KAISER ALUMINUM CORP

Previous wording

This Quarterly Report on Form 10-Q contains statements which constitute“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this Report and can be identified by the use of forward-looking terminology such as“believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or“anticipates,” or the negative of the foregoing or other variations of comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward‑looking statements are not guarantees of future performance and involve significant risks and uncertainties and that actual results may vary from those in the forward-looking statements as a result of various factors. These factors include: (i) the effectiveness of management’s strategies and decisions, including strategic investments, capital spending strategies, cost reduction initiatives, sourcing strategies, processes and countermeasures implemented to address operational and supply chain challenges and the execution of those strategies; (ii) general economic and business conditions, including the impact of geopolitical factors and governmental and other actions taken in response, cyclicality, reshoring, labor challenges, supply interruptions, customer disruptions, and other conditions that impact demand drivers in the Aero/HS Products, Packaging, GE Products, Automotive Extrusions and other end markets we serve; (iii) our ability to participate in mature and anticipated new automotive programs expected to launch in the future and successfully launch new automotive programs; (iv) changes or shifts in defense spending due to competing national priorities; (v) pricing, market conditions and our ability to effectively execute commercial and labor strategies, pass through cost increases, including the institution of surcharges, and flex costs in response to inflation, volatile commodity costs and changing economic conditions; (vi) developments in technology; (vii) the impact of our future earnings, cash flows, financial condition, capital requirements and other factors on our financial strength and flexibility; (viii) new or modified statutory or regulatory requirements; (ix) the successful integration of acquired operations and technologies and (x) stakeholders’, including regulators’, views regarding our sustainability goals and initiatives and the impact of factors outside of our control on such goals and initiatives. This Item and Part I, Item 1A. “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023, each identify other factors that could cause actual results to vary. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward looking statements.

Current wording

This Quarterly Report on Form 10-Q contains statements which constitute“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this Report and can be identified by the use of forward-looking terminology such as“believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans” or“anticipates,” or the negative of the foregoing or other variations of comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward‑looking statements are not guarantees of future performance and involve significant risks and uncertainties and that actual results may vary from those in the forward-looking statements as a result of various factors. These factors include: (i) the effectiveness of management’s strategies and decisions, including strategic investments, capital spending strategies, cost reduction initiatives, sourcing strategies, processes and countermeasures implemented to address operational and supply chain challenges and the execution of those strategies; (ii) the execution and timing of strategic investments; (iii) general economic and business conditions, including the impact of geopolitical factors and governmental and other actions taken in response, cyclicality, reshoring, labor challenges, supply interruptions, customer disruptions, customer inventory imbalances and supply chain issues, and other conditions that impact demand drivers in the Aero/HS Products, Packaging, GE Products, Automotive Extrusions and other end markets we serve; (iv) our ability to participate in mature and anticipated new automotive programs expected to launch in the future and successfully launch new automotive programs; (v) changes or shifts in defense spending due to competing national priorities; (vi) pricing, market conditions and our ability to effectively execute commercial and labor strategies, pass through cost increases, including the institution of surcharges, and flex costs in response to inflation, volatile commodity costs and changing economic conditions; (vii) developments in technology; (viii) the impact of our future earnings, cash flows, financial condition, capital requirements and other factors on our financial strength and flexibility; (ix) new or modified statutory or regulatory requirements; (x) the successful integration of acquired operations and technologies and (xi) stakeholders’, including regulators’ and customers’, views regarding our sustainability goals and initiatives and the impact of factors outside of our control on such goals and initiatives. This Item and Part I, Item 1A. “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023, each identify other factors that could cause actual results to vary. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward looking statements.

