Kaiser Aluminum Earnings 2021-03-31

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

kalu-10q_20210331.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 March 31, 2021

☐	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 May 3, 2021, there were 15,847,938 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		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		36

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)

	As of March 31, 2021			As of December 31, 2020
	(In millions of dollars, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	128.0		$	780.3
Receivables:
Trade receivables, net		305.8			112.8
Other		31.5			11.6
Contract assets		44.4			36.1
Inventories		385.3			152.0
Prepaid expenses and other current assets		35.8			28.6
Total current assets		930.8			1,121.4
Property, plant and equipment, net		1,006.6			627.2
Operating lease assets		38.9			26.5
Intangible assets, net		82.5			26.7
Goodwill		46.2			18.8
Other assets		47.8			44.1
Total	$	2,152.8		$	1,864.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	259.6		$	86.1
Accrued salaries, wages and related expenses		31.9			30.8
Other accrued liabilities		58.9			41.4
Total current liabilities		350.4			158.3
Long-term portion of operating lease liabilities		34.1			25.6
Pension and other postretirement benefits		85.0			1.3
Net liabilities of Salaried VEBA		17.4			17.8
Deferred tax liabilities		15.9			13.9
Long-term liabilities		76.3			77.3
Long-term debt		838.7			838.1
Total liabilities		1,417.8			1,132.3
Commitments and contingencies – Note 8
Stockholders’ equity:
Preferred stock, 5,000,000 shares authorized at both March 31, 2021 and December 31, 2020; no shares were issued and outstanding at March 31, 2021 and December 31, 2020		—			—
Common stock, par value $0.01, 90,000,000 shares authorized at both March 31, 2021 and December 31, 2020; 22,683,224 shares issued and 15,847,938 shares outstanding at March 31, 2021; 22,647,455 shares issued and 15,812,169 shares outstanding at December 31, 2020		0.2			0.2
Additional paid in capital		1,069.3			1,068.6
Retained earnings		151.0			158.2
Treasury stock, at cost, 6,835,286 shares at both March 31, 2021 and December 31, 2020		(475.9	)		(475.9	)
Accumulated other comprehensive loss		(9.6	)		(18.7	)
Total stockholders’ equity		735.0			732.4
Total	$	2,152.8		$	1,864.7

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

	Quarter Ended March 31,
	2021			2020
	(In millions of dollars, except share and per share amounts)
Net sales	$	324.0		$	369.3
Costs and expenses:
Cost of products sold, excluding depreciation and amortization and other items		262.5			286.6
Depreciation and amortization		13.5			13.2
Selling, general, administrative, research and development		31.8			23.9
Restructuring benefit		(0.7	)		—
Total costs and expenses		307.1			323.7
Operating income		16.9			45.6
Other expense:
Interest expense		(12.3	)		(6.1	)
Other expense, net – Note 11		(0.4	)		(0.8	)
Income before income taxes		4.2			38.7
Income tax benefit (provision)		0.3			(9.6	)
Net income	$	4.5		$	29.1
Net income per common share:
Basic	$	0.28		$	1.83
Diluted	$	0.28		$	1.81
Weighted-average number of common shares outstanding (in thousands):
Basic		15,805			15,838
Diluted		15,987			16,008

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 (UNAUDITED)

	Quarter Ended March 31,
	2021			2020
	(In millions of dollars)
Net income	$	4.5		$	29.1
Other comprehensive income (loss), net of tax – Note 9:
Defined benefit pension plan and Salaried VEBA		0.7			1.1
Available for sale securities		—			(0.2	)
Cash flow hedges		8.5			(15.9	)
Fair value hedges		—			(0.5	)
Foreign currency translation		(0.1	)		—
Other comprehensive income (loss), net of tax		9.1			(15.5	)
Comprehensive income	$	13.6		$	13.6

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)

Quarter Ended March 31, 2021

	Common Shares Outstanding^1,2			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, 2020		15,812,169		$	0.2	$	1,068.6		$	158.2		$	(475.9	)	$	(18.7	)	$	732.4
Net income		—			—		—			4.5			—			—			4.5
Other comprehensive income, net of tax		—			—		—			—			—			9.1			9.1
Common shares issued (including impacts from Long-Term Incentive programs)		56,394			—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares		(20,625	)		—		(2.4	)		—			—			—			(2.4	)
Cash dividends declared³		—			—		—			(11.7	)		—			—			(11.7	)
Amortization of unearned equity compensation		—			—		3.1			—			—			—			3.1
BALANCE, March 31, 2021		15,847,938		$	0.2	$	1,069.3		$	151.0		$	(475.9	)	$	(9.6	)	$	735.0

¹	At March 31, 2021, 232,320 shares were available for awards under the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan (“2016 Plan”).

