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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 September 30, 2022

 

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.)

 

1550 West McEwen Drive, Suite 500

 

 

Franklin, Tennessee

 

37067

(Address of principal executive offices)

 

(Zip Code)

 

(629) 252-7040

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

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 October 19, 2022, there were 15,940,625 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

 

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4. Controls and Procedures

 

33

 

 

 

PART II

 

 

Item 1. Legal Proceedings

 

34

Item 1A. Risk Factors

 

34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

34

Item 3. Defaults Upon Senior Securities

 

34

Item 4. Mine Safety Disclosures

 

34

Item 5. Other Information

 

34

Item 6. Exhibits

 

35

 

 

 

SIGNATURES

 

36

 

 

 

 


 

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

As of September 30, 2022

 

 

As of December 31, 2021

 

 

 

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

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

129.3

 

 

$

303.2

 

Receivables:

 

 

 

 

 

 

Trade receivables, net

 

 

311.5

 

 

 

332.7

 

Other

 

 

56.9

 

 

 

53.0

 

Contract assets

 

 

51.0

 

 

 

63.2

 

Inventories

 

 

538.1

 

 

 

404.6

 

Prepaid expenses and other current assets

 

 

40.9

 

 

 

48.7

 

Total current assets

 

 

1,127.7

 

 

 

1,205.4

 

Property, plant and equipment, net

 

 

989.6

 

 

 

955.2

 

Operating lease assets

 

 

41.4

 

 

 

46.2

 

Deferred tax assets, net

 

 

6.6

 

 

 

3.4

 

Intangible assets, net

 

 

56.7

 

 

 

67.7

 

Goodwill

 

 

39.3

 

 

 

39.3

 

Other assets

 

 

112.3

 

 

 

105.2

 

Total

 

$

2,373.6

 

 

$

2,422.4

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

337.3

 

 

$

351.4

 

Accrued salaries, wages and related expenses

 

 

42.4

 

 

 

46.9

 

Other accrued liabilities

 

 

88.5

 

 

 

58.4

 

Total current liabilities

 

 

468.2

 

 

 

456.7

 

Long-term portion of operating lease liabilities

 

 

37.3

 

 

 

40.8

 

Pension and other postretirement benefits

 

 

91.8

 

 

 

92.5

 

Net liabilities of Salaried VEBA

 

 

19.8

 

 

 

20.6

 

Deferred tax liabilities

 

 

4.7

 

 

 

10.5

 

Long-term liabilities

 

 

72.2

 

 

 

72.5

 

Long-term debt

 

 

1,037.6

 

 

 

1,036.3

 

Total liabilities

 

 

1,731.6

 

 

 

1,729.9

 

Commitments and contingencies – Note 6

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, 5,000,000 shares authorized at both September 30, 2022 and
   December 31, 2021;
no shares were issued and outstanding at
   September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, par value $0.01, 90,000,000 shares authorized at both
   September 30, 2022 and December 31, 2021;
22,775,866 shares issued and
   
15,940,580 shares outstanding at September 30, 2022; 22,700,404 shares
   issued and
15,865,118 shares outstanding at December 31, 2021

 

 

0.2

 

 

 

0.2

 

Additional paid in capital

 

 

1,087.2

 

 

 

1,078.9

 

Retained earnings

 

 

52.2

 

 

 

93.0

 

Treasury stock, at cost, 6,835,286 shares at both September 30, 2022 and
   December 31, 2021

 

 

(475.9

)

 

 

(475.9

)

Accumulated other comprehensive loss

 

 

(21.7

)

 

 

(3.7

)

Total stockholders’ equity

 

 

642.0

 

 

 

692.5

 

Total

 

$

2,373.6

 

 

$

2,422.4

 

 

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

1


 

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME (LOSS) (UNAUDITED)

 

 

 

Quarter Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

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

 

Net sales

 

$

748.9

 

 

$

750.6

 

 

$

2,651.9

 

 

$

1,815.6

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold, excluding depreciation and amortization and other items

 

 

694.9

 

 

 

677.8

 

 

 

2,459.2

 

 

 

1,613.6

 

Depreciation and amortization

 

 

25.8

 

 

 

24.9

 

 

 

80.4

 

 

 

64.2

 

Selling, general, administrative, research and development

 

 

25.2

 

 

 

28.1

 

 

 

82.9

 

 

 

90.8

 

Restructuring costs (benefit)

 

 

 

 

 

 

 

 

 

 

 

(0.8

)

Other operating charges, net

 

 

 

 

 

 

 

 

3.2

 

 

 

 

Total costs and expenses

 

 

745.9

 

 

 

730.8

 

 

 

2,625.7

 

 

 

1,767.8

 

Operating income

 

 

3.0

 

 

 

19.8

 

 

 

26.2

 

 

 

47.8

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(12.1

)

 

 

(12.5

)

 

 

(36.5

)

 

 

(37.2

)

Other income (expense), net – Note 8

 