Previous wording

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby earning profit predominantly from the conversion of aluminum into semi-fabricated mill products. We refer to this as “metal price neutrality.” We purchase primary, rolling ingot and scrap, or recycled, aluminum, our main raw material, and alloys at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying index cost of aluminum and certain alloys through to our customers so that we remain neutral to metal pricing. However, for some of our higher margin products sold on a spot basis, competitive dynamics may limit the amount and/or delay the timing of selling price increases to recover our increased aluminum and alloy costs, resulting in a lag up to several months during which we may be exposed to metal price risk. As a result, we can experience an adverse impact when aluminum and alloy prices increase, and a favorable impact to us when aluminum and alloy prices decline, as we and our competitors tend to defer adjusting pricing unless market dynamics require such in a declining metal cost environment. We may also enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price. Spot sales with lagged aluminum and alloy price pass through and firm-price sales agreements create price exposure for us, which we mitigate through hedging and related programs with an objective to remain metal price neutral. Additionally, we have certain contracts that may adjust certain alloy prices for a forward period based on an average prior period cost for such alloys. As a result, until the selling price resets, we can experience an adverse impact when alloy prices increase and a favorable impact when alloy prices decrease.

Current wording

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby earning profit predominantly from the conversion of aluminum into semi-fabricated mill products. We refer to this as “metal price neutrality.” We purchase primary, rolling ingot and scrap, or recycled, aluminum, our main raw material, and alloys at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying index cost of aluminum and certain alloys through to our customers so that we remain neutral to metal pricing. However, for some of our higher margin products sold on a spot basis, competitive dynamics may limit the amount and/or delay the timing of selling price increases to recover our increased aluminum and alloy costs, resulting in a lag up to several months during which we may be exposed to metal price risk. As a result, we can experience an adverse impact when aluminum and alloy prices increase, and a favorable impact to us when aluminum and alloy prices decline, as we and our competitors tend to defer adjusting pricing unless required by market dynamics in a declining metal cost environment. Similarly, we typically purchase scrap at a discount to the index price of aluminum which can vary depending on market dynamics and availability. As a result, we can experience an adverse impact when scrap discounts decrease and a favorable impact when scrap discounts increase. We may also enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price. Spot sales with lagged aluminum and alloy price pass through and firm-price sales agreements create price exposure for us, which we mitigate through hedging and related programs with an objective to remain metal price neutral. Additionally, we have certain contracts that may adjust certain alloy prices for a forward period based on an average prior period cost for such alloys. As a result, until the selling price resets, we can experience an adverse impact when alloy prices increase and a favorable impact when alloy prices decrease.

Previous wording

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying price of primary, rolling ingot and scrap, or recycled, aluminum, our main raw material, and certain alloys so that our earnings are predominantly associated with the conversion of aluminum to semi‑fabricated mill products. To allow users of our financial statements to consider the impact of aluminum and alloy cost on our Net sales, we disclose Net sales as well as Conversion Revenue, which is Net sales less the Hedged Cost of Alloyed Metal. As used in this discussion, “Hedged Cost of Alloyed Metal” is the cost of aluminum at the average MWTP plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period. The average MWTP of aluminum reflects the primary aluminum supply/demand dynamics in North America. For a reconciliation of Conversion Revenue to Net sales, see below in “Results of Operations - Selected Operational and Financial Information.”

Current wording

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in the underlying price of primary, rolling ingot and scrap, or recycled, aluminum, our main raw material, and certain alloys so that our earnings are predominantly associated with the conversion of aluminum to semi‑fabricated mill products. To allow users of our financial statements to consider the impact of aluminum and alloy cost on our Net sales, we disclose Net sales as well as Conversion Revenue, which is Net sales less the Hedged Cost of Alloyed Metal. As used in this discussion, “Hedged Cost of Alloyed Metal” is the cost of aluminum at the average MWTP plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period. The average MWTP of aluminum reflects the primary aluminum supply/demand dynamics in North America. For a reconciliation of Conversion Revenue to Net sales, see below in “Results of Operations - Selected Operational and Financial Information.”

Previous wording

With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higher strength and other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolled heat treat plate and sheet, which are produced at Trentwood, are Aero/HS Products (which we sell globally) and GE Products (which we predominantly sell within North America). The primary end market application of bare and coated aluminum coil, which are produced at Warrick, is Packaging for can stock applications (which we sell in North America). Our Packaging products require demanding attributes and can be further processed to include coating and slitting depending on customer specifications.

