Kaiser Aluminum Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

kalu-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 1-09447

KAISER ALUMINUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		94-3030279
(State of incorporation)		(I.R.S. Employer Identification No.)

27422 Portola Parkway, Suite 200
Foothill Ranch, California		92610-2831
(Address of principal executive offices)		(Zip Code)

(949) 614-1740

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	KALU	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 20, 2020, there were 15,812,169 shares of common stock of the registrant outstanding.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements		1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		36
Item 4. Controls and Procedures		37

PART II
Item 1. Legal Proceedings		38
Item 1A. Risk Factors		38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3. Defaults Upon Senior Securities		39
Item 4. Mine Safety Disclosures		39
Item 5. Other Information		39
Item 6. Exhibits		40

SIGNATURES		41

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30, 2020			December 31, 2019
	(In millions of dollars, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	710.6		$	264.3
Short-term investments		—			78.7
Receivables:
Trade receivables, net		126.4			167.1
Other		22.0			18.1
Contract assets		41.6			54.6
Inventories		181.4			177.6
Prepaid expenses and other current assets		25.7			19.4
Total current assets		1,107.7			779.8
Property, plant and equipment, net		627.1			622.0
Operating lease assets		28.0			25.8
Deferred tax assets, net		—			11.8
Intangible assets, net		28.1			29.6
Goodwill		18.8			18.8
Other assets		38.7			38.4
Total	$	1,848.4		$	1,526.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	61.0		$	92.0
Accrued salaries, wages and related expenses		34.9			34.4
Other accrued liabilities		54.5			44.0
Total current liabilities		150.4			170.4
Long-term portion of operating lease liabilities		27.0			25.2
Net liabilities of Salaried VEBA		32.5			32.6
Deferred tax liabilities		7.3			4.5
Long-term liabilities		75.3			67.0
Long-term debt		837.1			492.6
Total liabilities		1,129.6			792.3
Commitments and contingencies – Note 7
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized at both June 30, 2020 and December 31, 2019; no shares were issued and outstanding at June 30, 2020 and December 31, 2019		—			—
Common stock, par value $0.01, 90,000,000 shares authorized at both June 30, 2020 and at December 31, 2019; 22,647,455 shares issued and 15,812,169 shares outstanding at June 30, 2020; 22,550,827 shares issued and 15,868,304 shares outstanding at December 31, 2019		0.2			0.2
Additional paid in capital		1,063.3			1,062.9
Retained earnings		173.4			172.8
Treasury stock, at cost, 6,835,286 shares at June 30, 2020 and 6,682,523 shares at December 31, 2019, respectively		(475.9	)		(463.4	)
Accumulated other comprehensive loss		(42.2	)		(38.6	)
Total stockholders' equity		718.8			733.9
Total	$	1,848.4		$	1,526.2

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED (LOSS) INCOME (UNAUDITED)

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(In millions of dollars, except share and per share amounts)
Net sales	$	275.7		$	375.3		$	645.0		$	770.5
Costs and expenses:
Cost of products sold, excluding depreciation and amortization and other items		224.5			303.5			511.1			618.6
Depreciation and amortization		13.0			12.1			26.2			24.0
Selling, general, administrative, research and development		22.7			27.2			46.6			52.4
Restructuring costs		11.9			—			11.9			—
Other operating (income) charges, net		(1.1	)		0.1			(1.1	)		0.1
Total costs and expenses		271.0			342.9			594.7			695.1
Operating income		4.7			32.4			50.3			75.4
Other income (expense):
Interest expense		(10.5	)		(5.8	)		(16.6	)		(11.5	)
Other income (expense), net – Note 10		0.5			(0.1	)		(0.3	)		0.4
(Loss) income before income taxes		(5.3	)		26.5			33.4			64.3
Income tax provision		(1.3	)		(7.3	)		(10.9	)		(17.1	)
Net (loss) income	$	(6.6	)	$	19.2		$	22.5		$	47.2

Net (loss) income per common share:
Basic	$	(0.41	)	$	1.19		$	1.42		$	2.93
Diluted	$	(0.41	)	$	1.18		$	1.41		$	2.89
Weighted-average number of common shares outstanding (in thousands):
Basic		15,781			16,063			15,809			16,085
Diluted		15,781			16,240			15,929			16,298

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(In millions of dollars)
Net (loss) income	$	(6.6	)	$	19.2		$	22.5		$	47.2
Other comprehensive income (loss), net of tax – Note 8:
Defined benefit pension plan and Salaried VEBA		0.9			1.1			2.0			2.2
Available for sale securities		(0.3	)		(0.1	)		(0.5	)		(0.3	)
Cash flow hedges		10.8			(4.2	)		(5.1	)		4.6
Fair value hedges		0.5			—			—			—
Other comprehensive income (loss), net of tax		11.9			(3.2	)		(3.6	)		6.5
Comprehensive income	$	5.3		$	16.0		$	18.9		$	53.7

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED)

