Kaiser Aluminum Corporation Reports First Quarter 2011 Financial Results

/ Source: GlobeNewswire

    FOOTHILL RANCH, Calif., April 27, 2011 (GLOBE NEWSWIRE) -- Kaiser Aluminum Corporation (Nasdaq:KALU) today reported net income of $11 million or $0.59 earnings per diluted share for the first quarter 2011 compared to $9 million, or $0.44 per diluted share for the prior year quarter. Excluding the impact of non-run-rate items, adjusted net income and earnings per diluted share were $9 million and $0.47, respectively, for both the first quarter of 2011 and the prior year quarter.

    Value added revenue of $157 million for the first quarter ended March 31, 2011 increased $20 million from $137 million in the prior year quarter. Adjusted consolidated EBITDA of $23 million or 15% of value added revenue reflected the favorable impact of stronger demand and recent acquisitions, partially offset by a margin squeeze due to a lag in passing through rapidly increasing metal costs on some products during the quarter.

    Summary

    "Improving demand across our end market applications combined with the benefit of our recent acquisitions of Alexco and Nichols Wire drove higher sales and higher adjusted EBITDA," said Jack A. Hockema, President, CEO and Chairman. "However, we did not fully realize our earnings potential during the quarter as the timing and amount of price increases on spot sales for high value added products have been insufficient to recover sharply rising aluminum and alloying costs. We are encouraged that recently implemented price increases are sustainable, and we expect to begin to recapture some of the margin squeeze in the second quarter," said Mr. Hockema.

    "The ramp-up of our Kalamazoo, Michigan extrusion facility continues to gain momentum. We expect that EBITDA margins will improve throughout the year as we realize price increases and improving cost benefits from Kalamazoo," concluded Mr. Hockema.

    As indicated in the Company's prior earnings call outlook, higher value added revenue and adjusted EBITDA in the first quarter reflected the benefit of additional sales from the acquisitions of Alexco and Nichols Wire in addition to improving demand and higher shipments across virtually all of the Company's products and end market applications. Adjusted consolidated EBITDA was $23 million for the first quarter of 2011, or 15% of value added revenue, compared to $20 million, or 15% of value added revenue in the prior year quarter.   

    Consolidated operating income was $21 million in the first quarter 2011, up $6 million compared to the prior year quarter partially as a result of more favorable non-run-rate adjustments. Adjusted for non-run-rate items, consolidated operating income was $17 million for the first quarter 2011 compared to $16 million the first quarter 2010. Operating income in the first quarter 2011 reflected a $2 million increase in depreciation and amortization due to assets placed in service during 2010.

    During the quarter, the Company completed the acquisition of Alexco, a Chandler, Arizona based manufacturer of hard alloy extrusions for the aerospace industry. The net cash consideration paid was approximately $83 million. Total cash combined with borrowing availability under the revolving credit facility exceeded $245 million as of March 31, 2011.

    Outlook

    "We are experiencing strong demand throughout our extensive aerospace product offering with the exception of aerospace plate where shipments have been constrained by the overhang of excess inventory in the supply chain. However, we anticipate that our aerospace plate order rate will begin to ramp up in the second half and into 2012. Longer term we expect very substantial aerospace demand growth driven by increasing build rates, larger airframes, and monolithic design," said Mr. Hockema.

    "Our general engineering and automotive applications continue to experience slowly improving underlying demand, modest restocking in the supply chain, and growth in new aluminum extrusion automotive programs. Although we have not to date experienced any change in demand for our automotive and semi-conductor applications as a result of manufacturing disruptions in Japan, there remains some uncertainty as to the potential impact, if any, on the overall supply chain.

    "Overall, we expect that our shipments and value added revenue in the second quarter of 2011 will be similar to the first quarter, and we expect our adjusted EBITDA margin as a percentage of value added revenue will benefit from improving operating efficiencies and partial recovery of the margin squeeze caused by rising aluminum costs.  Looking to the second half of the year, we are optimistic that we will get a strong second half boost from higher order rates for aerospace plate, and we anticipate further EBITDA margin improvement as we gain increasing benefits from higher aerospace plate shipments, the Kalamazoo ramp up, and improved pricing," concluded Mr. Hockema.

