Kaiser Aluminum (KALU) Q4 2023 earnings summary

Executive summary

• FY2023 adjusted EBITDA rose 48% to $210M; conversion revenue increased 6% despite 5% lower shipments, with record Aerospace / High Strength conversion revenue.

• Q4 adjusted EBITDA rose $22M YoY to $52M as aerospace strength offset packaging and general engineering destocking.

Financial highlights

• FY2023 shipments were 1,196M lbs, net sales $3,087M and conversion revenue $1,466M, versus 1,254M lbs, $3,428M and $1,383M in 2022.

• FY2023 operating income was $95.8M, net income $47M and diluted EPS $2.92; adjusted net income was $44M, or $2.74 per diluted share.

• Q4 net sales were $722M and conversion revenue $361M; reported net income was $8M and diluted EPS $0.47, versus a $26M net loss in Q4 2022.

• Q4 adjusted net income was $10M, or $0.60 diluted EPS, versus an adjusted $6M loss and $(0.35) per share in Q4 2022.

Outlook and guidance

• FY2024 conversion revenue is expected to improve 2%-3% versus 2023; adjusted EBITDA margin is projected to rise 70-170 bps.

• Aerospace momentum is expected to continue; packaging shipments and conversion revenue should improve as coated-food destocking ends, and general engineering shipments are expected to strengthen in H2 2024.

• Automotive extrusions demand is expected to continue a modest recovery, with steady shipments and conversion revenue.

• Cost reductions, manufacturing efficiencies and strategic growth initiatives are expected to support further EBITDA and margin improvement; higher labor and medical costs are partial offsets.