KAISER ALUMINUM CORP

Previous wording

Effective January 1, 2025, we changed our inventory valuation methodology from LIFO to WAC. The impact of this change in accounting principle to both the current quarter and, as applied retrospectively, to the comparable quarter of the prior fiscal year is disclosed in Note 14 of the Form 10-Q. Prior period information provided in this Management’s Discussion and Analysis has been updated to reflect the retrospective application of the change in accounting principle.

Current wording

Effective January 1, 2025, we changed our inventory valuation methodology from LIFO to WAC. The impact of this change in accounting principle to both the current period and, as applied retrospectively, to the comparable period of the prior fiscal year is disclosed in Note 14 of the Form 10-Q. Prior period information provided in this Management’s Discussion and Analysis has been updated to reflect the retrospective application of the change in accounting principle.

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 quarter ended March 31, 2025 totaled $777.4 million on approximately 275.6 million pounds shipped from our facilities. We employed approximately 3,900 people at March 31, 2025.

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 six months ended June 30, 2025 totaled $1,600.5 million on approximately 564.0 million pounds shipped from our facilities. We employed approximately 3,900 people at June 30, 2025.

Previous wording

Net income $21.6 million; Net income per diluted share $1.31;

Current wording

Net income $23.2 million; Net income per diluted share $1.41;

Previous wording

Cash dividends and dividend equivalents of $0.77 per share or $12.9 million paid during the quarter ended March 31, 2025; and

Current wording

Cash dividends and dividend equivalents of $0.77 per share or $12.8 million paid during the quarter ended June 30, 2025.

Previous wording

The increase in Net sales reflected an increase in the average realized sales price per pound of $0.29 (11%), partially offset by a 15.4 million pound (5%) decrease in shipment volume.

Current wording

The increase in Net sales reflected an increase in the average realized sales price per pound of $0.27 (11%), partially offset by a 23.8 million pound (4%) decrease in shipment volume.

Previous wording

COGS. COGS for the quarter ended March 31, 2025 totaled $673.4 million, or 87% of Net sales, compared to $651.3 million, or 88% of Net sales, for the quarter ended March 31, 2024. The increase reflected the following (in millions of dollars):

Current wording

COGS. COGS for the quarter ended June 30, 2025 totaled $722.8 million, or 88% of Net sales, compared to $669.8 million, or 87% of Net sales, for the quarter ended June 30, 2024. The increase reflected the following (in millions of dollars):

Previous wording

Of the $43.6 million increase in Hedged Cost of Alloyed Metal, $63.1 million was due to an increase in hedged metal prices (see above in our “Net Sales” discussion for further details), partially offset by a $19.5 million decrease in shipment volume. The $20.8 million decrease in manufacturing cost was due to lower metal costs partially offset by higher energy prices and employee and employee-related costs for hourly personnel. The $2.1 million increase in plant overhead was due to higher employee and employee-related costs for salaried operational personnel. The $1.5 million decrease in freight costs was primarily due to favorable shipping rates and lower shipment volume. For a further discussion of the comparative results of operations for the quarters ended March 31, 2025 and March 31, 2024, see below in “Selected Operational and Financial Information.”

Current wording

Of the $88.0 million increase in Hedged Cost of Alloyed Metal, $119.4 million was due to an increase in hedged metal prices (see above in our “Net Sales” discussion for further details), partially offset by a $31.4 million decrease in shipment volume. The $17.2 million decrease in manufacturing costs was primarily due to lower shipment volume and favorable metal consumption, partially offset by higher manufacturing costs associated with the startup of the fourth coating line at Warrick. The $6.4 million increase in other cost of products sold was primarily driven by an increase in major maintenance costs associated with the timing of furnace rebuilds. The $3.7 million decrease in freight costs was primarily due to lower shipment volume. The $1.6 million increase in plant overhead was due to higher employee and employee-related costs for salaried operational personnel. For a further discussion of the comparative results of operations for the six months ended June 30, 2025 and June 30, 2024, 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 $30.8 million and $32.6 million for the quarters ended March 31, 2025 and March 31, 2024, respectively. The decrease reflected the following (in millions of dollars):

Current wording

Selling, General, Administrative, Research and Development (“SG&A and R&D”). SG&A and R&D expense totaled $32.6 million and $31.6 million for the quarters ended June 30, 2025 and June 30, 2024, respectively. The increase reflected the following (in millions of dollars):

Previous wording

The $1.7 million decrease in other selling, general and administrative costs was primarily due to a decrease in legal fees.

Current wording

The $1.8 million decrease in other selling, general and administrative costs was primarily due to a decrease in legal fees, third party consulting fees, and legacy environmental costs. The $1.6 million increase in employee costs was primarily due to an increase in incentive compensation.

Previous wording

Restructuring Costs. Restructuring costs of $1.8 million and $0.1 million for the quarters ended March 31, 2025 and March 31, 2024, respectively, were related to our restructuring plans. 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 $0.1 million and $6.8 million for the quarters ended June 30, 2025 and June 30, 2024, respectively, and $1.9 million and $6.9 million for the six months ended June 30, 2025 and June 30, 2024, respectively, were related to our restructuring plans. 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. We had no Other operating charges for the quarter ended March 31, 2025. Other operating charges of $0.4 million for the quarter ended March 31, 2024 represented an impairment charge on land classified as held for sale during the quarter ended March 31, 2024.

