Kaiser Aluminum Corporation Q3 FY2025 earnings call

• Strong third quarter performance with 23% EBITDA margin, fourth consecutive period ahead of expectations, and raising full-year EBITDA outlook.
• Trentwood Phase 7 plate capacity expansion near completion, on time and budget, though 12-week outage reduced aero/general engineering sales by $15-20 million.
• Warrick packaging rolling mill's fourth coating line progressing, strong output in September/October, expected to reach full run rate by late 2025, shifting to higher-margin coated products.
• End markets: Aerospace trending positive but not reflected in results yet; packaging supply tight with strong demand; general engineering outperforming; automotive rebounded late summer.
• Focus on managing costs, restoring efficiencies, and regaining best-in-class metrics post major investment cycle.

Conversion revenue for the third quarter was $351 million. Aerospace and high-strength conversion revenue totaled $100 million (down $28 million or ~22%, ~28.5% of total), driven by a 30% decline in shipments due to Trentwood outage and destocking. Packaging conversion revenue was $138 million (up $9 million or ~7%, ~39.3% of total), up on stronger pricing and mix despite 5% Y/Y shipment decline. General engineering conversion revenue was $81 million (up $5 million or 6%, ~23.1% of total), up on 7% shipment increase. Automotive conversion revenue was $32 million (up 10% Y/Y, ~9.1% of total), up due to improved pricing and mix offsetting lower shipments.

• Aerospace: Full-year shipments/revenue expected down ~10% Y/Y due to Trentwood outage and destocking, with recovery in Q4.
• Packaging: Conversion revenue expected up 12%-15% Y/Y, shipments down ~3%-5% Y/Y as new roll coat line ramps.
• General engineering: Shipments/revenue expected up ~5%-10% Y/Y on favorable mix shift.
• Automotive: Conversion revenue expected up ~3%-5% Y/Y, shipments down ~5%-7% Y/Y.
• Full-year conversion revenue guidance updated to flat to up 5% Y/Y; EBITDA outlook raised 10%, expecting 20%-25% Y/Y growth over recasted 2024 EBITDA of $241 million.

Q: On the aero and high strength, shipments down 30% quarter-on-quarter. How to delineate between planned maintenance vs weakness, and 2026 trajectory?

A: Q4 expected to recover close to first half levels, with Trentwood Phase 7 cutting into Q4 by 5%-10%, clearer 2026 view in February, build rates increasing expediting inventory absorption.

Q: On packaging, status of contract negotiations, full run rate, and commissioning charge?

A: Nearly finalized with one major customer, will ramp up beginning next year, taking measured approach with 75%-80% capacity initially; majority of $20M commissioning charge related to Warrick roll coat 4 start-up, less cost expected balance of year.

Q: Impact of tariffs, pushback on prices, share from import?

A: Tariffs neutral to slightly positive, domestic products in better demand as imports face premium, GE business holding up well, no immediate plan to take spare capacity for can sheet.

Q: Impact of competitor outages, spare capacity, and 2026 ramp-up cadence?

A: Currently fairly full, not in strong pace to help with bare product; 2026 ramp-up to have marginal outlooks first half, with full run rate and strong demand expected second half, excited about growth assets in place for next year.