• Total Net Sales: Just over $3 billion for the full year 2024.
• Conversion Revenue: $1.46 billion for 2024, a decrease of $10 million or 1% compared to 2023.
• Total Shipments: Down 24 million pounds or 2% year-over-year.
• Aero and Strength Conversion Revenue: $530 million, down $4 million or approximately 1% from the previous year.
• Packaging Conversion Revenue: $490 million, down $13 million or approximately 3% from 2023.
• General Engineering Revenue: $313 million, up 3% year-over-year.
• Automotive Conversion Revenue: $120 million, up 3% over 2023.
• Reported Operating Income: $88 million for 2024.
• Adjusted Operating Income: $100 million, down $1 million from 2023.
• Effective Tax Rate: 26% for 2024, compared to 16% in 2023.
• Reported Net Income: $47 million or $2.87 per diluted share for 2024.
• Adjusted Net Income: $41 million or $2.51 per adjusted diluted share for 2024.
• Adjusted EBITDA: $217 million, up approximately $7 million from 2023.
• Cash and Liquidity: Total cash of approximately $18 million and total liquidity of $572 million as of December 2024.
• Net Debt Leverage Ratio: 4.8x against a target of 2 to 2.5x.
• Capital Expenditures: $181 million for 2024.
• Dividends: $51 million returned to shareholders in 2024.

• Warning! GuruFocus has detected 6 Warning Signs with KALU.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kaiser Aluminum Corp (NASDAQ:KALU) achieved its second consecutive year of EBITDA margin expansion, increasing by approximately 60 basis points year-over-year.
• The company expects to continue its progress towards achieving EBITDA margin goals in the mid-20% range in 2025.
• Kaiser Aluminum Corp (NASDAQ:KALU) is making significant investments to meet growing demand, particularly in the packaging sector, which is expected to stabilize and become more favorable in 2025.
• The company has strong long-term customer relationships and is focused on niche markets with demanding applications, providing a competitive advantage.
• Kaiser Aluminum Corp (NASDAQ:KALU) has a strong liquidity position with $572 million in total liquidity and no debt maturing until 2028.

Negative Points

• Total shipments for 2024 were down 24 million pounds or 2%, and conversion revenue decreased by $10 million or 1% compared to 2023.
• Aerospace and high strength conversion revenue declined by approximately 1% due to a 4% decline in shipments.
• Packaging conversion revenue decreased by 3%, reflecting a 3% decline in shipments over 2023.
• The company reported a $9 million increase in depreciation expense due to capital investments, impacting operating income.
• Kaiser Aluminum Corp (NASDAQ:KALU) expects a temporary phase of destocking in the aerospace sector, leading to declines in shipments and conversion revenue by approximately 5% to 7% in 2025.

Q & A Highlights

Q: Within the consolidated 2025 EBITDA guide, what are your assumptions regarding scrap spreads and potential tariffs? A: Keith Harvey, President and CEO, explained that they used last year's performance as a baseline, expecting 150 to 200 basis points of improvement in EBITDA margins. If scrap spreads improve, it could be a tailwind. Regarding tariffs, the current assessment is neutral to positive for Kaiser Aluminum, with potential benefits from reduced import competition and increased domestic shipments.

Q: What is the outlook for the aerospace market, and when do you expect inventory levels to normalize? A: Keith Harvey noted that while there are current inventory challenges, the strength of their contracts should sustain them. He expects large OEM airframers to increase production rates throughout the year, potentially leading to increased demand in the second half of 2025.

Q: Can you provide more details on the packaging segment, particularly regarding pricing and contract renewals? A: Keith Harvey stated that the fourth quarter pricing decline was due to mix impact. They anticipate a 3% to 5% increase in shipments and a 20% to 25% increase in conversion revenue for 2025, driven by higher value-added products. The full benefit of their investments in Warrick is expected to be realized in the second half of the year.

Q: How does the increase in the Midwest premium affect your business, and are there any timing issues with passing it through to customers? A: Keith Harvey assured that their business model allows for immediate pass-through of metal costs, with minimal lag. They are focused on disciplined use of working capital, expecting over $100 million in free cash flow for 2025.

Q: What is the expected impact of changing inventory accounting methods, and how will it affect financial modeling? A: Keith Harvey mentioned they are evaluating different inventory accounting methods to better fit their business, aiming to reduce the impact of accounting changes on earnings. More details will be provided soon.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.