to increase 20%-25%, shipments up 3%-5% with the benefit more apparent in the second half. - Aero and High Strength: short-term declines in shipments and conversion revenue are expected in 2025 due to destocking, but long-term is strong with the Phase 7 expansion at Trentwood. - General Engineering: volumes and conversion revenue are expected to be up 5%-10% in 2025. - Automotive: conversion revenue is expected to be up 3%-5% with shipments following market production rates but skewed to the SUV and light trucks segments.

• Market conditions could change and materially impact performance. - Tariffs announced could have unknown impacts on the business. - Scrap availability and spreads could affect EBITDA margin. - Legacy contract renewals and their impact on pricing are uncertainties.

Q: Within the consolidated 2025 EBITDA guide, what are the assumptions regarding scrap spreads and tariff impact?

A: Neal West stated that they basically used the situation from last year, modeled 150 basis points to 200 basis points improvement from spreads, and are assessing tariffs which are overall neutral to positive.

Q: About Packaging, why was the fourth quarter pricing down and what about legacy contracts?

A: Keith Harvey said the fourth quarter pricing was mixed, there is strong demand, new capacity will be online in the second quarter, and legacy contract renewals will positively impact pricing with higher value-added products.

Q: Why is the company converting its inventory methodology?

A: Keith Harvey said it's because of LIFO impacts last year, and they are evaluating FIFO, average cost to find the best fit for the business.

Q: How much of the EBITDA is expected to be in the second half?

A: Keith Harvey said approximately 60% of the total EBITDA for the year is expected to be in the second half.