²	There were no repurchases of common stock during the quarter ended March 31, 2021. At March 31, 2021, $93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

³	Dividends declared per common share was $0.72 for the quarter ended March 31, 2021.

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)

Quarter Ended March 31, 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)		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 stock¹		(152,763	)		—		—			—			(12.5	)		—			(12.5	)
Cash dividends declared²		—			—		—			(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

¹	Weighted-average repurchase price (dollars per share) for the quarter ended March 31, 2020 was $81.94.

²	Dividends declared per common share was $0.67 for the quarter ended March 31, 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 CASH FLOWS (UNAUDITED)

	Quarter Ended March 31,
	2021			2020
	(In millions of dollars)
Cash flows from operating activities¹:
Net income	$	4.5		$	29.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		12.8			12.5
Amortization of definite-lived intangible assets		0.7			0.7
Amortization of debt premium and debt issuance costs		0.7			0.3
Deferred income taxes		(0.9	)		14.8
Non-cash equity compensation		3.1			1.7
Gain on disposition of short-term investments		—			(0.5	)
Loss on disposition of property, plant and equipment		—			0.2
Changes in operating assets and liabilities, net of effects of acquisition:
Trade and other receivables		(31.7	)		(12.6	)
Contract assets		(8.3	)		7.5
Inventories		(24.3	)		(17.0	)
Prepaid expenses and other current assets		(0.4	)		(2.6	)
Accounts payable		33.0			21.7
Accrued liabilities		4.2			(2.4	)
Annual variable cash contributions to Salaried VEBA		(1.7	)		(2.9	)
Long-term assets and liabilities, net		(3.1	)		1.9
Net cash (used in) provided by operating activities		(11.4	)		52.4
Cash flows from investing activities¹:
Capital expenditures		(9.1	)		(21.1	)
Cash payment for acquisition of Warrick Rolling Mill		(617.5	)		—
Purchase of short-term investments		—			(39.1	)
Proceeds from disposition of short-term investments		—			78.8
Net cash (used in) provided by investing activities		(626.6	)		18.6
Cash flows from financing activities¹:
Repayment of finance lease		(0.4	)		(0.4	)
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares		(2.4	)		(4.3	)
Repurchase of common stock		—			(12.5	)
Cash dividends and dividend equivalents paid		(11.7	)		(11.3	)
Net cash used in financing activities		(14.5	)		(28.5	)
Net (decrease) increase in cash, cash equivalents and restricted cash during the period		(652.5	)		42.5
Cash, cash equivalents and restricted cash at beginning of period		794.3			278.6
Cash, cash equivalents and restricted cash at end of period	$	141.8		$	321.1

¹	See Note 14 for supplemental cash flow information.

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES INDEX

Note		Page
Note 1	Basis of Presentation and Recent Accounting Pronouncements	8
Note 2	Supplemental Balance Sheet Information	9
Note 3	Leases	9
Note 4	Business Combinations, Goodwill and Intangible Assets	11
Note 5

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	2021-03-31	Filed 2021-05-06
10-K	2020-12-31	Filed 2021-02-26
10-Q	2020-09-30	Filed 2020-10-26
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	2020-11-30
8-K	2020-10-21
8-K	2020-10-13
8-K	2020-07-31
8-K	2020-07-22
8-K	2020-07-14
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-31.1	kalu-ex311_6.htm
EX-31.2	kalu-ex312_8.htm
EX-32.1	kalu-ex321_9.htm
EX-32.2	kalu-ex322_7.htm

KALU 10Q Quarterly Report

Kaiser Aluminum Earnings 2021-03-31