    Conference Call

    Kaiser Aluminum Corporation will host a conference call on April 28, 2011, at 10:00am (Pacific Time); 12:00pm (Central Time); 1:00pm (Eastern Time), to discuss first quarter 2011 results. To participate, the conference call can be directly accessed from the U.S. and Canada at (877) 645-6210, and accessed internationally at (914) 495-8566. A link to the simultaneous web cast can be accessed on the Company's website at . A copy of a presentation will be available for download prior to the call and an audio archive will be available on the Company's website following the call.

    Company Description

    Kaiser Aluminum Corporation, headquartered in Foothill Ranch, Calif., is a leading producer of semi-fabricated specialty aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, general engineering, and custom automotive and industrial applications. The Company's North American facilities produce value-added sheet, plate, extrusions, rod, bar, tube and wire products, adhering to traditions of quality, innovation and service that have been key components of our culture since the Company was founded in 1946. The Company's stock is included in the Russell 2000® index and the S&P SmallCap 600® index.

    The Kaiser Aluminum Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6081

    Available Information

    For more information, please visit the Company's web site at www.kaiseraluminum.com. The web site includes a section for investor relations under which the Company provides notifications of news or announcements regarding its financial performance, including Securities and Exchange Commission (SEC) filings, investor events, and earnings and other press releases. In addition, all Company filings submitted to the SEC are available through a link to the section of the SEC's web site at  which includes: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements for the Company's annual stockholders' meetings and other information statements as filed with the SEC. In addition, the Company provides a webcast of its quarterly earnings calls and certain events in which management participates or hosts with members of the investment community.

    Non-GAAP Financial Measures

    This earnings release contains certain non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying tables.

    The non-GAAP financial measures used within this earnings release are operating income, EBITDA, net income and earnings per diluted share, excluding non-run-rate items. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors.

    This press release contains statements based on management's current expectations, estimates and projections that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 involving known and unknown risks and uncertainties that may cause actual results, performance or achievements of the Company to be materially different from those expressed or implied. Kaiser Aluminum cautions that such forward-looking statements are not guarantees of future performance or events and involve significant risks and uncertainties and actual events may vary materially from those expressed or implied in the forward-looking statements as a result of various factors. These factors include: (a) material adverse changes in economic or industry conditions generally, including global financial markets; (b) our inability to achieve the level of growth or other benefits anticipated by management, including those anticipated from our acquisitions and other strategic investments and the integration of acquired businesses; (c) increases in our costs, including the cost of energy, raw materials and freight costs, which we are unable to pass through to our customers; (d) pressure to reduce defense spending and demand for the Company's products used in defense applications as the U.S. and other governments are faced with competing national priorities; (e) changes in the markets served by the Company, including aerospace, defense, general engineering, automotive, distribution and other markets, including changes impacting the volume, price or mix of products sold by the Company and the Company's ability to flex production consistent with changing demand levels; (f) the Company's ability to lower energy costs, realize manufacturing efficiencies and complete its expansion and organic growth projects, equipment and facility upgrades to improve manufacturing and cost efficiencies and product expansions as planned and by targeted completion dates; (g) unfavorable changes in laws or regulations that impact our operations and results; (h) the outcome of contingencies, including legal proceedings, government investigations and environmental remediation and (i) other risk factors summarized in the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2010. As more fully described in these reports, "non-run-rate" items are items that, while they may occur from period to period, are particularly material to results, impact costs primarily as a result of external market factors and may not occur in future periods if the same level of underlying performance were to occur. All information in this release is as of the date of the release. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

    CONTACT: Investor Relations Contact: Melinda C. Ellsworth Kaiser Aluminum (949) 614-1757 Public Relations Contact: Dave Quast Financial Dynamics (646) 421-5341