Current wording

With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higher strength and other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolled heat treat plate and sheet, which are produced at Trentwood, are Aero/HS Products (which we sell globally) and GE Products (which we predominantly sell within North America). The primary end market application of bare and coated aluminum coil, which are produced at Warrick, is Packaging (which we sell in North America). Our Packaging products require demanding attributes and can be further processed to include coating and slitting depending on customer specifications.

Previous wording

In the areas of aluminum extrusions, we focus on demanding Aero/HS Products, GE Products, and Automotive Extrusions that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise, strong production capability and high product quality. Our 10 active extrusion/drawing facilities, nine of which are in the United States and one of which is in Canada, serve primarily North American demand for aerospace, general engineering, or automotive applications. Additionally, we have a facility in Columbia, New Jersey, that focuses on multi-material advanced manufacturing methods and techniques, which include multi-axis computer numerical control machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, high technology, general industrial, and automotive applications. Our consolidated Net sales for the six months ended June 30, 2024 totaled $1,510.9 million on 587.8 million pounds shipped from our facilities. We employed approximately 4,000 people at June 30, 2024.

Current wording

In the areas of aluminum extrusions, we focus on demanding Aero/HS Products, GE Products, and Automotive Extrusions that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise, strong production capability and high product quality. Our 10 active extrusion/drawing facilities, nine of which are in the United States and one of which is in Canada, serve primarily North American demand for aerospace, general engineering, or automotive applications. Additionally, we have a facility in Columbia, New Jersey, that focuses on multi-material advanced manufacturing methods and techniques, which include multi-axis computer numerical control machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, high technology, general industrial, and automotive applications. Our consolidated Net sales for the nine months ended September 30, 2024 totaled $2,258.6 million on approximately 880.0 million pounds shipped from our facilities. We employed approximately 4,000 people at September 30, 2024.

Previous wording

Net income $3.1 million; Net income per diluted share $0.19;

Current wording

Net income $12.0 million; Net income per diluted share $0.74; and

Previous wording

Net Sales. Net sales totaled $773.4 million and $814.1 million for the quarters ended June 30, 2024 and June 30, 2023, respectively, reflecting a 17.3 million pound (6%) decrease in shipment volume and a $0.02/lb (1%) increase in average realized sales price per pound. The shipment volume decrease reflected: (i) a 17.4 million pound (11%) decrease in Packaging; (ii) a 1.7 million pound (3%) decrease in Aero/HS Products; and (iii) a 1.7 million pound (61%) decrease in Other products, partially offset by: (i) a 3.2 million pound (6%) increase in GE Products and (ii) a 0.3 million pound (1%) increase in Automotive Extrusions. The average realized sales price per pound reflected a $0.01/lb (1%) decrease in the average Hedged Cost of Alloyed Metal price per pound and a $0.03/lb (2%) increase in Conversion Revenue per pound reflecting higher pricing. For further details, see the table below in “Selected Operational and Financial Information.”

Current wording

Net Sales. Net sales totaled $747.7 million and $743.6 million for the quarters ended September 30, 2024 and September 30, 2023, respectively, reflecting a 7.1 million pound (2%) decrease in shipment volume and an $0.08/lb (3%) increase in average realized sales price per pound. The shipment volume decrease reflected: (i) a 4.7 million pound (7%) decrease in Aero/HS Products; (ii) a 3.5 million pound (2%) decrease in Packaging; (iii) a 1.1 million pound (52%) decrease in Other products; and (iv) a 0.4 million pound (2%) decrease in Automotive Extrusions, partially offset by a 2.6 million pound (5%) increase in GE Products. The average realized sales price per pound reflected a $0.03/lb (2%) increase in the average Hedged Cost of Alloyed Metal price per pound and a $0.05/lb (4%) increase in Conversion Revenue per pound reflecting higher pricing and improved mix. For further details, see the table below in “Selected Operational and Financial Information.”