 

12.7

 

 

 

(1.2

)

 

 

7.4

 

 

 

(38.2

)

Income (loss) before income taxes

 

 

3.6

 

 

 

6.1

 

 

 

(2.9

)

 

 

(27.6

)

Income tax (provision) benefit

 

 

(1.1

)

 

 

(8.4

)

 

 

(0.3

)

 

 

7.4

 

Net income (loss)

 

$

2.5

 

 

$

(2.3

)

 

$

(3.2

)

 

$

(20.2

)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

(0.14

)

 

$

(0.20

)

 

$

(1.28

)

Diluted

 

$

0.16

 

 

$

(0.14

)

 

$

(0.20

)

 

$

(1.28

)

Weighted-average number of common shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,926

 

 

 

15,852

 

 

 

15,897

 

 

 

15,831

 

Diluted

 

 

16,029

 

 

 

15,852

 

 

 

15,897

 

 

 

15,831

 

 

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

2


 

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

 

 

 

Quarter Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In millions of dollars)

 

 

(In millions of dollars)

 

Net income (loss)

 

$

2.5

 

 

$

(2.3

)

 

$

(3.2

)

 

$

(20.2

)

Other comprehensive income (loss), net of tax – Note 7:

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension plans and Salaried VEBA

 

 

1.0

 

 

 

0.8

 

 

 

2.8

 

 

 

2.2

 

Cash flow hedges

 

 

(1.4

)

 

 

10.0

 

 

 

(20.8

)

 

 

33.7

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

Other comprehensive (loss) income, net of tax

 

 

(0.4

)

 

 

10.8

 

 

 

(18.0

)

 

 

35.8

 

Comprehensive income (loss)

 

$

2.1

 

 

$

8.5

 

 

$

(21.2

)

 

$

15.6

 

 

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

3


 

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED STOCKHOLDERS EQUITY (UNAUDITED)

Nine Months Ended September 30, 2022

 

 

 

Common
Shares
Outstanding
1

 

 

Common
Stock

 

 

Additional
Paid in Capital

 

 

Retained
Earnings

 

 

Treasury
Stock

 

 

Accumulated
Other
Comprehensive
(Loss) Income

 

 

Total

 

 

 

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

 

BALANCE, December 31, 2021

 

 

15,865,118

 

 

$

0.2

 

 

$

1,078.9

 

 

$

93.0

 

 

$

(475.9

)

 

$

(3.7

)

 

$

692.5

 

Net income

 

 

 

 

 

 

 

 

 

 

 

8.1

 

 

 

 

 

 

 

 

 

8.1

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18.0

 

 

 

18.0

 

Common shares issued (including impacts from
   Long-Term Incentive programs)

 

 

58,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of shares to cover employees' tax
   withholdings upon vesting of non-vested shares

 

 

(19,643

)

 

 

 

 

 

(1.9

)

 

 

 

 

 

 

 

 

 

 

 

(1.9

)

Cash dividends declared2

 

 

 

 

 

 

 

 

 

 

 

(12.5

)

 

 

 

 

 

 

 

 

(12.5

)

Amortization of unearned equity compensation

 

 

 

 

 

 

 

 

4.0

 

 

 

 

 

 

 

 

 

 

 

 

4.0

 

BALANCE, March 31, 2022

 

 

15,904,116

 

 

$

0.2

 

 

$

1,081.0

 

 

$

88.6

 

 

$

(475.9

)

 

$

14.3

 

 

$

708.2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(13.8

)

 

 

 

 

 

 

 

 

(13.8

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35.6

)

 

 

(35.6

)

Common shares issued (including impacts from
   Long-Term Incentive programs)

 

 

18,101

 

 

 

 

 

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

0.6

 

Cancellation of shares to cover employees' tax
   withholdings upon vesting of non-vested shares

 

 

(155

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared2

 

 

 

 

 

 

 

 

 

 

 

(12.6

)

 

 

 

 

 

 

 

 

(12.6

)

Amortization of unearned equity compensation

 

 

 

 

 

 

 

 

3.2

 

 

 

 

 

 

 

 

 

 

 

 

3.2

 

BALANCE, June 30, 2022

 

 

15,922,062

 

 

$

0.2

 

 

$

1,084.8

 

 

$

62.2

 

 

$

(475.9

)

 

$

(21.3

)

 

$

650.0

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2.5

 

 

 

 

 

 

 

 

 

2.5

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.4

)

 

 

(0.4

)

Common shares issued (including impacts from
   Long-Term Incentive programs)

 

 

30,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of shares to cover employees' tax
   withholdings upon vesting of non-vested shares

 

 

(11,958

)

 

 

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

(0.9

)

Cash dividends declared2

 

 

 

 

 

 

 

 

 

 

 

(12.5

)

 

 

 

 

 

 

 

 

(12.5

)

Amortization of unearned equity compensation

 

 

 

 

 

 

 

 

3.3