Kaiser Aluminum Corporation

Welcome to the Kaiser Aluminum third quarter 2022 earnings call. My name is Vanessa and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press zero then one on your touchtone phone. I will now turn the call over to Melissa Ellsworth. You may begin.

Thank you. Good afternoon, everyone, and welcome to Kaiser Aluminum's third quarter and first nine months. If you've 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 Neal 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 constitutes forward-looking statements are based on management's current expectations. For a summary of specific risk factors that could cause results to differ materially in the forward 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 those comparable GAAP financial measures are included in the earnings relief. Reconciliations of certain forward financial measures are not provided because certain items required for such reconciliations outside of our control and or cannot be reasonably predicted or provided without unreasonable effort. Any reference 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, and thank you all for joining us for a review of our third quarter results. Starting to slide six, while our third quarter results reflected significant headwinds primarily related to supply chain issues at our Warwick rolling mill, we made tremendous progress to position Kaiser for success moving forward. EBITDA declined to $31 million in the third quarter, predominantly reflecting the headwinds associated with the US MAG and Alcoa supply chain challenges at Warwick and the planned outage at Trentwood in which we incurred incremental cost in the aggregate, totaling approximately $24 million for the quarter. We believe these issues at our Warwick operation, which have caused significant disruptions during most of the year, are now resolved. More on this topic in a moment. With the actions taken and major work now complete, we believe Warwick, Trentwood, and our other facilities are well positioned to operate at a more normalized run rate for the balance of the year in what remains a very challenging environment. As previously announced, in early July, we declared force majeure at our Warwick rolling mill due to the abrupt cessation of magnesium deliveries from USMAG. However, the force majeure was lifted in early September after we successfully secured and qualified magnesium from additional alternative sources. At this point, we have secured all our magnesium requirements through 2023. and are in the process of finalizing agreements for 2024 and beyond. As a result, we believe our supply base is well diversified, and we are no longer reliant on a single supplier or geographical region. Litigation with USMAG continues, but USMAG is no longer a factor in our magnesium supply base moving forward. At the time we declared force majeure, we anticipated production and shipments of certain beverage and food packaging products could be reduced by 40 to 50 percent of previously expected shipments in the third quarter. Our actual shipments were better than expected, and with the security of our magnesium supply and boric's capacity now fully restored, will work with our customers to return to more normalized production through the remainder of the year. Work with Alcoa continued during the quarter to improve the smelter's performance, which negatively impacted the efficiencies and financial performance of the Warwick rolling mill for several quarters. These issues have now been addressed and Alcoa's performance and quality have improved back to acceptable levels. As noted in our second quarter earnings call, we continue to qualify additional molten metal sources to further diversify our metal supply going forward and mitigate the risk of any further operational disruptions. Longer term, We intend to increase the use of recycled materials as a percentage of our raw materials as we continue to migrate towards more sustainable raw material and power supplies at Warren. During the quarter, we completed a long-planned major outage at our Trentwood rolling mill. There was significant work completed on our large stretcher the cast house, and other areas within the mill with minimal disruption to our customers. Trentwood is well positioned for a strong finish to the year as we focus on satisfying and improving aerospace market and meeting continued strong demand for general engineering plate. I want to congratulate the team there for the tremendous effort put forth to complete this body of work and prepare our operations for continued growth moving forward. We also continue to make good progress on our rollcoat capacity expansion project for beverage and food can applications at our Warrick facility. With the equipment on order, we are focused on readying the site for installation and startup of the new rollcoat line to begin in late 2023 for early 2024 with production to be fully operational mid to late 2024. In summary, I'm pleased with the progress we have made to restore our operations to more normalized levels following the significant headwinds we experienced during the third quarter. We have a strong and diversified portfolio, and demand has remained solid for the vast majority of the end markets we serve, which we expect to continue for the balance of the year. While continued high inflationary conditions remain and are having an adverse impact on cost and efficiencies within our operations, our teams are focused on offsetting these higher costs and inefficiencies through cost reduction efforts, efficiency improvements, and continued commercial actions to improve our margins, demonstrating the flexible nature of our cost structure. I am confident our solid market position, strong customer relationships, and multi-year contracts with strategic partners will continue to support the long-term profitable growth for Kaiser. I'll now turn the call over to Neil for more detail on the quarter. Neil?