Previous wording

Net sales totaled $1,510.9 million and $1,621.7 million for the six months ended June 30, 2024 and June 30, 2023, respectively, reflecting a 25.6 million pound (4%) decrease in shipment volume and a $0.07/lb (3%) decrease in average realized sales price per pound. The shipment volume decrease reflected: (i) a 28.7 million pound (9%) decrease in Packaging; (ii) a 3.4 million pound (61%) decrease in Other products; and (iii) a 0.9 million pound (2%) decrease in Automotive Extrusions, partially offset by: (i) a 4.4 million pound (4%) increase in GE Products and (ii) a 3.0 million pound (2%) increase in Aero/HS Products. The average realized sales price per pound reflected a $0.10/lb (7%) decrease in the average Hedged Cost of Alloyed Metal price per pound and a $0.03/lb (2%) increase in Conversion Revenue per pound reflecting higher pricing. For further details, see the table below in “Selected Operational and Financial Information.”

Current wording

Net sales totaled $2,258.6 million and $2,365.3 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, reflecting a 32.7 million pound (4%) decrease in shipment volume and a $0.02/lb (1%) decrease in average realized sales price per pound. The shipment volume decrease reflected: (i) a 32.2 million pound (7%) decrease in Packaging; (ii) a 4.5 million pound (58%) decrease in Other products; (iii) a 1.7 million pound (1%) decrease in Aero/HS Products; and (iv) a 1.3 million pound (2%) decrease in Automotive Extrusions, partially offset by a 7.0 million pound (4%) increase in GE Products. The average realized sales price per pound reflected a $0.06/lb (4%) decrease in the average Hedged Cost of Alloyed Metal price per pound and a $0.04/lb (3%) increase in Conversion Revenue per pound reflecting higher pricing and improved mix. For further details, see the table below in “Selected Operational and Financial Information.”

Previous wording

COGS. COGS for the quarter ended June 30, 2024 totaled $690.5 million, or 89% of Net sales, compared to $718.4 million, or 88% of Net sales, for the quarter ended June 30, 2023. The decrease of $27.9 million reflected a $31.2 million decrease in Hedged Cost of Alloyed Metal, partially offset by a $3.3 million increase in net manufacturing conversion and other costs. Of the $31.2 million decrease in Hedged Cost of Alloyed Metal, $24.0 million was due to lower shipment volume and $7.2 million was due to lower hedged metal prices (see above in our “Net Sales” discussion for further details). The $3.3 million increase in net manufacturing conversion and other costs primarily reflected: (i) a $5.5 million decrease in costs associated with a reduction in pounds shipped during the quarter, more than offset by; (ii) a $4.5 million net increase in manufacturing costs attributable to an $11.7 million increase in non-cash LIFO inventory expense, partially offset by improved metal sourcing and operating efficiencies; (iii) a $2.6 million increase in energy costs; and (iv) a $1.7 million increase in major maintenance costs driven by timing of annual planned maintenance programs. For a further discussion of the comparative results of operations for the quarters ended June 30, 2024 and June 30, 2023, see below in “Selected Operational and Financial Information.”

Current wording

COGS. COGS for the quarter ended September 30, 2024 totaled $671.8 million, or 90% of Net sales, compared to $665.2 million, or 89% of Net sales, for the quarter ended September 30, 2023. The increase of $6.6 million reflected a $0.7 million decrease in Hedged Cost of Alloyed Metal, more than offset by a $7.3 million increase in net manufacturing conversion and other costs. Of the $0.7 million decrease in Hedged Cost of Alloyed Metal, $9.2 million was due to lower shipment volume, partially offset by an $8.5 million increase in hedged metal prices (see above in our “Net Sales” discussion for further details). The $7.3 million increase in net manufacturing conversion and other costs primarily reflected: (i) a $3.3 million increase in legacy environmental costs; (ii) a $2.5 million net increase in costs primarily driven by product mix and higher energy costs; and (iii) a $1.5 million net increase in manufacturing costs, primarily attributable to a $1.8 million increase in LIFO reserve expense. For a further discussion of the comparative results of operations for the quarters ended September 30, 2024 and September 30, 2023, see below in “Selected Operational and Financial Information.”