Current wording

Other Operating Charges, Net. We had no Other operating charges for the quarter or six months ended June 30, 2025. Other operating charges of $0.4 million for the six months ended June 30, 2024 represented an impairment charge on land classified as held for sale during the quarter ended March 31, 2024.

Previous wording

Other (Expense) Income, Net. See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for details.

Current wording

Other Income (Expense), Net. See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for details.

Previous wording

Adjusted EBITDA includes favorable Metal Price Lag of $21.1 million and $5.4 million for the quarters ended March 31, 2025 and March 31, 2024, respectively.

Current wording

Adjusted EBITDA includes favorable Metal Price Lag of approximately $14.0 million and approximately $19.0 million for the quarters ended June 30, 2025 and June 30, 2024, respectively, and favorable Metal Price Lag of approximately $36.0 million and approximately $24.0 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Previous wording

Adjusted EBITDA for the quarter ended March 31, 2025 was $19.4 million higher than Adjusted EBITDA for the quarter ended March 31, 2024. Adjusted EBITDA for the quarter ended March 31, 2025 was impacted by: (i) improved product mix and pricing; (ii) favorable metal costs; and (iii) reduced overhead costs. This was partially offset by: (i) higher energy costs; and (ii) higher employee and employee-related costs. See above in “Consolidated Results of Operations” for further details.

Current wording

Adjusted EBITDA for the six months ended June 30, 2025 was $12.9 million higher than Adjusted EBITDA for the six months ended June 30, 2024. Adjusted EBITDA for the six months ended June 30, 2025 was impacted by: (i) improved product pricing and mix and (ii) favorable metal costs. This was partially offset by: (i) higher manufacturing costs primarily due to the startup of the fourth coating line at Warrick and (ii) higher major maintenance costs. See above in “Consolidated Results of Operations” for further details.

Previous wording

Hedged Cost of Alloyed Metal for the quarters ended March 31, 2025 and March 31, 2024 included $418.8 million and $367.1 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 $4.6 million and realized losses upon settlement of $3.5 million in the quarters ended March 31, 2025 and March 31, 2024, respectively, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. See Note 5 of Notes to Interim Consolidated Financial Statements included in this Report for the total realized (gain) loss on aluminum hedges for which we hedged the metal price exposure externally.

Current wording

Hedged Cost of Alloyed Metal for the quarters ended June 30, 2025 and June 30, 2024 included $449.5 million and $408.0 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 gains upon settlement of $0.6 million and $3.5 million in the quarters ended June 30, 2025 and June 30, 2024, 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, 2025 and June 30, 2024 included $868.3 million and $775.1 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 $5.2 million in the six months ended June 30, 2025, 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 Interim Consolidated Financial Statements included in this Report for the total realized gain on aluminum hedges for which we hedged the metal price exposure externally.

Previous wording

We had no outstanding borrowings under our Revolving Credit Facility as of March 31, 2025, after repaying borrowings of $42.5 million incurred during the quarter ended March 31, 2025, and no borrowings for the year ended December 31, 2024. See below in “Sources of Liquidity” for a further discussion of subsequent borrowing activity. See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report.

Current wording

We had $32.8 million of outstanding borrowings under the Revolving Credit Facility as of June 30, 2025, reflecting borrowings of $217.6 million and repayments of $184.8 million during the six months ended June 30, 2025 and no borrowings for the year ended December 31, 2024. See below in “Sources of Liquidity” for a further discussion of subsequent borrowing activity. See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report.

Previous wording

Cash provided by operating activities for the quarter ended March 31, 2025 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 $48.0 million, primarily due to increased metal prices; (ii) a decrease in accrued liabilities of $14.3 million, primarily due to timing; (iii) an increase in accounts payable of $20.3 million, primarily due to the timing of payments and higher metal cost; (iv) a decrease in inventory of $29.5 million, primarily due to our continued focus on inventory management; and (v) a decrease in contract assets of $5.5 million, primarily due to the timing of customer shipments.

Current wording

Cash provided by operating activities for the six months ended June 30, 2025 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 $75.9 million, primarily due to increased metal prices; (ii) a decrease in accrued liabilities of $26.0 million, primarily due to timing of uncleared cash disbursements; (iii) an increase in accounts payable of $45.7 million, primarily due to the timing of payments and higher metal cost; and (iv) a decrease in inventory of $6.3 million, primarily due to a reduction in total inventory pounds in connection with our continued focus on inventory management, offset by increased metal prices.

Previous wording

Cash provided by operating activities for the quarter ended March 31, 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 accounts payable of $18.6 million, primarily due to the timing of payments and higher metal cost; (ii) an increase in trade and other receivables of $15.1 million and contract assets of $4.5 million, primarily due to timing of customer shipments; (iii) a decrease in inventory of $12.8 million due to our continued focus on inventory management; and (iv) a decrease in accrued liabilities of $5.2 million.

Current 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 $14.8 million, due to our 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.

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 quarters ended March 31, 2025 and March 31, 2024.

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 six months ended June 30, 2025 and June 30, 2024.

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 March 31, 2025 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 June 30, 2025 constituted approximately 27% 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 coating 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. At our Trentwood facility, a significant portion of our capital spending over the past several years related to modernization projects, 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. These investments 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. At our Warrick facility, we have invested significant capital to expand our capacity and quality in higher margin coated products.