On July 24, 2024, Kaiser Aluminum Corp (KALU, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. Kaiser Aluminum Corp produces and sells semi-fabricated specialty aluminum products predominantly to industrial customers. Its products include fabricated aluminum mill products such as flat-rolled, extruded, drawn, and certain cast aluminum products. The company generates the majority of its revenue from the United States.
Performance Overview
Kaiser Aluminum Corp (KALU, Financial) reported net sales of $773 million for the second quarter of 2024, a decrease from $814 million in the same period last year. This decline was primarily driven by a 6% reduction in shipments. The company posted a net income of $3 million, or $0.19 per diluted share, falling short of the analyst estimate of $0.94 per share. Adjusted net income was $11 million, or $0.65 per diluted share, compared to $20 million, or $1.26 per diluted share, in the prior year period.
Financial Highlights
Despite the challenges, Kaiser Aluminum Corp (KALU, Financial) achieved several financial milestones:
- Conversion revenue for Q2 2024 was $369 million, reflecting a 3% decrease compared to the prior year period.
- Adjusted EBITDA was $54 million, down from $64 million in Q2 2023, with an adjusted EBITDA margin of 14.5%.
- Cash and cash equivalents stood at $70 million as of June 30, 2024, with total liquidity of $618 million.
Segment Performance
The company's performance across its various segments was mixed:
- Aerospace/High Strength: Net sales were $226 million, with conversion revenue of $133 million, reflecting a 2% increase driven by an improved product mix.
- Packaging: Net sales were $312 million, with conversion revenue of $119 million, reflecting an 11% decrease due to an unplanned outage at the Warrick facility.
- General Engineering: Net sales were $163 million, with conversion revenue of $83 million, reflecting a 6% increase in shipments.
- Automotive Extrusions: Net sales were $70 million, with conversion revenue of $33 million, reflecting a 9% increase driven by improved pricing.
Management Commentary
"Our business continued to perform well during the second quarter as demand met or exceeded our expectations," said Keith A. Harvey, President and Chief Executive Officer. "Importantly, aerospace/high strength demand remained steady at strong levels, illustrating the benefits of our diversified product mix. Our net income of $3 million and adjusted EBITDA of $54 million reflected the impact of a $9 million unfavorable non-cash LIFO charge related to significant inventory reductions we made during the quarter, consistent with our focus on managing working capital."
Income Statement Summary
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $773 million | $814 million |
| Net Income | $3 million | $18 million |
| Net Income per Diluted Share | $0.19 | $1.14 |
| Adjusted Net Income | $11 million | $20 million |
| Adjusted EBITDA | $54 million | $64 million |
Cash Flow and Liquidity
Adjusted EBITDA of $116 million reported in the first half of 2024 and cash on hand funded $28 million of working capital, $74 million of capital investments, $21 million of interest payments, and $25 million of cash returned to stockholders through quarterly dividends. As of June 30, 2024, the company had cash and cash equivalents of $70 million and borrowing availability under the company's revolving credit facility of $548 million, providing total liquidity of $618 million.
Outlook
Kaiser Aluminum Corp (KALU, Financial) expects demand across its end markets in 2024 to remain relatively consistent with 2023, with the potential for a modest upside. The company remains cautious on its near-term outlook for the commercial aerospace market due to lower than expected 2024 build rates. In the packaging market, shipments are expected to improve from current levels, which were negatively impacted due to various outages during the first half of 2024. For the full year 2024, the company expects conversion revenue to be flat to up 1% and adjusted EBITDA margins to improve by 50 to 100 basis points over 2023.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Kaiser Aluminum Corp for further details.