Previous wording

COGS for the six months ended June 30, 2024 totaled $1,333.4 million or 88% of Net sales, compared to $1,449.5 million, or 89% of Net sales, for the six months ended June 30, 2023. The decrease of $116.1 million reflected a $98.9 million decrease in Hedged Cost of Alloyed Metal and a $17.2 million decrease in net manufacturing conversion and other costs. Of the $98.9 million decrease in Hedged Cost of Alloyed Metal, $62.3 million was due to lower hedged metal prices and $36.6 million was due to lower shipment volume (see above in our “Net Sales” discussion for further details). The $17.2 million decrease in net manufacturing conversion and other costs primarily reflected: (i) an $18.8 million decrease in costs associated with a reduction in pounds shipped, and (ii) a $5.7 million decrease in major maintenance costs driven by timing of annual planned maintenance programs, partially offset by: (i) a $5.6 million net increase in manufacturing costs, primarily attributable to an $8.5 million increase in non-cash LIFO inventory expense, partially offset by improved metal sourcing and manufacturing efficiencies and (ii) a $1.7 million increase in energy costs. For a further discussion of the comparative results of operations for the six months ended June 30, 2024 and June 30, 2023, see below in “Selected Operational and Financial Information.”

Current wording

COGS for the nine months ended September 30, 2024 totaled $2,005.2 million or 89% of Net sales, compared to $2,114.7 million, or 89% of Net sales, for the nine months ended September 30, 2023. The decrease of $109.5 million reflected a $99.6 million decrease in Hedged Cost of Alloyed Metal and a $10.0 million decrease in net manufacturing conversion and other costs. Of the $99.6 million decrease in Hedged Cost of Alloyed Metal, $54.3 million was due to lower hedged metal prices and $45.3 million was due to lower shipment volume (see above in our “Net Sales” discussion for further details). The $10.0 million decrease in net manufacturing conversion and other costs primarily reflected: (i) a $17.8 million decrease in costs associated with a reduction in pounds shipped; (ii) a $4.9 million decrease in major maintenance costs driven by timing of annual planned maintenance programs, partially offset by: (i) a $6.4 million net increase in manufacturing costs, primarily attributable to an $10.3 million increase in LIFO reserve expense, partially offset by improved metal sourcing; (ii) a $3.2 million increase in legacy environmental costs; and (iii) a $3.1 million increase in energy costs. For a further discussion of the comparative results of operations for the nine months ended September 30, 2024 and September 30, 2023, see below in “Selected Operational and Financial Information.”

Previous wording

Selling, General, Administrative, Research and Development (“SG&A and R&D”). SG&A and R&D expense totaled $31.6 million and $32.2 million for the quarters ended June 30, 2024 and June 30, 2023, respectively, and $64.2 million and $61.9 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The decrease during the quarter ended June 30, 2024 was primarily due to: (i) a $0.5 million decrease in legal fees; (ii) a $0.3 million decrease in salaries, benefits, and incentive compensation; and (iii) a $0.3 million decrease in other SG&A and R&D expenses, partially offset by a $0.5 million increase in consulting and outsourced services.

Current wording

Selling, General, Administrative, Research and Development (“SG&A and R&D”). SG&A and R&D expense totaled $28.8 million and $30.5 million for the quarters ended September 30, 2024 and September 30, 2023, respectively, and $93.0 million and $92.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The decrease during the quarter ended September 30, 2024 was primarily due to: (i) a $1.3 million decrease in legal fees and (ii) a $1.0 million decrease in consulting and outsourced services, partially offset by a $0.5 million increase in salaries, benefits and incentive compensation. The increase for the nine months ended September 30, 2024 compared with September 30, 2023 was primarily due to a $3.2 million increase in salaries, benefits, and incentive compensation, partially offset by: (i) a $1.8 million decrease in legal fees; (ii) a $0.4 million decrease in consulting and outsourced services; and (iii) a $0.3 million decrease in other SG&A and R&D expenses.

