Kaiser Aluminum Corporation (NASDAQ:KALU) Q2 2017 Earnings Conference Call - Final Transcript

Jul 20, 2017 • 01:00 pm ET


Kaiser Aluminum Corporation (NASDAQ:KALU) Q2 2017 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Kaiser Aluminum Second Quarter 2017 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Ms. Melinda Ellsworth, Vice President, Investor Relations and Corporate Communications. Ma'am, you may begin.

Melinda Ellsworth

Thank you. Good afternoon, everyone and welcome to Kaiser Aluminum Second Quarter 2017 Earnings Conference Call. If you've not seen a copy of our current 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 Chief Executive Officer and Chairman, Jack Hockema; President and Chief Operating Officer, Keith Harvey; Executive Vice President and Chief Financial Officer, Dan Rinkenberger, and Vice President and Chief Accounting Officer, Neal West.

Before we begin, I'd like to refer you to the first two 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, 2016.

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, record affiliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of the presentation. 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 Jack Hockema. Jack?

Jack A. Hockema

Thanks, Melinda. Welcome to everyone joining us on the call today. Our second quarter results exceeded our expectation as Trentwood perform significantly better than anticipated, despite project related equipment outages and operational disruption. Beyond Trentwood strong performance, our other facilities continued to achieve solid underlying manufacturing efficiency. We also benefited from favorable scrap material prices, similar to the first quarter and overhead and other costs in this quarter were also more favorable than we had anticipated.

In addition to reduce complexity and execution risks risk at Trentwood, we rescheduled approximately $4 million of major maintenance projects unrelated to the modernization project from the second quarter to the second half.

As anticipated industry dynamics remain largely unchanged from the first quarter, despite construction related throughput constraints at Trentwood and destocking in the commercial aerospace supply chain total shipments increased 3% year-over-year. Reduced year-over-year aerospace shipments were more than offset by year-over-year growth in shipments for general engineering and automotive applications, driven by strong industrial demand and