Six Months Ended June 30, 2020

	Common Shares Outstanding			Common Stock		Additional Paid in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total
	(In millions of dollars, except share and per share amounts)
BALANCE, December 31, 2019		15,868,304		$	0.2	$	1,062.9		$	172.8		$	(463.4	)	$	(38.6	)	$	733.9
Net income		—			—		—			29.1			—			—			29.1
Other comprehensive loss, net of tax		—			—		—			—			—			(15.5	)		(15.5	)
Common shares issued (including impacts from Long-Term Incentive programs)¹		119,598			—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares		(45,545	)		—		(4.3	)		—			—			—			(4.3	)
Repurchase of common stock²		(152,763	)		—		—			—			(12.5	)		—			(12.5	)
Cash dividends declared³		—			—		—			(11.3	)		—			—			(11.3	)
Amortization of unearned equity compensation		—			—		1.7			—			—			—			1.7
BALANCE, March 31, 2020		15,789,594		$	0.2	$	1,060.3		$	190.6		$	(475.9	)	$	(54.1	)	$	721.1
Net loss		—			—		—			(6.6	)		—			—			(6.6	)
Other comprehensive income, net of tax		—			—		—			—			—			11.9			11.9
Common shares issued (including impacts from Long-Term Incentive programs)¹		22,575			—		0.4			—			—			—			0.4
Cash dividends declared³		—			—		—			(10.6	)		—			—			(10.6	)
Amortization of unearned equity compensation		—			—		2.6			—			—			—			2.6
BALANCE, June 30, 2020		15,812,169		$	0.2	$	1,063.3		$	173.4		$	(475.9	)	$	(42.2	)	$	718.8

¹	At June 30, 2020, 358,122 shares were available for awards under the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan ("2016 Plan").

Weighted-average repurchase price (dollars per share) for the quarter ended March 31, 2020 was $81.94. There was no repurchase of common stock for the quarter ended June 30, 2020. At June 30, 2020, $93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

³	Dividends declared per common share was $0.67 for each of the quarters ended March 31, 2020 and June 30, 2020.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY CONTINUED (UNAUDITED)

Six Months Ended June 30, 2019

Common

Outstanding

Common

Stock

Additional

Paid in

Capital

Retained

Earnings

Treasury

Stock

Accumulated

Other

Comprehensive

Loss

Total

(In millions of dollars, except share and per share amounts)

BALANCE, December 31, 2018

16,234,603

0.2

Price	94.51	EPS	6
Shares	16	P/E	15
MCap	1,534	P/FCF	10
Net Debt	185	EBIT	144
TEV	1,719	TEV/EBIT	12
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-28
10-Q	2020-03-31	Filed 2020-04-21
10-K	2019-12-31	Filed 2020-02-25
10-Q	2019-09-30	Filed 2019-10-25
10-Q	2019-06-30	Filed 2019-07-26
10-Q	2019-03-31	Filed 2019-04-25
10-K	2018-12-31	Filed 2019-02-22
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-30	Filed 2018-07-27
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-23
10-Q	2017-09-30	Filed 2017-10-27
10-Q	2017-06-30	Filed 2017-07-28
10-Q	2017-03-31	Filed 2017-04-21
10-K	2016-12-31	Filed 2017-02-22
10-Q	2016-09-30	Filed 2016-10-25
10-Q	2016-06-30	Filed 2016-07-27
10-Q	2016-03-31	Filed 2016-04-22
10-K	2015-12-31	Filed 2016-02-22
10-Q	2015-09-30	Filed 2015-10-22
10-Q	2015-06-30	Filed 2015-07-23
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-20
10-Q	2014-09-30	Filed 2014-10-24
10-Q	2014-06-30	Filed 2014-07-24
10-Q	2014-03-31	Filed 2014-04-25
10-K	2013-12-31	Filed 2014-02-18
10-Q	2013-09-30	Filed 2013-10-23
10-Q	2013-06-30	Filed 2013-07-25
10-Q	2013-03-31	Filed 2013-04-24
10-K	2012-12-31	Filed 2013-02-21
10-Q	2012-09-30	Filed 2012-10-25
10-Q	2012-06-30	Filed 2012-07-26
10-Q	2012-03-31	Filed 2012-04-26
10-K	2011-12-31	Filed 2012-02-29
10-Q	2011-09-30	Filed 2011-10-27
10-Q	2011-06-30	Filed 2011-08-02
10-Q	2011-03-31	Filed 2011-04-28
10-K	2010-12-31	Filed 2011-02-22
10-Q	2010-09-30	Filed 2010-10-27
10-Q	2010-06-30	Filed 2010-08-03
10-Q	2010-03-31	Filed 2010-04-29
10-K	2009-12-31	Filed 2010-02-24

8-K	2020-07-31	Officers, Exhibits
8-K	2020-07-22	Earnings, Exhibits
8-K	2020-07-14	Other Events, Exhibits
8-K	2020-06-22
8-K	2020-06-10
8-K	2020-05-01
8-K	2020-04-29
8-K	2020-04-29
8-K	2020-04-28
8-K	2020-04-21
8-K	2020-04-21
8-K	2020-04-20
8-K	2020-04-14
8-K	2020-03-05
8-K	2020-02-19
8-K	2020-01-14
8-K	2019-12-12
8-K	2019-11-26
8-K	2019-11-19
8-K	2019-11-18
8-K	2019-10-30
8-K	2019-10-30
8-K	2019-10-23
8-K	2019-10-15
8-K	2019-09-17
8-K	2019-07-24
8-K	2019-07-15
8-K	2019-06-06
8-K	2019-04-23
8-K	2019-04-15
8-K	2019-03-05
8-K	2019-02-23
8-K	2019-02-22
8-K	2019-02-20
8-K	2019-01-15
8-K	2018-10-17
8-K	2018-10-15
8-K	2018-09-19
8-K	2018-07-23
8-K	2018-07-16
8-K	2018-06-14
8-K	2018-04-25
8-K	2018-04-16
8-K	2018-03-05
8-K	2018-02-21
8-K	2018-01-16

EX-10.1	kalu-ex101_122.htm
EX-31.1	kalu-ex311_9.htm
EX-31.2	kalu-ex312_8.htm
EX-32.1	kalu-ex321_7.htm
EX-32.2	kalu-ex322_6.htm

KALU 10Q Quarterly Report

Kaiser Aluminum Earnings 2020-06-30