Kaiser Aluminum (KALU) Baird 2024 Global Industrials Conference summary

Company overview and strategy

• Operates in North America with 13 locations, focusing on aerospace, packaging, general engineering, and automotive markets.

• Maintains strong, long-term customer relationships and a diversified product portfolio.

• Invested over $3 billion since 2006 in organic and inorganic growth, including a major packaging acquisition in 2021.

• Strategy centers on premium, high-barrier markets and value-added products, emphasizing manufacturing efficiency and cost control.

• Targets selective market participation to maximize margin and EBITDA growth.

Market segments and growth outlook

• Aerospace and high-strength products account for over a third of business, with strong global demand and long-term contracts.

• Packaging segment re-entered in 2021, now focused on value-added coated products with a new production line launching in 2025.

• Automotive exposure is limited to structural components, agnostic to vehicle type, and only in extrusions.

• General engineering and semiconductor markets provide flexibility and additional growth avenues.

• Sees 3%-5% CAGR in packaging and aerospace, with semiconductor business expected to double by 2030.

Financial performance and targets

• Current conversion revenue is $1.4 billion, aiming for $2 billion with ongoing investments.

• EBITDA margins historically in mid-to-high 20s%, currently at 15%, targeting a return to mid-20s% as value-added strategy matures.

• Net leverage peaked at 7.1x post-acquisition, now at 4.6x, with a target of 2-2.5x within two years.

• Liquidity stands at $600 million, supporting continued investment and margin expansion.

• Expects significant margin growth in 2025-2026 as new contracts and investments take effect.