Previous wording

Restructuring Costs. Restructuring costs of $6.8 million and $1.2 million for the quarters ended June 30, 2024 and June 30, 2023, respectively, and $6.9 million and $2.6 million for the six months ended June 30, 2024 and June 30, 2023, respectively, related to our restructuring plans initiated in 2022 and 2024. See Note 4 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding the restructuring plans.

Current wording

Restructuring Costs. Restructuring costs of $0.7 million and $1.6 million for the quarters ended September 30, 2024 and September 30, 2023, respectively, and $7.6 million and $4.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, related to our restructuring plans initiated in 2022 and 2024. See Note 4 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding the restructuring plans.

Previous wording

Other Operating Charges, Net. Other operating charges of $0.4 million for the six months ended June 30, 2024 represents an impairment charge on land classified as held for sale during the quarter ended March 31, 2024.

Current wording

Other Operating Charges, Net. Other operating charges of $0.4 million for the nine months ended September 30, 2024 represented an impairment charge on land classified as held for sale during the quarter ended March 31, 2024.

Previous wording

Interest Expense. See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report for a discussion of our debt and credit facilities that were in effect during the quarters and six months ended June 30, 2024 and June 30, 2023 and interest expense capitalized as part of construction in progress.

Current wording

Interest Expense. See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report for a discussion of our debt and credit facilities that were in effect during the quarters and nine months ended September 30, 2024 and September 30, 2023 and interest expense capitalized as part of construction in progress.

Previous wording

Mark-to-market loss on derivative instruments represents the loss on non-designated commodity hedges. Adjusted EBITDA reflects the realized impact related to these derivatives upon settlement.

Current wording

Mark-to-market (gain) loss on derivative instruments represents the (gain) loss on non-designated commodity hedges. Adjusted EBITDA reflects the realized impact related to these derivatives upon settlement.

Previous wording

Adjusted EBITDA for the quarter ended June 30, 2024 was $10.2 million lower than Adjusted EBITDA for the quarter ended June 30, 2023. Adjusted EBITDA for the quarter ended June 30, 2024 was impacted by: (i) a decrease in shipment volume; (ii) an increase in costs, primarily attributable to non-cash LIFO inventory expenses partially offset by improved metal sourcing and manufacturing efficiencies; (iii) an increase in energy cost; and (iv) an increase in major maintenance. See above in “Consolidated Results of Operations” for further details.

Current wording

Adjusted EBITDA for the quarter ended September 30, 2024 was $2.8 million higher than Adjusted EBITDA for the quarter ended September 30, 2023, primarily driven by improved pricing and product mix. This was offset by: (i) an increase in LIFO reserve expense and (ii) an increase in energy costs. See above in “Consolidated Results of Operations” for further details.

Previous wording

Adjusted EBITDA for the six months ended June 30, 2024 was $5.5 million higher than Adjusted EBITDA for the six months ended June 30, 2023. Adjusted EBITDA for the six months ended June 30, 2024 was impacted by: (i) improved pricing and mix; (ii) a decrease in major maintenance driven by timing of annual planned maintenance programs, partially offset by: (i) a decrease in shipment volume and (ii) an increase in costs, primarily attributable to non-cash LIFO inventory expenses partially offset by improved metal sourcing and manufacturing efficiencies. See above in “Consolidated Results of Operations” for further details.

Current wording

Adjusted EBITDA for the nine months ended September 30, 2024 was $8.3 million higher than Adjusted EBITDA for the nine months ended September 30, 2023, primarily driven by improved pricing and product mix and lower major maintenance costs driven by timing of annual planned maintenance programs. This was offset by: (i) an increase in LIFO reserve expense, partially offset by improved metal sourcing and (ii) an increase in energy costs. See above in “Consolidated Results of Operations” for further details.

