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Kaiser Aluminum (KALU) Tops Q2 EPS by 40c, Revenues Beat

July 22, 2020 4:35 PM EDT

Kaiser Aluminum (NASDAQ: KALU) reported Q2 EPS of $0.36, $0.40 better than the analyst estimate of ($0.04). Revenue for the quarter came in at $276 million versus the consensus estimate of $263.9 million.

Second Quarter 2020:

  • Net Sales $276 Million; Value Added Revenue $175 Million, Down 17% Year-over-Year
  • Net Loss $7 Million; Net Loss per Diluted Share $0.41, Includes Pre-tax Restructuring Charges of $12 Million, or $0.57 per Diluted Share After-tax
  • Adjusted Net Income $6 Million; Adjusted Earnings per Diluted Share $0.36
  • Adjusted EBITDA $34 Million; Adjusted EBITDA Margin 19.7%
  • Total Liquidity ~$1.0 Billion

Second Quarter 2020 Highlights

“Second quarter shipments and value added revenue reflect the impact of lower demand across our end markets due to the effects of COVID-19,” said Keith A. Harvey, President and Chief Operating Officer. “As we experienced rapid changes in business conditions, we executed on our business model and aggressively flexed costs and operating levels at our facilities in response to lower demand. Although there is often a lag with certain cost and related benefits, our highly variable cost structure allows us to react quickly, and flex costs through the cycles. Despite the decline in end market demand, pricing has held steady,” said Mr. Harvey.

Outlook

As the Company noted on the first quarter earnings call, value added revenue for large commercial aerospace and defense applications is anticipated to be down approximately 15% to 20% from record full year 2019 results. The two businesses combined represent approximately 50% of the Company’s total value added revenue.

“For the second half 2020, we anticipate total value added revenue will be down approximately 10% to 15% from the second quarter pace, with EBITDA margin in the mid-teens,” said Mr. Harvey. “Compared to the second quarter pace, we expect value added revenue for aerospace and high strength applications will be weak in the second half as large commercial aerospace shipments were heavily weighted to the first half of 2020. We expect normal seasonal demand weakness for our general engineering applications and anticipate a strong rebound for our automotive applications to value added revenue similar to the first quarter pace as customers return to more normal operations, and new program launches resume. Our second half outlook for value added revenue and EBITDA margin anticipates a weaker third quarter than fourth quarter due to timing of aerospace shipments and approximately $4 million of higher major maintenance costs related to timing of planned projects.

“As previously noted during our first quarter earnings call, in April we began limiting capital spending to critical sustaining projects only; however, with ample liquidity and more visibility for our end markets, we will proactively initiate capital spending on a number of organic investment opportunities to further support our automotive growth and enhance efficiencies throughout our operations. We anticipate that total capital spending for the full year 2020 will be approximately $50 to $60 million,” concluded Mr. Harvey.

For earnings history and earnings-related data on Kaiser Aluminum (KALU) click here.



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