Kaiser Aluminum Corporation

quarter 2022 earnings conference call. My name is Zanara, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. During the question and answer session, if you have a question, please press 01 on your touchtone phone. I'll now turn the call over to Melinda Ellsworth. Melinda, you may begin.

Thank you. Good afternoon, everyone, and welcome to Kaiser Aluminum's first quarter 2022 earnings conference call. If you have not seen a copy of our earnings release, please visit the investor relations page on our website at kaiseraluminum.com. We have also posted a PDF version of the slide presentation for this call. Joining me on the call today are President and Chief Executive Officer Keith Harvey, Executive Vice President and Chief Financial Officer Neil West, and Vice President and Chief Accounting Officer Jennifer Huey. Before we begin, I'd like to refer you to the first three slides of our presentation and remind you that the statements made by management and the information contained in this presentation that constitute forward-looking statements are based on management's current expectations. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the company's earnings release and reports filed with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the full year ended December 31, 2021. The company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations. In addition, we have included non-GAAP financial information in our discussion. Reconciliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of the presentation. Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP financial measures are not provided because certain items required for such reconciliations are outside of our control and or cannot be reasonably predicted or provided without unreasonable effort. Any references in our discussion today to EBITDA means adjusted EBITDA, which excludes non-run rate items for which we've provided reconciliations in the appendix at the conclusion of the company's presentation we will open the call for questions i would now like to turn the call over to keith harvey keith thanks melinda good afternoon everyone and thank you for joining us in a review of our first quarter 2022 results turning to slide six

Adjusted EBITDA for the first quarter of 2022 of $55 million reflected a continued strong demand environment for our general engineering and packaging products and, as expected, steadily increasing demand for our aerospace products, which experienced the highest shipments and value-added revenue we've produced since the second quarter of 2020. Automotive demand remained in neutral as shipments and value-added revenue remain relatively flat to previous quarters due to the continued shortage of semiconductor chips for North American automotive and light truck production. Value-added revenue per pound improves sequentially across the board in all product categories, as our commercial teams have been successful in passing through rising metal, freight, energy, and other costs. Even with the success we've had to date in offsetting these costs, we are continuing to see rising costs in almost all materials and services we utilize. First quarter results reflect approximately $6 million of unusual freight costs incurred at our Trentwood operations, where we experienced higher than normal export shipments in the quarter. When ports and rail systems, generally utilized to transfer these products, experienced significant disruptions during the quarter, we utilized less efficient means of shipping material on an interim basis to meet needed deliveries for our customers. As I noted during our February earnings call, we expected efficiencies to continue to improve at most of our facilities in 2022. These improvements have generally begun to be realized. including at those facilities focused primarily on automotive, as they have continued to successfully pivot to servicing the unprecedented general engineering demand. However, as demand for packaging products remains quite strong, lingering supply chain issues regarding the availability and timely delivery of metal and magnesium continue to negatively impact efficiencies at the Warwick operations. We believe the actions we have taken will significantly reduce the impact of these conditions on our business going forward. Integration of the Warwick packaging business continues with completion of our final temporary service agreement with Alcoa, expected sometime in the second quarter. Looking at the larger global environment, the company is well positioned. With the exception of aerospace, our markets are heavily North American-centric. We have multi-decade relationships with our blue-chip customers and have strategic long-term contracts in most of our markets. Our supply base, for the most part, is well diversified, and we will continue to work to improve these positions. While historically, a small percentage of our primary aluminum requirements have been produced in Russia. That small portion of our requirements is now being sourced elsewhere. In addition, we have expanded and qualified other sources to diversify our supply over time to reduce our heavy dependency of mag from one supplier. The company maintains a conservative capital structure. And while we are focused on supporting the strong secular growth anticipated in all of our major markets, we will continue to manage our business as we have in the past by maintaining strong discipline in our use of capital, continued focus on debt leverage reduction to targeted levels, and relentless focus on managing cost. Neil will now discuss the first quarter results in more detail, and I'll follow up afterwards on our outlook for the balance of the year. Neil? Thanks, Keith.