Previous wording

Hedged Cost of Alloyed Metal for the quarters ended June 30, 2024 and June 30, 2023 included $408.0 million and $428.8 million, respectively, reflecting the cost of aluminum at the average MWTP and the cost of certain alloys used in the production process, as well as metal price exposure on shipments that we hedged with realized gains upon settlement of $3.5 million and realized losses upon settlement of $6.8 million in the quarters ended June 30, 2024 and June 30, 2023, respectively, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. Hedged Cost of Alloyed Metal for the six months ended June 30, 2024 and June 30, 2023 included $775.1 million and $865.6 million, respectively, reflecting the cost of aluminum at the average MWTP and the cost of certain alloys used in the production process, as well as metal price exposure on shipments that we hedged with realized losses upon settlement of $8.3 million in the six months ended June 30, 2023, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. There were no gains or losses upon settlement for the six months ended June 30, 2024. See Note 5 of Notes to Consolidated Financial Statements included in this Report for the total realized loss on aluminum hedges for which we hedged the metal price exposure externally.

Current wording

Hedged Cost of Alloyed Metal for the quarters ended September 30, 2024 and September 30, 2023 included $383.6 million and $380.0 million, respectively, reflecting the cost of aluminum at the average MWTP and the cost of certain alloys used in the production process, as well as metal price exposure on shipments that we hedged with realized losses upon settlement of $2.1 million and $6.5 million in the quarters ended September 30, 2024 and September 30, 2023, respectively, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. Hedged Cost of Alloyed Metal for the nine months ended September 30, 2024 and September 30, 2023 included $1,158.6 million and $1,245.6 million, respectively, reflecting the cost of aluminum at the average MWTP and the cost of certain alloys used in the production process, as well as metal price exposure on shipments that we hedged with realized losses upon settlement of $2.2 million and $14.8 million in the nine months ended September 30, 2024 and September 30, 2023, respectively, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. See Note 5 of Notes to Consolidated Financial Statements included in this Report for the total realized loss on aluminum hedges for which we hedged the metal price exposure externally.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 reflected results of business activity described above in our “Consolidated Results of Operations” discussion, as well as the following working capital changes: (i) an increase in trade and other receivables of $46.2 million primarily due to higher metal costs; (ii) a decrease in inventory of $22.6 million, excluding non-cash LIFO impact, due to continued focus on inventory management; (iii) an increase in accounts payable of $16.1 million primarily due to the timing of payments; and (iv) an increase in prepaid expenses and other current assets of $10.9 million.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 reflected results of business activity described above in our “Consolidated Results of Operations” discussion, as well as the following working capital changes: (i) an increase in trade and other receivables, net of $33.7 million primarily due to increased metal prices and sales mix; (ii) an increase in accounts payable of $17.5 million primarily due to the timing of payments and higher metal cost; (iii) an increase in inventory of $8.7 million, excluding LIFO impact, primarily due to strong customer demand in Packaging end market; and (iv) a net decrease in other accrued liabilities and prepaid expenses and other current assets of $4.5 million due to timing and a decrease in general business activities.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2023 reflected results of business activity described above in our “Consolidated Results of Operations” discussion, as well as the following working capital changes: (i) a decrease in accounts payable of $56.0 million primarily due to a decrease in metal purchases and timing of payments; (ii) a decrease in inventory of $31.5 million, excluding non-cash LIFO impact, due to increased focus on inventory management; and (iii) an increase in trade and other receivables of $17.8 million primarily due to increased pricing and an increase in metal costs.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2023 reflected results of business activity described above in our “Consolidated Results of Operations” discussion, as well as the following working capital changes: (i) a decrease in accounts payable of $53.9 million primarily due to a decrease in metal purchases and timing of payments; (ii) a decrease in inventory of $38.3 million, excluding LIFO impact, due to improved inventory management since beginning of the year; and (iii) a decrease in trade and other receivables of $11.7 million primarily due to lower shipments and a decrease in metal costs during this period.

Previous wording

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and June 30, 2023.

Current wording

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and September 30, 2023.

Previous wording

Our Revolving Credit Facility and Senior Notes have covenants that, we believe, allow us to operate our business with limited restrictions and significant flexibility for the foreseeable future. We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should we choose to do so during the next 12 months, nor do we believe it is likely that during the next 12 months we will trigger the availability threshold that would require measuring and maintaining a fixed charge coverage ratio.

