Kaiser Aluminum Corporation Reports
First Quarter 2019 Financial Results
First Quarter 2019 Highlights:
Net Sales $395 Million; Value Added Revenue $218 Million
Net Income $28 Million, Earnings per Diluted Share $1.71
Adjusted Net Income $30 Million, Adjusted Earnings per Diluted Share $1.85
Adjusted EBITDA $56 Million; Adjusted EBITDA Margin 25.7%
Strong Aerospace Demand, Moderating Aerospace Supply Chain Destocking
Improved Non-Contract Value Added Pricing
Unplanned Equipment Downtime at Trentwood
FOOTHILL RANCH, Calif., April 23, 2019 - Kaiser Aluminum Corporation (NASDAQ:KALU) today announced first quarter 2019 results.
First Quarter 2019 Management Summary
“Continuing the positive trend from the second half 2018, we reported strong first quarter 2019 results. Improving aerospace demand and non-contract value added pricing drove strong results in the quarter, partially offset by approximately $5 million of cost inefficiencies at our Trentwood facility, a combination of unplanned equipment downtime in the finishing operations and purchased rolling ingot costs necessitated by our planned casting furnace rebuilds,” said Jack A. Hockema, Chairman and Chief Executive Officer.
“Although demand for our general engineering products remains strong, we allocated a portion of our capacity for general engineering products in the quarter to address strong aerospace demand. This contrasts with 2017 and early 2018 when relatively soft aerospace demand enabled capacity to shift toward general engineering products,” said Mr. Hockema.
As previously noted during the Company’s fourth quarter earnings call, 2019 is a transition year for its automotive applications with numerous end-of-life automotive programs rolling off and new programs launching during the year. Additionally as noted, in January 2019 the Company successfully raised value-added prices on certain non-contract products and current market conditions continue to support the recent price increases.
“The recent reduction in Boeing 737-MAX build rates has introduced uncertainty for commercial aerospace industry demand. While it is likely that the reduced build rates will eventually lead to some level of supply chain destocking, the amount and timing are uncertain until the situation is resolved. Meanwhile, demand for military aircraft continues to increase for the new generation F-35 Joint Strike Fighter and the modernized F-15X Super-fighter and F/A-18E/F Super Hornet fighter aircraft,” said Mr. Hockema.
“While facing some uncertainty in aerospace and automotive demand this year, we are focused on executing on our strategic initiatives to capture the full efficiency and capacity benefits from our recent Trentwood investments and to position the Company for expected strong automotive extrusion shipments growth in 2020 and 2021.”
As the Company has previously discussed, significant maintenance activity and equipment downtime is scheduled to occur in the second quarter 2019 for the casting complex, hot line and large stretcher at Trentwood. The Company estimates a one-time EBITDA impact in the quarter of approximately $15 million related to operating inefficiencies, maintenance costs and lost production and sales compared to steady-state operations.
The following information was filed by Kaiser Aluminum Corp (KALU) on Tuesday, April 23, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.