Current wording

Our Revolving Credit Facility and Senior Notes have covenants that, we believe, allow us to operate our business with limited restrictions and significant flexibility for the foreseeable future. We do not believe that the covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should we choose to do so during the next 12 months, nor do we believe it is likely that during the next 12 months we will trigger the availability threshold that would require measuring and maintaining a fixed charge coverage ratio.

Previous wording

We engage in certain customer-based supply chain financing programs to accelerate the receipt of payment for outstanding accounts receivable from certain customers. Costs of these programs are typically reimbursed to us by the customer. Receivables transferred under these customer-based supply chain financing programs generally meet the requirements to be accounted for as sales resulting in the derecognition of such receivables from our consolidated balance sheets. Receivables involved with these customer‑based supply chain finance programs for the quarter ended June 30, 2024 constituted approximately 35% of our Net sales. See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for further details with respect to these supply chain financing programs.

Current wording

We engage in certain customer-based supply chain financing programs to accelerate the receipt of payment for outstanding accounts receivable from certain customers. Costs of these programs are typically reimbursed to us by the customer. Receivables transferred under these customer-based supply chain financing programs generally meet the requirements to be accounted for as sales resulting in the derecognition of such receivables from our consolidated balance sheets. Receivables involved with these customer‑based supply chain finance programs for the quarter ended September 30, 2024 constituted approximately 36% of our Net sales. See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for further details with respect to these supply chain financing programs.

Previous wording

We strive to strengthen our competitive position across our end markets through strategic capital investment. Significant investments over the past decade have positioned us well with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality and promoting operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment. A significant portion of our capital spending over the past several years related to the modernization project at Trentwood, which focused on equipment upgrades throughout the process flow to reduce conversion costs, increase efficiency, and further improve our competitive cost position on all products produced at Trentwood. In addition, a significant portion of the investment also focused on modernizing legacy equipment and the process flow for thin gauge plate to achieve Kaiser Select® quality enhancements for these Aero/HS Products and GE Products. These improvements have allowed us to gain incremental manufacturing capacity to enable future sales growth. We continue spending on our previously announced capital project to add a fourth roll coat line at Warrick to increase our capacity for higher margin coated packaging product.

Current wording

We strive to strengthen our competitive position across our end markets through strategic capital investment. Significant investments over the past decade have positioned us well with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality and promoting operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment. A significant portion of our capital spending over the past several years related to the modernization project at Trentwood, which focused on equipment upgrades throughout the process flow to reduce conversion costs, increase efficiency, and further improve our competitive cost position on all products produced at Trentwood. In addition, a significant portion of the investment also focused on modernizing legacy equipment and the process flow for thin gauge plate to achieve Kaiser Select® quality enhancements for these Aero/HS Products and GE Products. These improvements have allowed us to gain incremental manufacturing capacity to enable future sales growth. We continue spending on our previously announced capital project to add a fourth coating line at Warrick to increase our capacity for higher margin coated packaging product.

Previous wording

Our capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining our operations, enhancing product quality and increasing operating efficiencies. We anticipate total capital spending in 2024 of approximately $170.0 million to $190.0 million, the majority of which will be focused on growth initiatives, primarily reflecting investment in the new roll coat line at Warrick, which we anticipate will be approximately $100 million. We expect to continue to deploy capital thoughtfully so that investment decisions align with demand expectations in order to maximize the earnings potential of the business and maintain financial strength and flexibility.

Current wording

Our capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining our operations, enhancing product quality and increasing operating efficiencies. We anticipate total capital spending in 2024 of approximately $180.0 million to $190.0 million, the majority of which will be focused on growth initiatives, primarily reflecting investment in the fourth coating line at Warrick. We expect to continue to deploy capital thoughtfully so that investment decisions align with demand expectations in order to maximize the earnings potential of the business and maintain financial strength and flexibility.